EXHIBIT 4.4
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT is made as of the Date of
Grant set forth below, between TARRANT APPAREL GROUP, a California corporation
(the "COMPANY"), and the employee of the Company whose name appears below (the
"OPTIONEE").
RECITALS
A. The Compensation Committee (the "COMMITTEE") has determined
that it is to the advantage and in the best interests of the Company and its
shareholders to grant a non-qualified stock option to the Optionee covering
shares of the Company's Common Stock (or any class of stock into which such
Common Stock is converted or reclassified) ("COMMON STOCK") as an inducement to
remain in the service of the Company and as an incentive for increased effort
during such service, and has approved the execution of this Non-Qualified Stock
Option Agreement between the Company and the Optionee.
B. The option granted hereby is not intended to qualify as an
"incentive stock option" under Section 422 of the Internal Revenue Code of 1986,
as amended (the "CODE").
NOW, THEREFORE, the parties hereto agree as follows:
1. GRANT OF OPTION. The Company grants to the Optionee
the right and option (the "OPTION") to purchase on the terms and conditions
hereinafter set forth, all or any part of such number of shares of Common Stock
at such purchase price per share as are set forth below, which price is not less
than the fair market value of such stock (as determined pursuant to Section 4
hereof) on the Date of Grant. The Option shall be exercisable from time to time
in accordance with the provisions of this Agreement during a period expiring on
the tenth anniversary of the Date of Grant (the "EXPIRATION DATE") or earlier in
accordance with Section 5.
2. VESTING. Provided that Optionee continues to be
employed by the Company or one of its affiliates, the Option shall become
exercisable to purchase, and shall vest with respect to, such number of the
shares covered hereby as is set forth on the signature page hereof.
3. MANNER OF EXERCISE. Each exercise of the Option shall
be by means of a written notice of exercise delivered to the Company, specifying
the number of shares to be purchased and accompanied by payment to the Company
of the full purchased price of the shares to be purchased solely (i) in cash or
by check payable to the order of the Company, (ii) by delivery of shares of
Common Stock of the Company already owned by, and in the possession of, the
Optionee, valued at their fair market value, as determined in accordance with
Section 4, or (iii) (x) by a promissory note made by Optionee in favor of the
Company,
upon the terms and conditions determined by the Committee including, to the
extent the Committee determines appropriate, a security interest in the shares
issuable upon exercise or other property, or (y) through a "cashless exercise,"
in either case complying with applicable law (including, without limitation,
state and federal margin requirements), or any combination thereof. Shares of
Common Stock used to satisfy the exercise price of this Option shall be valued
at their fair market value determined (in accordance with Section 4 hereof) on
the date of exercise (or if such date is not a business day, as of the close of
the business day immediately preceding such date). This Option may not be
exercised for a fraction of a share and no partial exercise of this Option may
be for less than (a) one hundred (100) shares or (b) the total number of shares
then eligible for exercise, if less than one hundred (100) shares.
The Option may be exercised (i) during the lifetime of the
Optionee only by the Optionee; (ii) to the extent permitted by the Committee or
by the terms of this Agreement, Optionee's spouse if such spouse obtained the
Option pursuant to a qualified domestic relations ordered as defined by the Code
of Title I of Employment Retirement Income Security Act of 1974 as amended, or
the rules thereunder ("QUALIFIED DOMESTIC RELATIONS ORDER"); and (iii) after the
Optionee's death by his or her transferees by will or the laws of descent or
distribution.
4. FAIR MARKET VALUE OF COMMON STOCK. The fair market
value of shares of Common Stock shall be determined for purposes of this
Agreement by reference to the closing price on the principal stock exchange on
which such shares are then listed or, if such shares are not then listed on a
stock exchange, by reference to the closing price (if approved for quotation on
the NASDAQ National Market System) or the mean between the bid and asked price
(if other over-the-counter issue) of a share as supplied by the National
Association of Securities Dealers, Inc. through NASDAQ (or its successor in
function), in each case as reported by THE WALL STREET JOURNAL, for the business
day immediately preceding the date on which the Option is granted (which, for
all purposes, shall be the Date of Grant) or exercised (or, if for any reason no
such price is available, in such other manner as the Committee may deem
appropriate to reflect the then fair market value thereof).
5. TERMINATION OF EMPLOYMENT; DEATH OR PERMANENT
DISABILITY. If the Optionee ceases to be employed by the Company or one of its
affiliates for any reason other than the Optionee's death or "permanent
disability" (within the meaning of Section 22(e)(3) of the Code), the Option
shall be exercisable until the earlier of (i) the Expiration Date or (ii) a date
three (3) months after the date the Optionee ceases to be an employee of the
Company or such affiliate, to the extent exercisable on the date of such
cessation of employment, and shall thereafter expire and be void and of no
further force or effect. A leave of absence approved in writing by the Committee
shall not be deemed a termination of employment for the purposes of this Section
5, but the Option may not be exercised during any such leave of absence, except
during the first three (3) months thereof. Service as a member of the Company's
Board of Directors shall not, by itself, constitute employment for purposes
hereof. If the Optionee dies or becomes "permanently disabled" while the
Optionee is employed by the Company or one of its affiliates, the Option shall
expire on the earlier of (i) the Expiration Date or (ii) a date one (1) year
after the date of such death or "permanent disability," to the extent
exercisable on the
date of death or permanent disability, and shall thereafter expire and be void
and of no further force or effect. During such period after death, the Option
may, to the extent that it remained unexercised (but exercisable by the Optionee
according to the Option's terms) on the date of such death, be exercised by the
person or persons to whom the Optionee's rights under the Option shall pass by
the Optionee's will or by the laws of descent and distribution.
6. SHARES TO BE ISSUED IN COMPLIANCE WITH FEDERAL
SECURITIES LAWS AND EXCHANGE RULES. By accepting the Option, the Optionee
represents and agrees, for the Optionee and his or her legal successors (by will
or the laws of descent and distribution or through a Qualified Domestic
Relations Order), that none of the shares purchased upon exercise of the Option
will be acquired with a view to any sale, transfer or distribution of said
shares in violation of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), and the rules and regulations promulgated thereunder, or any applicable
state "blue sky" laws. If required by the Committee at the time the Option is
exercised, the Optionee or any other person entitled to exercise the Option
shall furnish evidence satisfactory to the Company (including a written and
signed representation) to such effect in form and substance satisfactory to the
Company, including an indemnification of the Company in the event of any
violation of the Securities Act or state "blue sky" laws by such person. The
Company shall use reasonable efforts to take all necessary and appropriate
action to assure that the shares issuable upon the exercise of this Option shall
be issued in full compliance with the Securities Act, state "blue sky" laws and
all applicable listing requirements of any principal securities exchange on
which shares of the same class are listed.
7. NO ASSIGNMENT. The Option and all other rights and
privileges granted hereby shall not be transferred, either voluntarily or by
operation of law otherwise than by will or the laws of descent and distribution
or pursuant to a Qualified Domestic Relations Order. Upon any attempt to so
transfer or otherwise dispose of this Option or any other right or privilege
granted hereby contrary to the provisions hereof, this Option and all rights and
privilege contained herein shall immediately become null and void and of no
further force or effect.
8. ADJUSTMENT FOR REORGANIZATIONS, STOCK SPLITS, ETC. If
the outstanding shares of Common Stock of the Company (or any other class of
shares or securities which shall have become issuable upon the exercise of this
Option pursuant to this sentence) are increased, decreased, changed into or
exchanged for a different number or kind of shares or securities of the Company
through reorganization, recapitalization, reclassification, stock dividend,
stock split, reverse stock split or other similar transaction, an appropriate
and proportionate adjustment shall be made in the maximum number and kind of
shares receivable upon the exercise of this Option, without change in the total
price applicable to the unexercised portion of this Option, but with a
corresponding adjustment in the price for each share or other unit of any
security covered by this Option.
Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all the property or
more than eighty percent (80%) of the then outstanding stock of the Company to
another corporation, this Option shall terminate; PROVIDED, however, that
notwithstanding the foregoing, the Committee shall provide in writing in
connection with such transaction for the appropriate satisfaction of this Option
by one or more of the following alternatives (separately or in combination): (i)
for this Option to become immediately exercisable notwithstanding the provisions
of Sections 2 and 3; (ii) for the assumption by the successor corporation of
this Option or the substitution by such corporation therefor of a new option
covering the stock of the successor corporation or its affiliates with
appropriate adjustments as to the number and kind of shares and prices; or (iii)
for the payment in cash or stock in lieu of and in complete satisfaction of this
Option.
Adjustments under this Section 8 shall be made by the
Committee, whose determination as to what adjustments shall be made, and the
extent thereof, shall be final, binding and conclusive. No fractional shares of
stock shall be issued under this Option on any such adjustment.
9. PARTICIPATION BY THE OPTIONEE IN OTHER COMPANY PLANS.
Nothing herein contained shall affect the right of the Optionee to participate
in and receive benefits under and in accordance with the then current provisions
of any pension, insurance, profit sharing or other employee welfare plan or
program of the Company or of any subsidiary of the Company.
10. NO RIGHTS AS A SHAREHOLDER UNTIL ISSUANCE OF STOCK
CERTIFICATE. Neither the Optionee nor any other person legally entitled to
exercise this Option shall be entitled to any of the rights or privileges of a
shareholder of the Company in respect of any shares issuable upon any exercise
of the Option unless and until a certificate or certificates representing such
shares shall have been actually issued and delivered to the Optionee. No shares
shall be issued and delivered upon the exercise of this Option unless and until
there shall have been full compliance with all applicable requirements of the
Securities Act (whether by registration or satisfaction of an exemption
therefrom), all applicable listing requirements of a national securities
exchange on which shares of the same class are listed and any other requirements
of law or of any regulatory bodies having jurisdiction over such issuance and
delivery.
11. NOT AN EMPLOYMENT OR SERVICE CONTRACT. Nothing herein
contained shall be construed as an agreement by the Company or any of its
affiliates, express or implied, to employ the Optionee or contract for the
Optionee's services, to restrict the Company's or such affiliate's right to
discharge the Optionee or cease contracting for the Optionee's services or to
modify, extend or otherwise affect in any manner whatsoever, the terms of any
employment agreement or contract for services which may exist between the
Optionee and the Company or any of its affiliates.
12. EXECUTION. The interpretation, performance and
enforcement of this Agreement shall be governed by the internal substantive laws
of the State of California.
COMPANY: TARRANT APPAREL GROUP
By: /S/ XXXXXXX XXXX
-------------------------
Xxxxxxx Xxxx,
Chief Financial Officer
OPTIONEE:
/S/ XXXXX XXXX
-------------------------
Xxxxx Xxxx
By his or her signature below, the spouse of the Optionee agrees to be
bound by all of the terms and conditions of the foregoing Agreement.
OPTIONEE'S SPOUSE:
--------------------------------
Name:
The following terms and conditions are an integral part of the
foregoing Non-Qualified Stock Option Agreement.
Optionee: Xxxxx Xxxx
Social Security No.: ###-##-####
Address: 00000 000xx Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Date of Grant: December 4, 2003
Number of shares purchasable: 400,000
Exercise Price per share: $3.939
Expiration Date: December 4, 2013
Vesting Schedule Dates Shares Initially Cumulative Shares
Exercisable Exercisable
---------------------- ---------------- -----------------
12/04/04 25,000 25,000
12/04/05 125,000 150,000
12/04/06 125,000 275,000
12/04/07 125,000 400,000
TARRANT APPAREL GROUP: OPTIONEE:
/S/ XXXXXXX XXXX /S/ XXXXX XXXX
------------------------- ---------------------------
Xxxxxxx Xxxx, Xxxxx Xxxx
Chief Financial Officer
