EXHIBIT 10.23
NON-QUALIFIED STOCK OPTION AGREEMENT
AGREEMENT made as of the 13th day of October, 2006, by and between
Movie Star, Inc., a New York corporation (the "Company"), and Xxxx Xxxxxxxxx
(the "Employee").
WHEREAS, effective on October 13, 2006 (the "Grant Date"), pursuant to
the terms and conditions of the Company's Amended and Restated 1988 Stock Option
Plan (the "Plan"), the Compensation Committee of the Board of Directors of the
Company (the "Committee") authorized the grant to the Employee of an option (the
"Option") to purchase an aggregate of 50,000 shares of the authorized but
unissued Common Stock of the Company, $.01 par value (the "Common Stock"),
conditioned upon the Employee's acceptance thereof upon the terms and conditions
set forth in this Agreement and subject to the terms of the Plan; and
WHEREAS, the Employee desires to acquire the Option on the terms and
conditions set forth in this Agreement.
IT IS AGREED:
1. Grant of Stock Option. The Company hereby grants the Employee the
Option to purchase all or any part of an aggregate of 50,000 shares of Common
Stock (the "Option Shares") on the terms and conditions set forth herein and
subject to the provisions of the Plan.
2. Non-Qualified Stock Option. The Option represented hereby is not
intended to be an Option which qualifies as an "Incentive Stock Option" under
Section 422 of the Internal Revenue Code of 1986, as amended.
3. Exercise Price. The exercise price of the Option shall be $1.00 per
share, subject to adjustment as hereinafter provided.
4. Exercisability. This Option is exercisable, subject to the terms and
conditions of the Plan, as follows: the right to purchase 20% of the Option
Shares (10,000 shares) shall be exercisable on and after each of the first
through fifth anniversaries of the Grant Date. After a portion of the Option
becomes exercisable, it shall remain exercisable except as otherwise provided
herein, until the
close of business on the day immediately preceding the tenth anniversary of the
Grant Date (the "Exercise Period").
5. Effect of Termination of Employment. Except as otherwise provided
below, if the Employee's employment by the Company terminates for any reason,
the portion of the Option not yet exercisable on the date of termination of
employment shall immediately expire. The portion of the Option which is
exercisable on the date of termination of employment shall be exercisable by the
Employee at any time during the ninety (90) day period following the termination
of employment; provided, however, that (i) if Employee's employment is
terminated as a result of the "disability" of the Employee (as defined in the
Employment Agreement, dated as of October 13, 2006, between the Company and
Employee ("Employment Agreement")), then the Employee's right to exercise the
Option shall terminate on the day preceding the first anniversary of the date of
termination by reason of such disability; (ii) if Employee's employment is
terminated because of death (or if death occurs within ninety days after
termination of the Employee's employment for reasons other than those set forth
in clause (i) above), then the Option shall be exercisable by the Employee's
personal representative or heirs, as the case may be, within one year after the
date of death of the Employee if and to the extent that it was exercisable at
the date of the termination of employment; (iii) if Employee's employment is
terminated by the Company without "Cause" as defined in the Employment Agreement
or is terminated by Employee for "Good Reason" as defined in the Employment
Agreement, then the portion of the Option which is exercisable on the date of
termination of employment and any additional portion of the Option which would
have become exercisable on or before June 30, 2009 if employment had continued
through that date shall continue to become exercisable as scheduled and shall
continue to be exercisable thereafter, absent the death of Employee (in which
case the Option shall be exercisable by the Employee's personal representative
or heirs, as the case may be, within one year after the date of death of the
Employee), until the close of business on the day immediately preceding the
tenth anniversary of the Grant Date; (iv) if Employee's employment is terminated
upon expiration of the Term or thereafter for any reason other than "Cause" as
defined in the Employment Agreement, then the Option shall continue to be
exercisable thereafter absent the death of Employee (in which case the Option
shall be exercisable by the Employee's personal representative or heirs, as the
case may be, within one year after the date of death of the Employee), until the
close of business on the day immediately preceding the tenth anniversary of the
Grant Date; and (v) if Employee's employment is
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terminated for "Cause" as defined in the Employment Agreement, then the portion
of the Option that was exercisable on the date of termination of employment
shall also immediately expire.
6. Withholding Tax. Not later than the date as of which an amount first
becomes includible in the gross income of the Employee for Federal income tax
purposes with respect to the Option, the Employee shall pay to the Company, or
make arrangements satisfactory to the Committee regarding the payment of, any
Federal, state and local taxes of any kind required by law to be withheld or
paid with respect to such amount ("Withholding Tax"). The obligations of the
Company under the Plan and pursuant to this Agreement shall be conditional upon
such payment or arrangements with the Company and the Company shall, to the
extent permitted by law, have the right to deduct any Withholding Taxes from any
payment of any kind otherwise due to the Employee from the Company.
7. Adjustments.
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7.1 In the event of a stock split, stock dividend, combination of
shares, or any other similar change in the Common Stock of the Company as a
whole, the Board of Directors of the Company shall make equitable, proportionate
adjustments in the number and kind of shares covered by the Option and in the
option price hereunder.
7.2 In the event of any reclassification or reorganization of the
outstanding shares of Common Stock other than a change covered by Section 7.1 or
that solely affects the par value of such shares of Common Stock, or in the case
of any merger or consolidation of the Company with or into another corporation
(other than a consolidation or merger in which the Company is the continuing
corporation and that does not result in any reclassification or reorganization
of the outstanding shares of Common Stock), the Employee shall have the right
thereafter (until the expiration of the right of exercise of this Option) to
receive upon the exercise hereof after such event, for the same aggregate
Exercise Price payable hereunder immediately prior to such reclassification,
reorganization, merger or consolidation, the amount and kind of consideration
receivable by a holder of the number of shares of Common Stock of the Company
obtainable upon exercise of this Option immediately prior to such event. The
provisions of this Section 7.2 shall similarly apply to successive
reclassifications, reorganizations, mergers or consolidations, sales or other
transfers.
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8. Method of Exercise.
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8.1 Notice to the Company. The Option shall be exercised in whole
or in part by written notice in substantially the form attached hereto as
Exhibit A directed to the Company at its principal place of business accompanied
by full payment as hereinafter provided of the exercise price for the number of
Option Shares specified in the notice and of the Withholding Taxes, if any.
8.2 Delivery of Option Shares. The Company shall deliver a
certificate for the Option Shares to the Employee as soon as practicable after
payment therefor.
8.3 Payment of Purchase Price. The Employee shall make cash
payments by certified or bank check, in each case payable to the order of the
Company; the Company shall not be required to deliver certificates for Option
Shares until the Company has confirmed the receipt of good and available funds
in payment of the purchase price thereof and of the Withholding Taxes, if any.
9. Nonassignability. The Option shall not be assignable or transferable
except by will or by the laws of descent and distribution in the event of the
death of the Employee. No transfer of the Option by the Employee by will or by
the laws of descent and distribution shall be effective to bind the Company
unless the Company shall have been furnished with written notice thereof and a
copy of the will and such other evidence as the Company may deem necessary to
establish the validity of the transfer and the acceptance by the transferee or
transferees of the terms and conditions of the Option.
10. Company Representations. The Company hereby represents and warrants
to the Employee that:
(i) the Company, by appropriate and all required action, is duly
authorized to enter into this Agreement and consummate all of the transactions
contemplated hereunder; and
(ii) the Option Shares, when issued and delivered by the Company
to the Employee in accordance with the terms and conditions hereof, will be duly
and validly issued and fully paid and non-assessable.
11. Employee Representations. The Employee hereby represents and
warrants to the Company that:
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(i) he is acquiring the Option and shall acquire the Option Shares
for his own account and not with a view towards the distribution thereof;
(ii) he has received a copy of all reports and documents required
to be filed by the Company with the Commission pursuant to the Exchange Act
within the last 24 months and all reports issued by the Company to its
stockholders;
(iii) he understands that he must bear the economic risk of the
investment in the Option Shares, which cannot be sold by him unless they are
registered under the Securities Act of 1933 (the "1933 Act") or an exemption
therefrom is available thereunder and that the Company is under no obligation to
register the Option Shares for sale under the 1933 Act;
(iv) in his position with the Company, he has had both the
opportunity to ask questions and receive answers from the officers and directors
of the Company and all persons acting on its behalf concerning the terms and
conditions of the offer made hereunder and to obtain any additional information
to the extent the Company possesses or may possess such information or can
acquire it without unreasonable effort or expense necessary to verify the
accuracy of the information obtained pursuant to clause (ii) above;
(v) he is aware that the Company shall place stop transfer orders
with its transfer agent against the transfer of the Option Shares in the absence
of registration under the 1933 Act or an exemption therefrom as provided herein;
and
(vi) in the absence of an effective registration statement under
the 1933 Act, the certificates evidencing the Option Shares shall bear the
following legend:
"The shares represented by this certificate have been acquired
for investment and have not been registered under the Securities Act of
1933. The shares may not be sold or transferred in the absence of such
registration or an exemption therefrom under said Act."
12. Restriction on Transfer of Option Shares. Anything in this
Agreement to the contrary notwithstanding, the Employee hereby agrees that he
shall not sell, transfer by any means or otherwise dispose of the Option Shares
acquired by him without registration under the 1933 Act, or in the event that
they are not so registered, unless (i) an exemption from the 1933 Act
registration requirements is
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available thereunder, and (ii) the Employee has furnished the Company with
notice of such proposed transfer and the Company's legal counsel, in its
reasonable opinion, shall deem such proposed transfer to be so exempt.
13. Miscellaneous.
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13.1 Notices. All notices, requests, deliveries, payments, demands
and other communications which are required or permitted to be given under this
Agreement shall be in writing and shall be either delivered personally or sent
by registered or certified mail, or by private courier, return receipt
requested, postage prepaid to the parties at their respective addresses set
forth herein, or to such other address as either shall have specified by notice
in writing to the other. Notice shall be deemed duly given hereunder when
delivered or mailed as provided herein.
13.2 Plan Paramount; Conflicts with Plan. This Agreement and the
Option shall, in all respects, be subject to the terms and conditions of the
Plan, whether or not stated herein. In the event of a conflict between the
provisions of the Plan and the provisions of this Agreement, the provisions of
the Plan shall in all respects be controlling.
13.3 Stockholder Rights. The Employee shall not have any of the
rights of a stockholder with respect to the Option Shares until such shares have
been issued after the due exercise of the Option.
13.4 Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach.
13.5 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof. This
Agreement may not be amended except by writing executed by the Employee and the
Company.
13.6 Binding Effect; Successors. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and, to the extent not
prohibited herein, their respective heirs, successors, assigns and
representatives. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto and as provided above, their
respective heirs, successors, assigns and representatives any rights, remedies,
obligations or liabilities.
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13.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to choice of law provisions.
13.8 Headings. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of this
Agreement.
13.9 Section 409A. The Option granted hereunder is intended to be
exempt from the provisions of Section 409A of the Internal Revenue Code of 1986,
as amended ("Section 409A"). To the extent that the Options or any payments or
benefits provided hereunder are considered deferred compensation subject to
Section 409A, the Company intends for this Agreement and the Option to comply
with the standards for nonqualified deferred compensation established by Section
409A (the "409A Standards"). Notwithstanding anything herein to the contrary, to
the extent that any terms of this Agreement or the Option would subject the
Employee to gross income inclusion, interest or an additional tax pursuant to
Section 409A, those terms are to that extent superseded by the 409A Standards.
The Company reserves the right to amend the Option granted hereunder to cause
such Option to comply with or be exempt from Section 409A.
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the day and year first above written.
EMPLOYEE: MOVIE STAR, INC.
/s/ Xxxx Xxxxxxxxx By: /s/ Xxxxxx Xxxxx
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Name: Xxxx Xxxxxxxxx Xxxxxx Xxxxx
Chief Financial Officer
Address:
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EXHIBIT A
FORM OF NOTICE OF EXERCISE OF OPTION
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DATE
Movie Star, Inc.
0000 Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: The Board of Directors
Re: Purchase of Option Shares
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Gentlemen:
In accordance with my Stock Option Agreement dated as of
October 13, 2006 ("Agreement") with Movie Star, Inc. (the "Company"), I hereby
irrevocably elect to exercise the right to purchase _________ shares of the
Company's common stock, par value $.01 per share ("Common Stock"), which are
being purchased for investment and not for resale.
As payment for my shares, enclosed is a certified or bank
check payable to Movie Star, Inc. in the sum of $ .
I hereby represent, warrant to, and agree with, the Company that
(i) I acquired the Option and shall acquire the
Option Shares for my own account and not with a view towards the
distribution thereof;
(ii) I have received a copy of all reports and
documents required to be filed by the Company with the Commission
pursuant to the Exchange Act within the last 24 months and all reports
issued by the Company to its stockholders;
(iii) I understand that I must bear the economic risk
of the investment in the Option Shares, which cannot be sold by me
unless they are registered under the Securities Act of 1933 (the "1933
Act") or an exemption therefrom is available thereunder and that the
Company is under no obligation to register the Option Shares for sale
under the 1933 Act;
(iv) in my position with the Company, I have had both
the opportunity to ask questions and receive answers from the officers
and directors of the Company and all persons acting on its behalf
concerning the terms and conditions of the offer made hereunder and to
obtain any additional information to the extent the Company possesses
or may possess such information or can acquire it without unreasonable
effort or expense necessary to verify the accuracy of the information
obtained pursuant to clause (ii) above;
(v) I am aware that the Company shall place stop
transfer orders with its transfer agent against the transfer of the
Option Shares in the absence of registration under the
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1933 Act or an exemption therefrom as provided herein;
(vi) my rights with respect to the Option Shares
shall, in all respects, be subject to the terms and conditions of this
Company's Amended and Restated 1988 Stock Option Plan and this
Agreement; and
(vii) in the absence of an effective registration
statement under the 1933 Act, the certificates evidencing the Option
Shares shall bear the following legend:
"The shares represented by this certificate have been
acquired for investment and have not been registered
under the Securities Act of 1933. The shares may not
be sold or transferred in the absence of such
registration or an exemption therefrom under said
Act."
Kindly forward to me my certificate at your earliest convenience.
Very truly yours,
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(Signature) (Address)
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(Print Name) (Address)
------------------------------
(Social Security Number)
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