EXHIBIT 99.4
Children's Concept, Inc.
Non-Qualified Stock Option
THIS STOCK OPTION ("Option") is granted this 7th day of August, 1995, by
Children's Concept, Inc., a Pennsylvania corporation (the "Company"), to Xxxx X.
Xxxxxxxxx (the "Optionee").
W I T N E S S E T H
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1. Grant. The Company hereby grants to the Optionee an Option to purchase
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on the terms and conditions hereinafter set forth all or any part of an
aggregate of 20,000 shares of the Company's Common Stock, par value $.01 per
share (the "Option Shares"), at the purchase price of $3.33 per share (the
"Option Price"). This Option is not intended to be an "incentive stock option"
within the meaning of section 422A(b) of the Internal Revenue Code of 1986 (the
"Code"). This Option is not granted pursuant to the Children's Concept, Inc.
1993 Stock Incentive Plan (the "Plan").
2. Term and Exercisability.
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(a) General Rule. The Option granted hereunder shall vest (the "Vested
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Options") in three cumulative installments, with each installment vesting on the
vesting date in the chart below for the number of Option Shares set forth across
from such vesting date.
Vesting Date Option Shares
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July 15, 1995 10,000
January 31, 1996 5,000
July 31, 1996; provided that the 5,000
vesting date shall be January 31, 1996
if the Master Brokerage Agreement
between Company and Optionee, effective
July 15, 1995 ("MBA"), is not renewed
Subject to the other terms of this Option regarding exercisability of this
Option, this Option may be exercised on or after the date shares have vested.
The Option granted hereunder shall terminate with respect to each installment at
5:00 p.m. local Philadelphia, Pennsylvania time on November 29, 2003 (the
"Expiration Date"), unless sooner terminated under Section 2(b) or (c) below.
Any installment may be exercised in whole or in part, except that this Option
may in no event be exercised with respect to fractional shares.
(b) Certain Transactions. If (i) the Company is dissolved or liquidated or
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(ii) an acquisition or business combination transaction occurs in which the
Company (A) is not the surviving or acquiring entity or (B) becomes an 80% or
more subsidiary of another person or company, then the Option shall terminate on
any date specified by the Company's Board of Directors ("Board"). If this
Section 2(b) shall become applicable, the Board shall have the right to advance
the Expiration Date of this Option without the consent of the Optionee, as it
deems necessary or desirable. The Board may accelerate the exercisability of any
installments that are not yet exercisable before the accelerated Expiration
Date, but the Board shall have no obligation to do so.
(c) Breach of Restrictive Covenants or Termination of MBA for Cause.
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Notwithstanding anything herein to the contrary, if the Company makes a finding
that the Optionee (i) has breached the MBA, the Non-Competition Agreement
entered in connection with the MBA, or any successor to either such agreement,
or has engaged in any sort of disloyalty to the Company or an Affiliate,
including, without limitation, fraud, embezzlement, theft, commission of a
felony or proven dishonesty or (ii) has disclosed trade secrets or confidential
information of the Company or an Affiliate, the Option shall terminate on the
date of such finding. In addition to immediate termination of the Option, the
Optionee shall forfeit all Option Shares for any exercised portion of the Option
for which the Company has not yet delivered the share certificates to the
Optionee upon refund by the Company of the Option Price paid by the Optionee.
Notwithstanding anything herein to the contrary, upon any purported exercise of
this Option, the Company may withhold delivery of share certificates pending the
resolution of an inquiry that could lead to a finding resulting in a forfeiture.
3. Transfers. This Option is not transferable by the Optionee otherwise
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than by will or pursuant to the laws of descent and distribution in the event of
the Optionee's death, in which event the Option may be exercised by the heirs or
legal representatives of the Optionee. The Option may be exercised during the
lifetime of the Optionee only by the Optionee or his legal representative in the
event of his incompetence. Any attempt at assignment, transfer, pledge or
disposition of the Option contrary to the provisions hereof or the levy of any
execution, attachment or similar process upon the Option shall be null and void
and without effect. Any exercise of the Option by a person other than the
Optionee shall be accompanied by appropriate proofs of the right of such person
to exercise the Option.
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4. Method of Exercise and Payment. When exercisable under Section 2, the
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Option may be exercised by written notice, pursuant to Section 8, to the
Company's Treasurer specifying the number of Option Shares to be purchased and,
unless the Option Shares are covered by a then current registration statement
under the Securities Act of 1933 (the "Act") and current registrations under all
applicable state securities laws, containing the Optionee's acknowledgment, in
form and substance satisfactory to the Company, that the Optionee (a) is
purchasing such Option Shares for investment and not for distribution or resale
(other than a distribution or resale which, in the opinion of counsel
satisfactory to the Company, may be made without violating the registration
provisions of the Act), (b) has been advised and understands that (i) the Option
Shares have not been registered under the Act and are "restricted securities"
within the meaning of Rule 144 under the Act and are subject to restrictions on
transfer, and (ii) the Company is under no obligation to register the Option
Shares under the Act or to take any action which would make available to the
Optionee any exemption from such registration, (c) has been advised and
understands that such Option Shares may not be transferred without compliance
with all applicable federal and state securities laws, and (d) has been advised
that an appropriate legend referring to the foregoing restrictions on transfer
may be endorsed on the certificates. The notice shall be accompanied by payment
of the aggregate Option Price of the Option Shares being purchased (a) in cash,
(b) by certified check payable to the order of the Company, or (c) by a
combination of the foregoing. Such exercise shall be effective upon the actual
receipt by the Company's Treasurer of written notice of exercise and payment.
In addition, except as provided below, the Optionee may make payment in
whole or in part in shares of the Company's Common Stock held by the Optionee.
For purposes of determining the amount of payment, such shares shall be valued
at their fair market value on the date of exercise as determined by the Board.
If payment is made in whole or in part in shares of the Company's Common Stock,
then the Optionee shall deliver to the Company certificates registered in the
name of the Optionee representing shares of the Company's Common Stock legally
and beneficially owned by the Optionee, free of all liens, claims and
encumbrances of every kind, accompanied by stock powers duly endorsed in blank
by the record holder of the shares represented by such certificates.
Notwithstanding the foregoing, the Board, in its sole discretion, may refuse to
accept shares of the Company's Common Stock in payment of the Option Price. In
that event, any certificates representing shares of the Company's Common Stock
which were delivered to the Company shall be returned to the Optionee with
notice of the refusal of the Board to accept such shares in payment of the
Option Price. Furthermore, the Board may impose from time to time such
limitations and prohibitions on the use of shares of the Company's Common Stock
for payment upon exercise of the Option as it deems appropriate in its sole
discretion.
5. Adjustments or Changes in Capitalization. In the event that, prior to
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the delivery by the Company of all of the Option Shares in respect of which the
Option is granted,
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there shall be a stock dividend, stock split, recapitalization or other change
in the number or class of issued and outstanding equity securities of the
Company resulting from a subdivision or consolidation of the Company's Common
Stock and/or other outstanding equity security or a recapitalization or other
capital adjustment affecting the Company's Common Stock or an equity security of
the Company which is effected without receipt of consideration by the Company,
the remaining number of Option Shares (or class of shares) subject to the Option
and the Option Price therefor shall be adjusted in a manner determined by the
Board so that the adjusted number of Option Shares (or class of shares) and the
adjusted Option Price shall be the substantial equivalent of the remaining
number of Option Shares subject to the Option and the Option Price thereof prior
to such change. For purposes of this Section 5, no adjustment shall be made as a
result of the issuance of the Company's Common Stock upon the conversion of
other securities of the Company which are convertible into Common Stock.
6. Legal Requirements and Purchase for Investment. Unless the Option Shares
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have been registered under the Act, the Optionee's right to exercise this Option
may be conditioned upon the Optionee's delivery of his written representation to
the Company that the Option Shares are being acquired by him for his own
investment and not with a view to resale or distribution. Notwithstanding
anything contained herein to the contrary, if (a) the listing, registration or
qualification of the Option Shares upon any securities exchange or under any
federal or state law, or (b) the consent or approval of any governmental
regulatory body is necessary as a condition of or in connection with the
purchase of Option Shares, the Company may defer exercise of this Option unless
and until such listing, registration, qualification, consent or approval shall
have been effected or obtained. If registration is considered unnecessary by the
Company or its counsel, the Company may permit exercise and cause a legend to be
placed on the Option Shares being issued calling attention to the fact that they
have been acquired for investment and have not been registered.
7. Interpretation and Application. All questions of interpretation and
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application of this Option shall be determined by the Board. Such determinations
shall be final, binding and conclusive.
8. Notices. Any notice to be given to the Company shall be addressed to the
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Treasurer of the Company at its principal executive office, and any notice to be
given to the Optionee shall be addressed to the Optionee at the address then
appearing on the records of the Company, or at such other addresses as either
party hereafter may designate in writing to the other. Any such notice shall be
deemed to have been duly given when delivered (personally, by courier service,
such as Federal Express, or by other messenger) or when deposited in the United
States mail, addressed as aforesaid, registered or certified mail, and with
proper postage and registration or certification fees prepaid.
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9. No Continued Service. Neither the grant of this Option nor anything
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herein contained shall be construed to imply or to constitute evidence of any
agreement, express or implied, on the part of the Company or an Affiliate to
retain the Optionee in the service of the Company or an Affiliate or to affect
in any way the right of the Company or any Affiliate to terminate the Optionee's
service, responsibilities, duties, or authority to represent the Company or any
Affiliate at any time for any reason whatsoever.
10. Withholding of Taxes. Whenever the Company proposes or is required to
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deliver or transfer Option Shares in connection with the exercise of this
Option, the Company shall have the right to (a) require the Optionee to remit to
the Company an amount sufficient to satisfy any federal, state and/or local
withholding tax requirements prior to the delivery or transfer of any
certificate or certificates for such Option Shares or (b) take whatever action
it deems necessary to protect its interests with respect to tax liabilities,
including, without limitation, withholding a portion of the Option Shares
otherwise deliverable pursuant to exercise of the Option.
11. Governing Law. This Agreement shall be governed by and interpreted
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under the laws of the Commonwealth of Pennsylvania without giving effect to any
conflict of laws provisions.
IN WITNESS WHEREOF, the Company has granted this Option on the day and year
first above written.
Attest: CHILDREN'S CONCEPT, INC.
/s/ Xxxxxx X. Xxxxxxx /s/ Xxxxx Xxxxxxxxxxxx
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Xxxxxx X. Xxxxxxx Xxxxx Xxxxxxxxxxxx,
Secretary President
(Corporate Seal)
Witness: ACCEPTED BY:
/s/ Xxxxx Xxxxx Xxxxx /s/ Xxxx X. Xxxxxxxxx
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Xxxxx Xxxxx Xxxxx Name: Xxxx X. Xxxxxxxxx
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