Exhibit 10.5
CANDIE'S, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
CANDIE'S, INC., a Delaware corporation (the "Company") hereby grants to Xxxx
Xxxx, (the "Optionee"), as of November 29, 1999 (the "Grant Date"), a
non-qualified stock option to purchase a total of 400,000 shares of the
Company's common stock, par value $.001 per share ("Common Stock"), at the price
of $1.50 per share on the terms and conditions set forth herein. This option is
intended to be a non-qualified stock option, i.e., this option is not intended
to be, nor is it, an incentive stock option as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").
1. Duration.
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(a) This option was granted as of the Grant Date.
(b) This option shall expire at the close of business on November 29, 2004, (the
"Termination Date"), but shall be subject to earlier termination as provided
herein.
(c) If the Optionee ceases to be employed by the Company for any reason other
than death, disability, termination for cause, or voluntary termination without
the consent of the Company, the Option may be exercised within three (3) months
after the date the Optionee ceases to be an employee, or within ten 10 years
from the granting of the Option, whichever is earlier, but may not be exercised
thereafter. In such event, the Option shall be exercisable only to the extent
that the right to purchase shares of Common Stock has accrued and is in effect
at the date of such cessation of employment.
In the event the Optionee's employment is terminated by the Company for
"cause" (as determined by the Board of Directors of the Company or as defined in
any employment agreement between the Optionee and the Company), or voluntarily
by the Optionee without the consent of the Company, the Optionee's right to
exercise any unexercised portion of this Option shall cease forthwith, and this
Option shall thereupon terminate.
In the event of disability of the Optionee (as determined by the Board of
Directors of the Company and as to the fact and date of which the Optionee is
notified by the Board in writing), the Option shall be exercisable within one
(1) year after the date of such disability or, if earlier, the term originally
prescribed by this Agreement. In such event, the Option shall be exercisable to
the extent that the right to purchase the shares of Common Stock hereunder has
accrued on the date the Optionee becomes disabled and is in effect as of such
determination date.
In the event of the death of the Optionee while an employee of the Company
or within three (3) months after the termination of employment (other than
termination for cause or without the consent of the Company), the Option shall
be exercisable to the extent exercisable but not exercised as of the date of
death and in such event, the Option must be exercised, if at all, within one (1)
year after the date of death of the Optionee or, if earlier, within the
originally prescribed term of the Option.
(d) For purposes of this Section 1 the term "Company" refers to Candie's, Inc.
and any subsidiary at least a majority of whose capital stock is owned by
Candie's, Inc.
2. Price.
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The purchase price for each share of Common Stock upon exercise of this
option is 1.50.
3. Qualification as Incentive Stock Option.
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These options are non-qualified stock options, subject to Section 83 of the
Code.
4. Written Notice of Exercise.
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This option, to the extent it is exercisable as provided in Section 10
herein, may be exercised only by delivering to the Company, at its principal
office within the time specified in Section 1 or such shorter time as is
otherwise provided for herein, a written notice of exercise substantially in the
form described in Section 10.
5. Anti-Dilution Provisions.
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(a) If there is any stock dividend or recapitalization resulting in a stock
split, or combination or exchange of shares of Common Stock of the Company, the
number of shares of Common Stock then subject to this option may be
proportionately and appropriately adjusted by the Board of Directors; provided,
however, that any fractional shares resulting from any such adjustment shall be
eliminated.
(b) If there is any other change in the Common Stock of the Company, including
capitalization, reorganization, sale or exchange of assets, exchange of shares,
offering of subscription rights, or a merger or consolidation in which the
Company is the surviving corporation, an adjustment, if any, shall be made in
the shares then subject to this option as the Company's Board of Directors (the
"Board") in its sole discretion may deem appropriate. Failure of the Board to
provide for an adjustment pursuant to this subparagraph prior to the effective
date of any Company action referred to herein shall be conclusive evidence that
no adjustment has been approved by the Board in consequence of such action and
that no such adjustment will be made in consequence of such action.
6. Investment Representation .
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The Optionee agrees that until such time as a registration statement under
the Securities Act of 1933, as amended (the "Act"), becomes effective with
respect to this option and/or the shares of Common Stock underlying this option,
the Optionee is taking this option and shall take the shares of Common Stock
underlying this option, for the Optionees own account, for investment, or not
for resale or distribution.
7. Non-Transferability.
This option shall not be transferable by the Optionee other than by will or
by the laws of descent and distribution, and is exercisable during the lifetime
of the Optionee only by the Optionee.
8. Certain Rights Not Conferred by Option.
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The Optionee shall not, by virtue of holding this option, be entitled to
any rights of a stockholder in the Company .
9. Transfer Taxes.
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The Company shall pay all original issue and transfer taxes with respect to
the issuance and transfer of shares of Common Stock of the Company pursuant
hereto provided that the shares are issued in the name of the Optionee.
10. Exercise of Options.
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(a) The amount of shares of Common Stock to this option shall become exercisable
as follows: 400,000 on the date hereof.
(b) An Option shall be exercisable by written notice of such exercise, in the
form prescribed by the Board to the Company, at its principal executive office.
The notice shall specify the number of shares for which the option is being
exercised, be signed by the Optionee and shall be accompanied by payment in cash
or by check of the amount of the full purchase price of such shares or in such
manner as the Board shall deem acceptable consistent with the provisions of the
Plan.
(c) No shares shall be delivered upon exercise of any option until all laws,
rules and regulations which the Board may deem applicable have been complied
with. If a registration statement under the Act is not then in effect with
respect to the shares issuable upon such exercise, the Company may require as a
condition precedent., among other things (i) that the person exercising the
option give to the Company a written representation and undertaking,
satisfactory in form and substance to the Company, that such person is acquiring
the shares for his own account for investment and not with a view to the
distribution thereof and/or (ii) an opinion of counsel satisfactory to the
Company with respect to the existence of an exemption from the registration
requirements of the Act, in which event the person(s) acquiring the Common Stock
shall be bound by the provisions of the following legend which shall be endorsed
upon the certificate(s) evidencing his option shares issued pursuant to such
exercise:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"). Such shares
may not be sold, transferred or otherwise disposed of unless they have
first been registered under the Act or, unless, in the opinion of
counsel satisfactory to the Company's counsel, such registration is
not required."
(d) Without limiting the generality of the foregoing, the Company may delay
issuance of the shares of Common Stock underlying this option until completion
of any action or obtaining of any consent, which the Company deems necessary
under any applicable law (including without limitation state securities or "blue
sky" laws).
(e) The person exercising an option shall not be considered a record holder of
the stock so purchased for any purpose until the date on which such person is
actually recorded as the holder of such stock in the records of the Company.
11. Continued Employment.
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Nothing herein shall be deemed to create any employment agreement or
guaranty of continued service as an employee or limit in any way the Company's
right to terminate Optionee's status as an employee at any time.
12. Notices.
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Any notice required or permitted by the terms of this Agreement shall be
given by registered or certified mail, return receipt requested, addressed as
follows:
To the Company:
Candies, Inc.
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
To the Optionee:
Xxxx X. Xxxx
c/o the Company
or to such other address or addresses of which notice in the same manner has
previously been given when mailed in accordance with the foregoing provisions.
Either party hereto may change the address to which such notices shall be given
by providing the other party hereto with written notice of such change.
13. Tax Withholding.
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Not later than the date as of which an amount first becomes includable in
the gross income of the Optionee or other holder for federal income tax purposes
with respect to this option, the Optionee or other holder shall pay to the
Company, or make arrangements satisfactory to the Company 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. The obligations of the Company
under this Agreement shall be conditional upon such payment or arrangements and
the Company shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the holder of the
option from the Company or any of its subsidiaries.
14. Benefit of Agreement.
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This Agreement shall be for the benefit of and shall be binding upon the
heirs, executors, administrators and successors of the parties hereto.
15. Governing Law.
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This option agreement shall be construed and enforced in accordance with
the law of the State of New York, except to the extent that the laws of the
State of Delaware may be applicable.
CANDIE'S, INC.
By:/s/Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Accepted as of the date first set above.
/s/ Xxxx Xxxx
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Signature required with return of document to company to formalize issuance of
agreement.
