Non-Qualified Stock Option Agreement - Alloy Online Inc. and Neil Vogel
NON-QUALIFIED STOCK OPTION AGREEMENT
ALLOY ONLINE, INC.
AGREEMENT made as of August 2, 1999 between Alloy Online, Inc. (the
"Company"), a Delaware corporation, and Neil Vogel (the "Participant").
WHEREAS, the Company desires to grant to the Participant an Option to
purchase shares of its common stock, par value $.01 per share (the "Shares"),
under and for the purposes set forth in the Company's Restated 1997 Employee,
Director and Consultant Stock Option Plan (the "Plan"); and
WHEREAS, the Company and the Participant understand and agree that any
terms used and not defined herein have the same meanings as in the Plan; and
WHEREAS, the Company and the Participant each intend that the Option
granted herein shall be a Non-Qualified Option.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto agree as
follows:
1. GRANT OF OPTION. The Company hereby grants to the Participant the
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right and option to purchase all or any part of an aggregate of one hundred
thousand (100,000) Shares, on the terms and conditions and subject to all the
limitations set forth herein and in the Plan, which is incorporated herein by
reference. The Participant acknowledges receipt of a copy of the Plan.
2. PURCHASE PRICE. The purchase prices of the Shares covered by the
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Option shall be $11 3/4 per share, subject to adjustment, as provided in the
Plan, in the event of a stock split, reverse stock split or other events
affecting the holders of Shares. Payment shall be made in accordance with
Paragraph 7 of the Plan.
3. EXERCISABILITY OF OPTION. Subject to the terms and conditions set
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forth in this Agreement and the Plan, the Option granted hereby shall become
exercisable as follows:
On or after August 2, 2000 Up to twenty five thousand (25,000) Shares
On or after August 2, 2001 Up to an additional twenty five thousand (25,000)
Shares
On or after August 2, 2002 Up to an additional twenty five thousand (25,000)
Shares
On or after August 2, 2003 Up to an additional twenty five thousand (25,000)
Shares
The foregoing rights are cumulative and are subject to the other terms and
conditions of this Agreement and the Plan.
(i) If a Change of Control (as hereinafter defined) occurs while the
Employee is an
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employee, director or consultant of the Company or of an Affiliate, the Option
shall accelerate and become fully exercisable immediately prior to the
effectiveness of such Change of Control; and
(ii) If the Employee's employment is terminated by the Employee's employer
without "cause" (as defined in the Plan), the Option shall accelerate and become
fully exercisable upon the effectiveness of such termination of employment.
As used herein, "Change of Control" means that any of the following events
has occurred:
(a) Any person (as such term is used in Section 13(d) of the Securities
Exchange Act of 1934), other than the Company, any employee benefit plan of the
Company or any entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan, together with all "affiliates" and
"associates" (as such terms are defined in Rule 12b-2 under the Securities
Exchange Act) becomes the beneficial owner or owners (as defined in Rule 13d-3
and 13d-5 promulgated under the Securities Exchange Act), directly or
indirectly, of more than fifty percent (50%) of the outstanding Common Stock of
the Company, or otherwise becomes entitled to vote more than fifty percent (50%)
of the voting power entitled to be cast at elections for directors ("Voting
Power") of the Company;
(b) A consolidation or merger of the Company pursuant to which the holders
of the Company's shares of Common Stock immediately prior to such merger or
consolidation would not be the holders, directly or indirectly, immediately
after such merger or consolidation of more than fifty percent (50%) of the
Voting Power of the entity surviving such transaction;
(c) The sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all of the assets of the
Company; or
(d) The liquidation or dissolution of the Company or the Company ceasing to
do business.
4. TERM OF OPTION. The Option shall terminate ten (10) years from the
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date of this Agreement, but shall be subject to earlier termination as provided
herein or in the Plan.
If the Employee ceases to be an employee of the Company or of an Affiliate
(for any reason other than the death or Disability of the Employee or
termination of the Employee's employment by the Employee's employer for any
reason, the Option may be exercised, if it has not previously terminated, within
three (3) months after the date the Employee ceases to be an employee of the
Company or an Affiliate, or within the originally prescribed term 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 Option has become
exercisable and is in effect at the date of such cessation of employment.
Notwithstanding the foregoing, in the event of the Employee's Disability or
death within three (3) months after the termination of employment, the Employee
or the Employee's Survivors may exercise the Option within one (1) year after
the date of the Employee's termination of employment, but in no event after the
date of expiration of the term of the Option. Notwithstanding the foregoing, in
the event of the Participant's Disability or death within three (3) months after
the termination of employment, directorship or consultancy, the
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Participant or the Participant's Survivors may exercise the Option within one
(1) year after the date of the Participant's termination of employment,
directorship or consultancy, but in no event after the date of expiration of the
term of the Option.
Notwithstanding any other provision of this Agreement, in the event the
Employee's employment is terminated by the Employee's employer without "cause"
(as defined in the Plan), the Option may be exercised, if it has not previously
terminated, within the originally prescribed term of the Option.
In the event the Participant's employment, directorship or consultancy is
terminated by the Company or an Affiliate for "cause" (as defined in the Plan),
the Participant's right to exercise any unexercised portion of this Option shall
cease as of such termination, and this Option shall thereupon terminate.
Notwithstanding anything herein to the contrary, if subsequent to the
Participant's termination, but prior to the exercise of the Option, the Board of
Directors of the Company determines that, either prior or subsequent to the
Participant's termination, the Participant engaged in conduct which would
constitute "cause," then the Participant shall immediately cease to have any
right to exercise the Option and this Option shall thereupon terminate.
In the event of the Disability of the Participant, as determined in
accordance with the Plan, the Option shall be exercisable within one (1) year
after the Participant's termination of service or, if earlier, within the term
originally prescribed by the Option. In such event, the Option shall be
exercisable:
(a) To the extent exercisable but not exercised as of the date of
Disability; and
(b) In the event rights to exercise the Option accrue periodically, to the
extent of a pro rata portion of any additional rights to exercise the Option as
would have accrued had the Participant not become Disabled prior to the end of
the accrual period which next ends following the date of Disability. The
proration shall be based upon the number of days during the accrual period prior
to the date of Disability.
In the event of the death of the Participant while an employee, director or
consultant of the Company or of an Affiliate, the Option shall be exercisable by
the Participant's Survivors within one (1) year after the date of death of the
Participant or, if earlier, within the originally prescribed term of the Option.
In such event, the Option shall be exercisable:
(x) To the extent exercisable but not exercised as of the date of death;
and
(y) In the event rights to exercise the Option accrue periodically, to the
extent of a pro rata portion of any additional rights to exercise the Option as
would have accrued had the Participant not died prior to the end of the accrual
period which next ends following the date of death. The proration shall be
based upon the number of days during the accrual period prior to the
Participant's death.
5. METHOD OF EXERCISING OPTION. Subject to the terms and conditions of
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this Agreement, the Option may be exercised by written notice to the Company at
its principal
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executive office, in substantially the form of Exhibit A attached hereto. Such
notice shall state the number of Shares with respect to which the Option is
being exercised and shall be signed by the person exercising the Option. Payment
of the purchase price for such Shares shall be made in accordance with Paragraph
7 of the Plan. The Company shall deliver a certificate or certificates
representing such Shares as soon as practicable after the notice shall be
received, provided, however, that the Company may delay issuance of such Shares
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). The certificate or certificates for the Shares
as to which the Option shall have been so exercised shall be registered in the
name of the person or persons so exercising the Option (or, if the Option shall
be exercised by the Participant and if the Participant shall so request in the
notice exercising the Option, shall be registered in the name of the Participant
and another person jointly, with right of survivorship) and shall be delivered
as provided above to or upon the written order of the person or persons
exercising the Option. In the event the Option shall be exercised, pursuant to
Section 4 hereof, by any person or persons other than the Participant, such
notice shall be accompanied by appropriate proof of the right of such person or
persons to exercise the Option. All Shares that shall be purchased upon the
exercise of the Option as provided herein shall be fully paid and nonassessable.
6. PARTIAL EXERCISE. Exercise of this Option to the extent above stated
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may be made in part at any time and from time to time within the above limits,
except that no fractional share shall be issued pursuant to this Option.
7. NON-ASSIGNABILITY. The Option shall not be transferable by the
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Participant otherwise than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code or Title
I of the Employee Retirement Income Security Act or the rules thereunder.
Except as provided in the previous sentence, the Option shall be exercisable,
during the Participant's lifetime, only by the Participant (or, in the event of
legal incapacity or incompetency, by the Participant's guardian or
representative) and shall not be assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of the Option or of any rights
granted hereunder contrary to the provisions of this Section 7, or the levy of
any attachment or similar process upon the Option shall be null and void.
8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The Participant shall have no
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rights as a stockholder with respect to Shares subject to this Agreement until
registration of the Shares in the Company's share register in the name of the
Participant. Except as is expressly provided in the Plan with respect to
certain changes in the capitalization of the Company, no adjustment shall be
made for dividends or similar rights for which the record date is prior to the
date of such registration.
9. CAPITAL CHANGES AND BUSINESS SUCCESSIONS. The Plan contains provisions
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covering the treatment of Options in a number of contingencies such as stock
splits and mergers. Provisions in the Plan for adjustment with respect to stock
subject to Options and the related provisions with respect to successors to the
business of the Company are hereby made
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applicable hereunder and are incorporated herein by reference, provided,
however, that in the event of an Acquisition (as defined in Section 16B of the
Plan) that also constitutes a Change of Control (as defined herein), the Option
shall become fully exercisable immediately prior to the effectiveness of and for
the purposes of such Acquisition.
10. TAXES. The Participant acknowledges that upon exercise of the Option
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the Participant will be deemed to have taxable income measured by the difference
between the then fair market value of the Shares received upon exercise and the
price paid for such Shares pursuant to this Agreement. The Participant
acknowledges that any income or other taxes due from him or her with respect to
this Option or the Shares issuable pursuant to this Option shall be the
Participant's responsibility. The Participant agrees that the Company may
withhold from the Participant's remuneration, if any, the appropriate amount of
federal, state and local withholding attributable to such amount that is
considered compensation includable in such person's gross income. At the
Company's discretion, the amount required to be withheld may be withheld in cash
from such remuneration, or in kind from the Shares otherwise deliverable to the
Participant on exercise of the Option. The Participant further agrees that, if
the Company does not withhold an amount from the Participant's remuneration
sufficient to satisfy the Company's income tax withholding obligation, the
Participant will reimburse the Company on demand, in cash, for the amount under-
withheld.
11. PURCHASE FOR INVESTMENT. Unless the offering and sale of the Shares
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to be issued upon the particular exercise of the Option shall have been
effectively registered under the Securities Act of 1933, as now in force or
hereafter amended (the "1933 Act"), the Company shall be under no obligation to
issue the Shares covered by such exercise unless and until the following
conditions have been fulfilled:
(a) The person(s) who exercise the Option shall warrant to the Company, at
the time of such exercise, that such person(s) are acquiring such Shares for
their own respective accounts, for investment, and not with a view to, or for
sale in connection with, the distribution of any such Shares, in which event the
person(s) acquiring such Shares shall be bound by the provisions of the
following legend which shall be endorsed upon the certificate(s) evidencing the
Shares issued pursuant to such exercise:
"The shares represented by this certificate have been taken for
investment and they may not be sold or otherwise transferred by any
person, including a pledgee, unless (1) either (a) a Registration
Statement with respect to such shares shall be effective under the
Securities Act of 1933, as amended, or (b) the Company shall have
received an opinion of counsel satisfactory to it that an exemption
from registration under such Act is then available, and (2) there
shall have been compliance with all applicable state securities
laws;" and
(b) If the Company so requires, the Company shall have received an opinion
of its counsel that the Shares may be issued upon such particular exercise in
compliance with the 1933 Act without registration thereunder. Without limiting
the generality of the foregoing, the Company may delay issuance of the Shares
until completion of any action or obtaining of any
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consent, which the Company deems necessary under any applicable law (including
without limitation state securities or "blue sky" laws).
12. RESTRICTIONS ON TRANSFER OF SHARES. If, in connection with a
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registration statement filed by the Company pursuant to the Securities Act, the
Company or its underwriter so requests, the Participant will agree not to sell
any Shares for a period not to exceed 180 days following the effectiveness of
such registration.
13. NO OBLIGATION TO MAINTAIN RELATIONSHIP. The Company is not by the
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Plan or this Option obligated to continue the Participant as an employee,
director or consultant of the Company.
14. NOTICES. Any notices required or permitted by the terms of this
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Agreement or the Plan shall be given by hand delivery or by recognized courier
service, facsimile, registered or certified mail, return receipt requested,
addressed as follows:
If to the Company to: The Company at its principal business office.
If to the Participant to: The Participant at the address set forth below.
or to such other address or addresses of which notice in the same manner has
previously been given. Any such notice shall be deemed to have been given upon
the earlier of receipt, one business day following delivery to a recognized
courier service or three business days following mailing by registered or
certified mail.
15. GOVERNING LAW. This Agreement shall be construed and enforced in
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accordance with the law of the State of Delaware, without giving effect to the
conflict of law principles thereof.
16. BENEFIT OF AGREEMENT. Subject to the provisions of the Plan and the
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other provisions hereof, this Agreement shall be for the benefit of and shall be
binding upon the heirs, executors, administrators, successors and assigns of the
parties hereto.
17. ENTIRE AGREEMENT. This Agreement, together with the Plan, embodies
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the entire agreement and understanding between the parties hereto with respect
to the subject matter hereof and supersedes all prior oral or written agreements
and understandings relating to the subject matter hereof. No statement,
representation, warranty, covenant or agreement not expressly set forth in this
Agreement shall affect or be used to interpret, change or restrict, the express
terms and provisions of this Agreement, provided, however, in any event, this
Agreement shall be subject to and governed by the Plan.
18. MODIFICATIONS AND AMENDMENTS. The terms and provisions of this
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Agreement may be modified or amended as provided in the Plan.
19. WAIVERS AND CONSENTS. Except as provided in the Plan, the terms and
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provisions of this Agreement may be waived, or consent for the departure
therefrom granted, only by written document executed by the party entitled to
the benefits of such terms or
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provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer, and the Participant has hereunto set his or her
hand, all as of the day and year first above written.
ALLOY ONLINE, INC.
By: /s/ Samuel Gradess
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Name Samuel Gradess
Title Chief Financial Officer
PARTICIPANT
/s/ Neil Vogel
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Signature
Print Name: Neil Vogel
Address 115 West 30th Street, #201
New York, NY 10001
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Exhibit A
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NOTICE OF EXERCISE OF NON-QUALIFIED STOCK OPTION
[FORM FOR REGISTERED SHARES]
TO: ALLOY ONLINE, INC.
IMPORTANT NOTICE: This form of Notice of Exercise may only be used at such time
as the Company has filed a Registration Statement with the Securities and
Exchange Commission under which the issuance of the Shares for which this
exercise is being made is registered and such Registration Statement remains
effective.
Ladies and Gentlemen:
I hereby exercise my Non-Qualified Stock Option to purchase ____ shares
(the "Shares") of the common stock, par value $.01 per share, of Alloy Online,
Inc. (the "Company"), at the exercise price of $________ per share, pursuant to
and subject to the terms of that certain Non-Qualified Stock Option Agreement
between the undersigned and the Company dated as of August 2, 1999.
I understand the nature of the investment I am making and the financial
risks thereof. I am aware that it is my responsibility to have consulted with
competent tax and legal advisors about the relevant national, state and local
income tax and securities laws affecting the exercise of the Option and the
purchase and subsequent sale of the Shares.
I am paying the option exercise price for the Shares as follows:
_____________________
Please issue the stock certificate for the Shares (check one): [ ] to me;
or [ ] to me and ____________________________, as joint tenants with right of
survivorship and mail the certificate to me at the following address:
___________________________
My mailing address for shareholder communications, if different from the
address listed above, is: _____________________________________________________
Very truly yours,
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Participant (signature)
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Print Name
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Date
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Social Security Number
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