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Exhibit
10.6
NEITHER THIS OPTION NOR THE UNDERLYING
COMMON SHARES HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THIS OPTION AND THE UNDERLYING COMMON SHARES MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF UNLESS (I) THERE IS
AN EFFECTIVE REGISTRATION COVERING SUCH OPTION OR SUCH SHARES, AS
THE CASE MAY BE, UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE
STATES SECURITIES LAWS, (II) THE CORPORATION FIRST RECEIVES A
LETTER FROM AN ATTORNEY, ACCEPTABLE TO THE BOARD OF DIRECTORS OR
ITS AGENTS, STATING THAT IN THE OPINION OF THE ATTORNEY THE
PROPOSED TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES
ACT OF 1933 AND UNDER ALL APPLICABLE STATE SECURITIES LAWS, OR
(iii) THE TRANSFER IS MADE PURSUANT TO RULE 144 UNDER THE
SECURITIES ACT OF 1933.
CYGNE DESIGNS,
INC.
NON-QUALIFIED SHARE OPTION
AGREEMENT
This Agreement is entered
into this 25 th day
of April, 2008 by and between CYGNE DESIGNS INC,, a Delaware
corporation with its offices located at 11 West 42
nd
Street, New York, New York
10036, (“Corporation”), and Samuel J. Furrow, Jr.
(“Furrow”).
WHEREAS, the Corporation desires to
retain Furrow’s services as Chief Executive Officer of the
Corporation;
WHEREAS, this Option will provide equity
incentives for Furrow to become and remain the Chief Executive
Officer of the Corporation by granting such person options to
purchase shares of the Corporation’s common stock
(“Shares” or “Common Stock,” as the case
may be);
WHEREAS, the Board has determined to
grant to Furrow a non-qualified share option (“Option”)
to purchase 1,000,000 shares upon and subject to the terms and
conditions stated in this Agreement.
NOW THEREFORE, IT IS AGREED AS
FOLLOWS:
Section 1. Grant of
Option . Subject to the terms and conditions of this Agreement,
the Corporation hereby grants to Furrow, during the period from the
date of this Agreement until 5:00 p.m. local time on
April 25 * 2018
(“Expiration Date”), the option to purchase from the
Corporation, from time to time, at a price of $0.30 per Share
(“Exercise Price”), up to, but not to exceed, an
aggregate of 1,000,000 Shares (“Option
Shares”).
Section 2. Exercise of
Option .
2.1 Date Exercisable . This
Option shall be exercisable immediately by Furrow with respect to
all of the Option Shares.
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2.2 Manner of Exercise . This
Option may be exercised in whole or in part by delivery to the
Corporation, from time to time, of a written notice in
substantially the form set forth in Exhibit A hereto, signed by
Furrow, specifying the number of Option Shares that Furrow then
desires to purchase, together with cash, certified check, or bank
draft payable to the order of the Corporation, or other form of
payment acceptable to the Corporation, for an amount of United
States dollars equal to the Exercise Price of such
shares.
This Option may also be
exercised by means of a “cashless exercise” in which
Furrow shall be entitled to receive a certificate for the number of
Option Shares equal to the quotient obtained by dividing [(A-B)
(X)] by (A), where:
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| (A) |
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the
closing price on the Shares on the Trading Day of the date of such
election; |
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| (B) |
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the
Exercise Price of this Option, as adjusted; and |
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the
number of Shares issuable upon exercise of this Option in
accordance with the terms of this Option by means of a cash
exercise rather than a cashless exercise. |
Notwithstanding anything
herein to the contrary, on the Expiration Date, this Option shall
be automatically exercised via cashless exercise pursuant to this
Section 2.2.
2.3 Certificates . Promptly after
any exercise in whole or in part of this Option by Furrow, the
Corporation shall deliver to Furrow a certificate or certificates
for the number of Option Shares with respect to which this Option
was so exercised, registered in Furrow’s name.
2.4 Restrictive Legends. Each
certificate for Shares issued to the Furrow or to a subsequent
transferee (except as a result of a transfer determined by
Corporation’s counsel to be free from such restrictions)
shall include a legend in substantially the following
form:
THE SHARES EVIDENCED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “1933 ACT”), IN RELIANCE UPON THE
EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 4(2) OF THE 1933
ACT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES LAWS OF
APPLICABLE STATES IN RELIANCE UPON APPLICABLE EXEMPTIONS FROM
REGISTRATION UNDER THE SECURITIES LAWS OF SUCH STATES. THESE SHARES
HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE
OFFERED FOR SALE, HYPOTHECATED, SOLD OR TRANSFERRED, NOR WILL ANY
ASSIGNEE OR TRANSFEREE THEREOF BE RECOGNIZED BY THE CORPORATION AS
HAVING ANY INTEREST IN THESE SHARES, IN THE ABSENCE OF (i) AN
EFFECTIVE REGISTRATION STATEMENT WITH RESPECT TO THE SHARES UNDER
THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS OR
(ii) COMPLIANCE WITH APPLICABLE EXEMPTIONS FROM REGISTRATION
UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS. THE
CORPORATION MAY, IF IT DEEMS APPROPRIATE IN ITS SOLE DISCRETION,
REQUIRE AN OPINION OF
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COUNSEL SATISFACTORY TO THE CORPORATION
THAT THE OFFER, SALE, HYPOTHECATION OR TRANSFER OF THESE SHARES IS
EXEMPT FROM REGISTRATION UNDER THE 1933 ACT AND APPLICABLE STATE
SECURITIES LAWS.
2.6 Notice of Proposed Transfers
. Prior to any proposed transfer of the Shares other than a
transfer (i) subject to an effective registration statement
under the 1933 Act, (ii) to an affiliate of Furrow which is an
“accredited investor” within the meaning of
Rule 501(a) under the 1933 Act, provided that any such
transferee shall agree to be bound by the terms of this Agreement,
and (iii) to be made in reliance on Rule 144 under the 1933 Act,
the holder thereof shall give written notice to the Corporation of
such holder’s intention to effect such transfer, setting
forth the manner and circumstances of the proposed transfer, which
shall be accompanied by an opinion of counsel to the Corporation,
confirming that such transfer does not give rise to a violation of
the 1933 Act, satisfactory representation letters in form and
substance reasonably satisfactory to the Corporation to ensure
compliance with the provisions of the 1933 Act and letters in form
and substance reasonably satisfactory to the Corporation from each
such transferee stating such transferee’s agreement to be
bound by the terms of this Agreement. Such proposed transfer may be
effected only if the Corporation shall have received such notice of
transfer, opinion of counsel, representation letters and other
letters referred to in the immediately preceding sentence,
whereupon the holder of such Shares shall be entitled to transfer
such Shares in accordance with the terms of the notice delivered by
the holder to the Corporation.
2.7 Registration . The
Corporation will use its best efforts to file a registration
statement on Form S-8 or S-3 for the underlying Shares under the
1933 Act as soon as is reasonably practical following the signing
of this document, but in no event later than 45 days after demand
is made by Furrow for such registration, unless delayed by Furrow.
The Issuer shall seek to have such registration statement declared
effective or to be effective as regards Furrow’s resales as
soon after filing as is reasonably practicable.
2.8 Other Agreements Respecting
Registration of Shares . In connection with the filing of a
registration statement by the Corporation which covers any of the
Shares, the parties agree that:
(a) The Corporation shall bear all
reasonable costs and expenses to be incurred in connection with any
registration statement covering any of the Shares, including
printing costs, the fees of the registrant’s counsel and
accountants, and SEC and NASD filing fees; however, the Corporation
shall not be responsible for the fees and expenses of any counsel
engaged by Furrow, or any underwriter engaged by Furrow, and shall
not be responsible for the underwriters’, brokers’ or
dealers’ commissions, fees, expenses, discounts or other
compensation attributable to the offer or sale of any of the shares
by Furrow.
(b) If the Corporation, conducts an
underwritten offering for the account of the Corporation and the
managing underwriter(s) advise the Corporation in writing, that in
their reasonable good faith opinion, marketing or other factors
dictate that a limitation on the number of shares of common stock
which may be sold by affiliates of the Corporation is necessary to
facilitate and not adversely affect the proposed offeri
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