TIME-BASED VESTING INCENTIVE
STOCK OPTION AGREEMENT
This Stock Option
Agreement (this “Agreement”) is entered into and
effective as of December 15, 2005 (the “Grant Date”)
between FGX International Holdings Limited, a British Virgin
Islands company (the “Company”) and Alec Taylor (the
“Optionee”).
The Company is
desirous of increasing the incentive of the Optionee whose
contributions are important to the continued success of the Company
and its subsidiaries by means of the grant to the Optionee of
options to purchase the Company’s ordinary shares, $1.00 par
value per share (“Ordinary Shares”), under the FGX
International Holdings Limited 2004 Key Executive Stock Option Plan
(f/k/a the Envision Worldwide Holdings Limited 2004 Key Executive
Stock Option Plan) (the “Plan”), a copy of which is
attached hereto as Exhibit A .
NOW,
THEREFORE, in consideration of the foregoing, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereby agree as
follows:
Subject to the
terms and conditions of this Agreement and the Plan, the Company
hereby grants to the Optionee an option (the “Option”)
to purchase an aggregate of 1.979991 Ordinary Shares (the
“Option Shares”). This Option is intended to be treated
as an option which qualifies as an “incentive stock
option” within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”).
The number of Option Shares shall be subject to adjustment in the
event of changes in the capitalization of the Company as set forth
in Section 19 of the Plan.
Subject to the
terms and conditions of the Plan, the exercise price (the
“Option Price”) of this Option shall be $2,453,728 per
Option Share (prorated for any partial Option Share), which is not
less than the fair market value of the Ordinary Shares on the date
of grant. The Option Price of this Option shall be subject to
adjustment in the event of changes in the capitalization of the
Company, as set forth in Section 19 of the Plan.
3. TERM AND
VESTING OF OPTION
(a)
Option Period . Subject to the terms and conditions of the
Plan, this Option shall terminate and all rights to purchase shares
hereunder shall cease on the tenth anniversary of the Grant
Date.
(b)
Vesting and Exercisability . (i) Subject to the terms
and conditions of the Plan and subject to Section 3(b)(ii)
below, this Option shall become exercisable upon the
dates described
in the following schedule and shall be exercisable as to not more
than the vested percentage of the shares subject to this Option as
follows:
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Incremental
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Cumulative
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Percentage of
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Percentage of
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Date
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Option Exercisable
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Option Exercisable
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33.33
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%
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33.33
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%
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33.33
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%
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66.66
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%
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33.34
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%
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100
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%
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(ii) Subject
to the terms and conditions of the Plan and notwithstanding
Section 3(b)(i) above, this Option shall become exercisable,
if the Company successfully completes an Initial Public Offering
(as defined in the Plan) prior to October 19, 2006, as to not
more than the vested percentage of the shares subject to this
Option as follows:
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Incremental
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Cumulative
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Percentage of
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Percentage of
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Date
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Option Exercisable
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Option Exercisable
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Date of Initial Public Offering
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33.33
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%
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33.33
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%
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First Anniversary of Initial Public
Offering
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33.33
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%
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66.66
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%
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Second Anniversary of Initial Public
Offering
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33.34
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%
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100
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%
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(iii) Notwithstanding
the foregoing, the Board of Directors of the Company (the
“Board”) may in its sole discretion provide that any
vesting requirement or other such limitation on the exercise of
this Option may be rescinded, modified or waived by the Board, in
its sole discretion, at any time and from time to time after the
Grant Date, so as to accelerate the time at which this Option may
be exercised; provided that the Optionee’s written consent be
obtained prior to any such rescission or modification which would
adversely effect the Optionee’s rights hereunder.
(c)
Acceleration Upon Change in Control . Notwithstanding the
foregoing provisions of Section 3(b), this Option shall become
fully vested and exercisable in full as of the Change in Control
Date upon a Change in Control if the Optionee continues to be
employed by the Company or any of its subsidiaries on the Change in
Control Date or his employment was terminated by the Company or its
subsidiaries, as applicable, “without Cause” within six
(6) months before and in anticipation of, or twelve
(12) months after, the Change in Control Date.
(d) For
purposes of this Agreement, the following terms shall be
defined as follows:
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(i)
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“ Cause ” has the
meaning set forth in the Employment Agreement between FGX
International Inc. and the Optionee dated as of October 19, 2005,
and as the same may be further amended from time to time by the
parties in accordance with the terms therein (the “Employment
Agreement”).
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(ii)
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“ Change in Control
” will be deemed to have occurred if (i) a Takeover
Transaction occurs, or (ii) any election of the Board takes
place (whether by the directors then in office or by the
stockholders at a meeting or by written consent) and a majority of
the directors in office following such election are individuals who
were not nominated by a vote of two-thirds of the members of the
Board immediately preceding such election, or (iii) the
Company effectuates a complete liquidation of the Company or a sale
or disposition of all or substantially all of its assets. A
“Change in Control” shall not be deemed to include, the
recapitalization of the Company or any transactions related
thereto, consummated on or prior to the date hereof.
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(iii)
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“ Change in Control
Date ” means the date on which a Change in Control
occurs.
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(iv)
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“ Takeover Transaction
” means (i) a merger or consolidation of the Company
with, or an acquisition of the Company or all or substantially all
of its assets by, any other corporation, other than a merger,
consolidation or acquisition in which the individuals who were
members of the Board immediately prior to such transaction continue
to constitute a majority of the Board of the surviving corporation
(or, in the case of an acquisition involving a holding company,
constitute a majority of the Board of Directors of the holding
company) for a period of not less than twelve (12) months following
the closing of such transaction, or (ii) when any person,
including any “group” as such term is defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), becomes after the date
hereof the “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act) of securities of the
Company representing more than fifty percent (50%) of the total
number of votes that may be cast for the election of the Board,
excluding (i) any person that is excluded from the definition
of “beneficial owner” under Rule 16(a)-1(a)(1)
under the Exchange Act and (ii) any person (including any such
group) that consists of or is controlled by (within the meaning of
the definition of “affiliate” in Rule 144 under
the Securities Act of 1933, as amended (an
“Affiliate”)) any person that is a shareholder of the
Company on the date hereof or any Affiliate of such
person.
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The provisions of
the Plan shall govern if and to the extent that there are
inconsistencies between those provisions and the provisions hereof.
By execution of this Agreement, the Optionee acknowledges receipt
of a copy of the Plan and represents that he or she (a) is
familiar with the terms and provisions thereof, (b) accepts
this Option granted hereby subject to all of the terms and
provisions of this Agreement and the Plan, and (c) after
reviewing the Plan and this Agreement in their entirety, has had
the opportunity to obtain the advice of counsel and fully
understands all of the terms and provisions of this Agreement and
the Plan prior to the execution hereof.
5. MANNER OF
EXERCISE AND PAYMENT
(a)
Exercise . This Option may be exercised to the extent vested
as provided in Section 3 hereof by delivery to the Company on
any business day, at its principal office, addressed to the
attention of the President of written notice of exercise, which
notice shall specify the number of shares with respect to which
this Option is being exercised, and shall be accompanied by payment
in full of the Option Price of the shares for which this Option is
being exercised, by one or more of the methods provided
below.
(b)
Payment . Payment of the Option Price for the Ordinary
Shares purchased pursuant to the exercise of this Option shall be
made (i) in cash or in cash equivalents; (ii) through the
tender to the Company of the Ordinary Shares, which shares shall be
valued, for purposes of determining the extent to which the Option
Price has been paid thereby, at their fair market value (determined
in good faith by the Board) on the date of exercise; (iii) by
delivering a written direction to the Company that this Option be
exercised pursuant to a “cashless” exercise/sale
procedure (pursuant to which funds to pay for exercise of this
Option are delivered to the Company by a broker upon receipt of
stock certificates from the Company) or a cashless exercise/loan
procedure (pursuant to which the Optionee would obtain a margin
loan from a broker to fund the exercise) through a licensed broker
acceptable to the Company whereby the stock certificate or
certificates for the Ordinary Shares for which this Option is
exercised will be delivered to such broker as the agent for the
individual exercising this Option and the broker will deliver to
the Company cash (or cash equivalents acceptable to the Company)
equal to the Option Price for the Ordinary Shares purchased
pursuant to the exercise of this Option plus the amount (if any) of
federal and other taxes that the Company, may, in its judgment, be
required to withhold with respect to the exercise of this Option;
(iv) to the extent permitted by applicable law and agreed to
by the Board in its sole and absolute discretion, by the delivery
of a promissory note of the Optionee to the Company on such terms
as the Board shall specify in its sole and absolute discretion; or
(v) by a combination of the methods described in clauses (i),
(ii), (iii) and (iv). Payment in full of the Option Price need
not accompany the written notice of exercise if this Option is
exercised pursuant to the cashless exercise/sale procedure
described above. An attempt to exercise any Option granted
hereunder other than as set forth above shall be invalid and of no
force and effect.
(c)
Issuance of Certificates . Promptly after the exercise of
this Option, Optionee shall be entitled to the issuance of a
certificate or certificates evidencing his
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ownership of
such Ordinary Shares. The Company shall use reasonable efforts to
deliver the certificate within seven (7) days following such
exercise. An individual holding or exercising an Option shall have
none of the rights of a shareholder until the Ordinary Shares
covered thereby are fully paid and issued to him and, except as
provided in Section 19 of the Plan, no adjustment shall be
made for dividends or other rights for which the record
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