Exhibit 10.5

  

  AMENDED AND RESTATED   EFFECTIVE [  ], 2014

 

XCEL BRANDS, INC.

2011 EQUITY INCENTIVE PLAN

 

Section 1. Purposes; Definitions.

 

The purpose of the Xcel Brands, Inc. Equity Incentive Plan is to enable Xcel
Brands, Inc. to offer to those of its employees and to the employees of its
Subsidiaries and other persons who are expected to contribute to the success of
the Company, long term performance-based stock and/or other equity interests in
the Company, thereby enhancing their ability to attract, retain and reward such
key employees or other persons, and to increase the mutuality of interests
between those employees or other persons and the stockholders of Xcel Brands,
Inc.

 

For purposes of the Plan, unless the context requires otherwise, the following
terms shall be defined as set forth below:

 

(a)          “Award” means an award granted under the Plan including a Stock
Option, Restricted Stock or a Cash Award.

 

(b)          “Board” means the Board of Directors of Xcel Brands, Inc.

 

(c)          “Cash Award” means an Award entitling the Participant to a payment
of cash, in the amount, under the circumstances and at the times set forth in
the Award, as further described in Section 7.

 

(d)          “Cause” shall have the meaning ascribed thereto in Section 5(b)(ix)
below.

 

(e)          “Change of Control” shall have the meaning ascribed thereto in
Section 9 below.

 

(f)          “Code” means the Internal Revenue Code of 1986, as amended from
time to time and any successor thereto.

 

(g)          “Committee” means the Compensation Committee of the Board, if
established, or any other committee of the Board which the Board may designate,
consisting of two or more members of the Board each of whom shall meet the
definition of an “independent director” under the listing rules of any
securities exchange or national securities association on which the Stock is
listed for trading  and the requirements set forth in any other law, rule or
regulation applicable to the Plan hereinafter enacted, provided, however, that
(i) with respect to any Award that is intended to satisfy the requirements of
Rule 16b-3, such Award shall be granted and administered by a committee of the
Board consisting of at least such number of directors as are required from time
to time by Rule 16b-3, and each such committee member shall meet such
qualifications as are required by Rule 16b-3 and (ii) with respect to any Award
that is intended to satisfy the requirements of Section 162(m) of the Code, such
Award shall be granted and administered by a committee of the Board consisting
of at least such number of directors as are required from time to time by
Section 162(m) of the Code, and each such committee member shall meet such
qualifications as are required by Section 162(m) of the Code.

 

(h)          “Company” means Xcel Brands, Inc., a corporation organized under
the laws of the State of Delaware or any successor entity.

 

(i)          “Covered Employee” shall mean any employee of the Company or any of
its Subsidiaries who is deemed to be a “covered employee” within the meaning of
Section 162(m) of the Code.

   

(j)          “Disability” means the permanent and total disability as defined in
Section 22(e)(3) of the Code.

 

(k)          “Early Retirement” means retirement, with the approval of the Board
or the Committee, for purposes of one or more Award(s) hereunder, from active
employment with the Company or any Parent or Subsidiary prior to age 65.

  

(l)          “Exchange Act” means the Securities Exchange Act of 1934, as
amended, as in effect from time to time.

 

 

 

  

(m)          “Fair Market Value”, unless otherwise required by any applicable
provision of the Code or any regulations issued thereunder, means, as of any
given date: (i) if the principal market for the Stock is a national securities
exchange or the National Association of Securities Dealers Automated Quotations
System (“NASDAQ”), the closing sales price of the Stock on such day as reported
by such exchange or market system, or on a consolidated tape reflecting
transactions on such exchange or market system, or (ii) if the principal market
for the Stock is not a national securities exchange and the Stock is not quoted
on NASDAQ, the arithmetic mean of the high and low prices of the Stock on the
trading day of the grant as reported or provided  by NASDAQ or the National
Quotation Bureau, Inc., provided that if clauses (i) and (ii) of this paragraph
are both inapplicable, or if no trades have been made or no quotes are available
for such day, the Fair Market Value of the Stock shall be determined in good
faith by the Board or the Committee, as the case may be, which determination
shall be conclusive as to the Fair Market Value of the Stock.

 

(n)          “409A Change” shall mean (i) the acquisition by any one person, or
more than one person acting as a group, of Stock that, together with Stock held
by such person or group, constitutes more than fifty percent (50%) of the total
fair market value or total voting power of the Stock; (ii) (a) the acquisition
by any one person, or more than one person acting as a group (or the acquisition
during the 12-month period ending on the date of the most recent acquisition by
such person or persons) of ownership of Stock possessing fifty percent (50%) or
more of the total voting power of the Stock; or (b) a majority of members of the
Board is replaced during any 12-month period by directors whose appointment or
election is not endorsed by a majority of the members of the Board prior to the
date of the appointment or election; or (iii) the acquisition by any one person
or more than one person acting as a group (or the acquisition during the
12-month period ending on the date of the most recent acquisition by such person
or persons) of assets from the Company resulting in a Change of Control and, in
any event, that have a total gross fair market value equal to or more than forty
percent (40%) of the total gross fair market value of all of the assets of the
Company immediately prior to such acquisition or acquisitions. The foregoing
definition of “409A Change” shall be interpreted consistent with, and shall
include all of the requirements of, Section 409A of the Code and the Treasury
regulations issued thereunder, to constitute a change in the ownership or
effective control of the corporation, or in the ownership of a substantial
portion of the assets of the corporation as defined therein.

 

(o)          “Incentive Stock Option” means any Stock Option which is intended
to be and is designated as an “incentive stock option” within the meaning of
Section 422 of the Code, or any successor thereto. An Incentive Stock Option may
only be granted to an employee of the Company, a Parent or a Subsidiary as set
forth in Section 421 and 422 of the Code, as applicable.

 

(p)          “Non-Qualified Stock Option” means any Stock Option that is not an
Incentive Stock Option.

 

(q)          “Normal Retirement” means retirement from active employment with
the Company or any Parent or Subsidiary on or after age 65.

 

(r)          “Participant” shall mean any person who has received an award of an
Option, Restricted Stock or a Cash Award under the Plan.

 

(s)          “Parent” means any present or future parent of the Company, as such
term is defined in Section 424(e) of the Code, or any successor thereto.

 

(t)          “Plan” means this Xcel Brands, Inc. 2011 Equity Incentive Plan, as
hereinafter amended from time to time.

 

(u)          “Restricted Stock” means Stock, received under an award made
pursuant to Section 6 below that is subject to restrictions imposed pursuant to
said Section 6.

 

(v)         “Retirement” means Normal Retirement or Early Retirement.

 

(w)          “Rule 16b-3” means Rule 16b-3 of the General Rules and Regulations
under the Exchange Act, as in effect from time to time, and any successor
thereto.

  

(x)          “Securities Act” means the Securities Act of 1933, as amended, as
in effect from time to time.

 

(y)          “Stock” means the common stock of the Company.

 

(z)          “Stock Option” or “Option” means any option to purchase shares of
Stock which is granted pursuant to the Plan.

  

(aa)         “Subsidiary” means any present or future subsidiary corporation of
the Company, as such term is defined in Section 424(f) of the Code, or any
successor thereto.

 

 

 

  

Section 2. Administration.

 

The Plan shall be administered by the Board, or, at its discretion, the
Committee.

 

The Board or the Committee, as the case may be, shall have the authority to
grant Awards pursuant to the terms of the Plan, to officers and other employees
or other persons eligible under Section 4 below.

 

For purposes of illustration and not of limitation, the Board or the Committee,
as the case may be, shall have the authority (subject to the express provisions
of the Plan):

 

(i)          to select the officers, other employees of the Company or any
Parent or Subsidiary and other persons to whom Stock Options and/or Restricted
Stock may be from time to time granted hereunder;

 

(ii)         to determine the Incentive Stock Options, Non-Qualified Stock
Options, Restricted Stock and/or Cash Awards or any combination thereof, if any,
to be granted hereunder to one or more eligible persons;

 

(iii)        to determine the number of shares of Stock to be covered by each
Award granted hereunder;

 

(iv)        to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any Award granted hereunder (including, but not limited
to, share price, any restrictions or limitations, and any vesting acceleration,
exercisability and/or forfeiture provisions); and

 

(v)         to determine the terms and conditions under which Awards granted
hereunder are to operate on a tandem basis and/or in conjunction with or apart
from other awards made by the Company or any Parent or Subsidiary outside of the
Plan.

 

Subject to Section 10 hereof, the Board or the Committee, as the case may be,
shall have the authority to (i) adopt, alter and repeal such administrative
rules, guidelines and practices governing the Plan as it shall, from time to
time, deem advisable, (ii) interpret the terms and provisions of the Plan and
any Award issued under the Plan (and to determine the form and substance of all
agreements relating thereto), and (iii) to otherwise supervise the
administration of the Plan.

  

Subject to the express provisions of the Plan, all decisions made by the Board
or the Committee, as the case may be, pursuant to the provisions of the Plan
shall be made in the Board’s or the Committee's, as the case may be, sole and
absolute discretion and shall be final and binding upon all persons, including
the Company, its Parent and Subsidiaries and the Plan Participants.

 

Subject to the provisions of the Plan, the Board or the Committee, as the case
may be, may, in its sole discretion, from time to time delegate to the Chief
Executive Officer of the Company (the “CEO”) the authority, subject to such
terms as the Board or the Committee, as the case may be, to determine and
designate from time to time the employees or other persons to whom Awards may be
granted and to perform other specified functions under the Plan; provided,
however, that the CEO may not grant any Award to, or perform any function
related to an Award to, himself or any individual (i) then subject to Section 16
of the Exchange Act or (ii) who is or, in the determination of the Board or the
Committee, as the case may be, may become a Covered Employee, and any such grant
or function relating to such individuals shall be performed solely by the Board
or the Committee, as the case may be, to ensure compliance with the applicable
requirements of the Exchange Act and the Code or (iii) where the grant or
performance of such function by the CEO will cause the Plan not to comply with
any applicable regulation of any securities exchange or automated quotation
system where the Stock is listed for trading.

  

Any such delegation of authority by the Board or the Committee, as the case may
be, shall be by a resolution adopted by the Board or the Committee, as the case
may be, and shall specify all of the terms and conditions of the delegation. The
resolution of the Board or the Committee, as the case may be, granting such
authority may authorize the CEO to grant Awards pursuant to the Plan and may set
forth the types of Awards that may be granted; provided, however, that the
resolution shall (i) specify the maximum number of shares of Stock that may be
awarded to any individual Plan Participant and to all Participants during a
specified period of time and (ii) specify the exercise price (or the method for
determining the exercise price), if any, of an Award, the vesting schedule, and
any other terms, conditions, or restrictions that may be imposed by the Board or
the Committee, as the case may be, in its sole discretion. The resolution of the
Board or the Committee, as the case may be, shall also require the CEO to
provide the Board or the Committee, as the case may be, on at least a monthly
basis, a report that identifies the Awards granted, the Awards granted pursuant
to the delegated authority and, with respect to each Award: the name of the
Participant, the date of grant of the award, the number of shares of Stock, the
exercise price and period, if any, and the vesting provisions of such Award, the
terms of such Awards, in all cases, being subject to the resolutions of the
Board or the Committee, as the case may be, granting such authority.

 

 

 

  

The Board or the Committee, or the case may be, may also delegate to other
officers of the Company, pursuant to a written delegation, the authority to
perform specified functions under the Plan that are not inconsistent with Rule
16b-3 or other rules or regulations applicable to the Plan. Any actions taken by
any officers of the Company pursuant to such written delegation of authority
shall be deemed to have been taken by the Board or the Committee, as the case
may be.

 

Section 3. Stock Subject to Plan.

 

The total number of shares of Stock reserved and available for distribution
under the Plan shall be 8,000,000 shares. Such shares may consist, in whole or
in part, of authorized and unissued shares or treasury shares. The maximum
number of shares of Stock with respect to which Incentive Stock Options may be
granted under the Plan shall be 5,000,000 shares of Stock. 

 

If any shares of Stock that have been optioned cease to be subject to a Stock
Option award for any reason (other than by issuance of such shares upon exercise
of a Stock Option), or if any shares of Stock that are subject to any Restricted
Stock award are forfeited or any such award otherwise terminates without the
issuance of such shares, such shares shall again be available for distribution
under the Plan. Without limiting the foregoing, (i) any shares of Stock subject
to an Award that remain unissued upon the cancellation, surrender, exchange or
termination of such Award without having been exercised or settled, (ii) any
shares of Stock subject to an Award that are retained by the Company as payment
of the exercise price or tax withholding obligations with respect to an Award,
and (iii) any shares of Stock equal to the number of previously owned shares of
Stock surrendered to the Company as payment of the exercise price of a Stock
Option or to satisfy tax withholding obligations with respect to an Award.

 

In the event of any merger, reorganization, consolidation, recapitalization,
stock dividend, stock split, extraordinary distribution with respect to the
Stock or other change in corporate structure affecting the Stock, such
substitution or adjustments shall be made in the (A) aggregate number of shares
of Stock reserved for issuance under the Plan, (B) number, kind and exercise
price of shares of Stock subject to outstanding Options granted under the Plan,
and (C) number, kind, purchase price and/or appreciation base of shares of Stock
subject to other outstanding Awards granted under the Plan, as may be determined
to be appropriate by the Board or the Committee, as the case may be, in order to
prevent dilution or enlargement of rights; provided, however, that the number of
shares of Stock subject to any Award shall always be a whole number. Such
adjusted exercise price shall also be used to determine the amount which is
payable to the optionee upon the exercise by the Board or the Committee, as the
case may be, of the alternative settlement right which is set forth in Section
5(b)(xi) below.  

  

Subject to the provisions of the immediately preceding paragraph, the maximum
number of shares of Stock with respect to which Options or Restricted Stock may
be granted or measured to any Participant under the Plan during any calendar
year or part thereof shall not exceed 5,000,000 shares.

 

The maximum Cash Award that may be paid to any Participant under the Plan during
any calendar year shall not exceed $2,500,000.

 

Section 4. Eligibility.

 

Officers and other employees of the Company or any Parent or Subsidiary (but
excluding any person whose eligibility would adversely affect the compliance of
the Plan with the requirements of Rule 16b-3) who are at the time of the grant
of an Award under the Plan employed by the Company or any Parent or Subsidiary
and who are responsible for or contribute to the management, growth and/or
profitability of the business of the Company or any Parent or Subsidiary are
eligible to be granted Awards under the Plan. In addition, Non-Qualified Stock
Options and other Awards (but not Incentive Stock Options) may be granted under
the Plan to any person, including, but not limited to, directors, independent
agents, consultants and attorneys who the Board or the Committee, as the case
may be, believes has contributed or will contribute to the success of the
Company. Eligibility under the Plan shall be determined by the Board or the
Committee, as the case may be.

 

The Board or the Committee, as the case may be, may, in its sole discretion,
include additional conditions and restrictions in the agreement entered into in
connection with such Awards under the Plan. The grant of an Option or other
Award under the Plan, and any determination made in connection therewith, shall
be made on a case by case basis and can differ among optionees and grantees. The
grant of an Option or other Award under the Plan is a privilege and not a right
and the determination of the Board or the Committee, as the case may be, can be
applied on a non-uniform (discretionary) basis.

 

 

 

  

Section 5. Stock Options.

 

(a) Grant and Exercise. Stock Options granted under the Plan may be of two
types: (i) Incentive Stock Options and (ii) Non-Qualified Stock Options. Any
Stock Option granted under the Plan shall contain such terms as the Board or the
Committee, as the case may be, may from time to time approve. The Board or the
Committee, as the case may be, shall have the authority to grant to any optionee
Incentive Stock Options, Non-Qualified Stock Options, or both types of Stock
Options, and they may be granted alone or in addition to other awards granted
under the Plan. To the extent that any Stock Option is not designated as an
Incentive Stock Option or does not qualify as an Incentive Stock Option, it
shall constitute a Non-Qualified Stock Option. The grant of an Option shall be
deemed to have occurred on the date on which the Board or the Committee, as the
case may be, by resolution, designates an individual as a grantee thereof, and
determines the number of shares of Stock subject to, and the terms and
conditions of, said Option, including the exercise price.

 

Anything in the Plan to the contrary notwithstanding, no term of the Plan
relating to Incentive Stock Options or any agreement providing for Incentive
Stock Options shall be interpreted, amended or altered, nor shall any discretion
or authority granted under the Plan be exercised, so as to disqualify the Plan
under Section 422 of the Code, or, without the consent of the optionee(s)
affected, to disqualify any Incentive Stock Option under said Section 422.

 

(b) Terms and Conditions. Stock Options granted under the Plan shall be subject
to the following terms and conditions:

 

(i)          Option Price. The option price per share of Stock purchasable under
a Stock Option shall be determined by the Board or the Committee, as the case
may be, at the time of the grant and shall not be less than 100% (110% in the
case of an Incentive Stock Option granted to an optionee who, at the time of
grant, owns Stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company or its Parent, if any, or its Subsidiaries
(“10% Stockholder”)) of the Fair Market Value of the Stock at the time the Stock
Option is granted.

 

(ii)         Option Term. The term of each Stock Option shall be fixed by the
Board or the Committee, as the case may be, but no Incentive Stock Option shall
be exercisable more than ten years (five years, in the case of an Incentive
Stock Option granted to a 10% Stockholder) after the date on which the Option is
granted.  

  

(iii)        Exercisability. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Board or the Committee, as the case may be. If the Board or the Committee, as
the case may be, provides, in its discretion, that any Stock Option is
exercisable only in installments, the Board or the Committee, as the case may
be, may waive such installment exercise provisions at any time at or after the
time of grant in whole or in part, based upon such factors as the Board or the
Committee, as the case may be, shall determine.

 

(iv)        Method of Exercise. Subject to whatever installment, exercise and
waiting period provisions are applicable in a particular case, Stock Options may
be exercised in whole or in part at any time during the option period by giving
written notice of exercise to the Company specifying the number of shares of
Stock to be purchased. Such notice shall be accompanied by payment in full of
the exercise price for the Stock Options exercised, which shall be in cash or,
if provided in the Stock Option agreement referred to in Section 5(b)(xii) below
or otherwise provided by the Board, or Committee, as the case may be, either at
or after the date of grant of the Stock Option, in whole shares of Stock which
are already owned by the holder of the Option or partly in cash and partly in
such Stock. Cash payments shall be made by wire transfer, certified or bank
check or personal check, in each case payable to the order of the Company;
provided, however, that the Company shall not be required to deliver
certificates for shares of Stock with respect to which an Option is exercised
until the Company has confirmed the receipt of good and available funds in
payment of the purchase price thereof. If permitted, payments of the exercise
price and any tax required to be withheld by the Company in the form of Stock
(which shall be valued at the Fair Market Value of a share of Stock on the date
of exercise) shall be made by delivery of stock certificates in negotiable form
which are effective to transfer good and valid title thereto to the Company,
free of any liens or encumbrances. In addition to the foregoing, payment of the
exercise price may be made by delivery to the Company by the optionee of an
executed exercise form, together with irrevocable instructions to a
broker-dealer to sell or margin a sufficient portion of the shares covered by
the option and deliver the sale or margin loan proceeds directly to the Company.
Except as otherwise expressly provided in the Plan or in the Stock Option
agreement referred to in Section 5(b)(xii) below or otherwise provided by the
Board or Committee, as the case may be, either at or after the date of grant of
the Option, no Option which is granted to a person who is at the time of grant
an employee of the Company or of a Subsidiary or Parent of the Company may be
exercised at any time unless the holder thereof is then an employee of the
Company or of a Parent or a Subsidiary. The holder of an Option shall have none
of the rights of a stockholder with respect to the shares subject to the Option
until the optionee has given written notice of exercise, has paid in full for
those shares of Stock and, if requested by the Board or Committee, as the case
may be, has given the representation described in Section 12(a) below.

 

 

 

  

(v)        Transferability; Exercisability. No Stock Option shall be
transferable by the optionee other than by will or by the laws of descent and
distribution, except as may be otherwise provided with respect to a
Non-Qualified Option pursuant to the specific provisions of the Stock Option
agreement pursuant to which it was issued as referred to in Section 5(b)(xii)
below (which agreement may be amended, from time to time). Except as otherwise
provided in the Stock Option agreement relating to a Non-Qualified Stock Option,
all Stock Options shall be exercisable, during the optionee's lifetime, only by
the optionee or his or her guardian or legal representative.

 

(vi)        Termination by Reason of Death. Subject to Section 5(b)(x) below, if
an optionee's employment by the Company or any Parent or Subsidiary terminates
by reason of death, any Stock Option held by such optionee may thereafter be
exercised, to the extent then exercisable or on such accelerated basis as the
Board or Committee, as the case may be, may determine at or after the time of
grant, for a period of one year (or such other period as the Board or the
Committee, as the case may be, may specify at or after the time of grant) from
the date of death or until the expiration of the stated term of such Stock
Option, whichever period is the shorter.

 

(vii)       Termination by Reason of Disability. Subject to Section 5(b)(x)
below, if an optionee's employment by the Company or any Parent or Subsidiary
terminates by reason of Disability, any Stock Option held by such optionee may
thereafter be exercised by the optionee, to the extent it was exercisable at the
time of termination or on such accelerated basis as the Board or the Committee,
as the case may be, may determine at or after the time of grant, for a period of
one year (or such other period as the Board or the Committee, as the case may
be, may specify at or after the time of grant) from the date of such termination
of employment or until the expiration of the stated term of such Stock Option,
whichever period is the shorter; provided, however, that if the optionee dies
within such one year period (or such other period as the Board or the Committee,
as the case may be, shall specify at or after the time of grant), any
unexercised Stock Option held by such optionee shall thereafter be exercisable
to the extent to which it was exercisable at the time of death for a period of
one year from the date of death or until the expiration of the stated term of
such Stock Option, whichever period is the shorter.

  

(viii)      Termination by Reason of Retirement. Subject to Section 5(b)(x)
below, if an optionee's employment by the Company or any Parent or Subsidiary
terminates by reason of Normal Retirement, any Stock Option held by such
optionee may thereafter be exercised by the optionee, to the extent it was
exercisable at the time of termination or on such accelerated basis as the Board
or the Committee, as the case may be, may determine at or after the time of
grant, for a period of one year (or such other period as the Board or the
Committee, as the case may be, may specify at or after the time of grant) from
the date of such termination of employment or the expiration of the stated term
of such Stock Option, whichever period is the shorter; provided, however, that
if the optionee dies within such one year period (or such other period as the
Board or the Committee, as the case may be, shall specify at or after the date
of grant), any unexercised Stock Option held by such optionee shall thereafter
be exercisable to the extent to which it was exercisable at the time of death
for a period of one year from the date of death or until the expiration of the
stated term of such Stock Option, whichever period is the shorter. If an
optionee's employment with the Company or any Parent or Subsidiary terminates by
reason of Early Retirement, the Stock Option shall thereupon terminate;
provided, however, that if the Board or the Committee, as the case may be, so
approves at the time of Early Retirement, any Stock Option held by the optionee
may thereafter be exercised by the optionee as provided above in connection with
termination of employment by reason of Normal Retirement.

 

(ix)         Other Termination. Subject to the provisions of Section 12(h)
below, and unless otherwise determined by the Board or Committee, as the case
may be, at or after the time of grant, if an optionee's employment by the
Company or any Parent or Subsidiary terminates for any reason other than death,
Disability or Retirement, the Stock Option shall thereupon automatically
terminate, except that if the optionee is involuntarily terminated by the
Company or any Parent or a Subsidiary without Cause (as hereinafter defined),
such Stock Option may be exercised for a period of three months (or such other
period as the Board or the Committee, as the case may be, shall specify at or
after the time of grant) from the date of such termination or until the
expiration of the stated term of such Stock Option, whichever period is shorter.
For purposes of the Plan, “Cause” shall mean (1) the conviction of the optionee
of a felony under Federal law or the law of the state in which such action
occurred, (2) dishonesty by the optionee in the course of fulfilling his or her
employment duties, or (3) the failure on the part of the optionee to perform his
or her employment duties in any material respect. In addition, with respect to
an option granted to an employee of the Company, a Parent or a Subsidiary, for
purposes of the Plan, “Cause” shall also include any definition of “Cause”
contained in any employment agreement between the optionee and the Company,
Parent or Subsidiary, as the case may be.

 

(x)         Additional Incentive Stock Option Limitation. In the case of an
Incentive Stock Option, the aggregate Fair Market Value of Stock (determined at
the time of grant of the Option) with respect to which Incentive Stock Options
are exercisable for the first time by an individual optionee during any calendar
year (under all such plans of optionee's employer corporation and its Parent and
Subsidiaries) shall not exceed $100,000.

 

 

 

 

(xi)        Alternative Settlement of Option. If provided for, upon the receipt
of written notice of exercise or otherwise provided for by the Board or
Committee, as the case may be, either at or after the time of grant of the Stock
Option, the Board or the Committee, as the case may be, may elect to settle all
or part of any Stock Option by paying to the optionee an amount, in cash or
Stock (valued at Fair Market Value on the date of exercise), equal to the
product of the excess of the Fair Market Value of one share of Stock, on the
date of exercise over the Option exercise price, multiplied by the number of
shares of Stock with respect to which the optionee proposes to exercise the
Option. Any such settlements which relate to Options which are held by optionees
who are subject to Section 16(b) of the Exchange Act shall comply with any
“window period” provisions of Rule 16b-3, to the extent applicable, and with
such other conditions as the Board or Committee, as the case may be, may impose.

 

(xii)       Stock Option Agreement. Each grant of a Stock Option shall be
confirmed by, and shall be subject to the terms of, an agreement executed by the
Company and the Participant.  An Incentive Stock Option granted pursuant to the
Plan shall be issued substantially in the form set forth in Appendix I hereof,
which form is hereby incorporated by reference and made a part hereof, and shall
contain substantially the terms and conditions set forth therein.   A
Non-Qualified Stock Option granted  to an Employee pursuant to the Plan shall be
issued substantially in the form set forth in Appendix II hereof, which form is
hereby incorporated by reference and made a part hereof, and shall contain
substantially the terms and conditions set forth therein.  A Non-Qualified Stock
Option granted to a non-employee directors or consultants shall be issued
substantially in the form set forth in Appendix III hereof, which form is hereby
incorporated by reference and made a part hereof, and shall contain
substantially the terms and conditions set forth therein. At the time of the
grant of a Stock Option, the Board or Committee may, in the Board or Committee’s
sole discretion, amend or supplement any of the option terms contained in
Appendix I, II or III hereof for any particular optionee, provided that with
respect to an Incentive Stock Option, the Stock Option satisfies the
requirements for an Incentive Stock Option set forth in the Code.

  

Section 6. Restricted Stock.

  

(a) Grant and Exercise. Shares of Restricted Stock may be issued either alone or
in addition to or in tandem with other awards granted under the Plan. The Board
or the Committee, as the case may be, shall determine the eligible persons to
whom, and the time or times at which, grants of Restricted Stock will be made,
the number of shares to be awarded, the price (if any) to be paid by the
recipient, the time or times within which such Awards may be subject to
forfeiture (the “Restriction Period”), the vesting schedule and rights to
acceleration thereof, and all other terms and conditions of the Awards. The
Board or the Committee, as the case may be, may condition the grant of
Restricted Stock upon the attainment of such factors as the Board or the
Committee, as the case may be, may determine.

 

(b) Terms and Conditions. Each Restricted Stock award shall be subject to the
following terms and conditions:

 

(i)          Restricted Stock, when issued, shall be represented by a stock
certificate or certificates registered in the name of the holder to whom such
Restricted Stock shall have been awarded. During the Restriction Period, any
certificates representing the Restricted Stock and any securities constituting
Retained Distributions (as defined below) shall bear a restrictive legend to the
effect that ownership of the Restricted Stock (and such Retained Distributions),
and the enjoyment of all rights related thereto, are subject to the
restrictions, terms and conditions provided in the Plan and the Restricted Stock
agreement referred to in Section 6(b)(iv) below. Any such certificates shall be
deposited by the holder with the Company, together with stock powers or other
instruments of assignment, endorsed in blank, which will permit transfer to the
Company of all or any portion of the Restricted Stock and any securities
constituting Retained Distributions that shall be forfeited or that shall not
become vested in accordance with the Plan and the applicable Restricted Stock
agreement.

 

(ii)         Restricted Stock shall constitute issued and outstanding shares of
Common Stock for all corporate purposes, and the issuance thereof shall be made
for at least the minimum consideration (if any) necessary to permit the shares
of Restricted Stock to be deemed to be fully paid and nonassessable. Unless the
Board or the Committee, as the case may be, determines otherwise, the holder
will have the right to vote such Restricted Stock, to receive and retain all
regular cash dividends and other cash equivalent distributions as the Board or
the Committee, as the case may be, may, in its sole discretion designate, pay or
distribute on such Restricted Stock and to exercise all other rights, powers and
privileges of a holder of Stock with respect to such Restricted Stock, with the
exceptions that (A) the holder will not be entitled to delivery of the stock
certificate or certificates representing such Restricted Stock until the
Restriction Period shall have expired and unless all other vesting requirements
with respect thereto shall have been fulfilled; (B) the Company will retain
custody of the stock certificate or certificates representing the Restricted
Stock during the Restriction Period; (C) other than regular cash dividends and
other cash equivalent distributions as the Board or the Committee, as the case
may be, may in its sole discretion designate, pay or distribute, the Company
will retain custody of all distributions (“Retained Distributions”) made or
declared with respect to the Restricted Stock (and such Retained Distributions
will be subject to the same restrictions, terms and conditions as are applicable
to the Restricted Stock) until such time, if ever, as the Restricted Stock with
respect to which such Retained Distributions shall have been made, paid or
declared shall have become vested and with respect to which the Restriction
Period shall have expired; (D) the holder may not sell, assign, transfer,
pledge, exchange, encumber or dispose of the Restricted Stock or any Retained
Distributions during the Restriction Period; and (E) a breach of any of the
restrictions, terms or conditions contained in the Plan or the Restricted Stock
agreement referred to in Section 6(b)(iv) below, or otherwise established by the
Board or the Committee, as the case may be, with respect to any Restricted Stock
or Retained Distributions will cause a forfeiture of such Restricted Stock and
any Retained Distributions with respect thereto.  

 

 

 

  

(iii)        Upon the expiration of the Restriction Period with respect to each
award of Restricted Stock and the satisfaction of any other applicable
restrictions, terms and conditions (A) all or part of such Restricted Stock
shall become vested in accordance with the terms of the Restricted Stock
agreement referred to in Section 6(b)(iv) below, and (B) any Retained
Distributions with respect to such Restricted Stock shall become vested to the
extent that the Restricted Stock related thereto shall have become vested. Any
such Restricted Stock and Retained Distributions that do not vest shall be
forfeited to the Company and the holder shall not thereafter have any rights
with respect to such Restricted Stock and Retained Distributions that shall have
been so forfeited.

 

(iv)        Restricted Stock Agreement.  Each Restricted Stock award shall be
confirmed by, and shall be subject to the terms of, an agreement executed by the
Company and the Participant.  A Restricted Stock award granted pursuant to the
Plan shall be issued substantially in the form set forth in Appendix IV hereof,
which form is hereby incorporated by reference and made a part hereof, and shall
contain substantially the terms and conditions set forth therein. At the time of
the grant of Restricted Stock, the Board or Committee may, in the Board or
Committee’s sole discretion, amend or supplement any of the terms contained in
Appendix IV hereof for any particular Restricted Stock holder.

  

Section 7. Cash Awards.

 

(a)          Grant. Cash Awards may be issued under the Plan either alone or in
addition to or in tandem with other Awards granted under the Plan or other
payments made to a Participant not under the plan. The Board or Committee, as
the case may be, shall determine the eligible persons to whom, and the time or
times at which, cash awards will be made, the amount that is subject to the Cash
award, the circumstances and conditions under which such amount shall be paid,
in whole or in part, the time of payment, and all other terms and conditions of
the Awards.

 

(b)          Written agreement. Each Cash Award shall be confirmed by, and shall
be subject to the terms of, an agreement executed.

 

(c)          Other cash payments. This Section 7 shall not be construed to
prohibit the Company from making cash payments not under the Plan to employees,
consultants, service providers, independent contractors and directors as
determined by the Company in its sole discretion.

 

Section 8. Performance-Based Awards.

 

(a) In General. All Options, certain Restricted Stock awards and Cash Awards
wards  granted under the Plan, and the compensation attributable to such awards,
are intended to (i) qualify as Performance-Based Awards (as defined in the next
sentence) or (ii) be otherwise exempt from the deduction limitation imposed by
Section 162(m) of the Code. Certain Awards granted under the Plan may be granted
in a manner such that Awards qualify as “performance-based compensation” (as
such term is used in Section 162(m) of the Code and the regulations thereunder)
and thus be exempt from the deduction limitation imposed by Section 162(m) of
the Code (“Performance-Based Awards”). Awards may only qualify as
Performance-Based Awards if they are granted by the Committee at a time when the
Committee is comprised solely of two or more “outside directors” (as such term
is used in Section 162(m) of the Code and the regulations thereunder)
(“Qualifying Committee”).

 

(b) Options. Stock Options granted under the Plan with an exercise price at or
above the Fair Market Value of Common Stock on the date of grant are intended to
qualify as Performance-Based Awards.

 

(c) Other Performance-Based Awards. Restricted Stock awards and Cash
Awards granted under the Plan may qualify as Performance-Based Awards if, as
determined by a Qualifying Committee, in its discretion, either the granting of
such award is subject to the achievement of a performance target or targets
based on one or more of the performance measures specified in Section 8(d)
below. With respect to such awards intended to qualify as Performance-Based
Awards:

 

 

 

 

(1) the Qualifying Committee shall establish in writing (x) the objective
performance-based goals applicable to a given period and (y) the individual
employees or class of employees to which such performance-based goals apply no
later than 90 days after the commencement of such period (but in no event after
25 percent of such period has elapsed);

 

(2) no Performance-Based Awards shall be payable to or vest with respect to, as
the case may be, any Participant for a given period until the Qualifying
Committee certifies in writing that the objective performance goals (and any
other material terms) applicable to such period have been satisfied; and

 

(3) after the establishment of a performance goal, the Qualifying Committee
shall not revise such performance goal or increase the amount of compensation
payable thereunder (as determined in accordance with Section 162(m) of the Code)
upon the attainment of such performance goal.  

  

(d) Performance Measures. The Qualifying Committee may use the following
performance measures (either individually or in any combination) to set
performance targets with respect to awards intended to qualify as
Performance-Based Awards: revenue; pretax income before allocation of corporate
overhead and bonus; budget; earnings per share; net income; division, group or
corporate financial goals; return on stockholders’ equity; return on assets;
return on net assets; return on investment capital; gross margin return on
investment; gross margin dollars or percent; payroll as a percentage of
revenues; inventory shrink; employee turnover; sales, general and administrative
expense; attainment of strategic and operational initiatives; appreciation in
and/or maintenance of the price of Common Stock or any other publicly-traded
securities of the Company, if any; market share; gross profits; earnings before
interest and taxes; earnings before interest, taxes, depreciation and
amortization (“EBITDA”); EBITDA adjusted for non-cash or non-recurring items;
economic value-added models; comparisons with various stock market indices;
achievement of technological or product development milestones; and/or
reductions in costs. The foregoing criteria shall have any reasonable
definitions that the Qualifying Committee may specify, which may include or
exclude any or all of the following items as the Qualifying Committee may
specify: extraordinary, unusual or non-recurring items; effects of accounting
changes; effects of financing activities; expenses for restructuring or
productivity initiatives; other non-operating items; spending for acquisitions;
effects of divestitures; and effects of litigation activities and settlements.
Any such performance criterion or combination of such criteria may apply to the
Participant’s award opportunity in its entirety or to any designated portion or
portions of the award opportunity, as the Qualifying Committee may specify.

 

Section 9. Change of Control Provisions.

 

(a) A “Change of Control” shall be deemed to have occurred on the tenth day
after:

 

(i)          any individual, corporation or other entity or group (as defined in
Section 13(d)(3) of the Exchange Act), becomes, directly or indirectly, the
beneficial owner (as defined in the General Rules and Regulations of the
Securities and Exchange Commission with respect to Sections 13(d) and 13(g) of
the Exchange Act) of more than 50% of the then outstanding shares of the
Company's capital stock entitled to vote generally in the election of directors
of the Company; or

 

(ii)         the commencement of, or the first public announcement of the
intention of any individual, firm, corporation or other entity or of any group
(as defined in Section 13(d)(3) of the Exchange Act) to commence, a tender or
exchange offer subject to Section 14(d)(1) of the Exchange Act for any class of
the Company's capital stock; or

 

(iii)        the stockholders of the Company approve (A) a definitive agreement
for the merger or other business combination of the Company with or into another
corporation pursuant to which the stockholders of the Company do not own,
immediately after the transaction, more than 50% of the voting power of the
corporation that survives, or (B) a definitive agreement for the sale, exchange
or other disposition of all or substantially all of the assets of the Company,
or (C) any plan or proposal for the liquidation or dissolution of the Company;
provided, however, that a “Change of Control” shall not be deemed to have taken
place if beneficial ownership is acquired (A) directly from the Company, other
than an acquisition by virtue of the exercise or conversion of another security
unless the security so converted or exercised was itself acquired directly from
the Company, or (B) by, or a tender or exchange offer is commenced or announced
by, the Company, any profit-sharing, employee ownership or other employee
benefit plan of the Company; or any trustee of or fiduciary with respect to any
such plan when acting in such capacity.

 

(b) In the event of a “Change of Control” as defined in Section 9(a) above, and
unless otherwise provided in a grant agreement, employment agreement or other
agreement between the Company and the Participant, Awards granted under the Plan
will be subject to the following provisions, unless the provisions of this
Section 9 are suspended or terminated by an affirmative vote of a majority of
the Board prior to the occurrence of such a “Change of Control”:

 

 

 

 

(i)          all outstanding Stock Options which have been outstanding for at
least six months  shall become exercisable in full, whether or not otherwise
exercisable at such time, and any such Stock Option shall remain exercisable in
full thereafter until it expires pursuant to its terms; and

 

(ii)         all restrictions and deferral limitations contained in Restricted
Stock awards granted under the Plan shall lapse and the shares of stock subject
to such awards shall be distributed to the Participant within thirty (30) days
of the “Change of Control.” Notwithstanding the foregoing to the contrary, all
restrictions and deferral limitations with respect to an Award to which Section
409A of the Code applies shall not lapse and no distribution made under this
Section 9(b) unless the “Change of Control” qualifies as a 409A Change and such
lapse and distribution does not cause adverse tax consequences under Section
409A of the Code.  

  

Section 10. Amendments and Termination.

 

The Board may at any time, and from time to time, amend any of the provisions of
the Plan, and may at any time suspend or terminate the Plan. The Board or the
Committee, as the case may be, may amend the terms of any Stock Option or other
award theretofore granted under the Plan; provided, however, that subject to
Section 3 above, no such amendment may be made by the Board or the Committee, as
the case may be, which in any material respect impairs the rights of the
Participant without the Participant's consent, except for such amendments which
are made to cause the Plan to qualify for the exemption provided by Rule 16b-3.
Moreover, no Stock Option previously granted under the Plan may be amended to
reduce the exercise price of the Stock Option.

  

Section 11. Unfunded Status of Plan.

 

The Plan is intended to constitute an “unfunded” plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant or
optionee by the Company, nothing contained herein shall give any such
Participant or optionee any rights that are greater than those of a creditor of
the Company.

 

Section 12. General Provisions.

 

(a) The Board or the Committee, as the case may be, may require each person
acquiring shares of Stock pursuant to an Option, Restricted Stock, or other
award under the Plan to represent to and agree with the Company in writing,
among other things, that the optionee or Participant is acquiring the shares for
investment without a view to distribution thereof.

 

(b) All certificates for shares of Stock delivered under the Plan shall be
subject to such stop transfer orders and other restrictions as the Board or the
Committee, as the case may be, may deem to be advisable under the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange or association upon which the Stock is then listed or traded,
any applicable Federal or state securities law, and any applicable corporate
law, and the Board or the Committee, as the case may be, may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions.

 

(c) Nothing contained in the Plan shall prevent the Board from adopting such
other or additional incentive arrangements as it may deem desirable, including,
but not limited to, the granting of stock options and the awarding of stock and
cash otherwise than under the Plan; and such arrangements may be either
generally applicable or applicable only in specific cases.

   

(d) Nothing contained in the Plan or in any award hereunder shall be deemed to
confer upon any employee of the Company or any Parent or Subsidiary any right to
continued employment with the Company or any Parent or Subsidiary, nor shall it
interfere in any way with the right of the Company or any Parent or Subsidiary
to terminate the employment of any of its employees at any time.

 

(e) No later than the date as of which an amount first becomes includable in the
gross income of the Participant for Federal income tax purposes with respect to
any Option, Restricted Stock, Cash Award or other award under the Plan, the
Participant shall pay to the Company, or make arrangements satisfactory to the
Board or the Committee, as the case may be, 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. If permitted by the Board or the Committee, as
the case may be, tax withholding or payment obligations may be settled with
Stock, including Stock that is part of the award that gives rise to the
withholding requirement. The obligations of the Company under the Plan shall be
conditional upon such payment or arrangements, and the Company or the
Participant's employer (if not 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 Participant from the Company or any Parent or Subsidiary.

 

 

 

 

(f) The Plan and all awards made and actions taken thereunder shall be governed
by and construed in accordance with the laws of the State of   Delaware (without
regard to choice of law provisions).

   

(g) Any Stock Option, Restricted Stock, Cash Award or other award made under the
Plan shall not be deemed compensation for purposes of computing benefits under
any retirement plan of the Company or any Parent or Subsidiary and shall not
affect any benefits under any other benefit plan now or subsequently in effect
under which the availability or amount of benefits is related to the level of
compensation (unless required by specific reference in any such other plan to
awards under the Plan).

 

(h) Subject to the requirements of Section 409A of the Code if applicable, a
leave of absence, unless otherwise determined by the Board or the Committee, as
the case may be, prior to the commencement thereof, shall not be considered a
termination of employment. Any Stock Option, Restricted Stock, Cash Award or
other awards made under the Plan shall not be affected by any change of
employment, so long as the holder continues to be an employee of the Company or
any Parent or Subsidiary.

 

(i) Except as otherwise expressly provided in the Plan or in any Stock Option
agreement, Restricted Stock agreement or Cash Award agreement, no right or
benefit under the Plan may be alienated, sold, assigned, hypothecated, pledged,
exchanged, transferred, encumbranced or charged, and any attempt to alienate,
sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge the
same shall be void. No right or benefit hereunder shall in any manner be subject
to the debts, contracts or liabilities of the person entitled to such benefit.

 

(j) The obligations of the Company with respect to all Stock Options, Restricted
Stock, Cash Awards and other awards under the Plan shall be subject to (A) all
applicable laws, rules and regulations, and such approvals by any governmental
agencies as may be required, including, without limitation, the effectiveness of
a registration statement under the Securities Act, and (B) the rules and
regulations of any securities exchange or association on which the Stock may be
listed or traded.

 

(k) If any of the terms or provisions of the Plan conflicts with the
requirements of Rule 16b-3 as in effect from time to time, or with the
requirements of any other applicable law, rule or regulation, and with respect
to Incentive Stock Options, Section 422 of the Code, then such terms or
provisions shall be deemed inoperative to the extent they so conflict with the
requirements of said Rule 16b-3, and with respect to Incentive Stock Options,
Section 422 of the Code. With respect to Incentive Stock Options, if the Plan
does not contain any provision required to be included herein under Section 422
of the Code, such provision shall be deemed to be incorporated herein with the
same force and effect as if such provision had been set out at length herein.

 

(l) The Board or the Committee, as the case may be, may terminate any Stock
Option, Restricted Stock, Cash Award or other award made under the Plan if a
written agreement relating thereto is not executed and returned to the Company
within 30 days after such agreement has been delivered to the optionee or
Participant for his or her execution.

 

(m) The grant of awards pursuant to the Plan shall not in any way effect the
right or power of the Company to make reclassifications, reorganizations or
other changes of or to its capital or business structure or to merge,
consolidate, liquidate, sell or otherwise dispose of all or any part of its
business or assets.

 

Section 13. Effective Date of Plan.

 

The Plan shall be effective upon the effective date of a business combination
with a public reporting company that, upon the effectiveness of such business
combination, such public reporting company shall have at least 2,000,000
authorized and unissued shares.

 

Section 14. Term of Plan.

 

No Stock Option, Restricted Stock or Cash Award shall be granted pursuant to the
Plan after the fifth anniversary of the effective date of the Plan, but awards
granted on or prior to such fifth anniversary may extend beyond that date.

 

 

 

 

Section 15. Section 409A of the Code Compliance.

 

(a) Awards under the Plan are intended either to be exempt from the rules of
Section 409A of the Code or to satisfy those rules and shall be construed
accordingly. If intended to satisfy the applicable requirements of Section 409A
of the Code, an Award and the Plan, as applicable, shall be performed and
interpreted consistent with such intent. If the Board or the Committee, as the
case may be, determines in good faith that any provision of this Plan does not
satisfy such requirements or could cause any person to recognize additional
taxes, penalties or interest under Section 409A of the Code, the Board or the
Committee, as the case may be, is empowered to modify, to the extent
practicable, the original intent of the applicable provision without violation
of Section 409A of the Code. In addition, notwithstanding any provision
contained herein to the contrary, the Board or the Committee, as the case may
be, shall have broad authority to amend or to modify the Plan, without advance
notice to or consent by any person, to the extent necessary or desirable to
ensure compliance with Section 409A of the Code. However, the Company shall not
be liable to any Participant or other holder of an Award with respect to any
Award-related adverse tax consequences arising under Section 409A of the Code or
other provision of the Code.

 

(b) If any provision of the Plan or an Award agreement contravenes any
regulations or treasury guidance promulgated under Section 409A of the Code or
could cause an Award to be subject to the interest and penalties under Section
409A of the Code, such provision of the Plan or Award shall be deemed
automatically modified to maintain, to the maximum extent practicable, the
original intent of the applicable provision without violating the provisions of
Section 409A of the Code and the Board or the Committee, as the case may be, in
its reasonable discretion, may take such actions as it determines to avoid
contravention of Section 409A of the Code. Moreover, any discretionary authority
that the Board or the Committee, as the case may be, may have pursuant to the
Plan shall not be applicable to an Award that is subject to Section 409A of the
Code to the extent such discretionary authority will contravene Section 409A of
the Code or the treasury regulations or guidance promulgated thereunder.

 

(c) Notwithstanding any provisions of this Plan or any Award granted hereunder
to the contrary, no acceleration shall occur with respect to any Award to the
extent such acceleration would cause the Plan or an Award granted hereunder to
fail to comply with Section 409A of the Code.

 

(d) Notwithstanding any provisions of this Plan or any applicable Award
agreement to the contrary, no payment shall be made with respect to any Award
granted under this Plan to a “specified employee” (as such term is defined for
purposes of Section 409A of the Code) prior to the first date that is at least
six months after the employee’s separation of service to the extent such
six-month delay in payment is required to comply with Section 409A of the Code.
To the extent required to comply with Section 409A of the Code, a termination of
employment shall not be deemed to have occurred for purposes of any payment or
distribution upon or following a termination of employment unless such
termination is also a “separation from service” within the meaning of Section
409A of the Code and accordingly, a reference to termination of employment,
termination of service or like terms shall mean a “separation from service” as
the context may require.

 

(e) The Board or the Committee, as the case may be, may adopt rules and
procedures subject to the requirements of Section 409A of the Code to permit a
Participant to defer the receipt of any of the cash or Stock to be received
pursuant to an Award.

 

(f) In the case of an Award providing for the payment of deferred compensation
subject to Section 409A of the Code, any payment of such deferred compensation
by reason of a “change of control” shall be made only if the “change of control”
is (1) one described in Section 9 and (2) one described in a 409A Change, and
shall be paid consistent with the requirements of Section 409A of the Code. If
any deferred compensation that would otherwise be payable by reason of a “change
of control” cannot be paid by reason of the immediately preceding sentence, it
shall be paid as soon as practicable thereafter consistent with the requirements
of Section 409A of the Code, as determined by the Board or the Committee, as the
case may be.  

 

 

 

 

APPENDIX I

 

INCENTIVE STOCK OPTION

 

To:       Name           Address  

 

Date of Grant:  _____________________

 

You (“Optionee”) are hereby granted an option, effective as of the date hereof,
to purchase __________ shares of common stock ("Common Stock"), of Xcel Brands,
Inc., a Delaware corporation (the "Company"), at a price of $ ___ per share
pursuant to the Company's Equity Incentive Plan (the "Plan").

 

This option shall terminate and is not exercisable after ten years from the date
of its grant (the "Scheduled Termination Date"), except if terminated earlier as
hereafter provided.

 

Your option may first be exercised on and after one year from the date of grant,
but not before that time.  On and after one year and prior to two years from the
date of grant, your option may be exercised for up to _________ % of the total
number of shares subject to the option minus the number of shares previously
purchased by exercise of the option (as adjusted for any change in the
outstanding shares of the Common Stock of the Company by reason of a stock
dividend, stock split, combination of shares, recapitalization, merger,
consolidation, transfer of assets, reorganization, conversion or what the Board
or Committee deems in its sole discretion to be similar circumstances).  Each
succeeding year thereafter your option may be exercised for up to an additional
__________ % of the total number of shares subject to the option minus the
number of shares previously purchased by exercise of the option (as adjusted for
any change in the outstanding shares of the Common Stock of the Company by
reason of a stock dividend, stock split, combination of shares,
recapitalization, merger, consolidation, transfer of assets, reorganization,
conversion or what the Board or Committee deems in its sole discretion to be
similar circumstances).  Thus, this option is fully exercisable on and after
_________ years after the date of grant, except if terminated earlier as
provided herein.

 

You may exercise your option by giving written notice to the Secretary of the
Company on forms supplied by the Company at its then principal executive office,
accompanied by payment of the option price for the total number of shares you
specify that you wish to purchase.  The payment may be in any of the following
forms: (a) cash, which may be evidenced by a check and includes cash received
from a stock brokerage firm in a so-called "cashless exercise"; (b) (unless
prohibited by the Board or Committee) certificates representing shares of Common
Stock of the Company, which will be valued by the Secretary of the Company at
the fair market value per share of the Company's Common Stock (as determined in
accordance with the Plan) on the date of delivery of such certificates to the
Company, accompanied by an assignment of the stock to the Company; or
(c) (unless prohibited by the Board or Committee) any combination of cash and
Common Stock of the Company valued as provided in clause (b).  The use of the
so-called "attestation procedure") to exercise a stock option may be permitted
by the Board or Committee. Any assignment of stock shall be in a form and
substance satisfactory to the Secretary of the Company, including guarantees of
signature(s) and payment of all transfer taxes if the Secretary deems such
guarantees necessary or desirable.

 

Your option will, to the extent not previously exercised by you, terminate three
months after the date on which your employment by the Company or any Parent or
Subsidiary is terminated other than: (i)  by reason of Disability or death, in
which case your option will terminate one year from the date of termination of
employment due to Disability or death (but in no event later than the Scheduled
Termination Date) or (ii) for Cause or your resignation, in which case your
option will terminate immediately and you will forfeit any right to exercise the
option. After the date your employment is terminated, as aforesaid (other than
for the reasons stated in clause ii), you may exercise this option only for the
number of shares which you had a right to purchase and did not purchase on the
date your employment terminated.  If you are employed by any Parent or
Subsidiary, your employment shall be deemed to have terminated on the date your
employer ceases to be a Parent or Subsidiary, unless you are on that date
transferred to the Company or another Parent or Subsidiary.  Your employment
shall not be deemed to have terminated if you are transferred from the Company
to any Parent or Subsidiary, or vice versa, or from one Subsidiary to another
Subsidiary.  

 

 

 

 

If you die while employed by the Company or any Parent or Subsidiary, your
executor or administrator, as the case may be, may, at any time within one year
after the date of your death (but in no event later than the Scheduled
Termination Date), exercise the option as to any shares which you had a right to
purchase and did not purchase during your lifetime.  If your employment with the
Company or  any Parent or Subsidiary n is terminated by reason of your
Disability, you or your legal guardian or custodian may at any time within one
year after the date of such termination (but in no event later than the
Scheduled Termination Date), exercise the option as to any shares which you had
a right to purchase and did not purchase prior to such termination.  Your
executor, administrator, guardian or custodian must present proof of his
authority satisfactory to the Company prior to being allowed to exercise this
option.

 

In the event of any change in the outstanding shares of the Common Stock of the
Company by reason of a stock dividend, stock split, combination of shares,
recapitalization, merger, consolidation, transfer of assets, reorganization,
conversion or what the Board or Committee deems in its sole discretion to be
similar circumstances, the number and kind of shares subject to this option and
the option price of such shares shall be appropriately adjusted in a manner to
be determined in the sole discretion of the Board or Committee, whose decision
shall be final, binding and conclusive in the absence of clear and convincing
evidence of bad faith.

 

In the event of a liquidation or proposed liquidation of the Company, including
(but not limited to) a transfer of assets followed by a liquidation of the
Company, or in the event of a Change in Control or proposed Change in Control,
the Board shall have the right to accelerate this option.

 

This option is not transferable otherwise than by will or the laws of descent
and distribution, and is exercisable during your lifetime only by you,
including, for this purpose, your legal guardian or custodian in the event of
Disability.  Until the option price has been paid in full pursuant to due
exercise of this option and the purchased shares are delivered to you, you do
not have any rights as a shareholder of the Company.  The Company reserves the
right not to deliver to you the shares purchased by virtue of the exercise of
this option during any period of time in which the Company deems, in its sole
discretion, that such delivery would violate a federal, state, local or
securities exchange rule, regulation or law.

 

Notwithstanding anything to the contrary contained herein, this option is not
exercisable until all the following events occur and during the following
periods of time:

 

(a)           Until the Plan pursuant to which this option is granted is
approved by the shareholders of the Company in the manner required by any
applicable provision of the Code and the regulations thereunder and any
applicable securities exchange or listing rule or agreement;

 

(b)          Until this option and the optioned shares are approved, registered
and listed with such federal, state, local and foreign regulatory bodies or
agencies and securities exchanges as the Company may deem necessary or
desirable, or the Company deems such option or optioned shares to be exempted
therefrom;

 

(c)           During any period of time in which the Company deems that the
exercisability of this option, the offer to sell the shares optioned hereunder,
or the sale thereof, may violate a federal, state, local or foreign law, rule or
regulation, or any applicable securities exchange or listing rule or agreement,
or may cause the Company to be legally obligated to issue or sell more shares
than the Company is legally entitled to issue or sell; or

 

(d)          Until you have paid or made suitable arrangements to pay (which may
include payment through the surrender of Common Stock, unless prohibited by the
Board or Committee) (i) all federal, state, local and foreign tax withholding
required by the Company in connection with the option exercise and (ii) the
employee's portion of other federal, state, local and foreign payroll and other
taxes due in connection with the option exercise.  

 

 

 

  

The following two paragraphs shall be applicable if, on the date of exercise of
this option, no registration statement and current prospectus under the
Securities Act of 1933 covers the Common Stock to be purchased pursuant to such
exercise, and shall continue to be applicable for so long as such registration
has not occurred and such current prospectus is not available:

 

(a)           You hereby agree, warrant and represent that you will acquire the
Common Stock to be issued hereunder for your own account for investment purposes
only, and not with a view to, or in connection with, any resale or other
distribution of any of such shares, except as hereafter permitted.  You further
agree that you will not at any time make any offer, sale, transfer, pledge or
other disposition of such Common Stock to be issued hereunder without an
effective registration statement under the Securities Act of 1933, as amended,
and under any applicable state securities laws or an opinion of counsel
acceptable to the Company to the effect that the proposed transaction will be
exempt from such registration.  You agree to execute such instruments,
representations, acknowledgments and agreements as the Company may, in its sole
discretion, deem advisable to avoid any violation of federal, state, local or
foreign law, rule or regulation, or any securities exchange rule or listing
agreement.

 

(b)           The certificates for the Common Stock to be issued to you
hereunder shall bear the following legend:

 

"The shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended, or under applicable state securities
laws.  The shares have been acquired for investment and may not be offered,
sold, transferred, pledged or otherwise disposed of without an effective
registration statement under the Securities Act of 1933, as amended, and under
any applicable state securities laws or an opinion of counsel acceptable to the
Company that the proposed transaction will be exempt from such registration."

 

The foregoing legend shall be removed upon registration of the legended shares
under the Securities Act of 1933, as amended, and under any applicable state
laws, and the availability of a current prospectus, or upon receipt of any
opinion of counsel acceptable to the Company that such registration and current
prospectus are no longer required.

 

The sole purpose of the agreements, warranties, representations and legend set
forth in the two immediately preceding paragraphs is to prevent violations of
the Securities Act of 1933, as amended, and any applicable state securities
laws.

 

It is the intention of the Company and you that this option shall, if possible,
be an "Incentive Stock Option" as that term is used in Section 422(b) of the
Code and the regulations thereunder.  In the event this option is in any way
inconsistent with the legal requirements of the Code or the regulations
thereunder for an "Incentive Stock Option," this option shall be deemed
automatically amended as of the date hereof to conform to such legal
requirements, if such conformity may be achieved by amendment.  To the extent
that the number of shares subject to this option which are exercisable for the
first time exceed the $100,000 limitation contained in Section 422(d) of the
Code, this option will not be considered an Incentive Stock Option.

 

If shares of Common Stock acquired by exercise of this option are disposed of
within two (2) years following the date of grant or one (1) year following the
issuance of the shares to you (or any situation in which the option will be
taxed as a non-qualified option), you shall, immediately prior to such
disposition, notify the Company in writing of the date and terms of such
disposition and provide such other information regarding the disposition as the
Company may reasonably require .

 

Nothing herein shall modify your status as an at-will employee of the Company or
any Parent or Subsidiary.  Further, nothing herein guarantees you employment for
any specified period of time.  This means that either you or the Company or any
Parent or Subsidiary may terminate your employment at any time for any reason,
with or without cause, or for no reason.  You recognize that, for instance, you
may terminate your employment or the Company or any Parent or Subsidiary may
terminate your employment prior to the date on which your option becomes vested
or exercisable.  

 

You understand and agree that the existence of this option will not affect in
any way the right or power of the Company or its shareholders to make or
authorize any or all adjustments, recapitalizations, reorganizations, or other
changes in the Company’s capital structure or its business, or any merger or
consolidation of the Company, or any issuance of bonds, debentures, preferred or
other stocks with preference ahead of or convertible into, or otherwise
affecting the common shares or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.

 

 

 

  

Any notice you give to the Company must be in writing and either hand-delivered
or mailed to the office of the Company. If mailed, it should be addressed
to  the Chief Financial Officer of the Company at its then main headquarters.
Any notice given to you will be addressed to you at your address as reflected on
the personnel records of the Company. You and the Company may change the address
for notice by like notice to the other. Notice will be deemed to have been duly
delivered when hand-delivered or, if mailed, on the day such notice is
postmarked.

 

In the event that any question or controversy shall arise with respect to the
nature, scope or extent of any one or more rights conferred by this option, or
any provision of this option, the determination in good faith by the Board of
Directors of the Company (as constituted at the time of such determination) of
your rights as the Optionee shall be conclusive, final and binding upon you as
the Optionee and upon any other person who shall assert any right pursuant to
this option.

 

This option shall be subject to the terms of the Plan in effect on the date this
option is granted, which terms are hereby incorporated herein by reference and
made a part hereof.  Capitalized terms used herein and not otherwise defined
herein shall have the meaning given to such terms in the Plan. In the event of
any conflict between the terms of this option and the terms of the Plan in
effect on the date of this option, the terms of the Plan shall govern.  This
option constitutes the entire understanding between the Company and you with
respect to the subject matter hereof and no amendment, supplement or waiver of
this option, in whole or in part, shall be binding upon the Company unless in
writing and signed by the President of the Company.  This option and the
performances of the parties hereunder shall be construed in accordance with and
governed by the laws of the State of Delaware.

 

Please sign the copy of this option and return it to the Company's Secretary,
thereby indicating your understanding of and agreement with its terms and
conditions.

 

  XCEL BRANDS, INC.       By:  

 

 

 

 

ACKNOWLEDGMENT

 

I hereby acknowledge receipt of a copy of the Plan.  I hereby represent that I
have read and understood the terms and conditions of the Plan and of this
option.  I hereby signify my understanding of, and my agreement with, the terms
and conditions of the Plan and of this option.  I agree to accept as binding,
conclusive, and final all decisions or interpretations of the Board or Committee
concerning any questions arising under the Plan with respect to this option.  I
accept this option in full satisfaction of any previous written or verbal
promise made to me by the Company or any Parent or Subsidiary with respect to
option or stock grants.

 

Date:  _____________       Signature of Optionee               Print Name

 

 

 

 

APPENDIX II

 

NON-QUALIFIED STOCK OPTION FOR OFFICERS AND OTHER

EMPLOYEES

 

To:       Name           Address  

 

Date of Grant:  _____________________

 

You (“Optionee”) are hereby granted an option, effective as of the date hereof,
to purchase __________ shares of common stock ("Common Stock"), of  Xcel Brands,
Inc. , a Delaware corporation (the "Company"), at a price of $ ___ per share
pursuant to the Company's  Equity Incentive Plan (the "Plan").

 

This option shall terminate and is not exercisable after ten years from the date
of its grant (the "Scheduled Termination Date"), except if terminated earlier as
hereafter provided.

 

Your option may first be exercised on and after one year from the date of grant,
but not before that time.  On and after one year and prior to two years from the
date of grant, your option may be exercised for up to ______% of the total
number of shares subject to the option minus the number of shares previously
purchased by exercise of the option (as adjusted for any change in the
outstanding shares of the Common Stock of the Company by reason of a stock
dividend, stock split, combination of shares, recapitalization, merger,
consolidation, transfer of assets, reorganization, conversion or what the Board
or Committee deems in its sole discretion to be similar circumstances).  Each
succeeding year thereafter your option may be exercised for up to an additional
_______% of the total number of shares subject to the option minus the number of
shares previously purchased by exercise of the option (as adjusted for any
change in the outstanding shares of the Common Stock of the Company by reason of
a stock dividend, stock split, combination of shares, recapitalization, merger,
consolidation, transfer of assets, reorganization, conversion or what the Board
or Committee deems in its sole discretion to be similar circumstances).  Thus,
this option is fully exercisable on and after _______ years after the date of
grant, except if terminated earlier as provided herein.

 

You may exercise your option by giving written notice to the Secretary of the
Company on forms supplied by the Company at its then principal executive office,
accompanied by payment of the option price for the total number of shares you
specify that you wish to purchase.  The payment may be in any of the following
forms: (a) cash, which may be evidenced by a check and includes cash received
from a stock brokerage firm in a so-called "cashless exercise"; (b) (unless
prohibited by the Board or Committee) certificates representing shares of Common
Stock of the Company, which will be valued by the Secretary of the Company at
the fair market value per share of the Company's Common Stock (as determined in
accordance with the Plan) on the date of delivery of such certificates to the
Company, accompanied by an assignment of the stock to the Company; or
(c) (unless prohibited by the Board or Committee) any combination of cash and
Common Stock of the Company valued as provided in clause (b).  The use of the
so-called "attestation procedure" to exercise a stock option may be permitted by
the Board or Committee. Any assignment of stock shall be in a form and substance
satisfactory to the Secretary of the Company, including guarantees of
signature(s) and payment of all transfer taxes if the Secretary deems such
guarantees necessary or desirable.  

  

Your option will, to the extent not previously exercised by you, terminate three
months after the date on which your employment by the Company or  any Parent or
Subsidiary is terminated other than: (i)  by reason of Disability or death, in
which case your option will terminate one year from the date of termination of
employment due to Disability or death (but in no event later than the Scheduled
Termination Date) or (ii) for Cause or your resignation, in which case your
option will terminate immediately and you will forfeit any right to exercise the
option. After the date your employment is terminated, as aforesaid (other than
for the reasons stated in clause ii), you may exercise this option only for the
number of shares which you had a right to purchase and did not purchase on the
date your employment terminated.  If you are employed by any Parent or
Subsidiary, your employment shall be deemed to have terminated on the date your
employer ceases to be a Parent or Subsidiary, unless you are on that date
transferred to the Company or another Parent or Subsidiary.  Your employment
shall not be deemed to have terminated if you are transferred from the Company
to any Parent or Subsidiary, or vice versa, or from one Subsidiary to another
Subsidiary.

 

 

 

  

If you die while employed by the Company or any Parent or Subsidiary, your
executor or administrator, as the case may be, may, at any time within one year
after the date of your death (but in no event later than the Scheduled
Termination Date), exercise the option as to any shares which you had a right to
purchase and did not purchase during your lifetime.  If your employment with the
Company or any Parent or Subsidiary is terminated by reason of your Disability,
you or your legal guardian or custodian may at any time within one year after
the date of such termination (but in no event later than the Scheduled
Termination Date), exercise the option as to any shares which you had a right to
purchase and did not purchase prior to such termination.  Your executor,
administrator, guardian or custodian must present proof of his authority
satisfactory to the Company prior to being allowed to exercise this option.

 

In the event of any change in the outstanding shares of the Common Stock of the
Company by reason of a stock dividend, stock split, combination of shares,
recapitalization, merger, consolidation, transfer of assets, reorganization,
conversion or what the Board or Committee deems in its sole discretion to be
similar circumstances, the number and kind of shares subject to this option and
the option price of such shares shall be appropriately adjusted in a manner to
be determined in the sole discretion of the Board or Committee, whose decision
shall be final, binding and conclusive in the absence of clear and convincing
evidence of bad faith.

 

In the event of a liquidation or proposed liquidation of the Company, including
(but not limited to) a transfer of assets followed by a liquidation of the
Company, or in the event of a Change in Control or proposed Change in Control,
the Board shall have the right to accelerate this option.

 

This option is not transferable otherwise than by will or the laws of descent
and distribution, and is exercisable during your lifetime only by you,
including, for this purpose, your legal guardian or custodian in the event of
Disability.  Until the option price has been paid in full pursuant to due
exercise of this option and the purchased shares are delivered to you, you do
not have any rights as a shareholder of the Company.  The Company reserves the
right not to deliver to you the shares purchased by virtue of the exercise of
this option during any period of time in which the Company deems, in its sole
discretion, that such delivery would violate a federal, state, local or
securities exchange rule, regulation or law.

 

Notwithstanding anything to the contrary contained herein, this option is not
exercisable until all the following events occur and during the following
periods of time:

 

(a)           Until the Plan pursuant to which this option is granted is
approved by the shareholders of the Company in the manner required by any
applicable provision of the Code and the regulations thereunder and any
applicable securities exchange or listing rule or agreement;

 

(b)           Until this option and the optioned shares are approved, registered
and listed with such federal, state, local and foreign regulatory bodies or
agencies and securities exchanges as the Company may deem necessary or
desirable, or the Company deems such option or optioned shares to be exempted
therefrom;

 

(c)           During any period of time in which the Company deems that the
exercisability of this option, the offer to sell the shares optioned hereunder,
or the sale thereof, may violate a federal, state, local or foreign law, rule or
regulation, or any applicable securities exchange or listing rule or agreement,
or may cause the Company to be legally obligated to issue or sell more shares
than the Company is legally entitled to issue or sell; or  

  

(d)           Until you have paid or made suitable arrangements to pay (which
may include payment through the surrender of Common Stock, unless prohibited by
the Board or Committee) (i) all federal, state, local and foreign tax
withholding required by the Company in connection with the option exercise and
(ii) the employee's portion of other federal, state, local and foreign payroll
and other taxes due in connection with the option exercise.

 

 

 

  

The following two paragraphs shall be applicable if, on the date of exercise of
this option, no registration statement and current prospectus under the
Securities Act of 1933 covers the Common Stock to be purchased pursuant to such
exercise, and shall continue to be applicable for so long as such registration
has not occurred and such current prospectus is not available:

 

(a)           You hereby agree, warrant and represent that you will acquire the
Common Stock to be issued hereunder for your own account for investment purposes
only, and not with a view to, or in connection with, any resale or other
distribution of any of such shares, except as hereafter permitted.  You further
agree that you will not at any time make any offer, sale, transfer, pledge or
other disposition of such Common Stock to be issued hereunder without an
effective registration statement under the Securities Act of 1933, as amended,
and under any applicable state securities laws or an opinion of counsel
acceptable to the Company to the effect that the proposed transaction will be
exempt from such registration.  You agree to execute such instruments,
representations, acknowledgments and agreements as the Company may, in its sole
discretion, deem advisable to avoid any violation of federal, state, local or
foreign law, rule or regulation, or any securities exchange rule or listing
agreement.

 

(b)           The certificates for the Common Stock to be issued to you
hereunder shall bear the following legend:

 

"The shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended, or under applicable state securities
laws.  The shares have been acquired for investment and may not be offered,
sold, transferred, pledged or otherwise disposed of without an effective
registration statement under the Securities Act of 1933, as amended, and under
any applicable state securities laws or an opinion of counsel acceptable to the
Company that the proposed transaction will be exempt from such registration."

 

The foregoing legend shall be removed upon registration of the legended shares
under the Securities Act of 1933, as amended, and under any applicable state
laws or upon receipt of any opinion of counsel acceptable to the Company that
said registration is no longer required.

 

The sole purpose of the agreements, warranties, representations and legend set
forth in the two immediately preceding paragraphs is to prevent violations of
the Securities Act of 1933, as amended, and any applicable state securities
laws.

 

It is the intention of the Company and you that this option shall not be an
“Incentive Stock Option” as that term is used in Section 422(b) of the Code and
the regulations thereunder.

 

Nothing herein shall modify your status as an at-will employee of the Company or
any Parent or Subsidiary.  Further, nothing herein guarantees you employment for
any specified period of time.  This means that either you or the Company or any
Parent or Subsidiary may terminate your employment at any time for any reason,
with or without cause, or for no reason.  You recognize that, for instance, you
may terminate your employment or the Company or any Parent or Subsidiary may
terminate your employment prior to the date on which your option becomes vested
or exercisable.

 

You understand and agree that the existence of this option will not affect in
any way the right or power of the Company or its shareholders to make or
authorize any or all adjustments, recapitalizations, reorganizations, or other
changes in the Company’s capital structure or its business, or any merger or
consolidation of the Company, or any issuance of bonds, debentures, preferred or
other stocks with preference ahead of or convertible into, or otherwise
affecting the common shares or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.  

  

Any notice you give to the Company must be in writing and either hand-delivered
or mailed to the office of the Company . If mailed, it should be addressed to
the Chief Financial Officer of the Company at its then main headquarters. Any
notice given to you will be addressed to you at your address as reflected on the
personnel records of the Company. You and the Company may change the address for
notice by like notice to the other. Notice will be deemed to have been duly
delivered when hand-delivered or, if mailed, on the day such notice is
postmarked.

 

 

 

  

In the event that any question or controversy shall arise with respect to the
nature, scope or extent of any one or more rights conferred by this option, or
any provision of this option, the determination in good faith by the Board of
Directors of the Company (as constituted at the time of such determination) of
your rights as the Optionee shall be conclusive, final and binding upon you as
the Optionee and upon any other person who shall assert any right pursuant to
this option.

 

This option shall be subject to the terms of the Plan in effect on the date this
option is granted, which terms are hereby incorporated herein by reference and
made a part hereof.  Capitalized terms used herein and not otherwise defined
herein shall have the meaning given to such terms in the Plan.  In the event of
any conflict between the terms of this option and the terms of the Plan in
effect on the date of this option, the terms of the Plan shall govern.  This
option constitutes the entire understanding between the Company and you with
respect to the subject matter hereof and no amendment, supplement or waiver of
this option, in whole or in part, shall be binding upon the Company unless in
writing and signed by the President of the Company.  This option and the
performances of the parties hereunder shall be construed in accordance with and
governed by the laws of the State of Delaware.

 

Please sign the copy of this option and return it to the Company's Secretary,
thereby indicating your understanding of and agreement with its terms and
conditions .

 

  XCEL BRANDS GROUP, INC.       By:  

 

 

 

 

ACKNOWLEDGMENT

 

I hereby acknowledge receipt of a copy of the Plan.  I hereby represent that I
have read and understood the terms and conditions of the Plan and of this
option.  I hereby signify my understanding of, and my agreement with, the terms
and conditions of the Plan and of this option.  I agree to accept as binding,
conclusive, and final all decisions or interpretations of the Board or Committee
concerning any questions arising under the Plan with respect to this option.  I
accept this option in full satisfaction of any previous written or verbal
promise made to me by the Company or any Parent or Subsidiary with respect to
option or stock grants.

 

Date:  _____________       Signature of Optionee               Print Name

  

 

 

 

APPENDIX III

 

NON-QUALIFIED STOCK OPTION FOR DIRECTORS

AND CONSULTANTS

 

To:       Name           Address  

 

Date of Grant:  _____________________

 

You (“Optionee”) are hereby granted an option, effective as of the date hereof,
to purchase __________ shares of common stock ("Common Stock"), of Xcel Brands
Group, Inc., a Delaware corporation (the "Company"), at a price of $ ____ per
share pursuant to the Company's  Equity Incentive Plan (the "Plan").

 

This option shall terminate and is not exercisable after ten years from the date
of its grant (the "Scheduled Termination Date"), except if terminated earlier as
hereafter provided.

 

Your option may first be exercised on and after one year from the date of grant,
but not before that time.  On and after one year and prior to two years from the
date of grant, your option may be exercised for up to _____% of the total number
of shares subject to the option minus the number of shares previously purchased
by exercise of the option (as adjusted for any change in the outstanding shares
of the Common Stock of the Company by reason of a stock dividend, stock split,
combination of shares, recapitalization, merger, consolidation, transfer of
assets, reorganization, conversion or what the Board or Committee deems in its
sole discretion to be similar circumstances).  Each succeeding year thereafter
your option may be exercised for up to an additional ____% of the total number
of shares subject to the option minus the number of shares previously purchased
by exercise of the option (as adjusted for any change in the outstanding shares
of the Common Stock of the Company by reason of a stock dividend, stock split,
combination of shares, recapitalization, merger, consolidation, transfer of
assets, reorganization, conversion or what the Board or Committee deems in its
sole discretion to be similar circumstances).  Thus, this option is fully
exercisable on and after ________ years after the date of grant, except if
terminated earlier as provided herein.

 

You may exercise your option by giving written notice to the Secretary of the
Company on forms supplied by the Company at its then principal executive office,
accompanied by payment of the option price for the total number of shares you
specify that you wish to purchase.  The payment may be in any of the following
forms: (a) cash, which may be evidenced by a check and includes cash received
from a stock brokerage firm in a so-called "cashless exercise"; (b) (unless
prohibited by the Board or Committee) certificates representing shares of Common
Stock of the Company, which will be valued by the Secretary of the Company at
the fair market value per share of the Company's Common Stock (as determined in
accordance with the Plan) on the date of delivery of such certificates to the
Company, accompanied by an assignment of the stock to the Company; or
(c) (unless prohibited by the Board or Committee) any combination of cash and
Common Stock of the Company valued as provided in clause (b).  The use of the
so-called "attestation procedure" to exercise a stock option may be permitted by
the Board or Committee. Any assignment of stock shall be in a form and substance
satisfactory to the Secretary of the Company, including guarantees of
signature(s) and payment of all transfer taxes if the Secretary deems such
guarantees necessary or desirable.

 

Your option will, to the extent not previously exercised by you, terminate three
months after the date on which your directorship or consultancy by the Company
or any Parent or Subsidiary is terminated other than by reason of (i) Disability
or death, in which case your option will terminate one year from the date of
termination of directorship or consultancy due to Disability or death (but in no
event later than the Scheduled Termination Date) or (ii) for Cause or your
resignation, in which case your option will terminate immediately and you will
forfeit any right to exercise the option. After the date your directorship or
consultancy is terminated, as aforesaid (other than for the reasons stated in
clause (ii), you may exercise this option only for the number of shares which
you had a right to purchase and did not purchase on the date your directorship
or consultancy terminated. Provided you are willing to continue your
directorship or consultancy for the Company or a successor after a Change in
Control at the same compensation you enjoyed immediately prior to such Change in
Control, if your directorship or consultancy is involuntarily terminated without
cause after a Change in Control, you may exercise this option for the number of
shares you would have had a right to purchase on the date of an Acceleration
Event. If you are employed by any Parent or Subsidiary, your directorship or
consultancy shall be deemed to have terminated on the date your employer ceases
to be a Parent or Subsidiary, unless you are on that date transferred to the
Company or another Parent or Subsidiary.  Your directorship or consultancy shall
not be deemed to have terminated if you are transferred from the Company to a
Parent or Subsidiary, or vice versa, or from one Subsidiary to another
Subsidiary.  

 

 

 

   

If you die while acting as a director of consultant of  the Company or any
Parent or Subsidiary, your executor or administrator, as the case may be, may,
at any time within one year after the date of your death (but in no event later
than the Scheduled Termination Date), exercise the option as to any shares which
you had a right to purchase and did not purchase during your lifetime.  If your
directorship or consultancy with the Company or  any Parent or Subsidiary is
terminated by reason of your Disability, you or your legal guardian or custodian
may at any time within one year after the date of such termination (but in no
event later than the Scheduled Termination Date), exercise the option as to any
shares which you had a right to purchase and did not purchase prior to such
termination.  Your executor, administrator, guardian or custodian must present
proof of his authority satisfactory to the Company prior to being allowed to
exercise this option.

 

In the event of any change in the outstanding shares of the Common Stock of the
Company by reason of a stock dividend, stock split, combination of shares,
recapitalization, merger, consolidation, transfer of assets, reorganization,
conversion or what the Board or Committee deems in its sole discretion to be
similar circumstances, the number and kind of shares subject to this option and
the option price of such shares shall be appropriately adjusted in a manner to
be determined in the sole discretion of the Board or Committee, whose decision
shall be final, binding and conclusive in the absence of clear and convincing
evidence of bad faith.

 

In the event of a liquidation or proposed liquidation of the Company, including
(but not limited to) a transfer of assets followed by a liquidation of the
Company, or in the event of a Change in Control or proposed Change in Control,
the Board shall have the right to accelerate this option.

 

This option is not transferable otherwise than by will or the laws of descent
and distribution, and is exercisable during your lifetime only by you,
including, for this purpose, your legal guardian or custodian in the event of
Disability.  Until the option price has been paid in full pursuant to due
exercise of this option and the purchased shares are delivered to you, you do
not have any rights as a shareholder of the Company.  The Company reserves the
right not to deliver to you the shares purchased by virtue of the exercise of
this option during any period of time in which the Company deems, in its sole
discretion, that such delivery would violate a federal, state, local or
securities exchange rule, regulation or law.

 

Notwithstanding anything to the contrary contained herein, this option is not
exercisable until all the following events occur and during the following
periods of time:

 

(a)           Until the Plan pursuant to which this option is granted is
approved by the shareholders of the Company in the manner required by any
applicable provision of the Code and the regulations thereunder and any
applicable securities exchange or listing rule or agreement;

 

(b)           Until this option and the optioned shares are approved, registered
and listed with such federal, state, local and foreign regulatory bodies or
agencies and securities exchanges as the Company may deem necessary or
desirable, or the Company deems such option or optioned shares to be exempted
therefrom;

 

(c)           During any period of time in which the Company deems that the
exercisability of this option, the offer to sell the shares optioned hereunder,
or the sale thereof, may violate a federal, state, local or foreign law, rule or
regulation, or any applicable securities exchange or listing rule or agreement,
or may cause the Company to be legally obligated to issue or sell more shares
than the Company is legally entitled to issue or sell; or  

  

 

 

 

(d)          Until you have paid or made suitable arrangements to pay (which may
include payment through the surrender of Common Stock, unless prohibited by the
Board or Committee) (i) all federal, state, local and foreign tax withholding
required by the Company in connection with the option exercise and (ii) the
employee's portion of other federal, state, local and foreign payroll and other
taxes due in connection with the option exercise.

 

The following two paragraphs shall be applicable if, on the date of exercise of
this option, no registration statement and current prospectus under the
Securities Act of 1933 covers the Common Stock to be purchased pursuant to such
exercise, and shall continue to be applicable for so long as such registration
has not occurred and such current prospectus is not available:

 

(a)           You hereby agree, warrant and represent that you will acquire the
Common Stock to be issued hereunder for your own account for investment purposes
only, and not with a view to, or in connection with, any resale or other
distribution of any of such shares, except as hereafter permitted.  You further
agree that you will not at any time make any offer, sale, transfer, pledge or
other disposition of such Common Stock to be issued hereunder without an
effective registration statement under the Securities Act of 1933, as amended,
and under any applicable state securities laws or an opinion of counsel
acceptable to the Company to the effect that the proposed transaction will be
exempt from such registration.  You agree to execute such instruments,
representations, acknowledgments and agreements as the Company may, in its sole
discretion, deem advisable to avoid any violation of federal, state, local or
foreign law, rule or regulation, or any securities exchange rule or listing
agreement.

 

(b)           The certificates for the Common Stock to be issued to you
hereunder shall bear the following legend:

 

"The shares represented by this certificate have not been registered under the
Securities Act of 1933, as amended, or under applicable state securities
laws.  The shares have been acquired for investment and may not be offered,
sold, transferred, pledged or otherwise disposed of without an effective
registration statement under the Securities Act of 1933, as amended, and under
any applicable state securities laws or an opinion of counsel acceptable to the
Company that the proposed transaction will be exempt from such registration."

 

The foregoing legend shall be removed upon registration of the legended shares
under the Securities Act of 1933, as amended, and under any applicable state
laws or upon receipt of any opinion of counsel acceptable to the Company that
said registration is no longer required.

 

The sole purpose of the agreements, warranties, representations and legend set
forth in the two immediately preceding paragraphs is to prevent violations of
the Securities Act of 1933, as amended, and any applicable state securities
laws.

 

It is the intention of the Company and you that this option shall not be an
"Incentive Stock Option" as that term is used in Section 422(b) of the Code and
the regulations thereunder.

 

Nothing herein guarantees your term as a director of, or consultant to, the
Company or any Parent or Subsidiary for any specified period of time.  This
means that either you or the Company or any Parent or Subsidiary may terminate
your directorship or consultancy at any time for any reason, with or without
cause, or for no reason.  You recognize that, for instance, the Company or any
Parent or Subsidiary may terminate your directorship or consultancy with the
Company or any Parent or Subsidiary prior to the date on which your option
becomes vested or exercisable.

 

You understand and agree that the existence of this option will not affect in
any way the right or power of the Company or its shareholders to make or
authorize any or all adjustments, recapitalizations, reorganizations, or other
changes in the Company’s capital structure or its business, or any merger or
consolidation of the Company, or any issuance of bonds, debentures, preferred or
other stocks with preference ahead of or convertible into, or otherwise
affecting the common shares or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.  

  

Any notice you give to the Company must be in writing and either hand-delivered
or mailed to the office of the Company. If mailed, it should be addressed to the
Chief Financial Officer of the Company at its then main headquarters. Any notice
given to you will be addressed to you at your address as reflected on the
records of the Company. You and the Company may change the address for notice by
like notice to the other. Notice will be deemed to have been duly delivered when
hand-delivered or, if mailed, on the day such notice is postmarked.

 

 

 

  

In the event that any question or controversy shall arise with respect to the
nature, scope or extent of any one or more rights conferred by this option, or
any provision of this option, the determination in good faith by the Board of
Directors of the Company (as constituted at the time of such determination) of
your rights as the Optionee shall be conclusive, final and binding upon you as
the Optionee and upon any other person who shall assert any right pursuant to
this option.

 

This option shall be subject to the terms of the Plan in effect on the date this
option is granted, which terms are hereby incorporated herein by reference and
made a part hereof.  Capitalized terms used herein and not otherwise defined
herein shall have the meaning given to such terms in the Plan.  In the event of
any conflict between the terms of this option and the terms of the Plan in
effect on the date of this option, the terms of the Plan shall govern.  This
option constitutes the entire understanding between the Company and you with
respect to the subject matter hereof and no amendment, supplement or waiver of
this option, in whole or in part, shall be binding upon the Company unless in
writing and signed by the President of the Company.  This option and the
performances of the parties hereunder shall be construed in accordance with and
governed by the laws of the State of Delaware.

 

Please sign the copy of this option and return it to the Company's Secretary,
thereby indicating your understanding of and agreement with its terms and
conditions.

 

  XCEL BRANDS, INC.       By:  

 

 

 

 

ACKNOWLEDGMENT

 

I hereby acknowledge receipt of a copy of the Plan.  I hereby represent that I
have read and understood the terms and conditions of the Plan and of this
option.  I hereby signify my understanding of, and my agreement with, the terms
and conditions of the Plan and of this option.  I agree to accept as binding,
conclusive, and final all decisions or interpretations of the Board or Committee
concerning any questions arising under the Plan with respect to this option.  I
accept this option in full satisfaction of any previous written or verbal
promise made to me by the Company or any Parent or Subsidiary with respect to
option or Stock grants.

 

Date:  _____________       Signature of Optionee               Print Name  

 

 

 

 

APPENDIX IV

 

RESTRICTED STOCK AGREEMENT

 

To:

 

Date of Award:

 

You are hereby awarded, effective as of the date hereof (the “Award Date”),
_________ shares (the “Shares”) of common stock (“Common Stock”), of Xcel
Brands, Inc., a Delaware corporation (the “Company”), pursuant to the Company’s
Equity Incentive Plan (the “Plan”), subject to certain restrictions specified
below in Restrictions and Forfeiture. (While subject to the Restrictions, this
Agreement refers to the Shares as “Restricted Shares”).

 

During the period commencing on the Award Date and terminating on
________________ (the “Restricted Period”), except as otherwise provided herein,
the Shares may not be sold, assigned, transferred, pledged, or otherwise
encumbered and are subject to forfeiture (the “Restrictions”).

 

Except as set forth below, the Restricted Period with respect to the Shares will
lapse in accordance with the vesting schedule set forth below (the “Vesting
Schedule”).  Subject to the restrictions set forth in the Plan, the Board or
Committee shall have the authority, in its discretion, to accelerate the time at
which any or all of the Restrictions shall lapse with respect to any Shares
subject thereto, or to remove any or all of such Restrictions, whenever the
Board or Committee may determine that such action is appropriate by reason of
changes in applicable tax or other laws, or other changes in circumstances
occurring after the commencement of the Restricted Period.

 

In addition to the terms, conditions, and restrictions set forth in the Plan,
the following terms, conditions, and restrictions apply to the Restricted
Shares:

 

Restrictions and Forfeiture   You may not sell, assign, pledge, encumber, or
otherwise transfer any interest in the Restricted Shares until the dates set
forth in the Vesting Schedule, at which point the Restricted Shares will be
referred to as “ Vested. ”

 

Vesting Schedule   Assuming you provide Continuous Service (as defined herein)
as an employee of the Company or any Parent or Subsidiary of the Company, all
Restrictions will lapse on the Restricted Shares on the Vesting date or Vesting
dates set forth in the schedule below for the applicable grant of Restricted
Shares and they will become Vested.

 

Vesting Schedule   Vesting Date   Number of Restricted Shares that Vest      

Continuous Service   “Continuous Service,” as used herein, means the absence of
any interruption or termination of your service as an employee of the Company or
any Parent or Subsidiary.  If you are employed by a Parent or Subsidiary, your
employment shall be deemed to have terminated on the date your employer ceases
to be a Parent or Subsidiary, unless you are on that date transferred to the
Company or another Parent or Subsidiary.  Service shall not be considered
interrupted in the case of sick leave, military leave or any other leave of
absence approved by the Company or any then Parent or Subsidiary.  Your
employment shall not be deemed to have terminated if you are transferred from
the Company to any Parent or Subsidiary, or vice versa, or from one Subsidiary
to another Subsidiary.

  

 Share Certificates   The Company will issue a certificate (or certificates) in
your name with respect to the Shares, and will hold such certificate (or
certificates) on deposit for your account until the expiration of the Restricted
Period with respect to the Shares represented thereby.  Such certificate (or
certificates) will contain the following restrictive legend:

  

 

 

  

    “The transferability of this certificate and the shares of stock represented
hereby are subject to the terms and conditions (including forfeiture) contained
in the Equity Incentive Plan of the Company, copies of which are on file in the
office of the Secretary of the Company.”      

Additional Conditions

to Issuance of Stock

Certificates

  You will not receive the certificates representing the Restricted Shares
unless and until the Company has received a stock power or stock powers in favor
of the Company executed by you.       Voting Rights   Prior to vesting, you will
have no voting rights with respect to any Restricted Shares that have not
Vested.       Cash Dividends   Cash dividends, if any, paid on the Restricted
Shares shall be held by the Company for your account and paid to you upon the
expiration of the Restricted Period, except as otherwise determined by the Board
or Committee.  All such withheld dividends shall not earn interest, except as
otherwise determined by the Board or Committee.  You will not receive withheld
cash dividends on any Restricted Shares which are forfeited and all such cash
dividends shall be forfeited along with the Restricted Shares which are
forfeited.       Tax Withholding   Unless you make an election under Section
83(b) of the Internal Revenue Code of 1986, as amended (the “Code”), and pay
taxes in accordance with that election, you will be taxed on the Shares as they
become Vested and must arrange to pay the taxes on this income. If the Board or
Committee so determines, arrangements for paying the taxes may include your
surrendering Shares that otherwise would be released to you upon becoming Vested
or your surrendering Shares you already own. The fair market value of the Shares
you surrender, determined as of the date when taxes otherwise would have been
withheld in cash, will be applied as a credit against the withholding taxes.    
      The Company shall have the right to withhold from your compensation an
amount sufficient to fulfill its or its Parent’s or Subsidiary’s obligations for
any applicable withholding and employment taxes.  Alternatively, the Company may
require you to pay to the Company the amount of any taxes which the Company is
required to withhold with respect to the Shares, or, in lieu thereof, to retain
or sell without notice a sufficient number of Shares to cover the amount
required to be withheld.  The Company may withhold from any cash dividends paid
on the Restricted Shares an amount sufficient to cover taxes owed as a result of
the dividend payment.  The Company’s method of satisfying its withholding
obligations shall be solely in the discretion of the Board or Committee, subject
to applicable federal, state, local and foreign laws.  The Company shall have a
lien and security interest in the Shares and any accumulated dividends to secure
your obligations hereunder.

 

Tax Representations   You hereby represent and warrant to the Company as
follows:           (a)           You have reviewed with your own tax advisors
the federal, state, local and foreign tax consequences of this investment and
the transactions contemplated by this Agreement.  You are relying solely on such
advisors and not on any statements or representations of the Company or any of
its Employees or agents.

  

 

 

  

    (b)           You understand that you (and not the Company) shall be
responsible for your own tax liability that may arise as a result of this
investment or the transactions contemplated by this Agreement.  You understand
that Section 83 of the Code taxes (as ordinary income) the fair market value of
the Shares as of the date any “restrictions” on the Shares lapse.  To the extent
that an award hereunder is not otherwise an exempt transaction for purposes of
Section 16(b) of the Securities Exchange Act of 1934, as amended (the “1934
Act”), with respect to officers, directors and 10% shareholders subject to
Section 16 of the 1934 Act, a “restriction” on the Shares includes for these
purposes the period after the award of the Shares during which such officers,
directors and 10% shareholders could be subject to suit under Section 16(b) of
the 1934 Act.  Alternatively, you understand that you may elect to be taxed at
the time the Shares are awarded rather than when the restrictions on the Shares
lapse, or the Section 16(b) period expires, by filing an election under Section
83(b) of the Code with the Internal Revenue Service within thirty (30) days from
the date of the award.

 

    YOU HEREBY ACKNOWLEDGE THAT IT IS YOUR SOLE RESPONSIBILITY AND NOT THE
COMPANY’S TO FILE TIMELY THE ELECTION AVAILABLE TO YOU UNDER SECTION 83(B) OF
THE CODE, EVEN IF YOU REQUEST THAT THE COMPANY OR ITS REPRESENTATIVES MAKE THIS
FILING ON YOUR BEHALF.       Securities Law Representations   The following two
paragraphs shall be applicable if, on the date of issuance of the Restricted
Shares, no registration statement and current prospectus under the Securities
Act of 1933, as amended (the “1933 Act”), covers the Shares, and shall continue
to be applicable for so long as such registration has not occurred and such
current prospectus is not available:           (a)           You hereby agree,
warrant and represent that you will acquire the Shares to be issued hereunder
for your own account for investment purposes only, and not with a view to, or in
connection with, any resale or other distribution of any of such shares, except
as hereafter permitted.  You further agree that you will not at any time make
any offer, sale, transfer, pledge or other disposition of such Shares to be
issued hereunder without an effective registration statement under the 1933 Act,
and under any applicable state securities laws or an opinion of counsel
acceptable to the Company to the effect that the proposed transaction will be
exempt from such registration.  You agree to execute such instruments,
representations, acknowledgments and agreements as the Company may, in its sole
discretion, deem advisable to avoid any violation of federal, state, local or
foreign law, rule or regulation, or any securities exchange rule or listing
agreement.           (b)          The certificates for Shares to be issued to
you hereunder shall bear the following legend:           “The shares represented
by this certificate have not been registered under the Securities Act of 1933,
as amended, or under applicable state securities laws.  The shares have been
acquired for investment and may not be offered, sold, transferred, pledged or
otherwise disposed of without an effective registration statement under the
Securities Act of 1933, as amended, and under any applicable state securities
laws or an opinion of counsel acceptable to the Company that the proposed
transaction will be exempt from such registration.”

 

Stock Dividend, Stock

Split and Similar

Capital Changes

  In the event of any change in the outstanding shares of the Common Stock of
the Company by reason of a stock dividend, stock split, combination of shares,
recapitalization, merger, consolidation, transfer of assets, reorganization,
conversion or what the Board or Committee deems in its sole discretion to be
similar circumstances, the number and kind of shares subject to this Agreement
shall be appropriately adjusted in a manner to be determined in the sole
discretion of the Board or Committee, whose decision shall be final, binding and
conclusive in the absence of clear and convincing evidence of bad faith.  Any
shares of Common Stock or other securities received, as a result of the
foregoing, by you with respect to the Restricted Shares shall be subject to the
same restrictions as the Restricted Shares, the certificate or other instruments
evidencing such shares of Common Stock or other securities shall be legended and
deposited with the Company as provided above with respect to the Restricted
Shares, and any cash dividends received with respect to such shares of Common
Stock or other securities shall be accumulated as provided above with respect to
the Restricted Shares.

  

 

 

  

Non-Transferability   Restricted Shares are not transferable.      

No Effect on

Employment

  Except as otherwise provided in your Employment Agreement [IF APPLICABLE],
dated _____________________, nothing herein shall modify your status as an
at-will employee of the Company or any Parent or Subsidiary.  Further, nothing
herein guarantees you employment for any specified period of time.  This means
that, except as provided in the Employment Agreement, either you or the Company
or any Parent or Subsidiary may terminate your employment at any time for any
reason, with or without cause, or for no reason.  You recognize that, for
instance, you may terminate your employment or the Company or any Parent or
Subsidiary may terminate your employment prior to the date on which your Shares
become vested.      

No Effect on Corporate

Authority

  You understand and agree that the existence of this Agreement will not affect
in any way the right or power of the Company or its shareholders to make or
authorize any or all adjustments, recapitalizations, reorganizations, or other
changes in the Company’s capital structure or its business, or any merger or
consolidation of the Company, or any issuance of bonds, debentures, preferred or
other stocks with preferences ahead of or convertible into, or otherwise
affecting the common shares or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.      

Questions or

Controversies

  In the event that any question or controversy shall arise with respect to the
nature, scope or extent of any one or more rights conferred by this Agreement,
or any provision of this Agreement, the determination in good faith by the Board
of Directors of the Company (as constituted at the time of such determination)
of your rights under this Agreement shall be conclusive, final and binding upon
you and upon any other person who shall assert any right pursuant to this
Agreement.       Governing Law   The laws of the State of Delaware will govern
all matters relating to this Agreement, without regard to the principles of
conflict of laws.       Notices   Any notice you give to the Company must be in
writing and either hand-delivered or mailed to the office of the Chief Financial
Officer of the Company. If mailed, it should be addressed to the Chief Financial
Officer   of the Company at its then main headquarters. Any notice given to you
will be addressed to you at your address as reflected on the personnel records
of the Company. You and the Company may change the address for notice by like
notice to the other. Notice will be deemed to have been duly delivered when
hand-delivered or, if mailed, on the day such notice is postmarked.

  

Agreement Subject to

Plan; Entire Agreement

  This Agreement shall be subject to the terms of the Plan in effect on the date
hereof, which terms are hereby incorporated herein by reference and made a part
hereof.  Capitalized terms used herein and not otherwise defined herein shall
have the meaning given to such terms in the Plan. This Agreement constitutes the
entire understanding between the Company and you with respect to the subject
matter hereof and no amendment, supplement or waiver of this Agreement, in whole
or in part, shall be binding upon the Company unless in writing and signed by
the Chief Executive Officer of the Company

  

 

 

  

Conflicting Terms   Wherever a conflict may arise between the terms of this
Agreement and the terms of the Plan in effect on the date hereof, the terms of
the Plan will control.

 

Please sign the copy of this Restricted Stock Agreement and return it to the
Chief Financial Officer, thereby indicating your understanding of, and agreement
with, its terms and conditions.

 

  XCEL BRANDS, INC.       By:  

 

 

 

 

ACKNOWLEDGMENT

 

I hereby acknowledge receipt of a copy of the Plan.  I hereby represent that I
have read and understood the terms and conditions of the Plan and of the
Restricted Stock Agreement.  I hereby signify my understanding of, and my
agreement with, the terms and conditions of the Plan and of the Restricted Stock
Agreement.  I agree to accept as binding, conclusive, and final all decisions or
interpretations of the Board or Committee concerning any questions arising under
the Plan with respect to this Restricted Stock Agreement.  I accept this
Restricted Stock Agreement in full satisfaction of any previous written or oral
promise made to me by the Company or any Parent or Subsidiary with respect to
option or stock grants.

 

Date:  ____________________

                    ADDRESS