Exhibit 10.62

 

TIME OPTION AGREEMENT

 

THIS AGREEMENT (the “Agreement”), is made effective as of the 11th day of
January, 2005, (hereinafter called the “Grant Date”), between ST. JOHN KNITS
INTERNATIONAL, INCORPORATED, a Delaware corporation (hereinafter called the
“Company”), and Max Weinstein (hereinafter called the “Participant”):

 

R E C I T A L S:

 

WHEREAS, the Company has adopted the Amended and Restated St. John Knits
International, Incorporated 1999 Stock Option Plan (the “Plan”), which Plan is
incorporated herein by reference and made a part of this Agreement. Capitalized
terms not otherwise defined herein shall have the same meanings as in the Plan;

 

WHEREAS, the Committee has determined that it would be in the best interests of
the Company and its stockholders to grant the option provided for herein (the
“Option”) to the Participant pursuant to the Plan and the terms set forth
herein; and

 

WHEREAS, simultaneous with the Company’s grant of this Option to the
Participant, the Participant acknowledges that Participant shall, if the
Participant has not already, become a party to the Management Stockholders’
Agreement between and among St. John Knits, Inc., the Company, Vestar/Gray
Investors LLC, Vestar/SJK Investors LLC and all other members of management of
the Company who have received or will receive options to acquire shares of
Common Stock (the “Management Stockholders’ Agreement”).

 

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth,
the parties agree as follows:

 

1. Grant of the Option. The Company hereby grants to the Participant the right
and option (the “Option”) to purchase, on the terms and conditions hereinafter
set forth, all or any part of an aggregate of 50,000 shares of Common Stock,
subject to adjustment as set forth in the Plan. The per share purchase price of
the shares of Common Stock subject to the Option (the “Exercise Price”) shall be
(a) $40.00 with respect to 25,000 shares and (b) $50.00 with respect to 25,000
shares. The Option is intended to be a non-qualified stock option, and is not
intended to be treated as an option that complies with Section 422 of the
Internal Revenue Code of 1986, as amended.

 

2. Vesting. At any time, the portion of the Option which has become vested and
exercisable as described in this Section 2 is hereinafter referred to as the
“Vested Portion.”

 

(a) Time Vesting. Subject to paragraphs (b) and (c) of this Section 2, the
Option shall vest and become exercisable with respect to twenty percent (20%) of
the shares of Common Stock initially covered by the Option on each of the first,
second, third, fourth and fifth anniversaries of the Grant Date.

 

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(b) Termination of Employment. If Participant’s employment is terminated by the
Company without Cause or by the Participant for Good Reason (as defined herein)
within the first 2 years of the Participant’s employment, then Participant shall
automatically become vested for those number of Options he would have been
vested in under this Agreement had he remained employed through the second
anniversary of the Grant Date and all other Options shall be canceled, and the
Vested Portion of the Option shall remain exercisable for the period set forth
in Section 3(a). If Participant’s employment with the Company is terminated for
Cause or by the Participant without Good Reason, then the Option shall, to the
extent not then vested, be canceled by the Company without consideration and the
Vested Portion of the Option shall remain exercisable for the period set forth
in Section 3(a).

 

(c) Change of Control. Notwithstanding any other provisions of this Agreement to
the contrary, in the event of a change of control, the Option shall, to the
extent not then vested and not previously canceled, immediately become fully
vested and exercisable. For purposes of this Agreement, a change of control
shall be deemed to occur as determined in the sole discretion of the Committee.

 

3. Exercise of Option.

 

(a) Period of Exercise. Subject to the provisions of the Plan and this
Agreement, the Participant may exercise all or any part of the Vested Portion of
the Option at any time prior to the earliest to occur of:

 

(i) the tenth anniversary of the Grant Date;

 

(ii) six months following the date of the Participant’s termination of
employment as a result of death or Disability;

 

(iii) the fifth anniversary of the Grant Date, in the event of the Participant’s
termination of employment by the Company without Cause (other than as a result
of death or Disability) or by the Participant for Good Reason; and

 

(iv) the date of the Participant’s termination of employment by the Company for
Cause or by the Participant without Good Reason.

 

For purposes of this Agreement:

 

“Cause” shall mean “cause” as defined in any employment agreement entered into
by and between the Participant and the Company or any of its Subsidiaries which
is in effect as of or after the Grant Date (as the same may be amended in
accordance with the terms thereof) or if not defined therein or if there shall
be no such agreement, “Cause” shall mean (i) willful malfeasance or willful
misconduct in connection with the performance of his duties as such, (ii) the
commission of (a) any felony or (b) a misdemeanor involving moral turpitude;

 

“Disability” shall mean “disability” as defined in any employment agreement
entered into by and between the Participant and the Company or any of its
Subsidiaries which is in effect as of or after the Grant Date (as the same may
be amended in

 

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accordance with the terms thereof) or if not defined therein or if there shall
be no such agreement, as defined in the Company long-term disability plan as in
effect from time to time, or if there shall be no plan or if not defined
therein, the Participant’s becoming physically or mentally incapacitated and
consequent inability for a period of six (6) months in any twelve (12)
consecutive month period to perform the Participant’s duties to the Company or
any Subsidiary;

 

“Good Reason” shall mean, if the Participant has entered into an employment
agreement with the Company or any of its Subsidiaries which is in effect as of
or after the Grant Date, the occurrence of such events which, under the terms of
such employment agreement (as the same may be amended in accordance with the
terms thereof), would expressly enable the Participant to resign from employment
and be treated under such employment agreement as though the Participant’s
employment had been terminated by the Company without “Cause” or, if the
employment agreement does not include such provisions or if there shall be no
such employment agreement, “Good Reason” shall mean: (i) the Company or any
Subsidiary has failed to pay the Participant his salary; (ii) the office where
the Participant performs his duties is moved more than 30 miles from where the
Participant performed the Participant’s duties on the Grant Date; (iii) a
substantial reduction of the Participant’s base salary (other than an across the
board reduction similarly affecting other comparable employees of the Company or
its Subsidiaries) or (iv) a substantial diminution of the Participant’s duties,
which, in each case, has not been remedied within a reasonable time specified by
the Participant that is not less than thirty (30) days after delivery to the
Company of written notice describing the event constituting Good Reason.

 

(b) Method of Exercise.

 

(i) Subject to Section 3(a), the Vested Portion of the Option may be exercised
by delivering to the Company at its principal office written notice of intent to
so exercise; provided that, the Option may be exercised with respect to whole
shares of Common Stock only. Such notice shall specify the number of shares of
Common Stock for which the Option is being exercised and shall be accompanied by
payment in full of the Exercise Price. The payment of the Exercise Price shall
be made in cash or, subject to the consent of the Committee, in shares of Common
Stock which have been owned by the Participant for at least six months, such
shares to be valued at their Fair Market Value (as such term is defined in the
Management Stockholders’ Agreement) as of the date of exercise.

 

(ii) Notwithstanding any other provision of the Plan or this Agreement to the
contrary, the Option may not be exercised prior to the completion of any
registration or qualification of the Option or the shares of Common Stock that
is required to comply with applicable state and federal securities or any ruling
or regulation of any governmental body or national securities exchange that the
Committee shall in its sole discretion determine in good faith to be necessary
or advisable.

 

(iii) Upon the Company’s determination that the Option has been validly
exercised as to any of the shares of Common Stock, the Company shall issue
certificates in the Participant’s name for such shares. However, the Company
shall not be liable to the Participant

 

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for damages relating to any delays in issuing the certificates to him, any loss
of the certificates, or any mistakes or errors in the issuance of the
certificates or in the certificates themselves.

 

(iv) In the event of the Participant’s death, the Vested Portion of the Option
shall remain exercisable by, the Participant’s executor or administrator, or the
person or persons to whom the Participant’s rights under this Agreement shall
pass by will or by the laws of descent and distribution as the case may be, to
the extent set forth in Section 3(a) (any of the foregoing, a “Permitted
Transferee”). Any heir or legatee of the Participant shall take rights herein
granted subject to the terms and conditions hereof. During the Participant’s
lifetime, the Option is exercisable only by the Participant.

 

(v) As a condition to exercising the Option, the Participant shall become a
party to the Management Stockholders’ Agreement.

 

4. No Right to Continued Employment. Neither the Plan nor this Agreement shall
be construed as giving the Participant the right to be retained in the employ
of, or in any consulting relationship to, the Company or any Affiliate. Further,
the Company or an Affiliate may at any time dismiss the Participant or
discontinue any consulting relationship, free from any liability or any claim
under the Plan or this Agreement, except as otherwise expressly provided herein.

 

5. Legend on Certificates. To the extent provided by the Management
Stockholders’ Agreement, the certificates representing the shares of Common
Stock purchased by exercise of the Option shall contain a legend stating that
they are subject to the Management Stockholders’ Agreement and may be subject to
such stop transfer orders and other restrictions as the Committee may deem
advisable under the Plan or the rules, regulations, and other requirements of
the Securities and Exchange Commission, any stock exchange upon which such
shares are listed, and any applicable Federal or state laws, and the Committee
may cause an additional legend or legends to be put on any such certificates to
make appropriate reference to such other restrictions.

 

6. Transferability. The Option may not be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by the Participant
otherwise than to a Permitted Transferee, and any such purported assignment,
alienation, pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against the Company or any Affiliate; provided that the
designation of a beneficiary shall not constitute an assignment, alienation,
pledge, attachment, sale, transfer or encumbrance. No such permitted transfer of
the Option to a Permitted Transferee shall be effective to bind the Company
unless the Committee shall have been furnished with written notice thereof and a
copy of such evidence as the Committee may deem necessary to establish the
validity of the transfer and the acceptance by the Permitted Transferee or
Transferees of the terms and conditions hereof.

 

7. Withholding. A Participant shall be required to pay to the Company or any
Affiliate, and the Company shall have the right and is hereby authorized to
withhold, any applicable withholding taxes in respect of an Option, its exercise
or any payment or transfer under an Option or under the Plan and to take such
other action as may be necessary in the opinion of the Company to satisfy all
obligations for the payment of such withholding taxes.

 

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8. Securities Laws; Representations.

 

(a) Upon the acquisition of any shares of Common Stock pursuant to the exercise
of the Option, the Participant will make or enter into such written
representations, warranties and agreements as the Committee may reasonably
request in order to comply with applicable securities laws or with this
Agreement.

 

(b) Participant represents and warrants that Participant, either alone or with a
representative advisor, has sufficient knowledge and experience in financial and
business matters that Participant is capable of evaluating the merits and risks
of this Option grant and, in the event such Option is exercised, the ownership
of such shares of Common Stock.

 

9. Notices. Any notice necessary under this Agreement shall be addressed to the
Company in care of its Secretary at the principal executive office of the
Company and to the Participant at the address appearing in the personnel records
of the Company for the Participant or to either party at such other address as
either party hereto may hereafter designate in writing to the other. Any such
notice shall be deemed effective upon receipt thereof by the addressee.

 

10. Choice of Law. THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.

 

11. Option Subject to Plan and Management Stockholders’ Agreement. By entering
into this Agreement the Participant agrees and acknowledges that the Participant
has received and read a copy of the Plan and the Management Stockholders’
Agreement. The Option is subject to the Plan and the Management Stockholders’
Agreement. The terms and provisions of the Plan and the Management Stockholders’
Agreement as they may be amended from time to time in accordance with their
respective terms are hereby incorporated herein by reference. In the event of a
conflict between any term or provision contained herein and a term or provision
of the Plan or the Management Stockholders’ Agreement, the applicable terms and
provisions of the Plan or the Management Stockholders’ Agreement, as applicable,
will govern and prevail. In the event of a conflict between any term or
provision of the Plan and any term or provision of the Management Stockholders’
Agreement, the applicable terms and provisions of the Management Stockholders’
Agreement will govern and prevail.

 

12. Signature in Counterparts. This Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement.

 

ST. JOHN KNITS INTERNATIONAL,

INCORPORATED

By:    

Title:

   

 

Agreed and acknowledged as of the date first above written:

 

  

MAX WEINSTEIN

 

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