Exhibit
10.1


 


Form ISO/NQSO Agreement


Exhibit B-2


 


JOE’S
JEANS INC.


2004
STOCK INCENTIVE PLAN


 


STOCK
OPTION AGREEMENT


 


This
Stock Option Agreement (the “Agreement”)
is made and entered into as of the date of grant set forth below (the “Date of Grant”) by and between Joe’s
Jeans Inc., a Delaware corporation (the “Company”),
and participant named below (“Participant”).
Capitalized terms not defined herein will have the meaning ascribed to them in
the Company’s 2004 Stock Incentive Plan (the “Plan”).


 


Participant:


Social Security:


Address:


 


Total
Option Shares:


Exercise
Price Per Share:


Date of
Grant:


Expiration
Date:


 


Type of Stock Option


	
  (Check One):

  	
   

  	
  [  ]  Incentive Stock Option

  
	
   

  	
   

  	
  [  ]  Nonqualified
  Stock Option

  



 


1.              Grant of Option. 
The Company hereby grants to Participant an option (this “Option”) to purchase the total
number of shares of Common Stock of the Company set forth above as Total Option
Shares (the “Shares”) at the Exercise
Price Per Share set forth above (the “Exercise Price”),
subject to all of the terms and conditions of this Agreement and the Plan. If
designated as an Incentive Stock Option above, the Option is intended to
qualify as an “incentive stock option” (the “ISO”)
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the “Code”), although the Company
makes no representation or guarantee that such Option will qualify as an
ISO.  The Option will be an ISO to the
maximum extent permitted under the Code and any portion which cannot qualify
will be a Nonqualified Stock Option.


 


2.              Exercise Period.


 


2.1       Provided Participant continues to provide Continuous
Service to the Company or any Subsidiary, the Option will become vested and
exercisable with respect to [    ]% of the Shares subject
thereto on each of the next [                (    )                ]
anniversaries of the Date of Grant until the Option is 100% vested.  Except as provided in this Agreement,
unvested Options will not be exercisable on or after Participant’s termination
of Continuous Service (“Termination Date”)
and will immediately terminate on such Termination Date.


 


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2.2       The Option will expire on the Expiration Date set
forth above or earlier as provided in Section 2.1, 3, or 10 of this
Agreement or, if applicable, pursuant to Section 7 or 18 of the Plan.


 


3.              Termination of Continuous
Service.


 


3.1                               If Participant’s Continuous Service is
terminated, Options will remain exercisable as follows:


 


(a)                                 If Participant’s termination of
Continuous Service is due to death, all unvested Options will terminate and all
vested Options will be exercisable by Participant’s designated beneficiary, or
if none, the person(s) to whom such Participant’s rights under the Option
are transferred by will or the laws of descendent and distribution for 1 year
following the Termination Date (but in no event beyond the term of the Option);
provided, that, if the Option is a Nonqualified Stock Option,
Participant’s designated beneficiary, or if none, the person(s) to whom
such Participant’s rights under the Option are transferred by will or the laws
of descent and distribution will have at least 1 year from the Termination Date
to exercise such vested Option.


 


(b)                                 If Participant’s termination of
Continuous Service is due to Disability, all unvested Options will terminate
and all vested Options will be exercisable by Participant for 1 year following
the Termination Date (but in no event beyond the term of the Option).


 


(c)                                  If Participant’s termination of
Continuous Service is due to termination for Cause, the Option will terminate
on the Termination Date, regardless of whether the Option was then exercisable.


 


(d)                                 If Participant’s termination of
Continuous Service is due to any other reason, all unvested Options will
terminate on the Termination Date and all Options (to the extent exercisable as
of the Termination Date) will be exercisable for a period of 3 months following
such Termination Date (but in no event beyond the term of the Option) and will
thereafter terminate.  The Participant’s
status as an employee will not be considered terminated in the case of leave of
absence agreed to in writing by the Company (including but not limited to
military and sick leave); provided, that, such leave is for a
period of not more than 3 months or reemployment upon expiration of such leave
is guaranteed by contract or statute.


 


3.2                               Nothing in the Plan or this Agreement
will confer on Participant any right to the continuation of service with the
Company, or any of its Subsidiaries, or interfere in any way with the right of
the Company or its Subsidiaries to terminate his or her Continuous Service at
any time.


 


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4.              Manner of Exercise.


 


4.1                               To exercise this Option, Participant (or
in the case of exercise after Participant’s death or incapacity, Participant’s
executor, administrator, heir or legatee, as the case may be) must deliver to
the Company an executed stock option exercise agreement in the form as may be
approved by the Committee from time to time (the “Exercise Agreement”), which
shall set forth, inter alia, (i) Participant’s election to exercise the
Option, (ii) the number of shares being purchased, (iii) any
restrictions imposed on the shares and (iv) any representations warranties
and agreements regarding Participant’s investment intent and access to
information as may be required by the Company to comply with applicable
securities laws.  If someone other than
Participant exercises the Option, then such person must submit documentation
reasonably acceptable to the Company verifying that such person has the legal
right to exercise the Option.  The Option
may not be exercised unless such exercise is in compliance with all applicable
federal and state securities laws, as they are in effect on the date of
exercise.  The Exercise Agreement shall
be accompanied by full payment of the Exercise Price for the Shares being
purchased in cash (by check), or where permitted by law and consented to by the
Committee in its sole discretion:


 


(a)                                 by surrender of shares of the Company’s
Common Stock (or attestation of ownership thereof) that (1) either (A) have
been owned by Participant for more than six (6) months (or such longer or
shorter period required to avoid a charge to earnings for financial accounting
purposes) and have been paid for within the meaning of SEC Rule 144; or (B) were
obtained by Participant in the open public market; and (2) are clear of
all liens, claims, encumbrances or security interests;


 


(b)                                 through a “same day sale” commitment from
Participant and a broker-dealer that is a member of the National Association of
Securities Dealers (an “NASD Dealer”)
whereby Participant irrevocably elects to exercise the Option and to sell a
portion of the shares so purchased sufficient to pay for the total Exercise
Price and whereby the NASD Dealer irrevocably commits upon receipt of such
shares to forward the total Exercise Price directly to the Company;


 


(c)                                  by having the Company withhold Shares
otherwise deliverable upon exercise of the Option with a Fair Market Value
equal to the Exercise Price; or


 


(d)                                 by any combination of the foregoing.


 


4.2                               At the time of exercise, Participant
shall pay to the Company such amount as the Company deems necessary to satisfy
its obligation to withhold Federal, state or local income or other taxes
incurred by reason of the exercise of Options granted hereunder.  Such payment shall be made: (a) in cash,
(b) with respect to (b), (c) and (d), by having the Company retain
shares which would otherwise be delivered upon exercise of an Option, (c) by
delivering to the Company owned and unencumbered Shares not acquired from the
Company, or (d) by any combination of any such methods.  For purposes hereof, Shares shall be valued
at Fair Market Value.


 


5.              Issuance of Shares. 
Except as otherwise provided in the Plan or this Agreement, as promptly
as practicable after receipt of such written notification of exercise and full
payment of the Exercise Price and any required income tax withholding, the
Company will issue or transfer to Participant the number of Shares with respect
to which Options have been so exercised (less shares withheld in satisfaction
of tax withholding obligations, if any), and will deliver to Participant a
certificate or certificates therefor, registered in Participant’s name.


 


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6.              Company; Participant.


 


6.1       The term “Company” as used in this Agreement with
reference to Continuous Service will include the Company and its Subsidiary, if
any, as appropriate.


 


6.2       Whenever the word “Participant” is used in any
provision of this Agreement under circumstances where the provision should
logically be construed to apply to the beneficiaries, the executors, the
administrators, or the person or persons to whom the Options may be transferred
by will or by the laws of descent and distribution, the word “Participant” will
be deemed to include such person or persons.


 


7.              Non-Transferability. 
The Options are not transferable by Participant otherwise than to a
designated beneficiary upon death or by will or the laws of descent and
distribution, and are exercisable during Participant’s lifetime only by him or
her.  No assignment or transfer of the
Options, or of the rights represented thereby, whether voluntary or
involuntary, by operation of law or otherwise (except to a designated
beneficiary, upon death, by will or the laws of descent and distribution), will
vest in the assignee or transferee any interest or right herein whatsoever, but
immediately upon such assignment or transfer the Options will terminate and
become of no further effect.


 


8.              Rights as Shareholder. 
Participant or a transferee of the Options will have no rights as
shareholder with respect to any Shares until he or she will have become the
holder of record of such share, and no adjustment will be made for dividends or
distributions or other rights in respect of such Shares for which the record
date is prior to the date upon which he or she will become the holder of record
thereof.


 


9.              Adjustments. 
Options may be adjusted or terminated in any manner as contemplated by
the Plan.


 


10.       Change in Control. 
Upon the occurrence of a Change in Control, all Options will become 100%
vested and exercisable in accordance with the Plan; provided, that,
Participant is then in Continuous Service.


 


11.       Compliance with Law. 
Notwithstanding any of the provisions hereof, Participant hereby agrees
that he or she will not exercise the Options, and that the Company will not be
obligated to issue or transfer any shares to Participant hereunder, if the
exercise hereof or the issuance or transfer of such shares will constitute a
violation by Participant or the Company of any provisions of any law or
regulation of any governmental authority. 
Any determination in this connection by the Committee will be final,
binding and conclusive.  The Company will
in no event be obliged to register any securities pursuant to the Securities
Act (as now in effect or as hereafter amended) or to take any other affirmative
action in order to cause the exercise of the Options or the issuance or
transfer of shares pursuant thereto to comply with any law or regulation of any
governmental authority.


 


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12.       Notice. 
Every notice or other communication relating to this Agreement will be
in writing, and will be mailed to or delivered to the party for whom it is
intended at such address as may from time to time be designated by it in a
notice mailed or delivered to the other party as herein provided; provided,
that, unless and until some other address be so designated, all notices
or communications by Participant to the Company will be mailed or delivered to
the Company at its principal executive office, and all notices or
communications by the Company to Participant may be given to Participant
personally or may be mailed to him or her at his or her address as recorded in
the records of the Company.


 


13.       Binding Effect. 
Subject to Section 7 hereof, this Agreement will be binding upon
the heirs, executors, administrators and successors of the parties hereto.


 


14.       Governing Law. 
This Agreement will be construed and interpreted in accordance with the
laws of the State of Delaware without regard to its conflict of law principles.


 


15.       Plan. 
The terms and provisions of the Plan are incorporated herein by
reference, and Participant hereby acknowledges receiving a copy of the
Plan.  In the event of a conflict or
inconsistency between the discretionary terms and provisions of the Plan and
the provisions of this Agreement, this Agreement will govern and control.


 


16.       Notice of Disqualifying
Disposition of ISO Shares.  If the Option is an ISO, and if Participant
sells or otherwise disposes of any of the Shares acquired pursuant to the ISO
on or before the later of (i) the date 2 years after the Date of Grant,
and (ii) the date 1 year after transfer of such Shares to Participant upon
exercise of the Option, Participant will immediately notify the Company in
writing of such disposition. Participant agrees that Participant may be subject
to income tax withholding by the Company on the compensation income recognized
by Participant from the early disposition by payment in cash or out of the
current wages or other compensation payable to Participant.  Participant understands that if he elects to
exercise the Option in the manner contemplated by Section 4.1(c) hereof,
the portion of the Shares withheld to pay the Exercise Price will result in a
disqualifying disposition of such Shares under this Section 18.


 


17.       Tax Consequences.  Set forth below
is a brief summary as of the Effective Date of the Plan of some of the federal
tax consequences of exercise of the Option and disposition of the Shares. THIS
SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT
TO CHANGE. PARTICIPANT SHOULD CONSULT A TAX ADVISOR BEFORE EXERCISING THE
OPTION OR DISPOSING OF THE SHARES.


 


17.1                        If the Option qualifies as an ISO, there
will be no regular federal income tax liability upon the exercise of the
Option, although the excess, if any, of the Fair Market Value of the Shares on
the date of exercise over the Exercise Price will be treated as a tax
preference item for federal alternative minimum tax purposes and may subject
Participant to the alternative minimum tax in the year of exercise.


 


17.2                        If the Option does not qualify as an ISO,
there may be a regular federal income tax liability upon the exercise of the
Option. Participant will be treated as having received compensation income
(taxable at ordinary income tax rates) equal to the excess, if any, of the Fair
Market Value of the Shares on the date of exercise over the Exercise Price. If
Participant is a current or former employee of the Company, the Company may be
required to withhold from Participant’s compensation or collect from Participant
and pay to the applicable taxing authorities an amount equal to a percentage of
this compensation income at the time of exercise.


 


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17.3                        The following tax consequences may apply
upon disposition of the Shares.


 


(a)         If the Shares are held for more than 12
months after the date of the transfer of the Shares pursuant to the exercise of
an ISO and are disposed of more than 2 years after the Date of Grant, any gain
realized on disposition of the Share will be treated as long term capital gain
for federal income tax purposes. If Shares purchased under an ISO are disposed
of within the applicable 1 year or 2 year period, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to extent of the excess, if any, of the Fair Market Value of the Shares
on the date of exercise over the Exercise Price.


 


(b)         If the Shares are held for more than 12
months after the date of the transfer of the Shares pursuant to the exercise of
an Nonqualified Stock Options, any gain realized on disposition of the Share
will be treated as long term capital gain.


 


(c)          The Company may be required to withhold
from Participant’s compensation or collect from Participant and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income.


 


18.       Successors and Assigns.  The Company
may assign any of its rights under this Agreement.  This Agreement will be binding upon and inure
to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Agreement will be binding upon
Participant and Participant’s heirs, executors, administrators, legal
representatives.


 


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IN WITNESS WHEREOF, the
Company has caused this Agreement to be executed in triplicate by its duly
authorized representative and Participant has executed this Agreement in
triplicate, effective as of the Date of Grant.


 


 


	
  JOE’S JEANS INC.

  	
   

  	
  PARTICIPANT

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
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