EXHIBIT 10.3


 


MOSSIMO,
INC.


 


2005
STOCK OPTION PLAN


 


1.               Purpose of
Plan.  The
purpose of the Mossimo, Inc. 2005 Stock Option Plan is to attract and
retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Directors, Employees and
Consultants of Mossimo, Inc., and to promote the success of its business.
Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant of an
Option and subject to the applicable provisions of Section 422 of the Code
and the regulations promulgated thereunder.


 


2.               Definitions.  As used herein, the following definitions
shall apply:


 


(a)                        “Administrator” means the Board or its Committee appointed
pursuant to Section 4 of the Plan.


 


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


 


(c)                        “Code” means the Internal Revenue Code of 1986,
as amended.


 


(d)                       “Committee” means the Committee appointed by the
Board in accordance with Section 4 of the Plan.


 


(e)                        “Common Stock” means the common stock, $.001 par value,
of the Company.


 


(f)                          “Company” means Mossimo, Inc., a Delaware
corporation.


 


(g)                       “Consultant” means any person who is engaged by
Company to render consulting or advisory services and is compensated for such
services.


 


(h)                       “Continuous Status as a Director, Employee or Consultant” means that
the director, employment or consulting relationship with Company is not
interrupted or terminated. Continuous Status as a Director, Employee or Consultant
shall not be considered interrupted in the case of (i) any leave of
absence approved by Company or (ii) transfers between locations of Company
or transfers to any subsidiary of Company, or between a subsidiary and Company
or any successor. A leave of absence shall include sick leave or any other
personal leave approved by an authorized representative of Company. For
purposes of Incentive Stock Options, no such leave may exceed 90 days, unless
reemployment upon expiration of such leave is guaranteed by statute or
contract, including policies of Company. If reemployment upon expiration of a
leave of absence approved by Company is not so guaranteed, on the day which is
three months after the 91st day of such leave any Incentive Stock Option held
by the Optionee shall cease to be treated as an Incentive Stock Option and
shall be treated for tax purposes as a Nonstatutory Stock Option.


 


(i)                           “Director” means a member of the Board of Directors
of Company.


 


(j)                           “Employee” means any person, including an Officer or
Director, employed by Company. The payment of a director’s fee by Company shall
not be sufficient to constitute “employment.”


 


(k)                        “Exchange Act” means the Securities Exchange Act of
1934, as amended.


 


(l)                           “Fair Market Value” means, as of any date, the value of the
Common Stock determined as follows:


 


(i)                     If the
Common Stock is listed on any established stock exchange or a national market
system, including without limitation the Nasdaq National Market of the National
Association of Securities Dealers, Inc. Automated Quotation (“Nasdaq “)
System, its Fair Market Value shall be the closing sales price for such stock
(or the closing bid, if no sales were reported) as quoted on such exchange or
system for the last market trading day prior to the time of determination and
reported in The Wall Street Journal or such other source as the Administrator
deems reliable;


 


1





















 


(ii)                  If the
Common Stock is quoted on the Nasdaq System (but not on the Nasdaq National
Market thereof) or regularly quoted by a recognized securities dealer but
selling prices are not reported, its Fair Market Value shall be the mean
between the high bid and low asked prices for the Common Stock on the last
market trading day prior to the day of determination; or


 


(iii)               In the
absence of an established market for the Common Stock, the Fair Market Value
thereof shall be determined in good faith by the Administrator.


 


(m)                     “Incentive Stock Option” means
an Option intended to qualify as an incentive stock option within the meaning
of Section 422 of the Code.


 


(n)                       “Nonstatutory Stock” Option” means an
option not intended to qualify as an Incentive Stock Option.


 


(o)                       “Notice of Grant” means the notice of stock option grant
to be given to each of the Optionees.


 


(p)                       “Officer” means a person who is an officer of
Company within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.


 


(q)                       “Option” means a stock option granted pursuant to
the Plan.


 


(r)                          “Optionee” means a Director, Employee or Consultant
who receives an Option.


 


(s)                        “Plan” means the Mossimo, Inc. 2005 Stock
Option Plan.


 


(t)                          “Rule 16b-3” means Rule 16b-3 promulgated under
the Exchange Act or any successor thereto.


 


(u)                       “Section 16(b)” means Section 16(b) of the
Exchange Act.


 


(v)                       “Share” means each of the shares of Common Stock
subject to an Option, as adjusted in accordance with Section 11 below.


 


3.               Stock
Subject to Plan.  Subject
to the provisions of Section 11 of the Plan, the maximum number of shares
of Common Stock that may be issued under this Plan is 1,500,000 unless amended
by the Board or the shareholders of Company.


 


If
an Option expires or becomes unexercisable without having been exercised in
full, or is surrendered pursuant to an option exchange pursuant to Section 4(c)(vi) or
otherwise, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated). However, Shares that have actually been issued under the Plan upon
exercise of an Option shall not be returned to the Plan and shall not become
available for future distribution under the Plan.


 


4.               Administration
of the Plan.


 


(a)                        Administration
by Board or Committee of Board.  The Plan
shall be administered as follows:


 


(i)                     Administration
With Respect to Directors and Officers.  With respect
to grants of Options to Directors or Employees who are also Officers or
Directors, the Plan shall be administered by a Committee designated by the
Board to Administer the Plan, which Committee shall be constituted to comply
with any applicable laws, including the rules under Rule 16b-3
relating to the disinterested administration of employee benefit plans under
which Section 16(b) exempt discretionary grants and awards of equity
securities are to be made and solely of “outside directors” (within the meaning
of Treas. Reg. 1.162-27(e)(3)) or such other persons as may be permitted from
time to time under Section 162(m) of the Code and the Treasury
Regulations promulgated thereunder.


 


(ii)                  Administration
With Respect to Other Employees and Consultants.  With respect
to grants of Options to Employees or Consultants who are neither Directors nor
Officers, the Plan shall be administered by (A) the Board or (B) a
Committee designated by the Board, which committee shall be constituted in such
a manner as to satisfy the legal requirements relating to the administration of


 


2





















 


stock option plans, if any, of United
States securities laws, of Delaware corporate and securities laws, of the Code,
and of any applicable stock exchange (the “Applicable Laws”).
Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefore, fill vacancies, however caused, and remove all members of the
Committee and thereafter directly administer the Plan, all to the extent
permitted by the Applicable Laws.


 


(b)                       Powers of
the Administrator.  Subject to
the provisions of the Plan and, in the case of the Committee, the specific
duties delegated by the Board to such Committee, and subject to the approval of
any relevant authorities, including the approval, if required, of any stock
exchange upon which the Common Stock is listed, the Administrator shall have
the authority in its discretion:


 


(i)                          to determine
the Fair Market Value of the Common Stock in accordance with Section 2(1) of
the Plan;


 


(ii)                       to select
the Directors, Consultants and Employees to whom Options may from time to time
be granted hereunder;


 


(iii)                    to determine
whether and to what extent Options are granted hereunder;


 


(iv)                   to determine
the number of Shares to be covered by each such award granted hereunder;


 


(v)                      to approve
forms of agreement for use under the Plan;


 


(vi)                   to construe
and interpret the terms of the Plan and awards granted pursuant to the Plan.


 


(c)                        Effect of
Administrator’s Decision.  All
decisions, determinations and interpretations of the Administrator shall be
final and binding on all Optionees and any other holders of any Options.


 


5.               Eligibility.


 


(a)                        Nonstatutory
Stock Options may be granted to Directors, Employees and Consultants. Incentive
Stock Options may be granted only to Employees. A Director, Employee or
Consultant who has been granted an Option may, if otherwise eligible, be
granted additional Options.


 


(b)                       Each Option
shall be designated in the written option agreement as either an Incentive
Stock Option or a Nonstatutory Stock Option. However, notwithstanding such
designation, to the extent that the aggregate Fair Market Value of the Shares
with respect to which Incentive Stock Options are exercisable for the first
time by the Optionee during any calendar year (under all plans of Company)
exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options.
For purposes of this Section 5(b), Incentive Stock Options shall be taken
into account in the order in which they were granted. The Fair Market Value of
the Shares shall be determined as of the time the Option with respect to such
Shares is granted.


 


(c)                        Neither the
Plan nor any Option shall confer upon any Optionee any right with respect to
continuation of his or her employment or consulting relationship with Company,
nor shall it interfere in any way with his or her right or Company’s right to
terminate his or her employment or consulting relationship at any time, with or
without cause.


 


6.               Term of
Plan.


 


(a)                        The Plan
shall become effective upon the earlier to occur of its adoption by the Board
or its approval by the shareholders of Company, as described in Section 17
of the Plan. It shall continue in effect for a term of ten years unless sooner
terminated under Section 13 of the Plan.


 


3





















 


7.               Term of
Option.


 


(a)                        The term of
each Option shall be the term stated in the Option Agreement; provided,
however, that the term shall be no more than ten years from the date of grant
thereof. In the case of an Incentive Stock Option granted to an Optionee who,
at the time the Option is granted, owns stock representing more than ten
percent of the voting power of all classes of stock of Company, the term of the
Option shall be five years from the date of grant thereof or such shorter term
as may be provided in the Option Agreement.


 


8.               Option
Exercise Price and Consideration.


 


(a)                        The per
share exercise price for the Shares to be issued upon exercise of any Option
shall be such price as is determined by the Administrator, but shall be subject
to the following:


 


(i)                          In the case
of an Incentive Stock Option


 


(A)                      granted to
an Employee who, at the time of grant of such Option, owns stock representing
more than ten percent of the voting power of all classes of stock of Company,
the per Share exercise price shall be no less than 110 percent of the Fair
Market Value per Share on the date of grant.


 


(B)                        granted to
any other Employee, the per Share exercise price shall be no less than 100
percent of the Fair Market Value per Share on the date of grant.


 


(ii)                       In the case
of a Nonstatutory Stock Option granted to any person, the per Share exercise
price shall be no less than 100 percent of the Fair Market Value per Share on
the date of grant.


 


(b)                       The
consideration to be paid for the Shares to be issued upon exercise of an
Option, including the method of payment, shall be determined by the
Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (i) cash,
(ii) check or (iii) any combination of those methods of payment. In
addition, if there is a public market for the Shares, the Administrator may
allow the Optionee to elect to pay the exercise price through either of the
following procedures:


 


(i)                          A special
sale and remittance procedure under which the Optionee provides irrevocable
written instructions to a designated brokerage firm to effect the immediate
sale of a portion of the purchased Shares and remit to Company, out of the sale
proceeds available on the settlement date, an amount sufficient to cover the
aggregate option price payable for the purchased Shares plus all applicable
Federal and State income and employment taxes required to be withheld by
Company by reason of such purchase and/or sale. The Optionee must also provide
such irrevocable written instructions to Company to deliver the certificates
for the purchased Shares directly to such brokerage firm to effect the sale
transaction. In making its determination as to the type of consideration to
accept, the Administrator shall consider if acceptance of such consideration
may be reasonably expected to benefit Company Optionee shall also deliver a
properly executed exercise notice together with such other documentation as the
Administrator and a broker, if applicable, shall require to effect an exercise
of the Option. Notwithstanding the above, Company shall not be required to
permit the Optionee to utilize the sale and remittance procedure described
above if Company’s legal counsel advises Company that the procedure may violate
any applicable law, regulation or regulatory guidance.


 


(ii)                       The
surrender to Company of shares of Company’s common stock which have already
been owned by the Optionee for more than six months. The shares of Company’s
common stock which are surrendered to Company as payment for Shares issued upon
the exercise of an Option shall be valued at their Fair Market Value on the
date of exercise of the Option.


 


9.               Exercise of
Option.


 


(a)                        Procedure for Exercise; Rights as a Shareholder.  Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator and as permissible under the terms of the
Plan, but in no case at a rate of less than 20 percent per year over five


 


4





















 


years from the date the
Option is granted. The right to exercise an Option may be conditioned on
specific performance criteria with respect to Company and/or the Optionee. An
Option may not be exercised for a fraction of a Share.


 


An
Option shall be deemed to be exercised when written notice of such exercise has
been given to Company in accordance with terms of the Option by the person entitled
to exercise the Option and full payment for the Shares with respect to which
the Option is exercised has been received by Company Full payment may, as
authorized by the Administrator, consist of any consideration and method of
payment allowable under Section 8(b) hereof. Until the issuance (as
evidenced by the appropriate entry on the books of Company or of a duly
authorized transfer agent of Company) of the stock certificate evidencing such
Shares, no right to vote, receive dividends or any other rights as a
shareholder shall exist with respect to the Shares, notwithstanding the
exercise of the Option. Company shall issue (or cause to be issued) such stock
certificate promptly upon exercise of the Option. No adjustment shall be made
for a dividend or other right for which the record date is prior to the date
the stock certificate is issued, except as provided in Section 11 hereof.


 


Exercise of an Option in
any manner shall result in a decrease in the number of Shares which thereafter
may be available, both for purposes of the Plan and for sale under the Option,
by the number of Shares as to which the Option is exercised.


 


(b)                       Termination
of Directorship, Employment or Consulting Relationship.  Except as
otherwise provided in subsections (c) and (d) below, in the event of
termination of an Optionee’s Continuous Status as a Director, Employee or
Consultant (but not in the event of an Optionee’s change of status from
Employee to Director or Consultant (in which case an Employee’s Incentive Stock
Option shall automatically convert to a Nonstatutory Stock Option three months
and one day following such change of status) or from Director or Consultant to
Employee), such Optionee may, but only within 30 days after the date of such
termination (and in no event later than the expiration date of the term of such
Option as set forth in the Option Agreement), exercise his or her Option to the
extent that the Optionee was entitled to exercise it at the date of such
termination; provided, however, that the Administrator may extend the period
during which a Nonstatutory Stock Option may be exercised following such
termination on a case-by-case basis, as the Administrator deems appropriate in
the Administrator’s discretion. To the extent that the Optionee was not
entitled to exercise the Option at the date of such termination, or if the
Optionee does not exercise such Option to the extent so entitled within the
time specified herein, the Option shall terminate.


 


(c)                        Disability
of Optionee.  In the event
of termination of an Optionee’s Continuous Status as a Director, Employee or
Consultant as a result of his or her disability, the Optionee may, but only
within 12 months from the date of such termination (and in no event later than
the expiration date of the termination of such Option as set forth in the
Option Agreement), exercise the Option to the extent otherwise entitled to
exercise it at the date of such termination. However, in the event of
termination of an Optionee’s Continuous Status as a Director, Employee or
Consultant as a result of his or her “permanent disability” as such term is
defined in Section 22(e)(3) of the Code, the Optionee shall be
entitled, but only within 12 months from the date of such termination (and in
no event later than the expiration date of the term of such Option as set forth
in the Option Agreement), to exercise all Options such Director, Employee or
Consultant would have been entitled to exercise had such Director, Employee or
Consultant remained employed for one year from the date of such termination. If
such disability is not a “permanent disability,” in the case of an Incentive
Stock Option such Incentive Stock Option shall automatically cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option three months and one day following such termination.
If the Optionee does not exercise such Option to the extent so entitled within
the time specified herein, the Option shall terminate, and the Shares covered
by such Option shall revert to the Plan.


 


(d)                       Death of
Optionee.  In the event
of the death of an Optionee, the Optionee’s estate or any person who acquired
the right to exercise the Option by bequest or inheritance shall be entitled,
but only within 12 months from the date of such termination (and in no event
later than the expiration date of the


 


5





















 


term of such Option as
set forth in the Option Agreement), to exercise all Options such Director,
Employee or Consultant would have been entitled to exercise had such Director,
Employee or Consultant remained employed for one year from the date of such
termination. All remaining Shares covered by the unexercisable portion of the
Option shall immediately revert to the Plan. If, after the Optionee’s death,
the Optionee’s estate or a person who acquires the right to exercise the Option
by bequest or inheritance does not exercise the Option within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.


 


(e)                        Rule 16b-3.  Options
granted to a person subject to Section 16(b) of the Exchange Act must
comply with Rule 16b-3 and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum exemption
from Section 16 of the Exchange Act with respect to Plan transactions.


 


10.         Non-Transferability
of Options.  Options may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in
any manner other than by will or by the laws of descent or distribution and may
be exercised, during the lifetime of the Optionee, only by the Optionee;
provided, however, that any Nonstatutory Stock Option may be transferred by the
optionee to any member of the Optionee’s immediate family, to a partnership the
members of which (other than the Optionee) are all members of the Optionee’s
immediate family, or to a family trust the beneficiaries of which (other than
the Optionee) are all members of the Optionee’s immediate family.


 


11.         Adjustments
Upon Changes in Capitalization or Merger.


 


(a)                        Changes in
Capitalization.  Subject to
any required action by the shareholders of Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock that have been authorized for issuance under the Plan but as to
which no Options have yet been granted or that have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price for each
share of Common Stock covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease as determined by the Administrator. Such adjustment shall be made by
the Administrator, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number of shares of Common Stock subject to an Option.


 


(b)                       Terminating
Events.  A
Terminating Event shall be defined as any one of the following events: (i) a
dissolution or liquidation of Company; (ii) a reorganization, merger or
consolidation of Company with one or more corporations, as the result of which (A) Company
is not the surviving corporation or (B) Company becomes a subsidiary of
another corporation (which shall be deemed to have occurred if another
corporation shall own directly or indirectly, over 50 percent of the aggregate
voting power of all outstanding equity securities of Company); (iii) a
sale of substantially all the assets of Company to another corporation; or (iv) a
sale of the equity securities of Company representing more than 50 percent of
the aggregate voting power of all outstanding equity securities of Company to
any person or entity, or any group of persons and/or entities acting in
concert. Upon a Terminating Event (i) Company shall deliver to each
optionee, no less than thirty days prior to the Terminating Event, written
notification of the Terminating Event and the optionee’s right to exercise all
options granted pursuant to this Plan, whether or not vested under this Plan or
applicable stock option agreement, and (ii) all outstanding options
granted pursuant to this Plan shall completely vest and become immediately
exercisable as to all shares granted pursuant to the option immediately prior
to such Terminating Event. This right of exercise shall be conditional upon
execution of a final plan of dissolution or liquidation or a definitive
agreement of consolidation or merger. Upon the occurrence of the Terminating
Event all then outstanding options and the Plan shall terminate; provided,
however, that any outstanding options not exercised as of the occurrence of the
Terminating Event shall not terminate if there is a successor corporation which
assumes the outstanding options or substitutes for such options, new options
covering


 


6





















 


the stock of the
successor corporation with appropriate adjustments as to the number and kind of
shares and prices.


 


(c)                        Compliance
with Incentive Stock Option Provisions.  Notwithstanding
anything to the contrary herein, each adjustment made to an Incentive Stock
Option pursuant to this Section 11 shall comply with the rules of Section 424(a) of
the Code, and no adjustment shall be made that would cause any Incentive Stock
Option to become a Nonstatutory Stock Option.


 


12.         Timing of
Granting Options.  The date of
grant of an Option shall, for all purposes, be the date on which the
Administrator makes the determination granting such Option, or such other date
as is determined by the Administrator. Notice of the determination shall be
given to each Director, Employee or Consultant to whom an Option is so granted
within a reasonable time after the date of such grant.


 


13.         Amendment
and Termination of The Plan.


 


(a)                       Amendment
and Termination.  The Board
may at any time amend, alter, suspend or discontinue the Plan, but no
amendment, alteration, suspension or discontinuation shall be made which would
impair the rights of any Optionee under any grant theretofore made, without his
or her consent. In addition, to the extent necessary and desirable to comply
with Rule 16b-3 under the Exchange Act or with Section 422 of the
Code (or any other applicable law or regulation, including the requirements of
the NASD or an established stock exchange), Company shall obtain shareholder
approval of any Plan amendment in such a manner and to such a degree as
required.


 


Effect of Amendment or
Termination.                   Any
amendment or termination of the Plan shall not affect Options already granted,
and such Options shall remain in full force and effect as if this Plan had not
been amended or terminated, unless mutually agreed otherwise between the
Optionee and the Administrator, which agreement must be in writing and signed
by the Optionee and Company.


 


14.         Conditions
Upon Issuance of Shares.  Shares shall
not be issued pursuant to the exercise of an Option unless the exercise of such
Option and the issuance and delivery of such Shares pursuant thereto shall
comply with all relevant provisions of law, including, without limitation, the
laws of the United States, including the Securities Act of 1933, as amended,
the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the Common Stock may then be
listed, and shall be further subject to the approval of counsel for Company
with respect to such compliance. As a condition to the exercise of an Option,
Company may require the person exercising such Option to represent and warrant
at the time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for Company, such a representation is required by
any of the aforementioned relevant provisions of law.


 


15.         Reservation
of Shares.  During the
term of this Plan, Company shall at all times reserve and keep available such
number of Shares as shall be sufficient to satisfy the requirements of the
Plan. The inability of Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by Company counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.


 


16.         Agreements.  Options
shall be evidenced by written agreements in such form as the Administrator
shall approve from time to time.


 


17.         Shareholder
Approval.  Continuance
of the Plan shall be subject to approval by the Shareholders of the Company
within 12 months, or after the Plan is adopted. Such shareholder approval shall
be obtained in the degree and manner required under applicable state and
federal law and the rules of any stock exchange (including NASDAQ) upon
which the Common Stock is listed.


 


7





















 


MOSSIMO,
INC.


 


2005
STOCK OPTION PLAN


 


STOCK
OPTION AGREEMENT


 


Capitalized
terms used without definition in this Stock Option Agreement (the “Option
Agreement”) shall have the meanings given such terms in the Mossimo, Inc.
2005 Stock Option Plan (the “Plan”).


 


I.


 


NOTICE
OF STOCK OPTION GRANT


 


1.               Option.  You have been granted an option to purchase
shares of common stock (the “Shares”) of Mossimo, Inc., a Delaware
corporation (the “Company”), subject to the terms and conditions of the Plan
and this Option Agreement, as follows:


 


	
  Date of
  Grant:

  	
   

  
	
   

  	
   

  
	
  Exercise Price per Share:

  	
   

  
	
   

  	
   

  
	
  Total Number of Shares Granted:

  	
   

  
	
   

  	
   

  
	
  Total Exercise Price:

  	
   

  
	
   

  	
   

  
	
  Type of Option:

  	
   

  
	
   

  	
   

  
	
  Expiration Date:

  	
  10 Years From Date of Grant

  



 


2.               Vesting and
Expiration


 


3.               Termination.  So long as
the Optionee maintains Continuous Status as a Director, Employee or Consultant,
this Option may be exercised, in whole or in part, with respect to any vested
Shares, anytime prior to the Expiration Date. If the Optionee’s Continuous
Status as a Director, Employee or Consultant terminates for any reason, the
Optionee shall have that amount of time set forth in Section 9 of the Plan
to exercise any vested Shares, after which time this Option shall expire.


 


II.


 


AGREEMENT


 


1.               Grant of
Option.  The Company
hereby grants to the Optionee (the “Optionee”) named in the Notice of Stock
Option Grant set forth above (the “Notice of Grant”) an option (the “Option”)
to purchase the total number of Shares set forth in the Notice of Grant, at the
exercise price per share set forth in the Notice of Grant (the “Exercise Price”),
subject to the terms, definitions and provisions of the Plan, which is
incorporated herein by reference.


 


2.               Exercise of
Option.


 


(a)                        Right to Exercise. This Option shall be exercisable prior
to its expiration date only, in accordance with the Vesting Schedule set
out in the Notice of Grant and with the applicable provisions of the Plan and
this Option Agreement.


 


(b)                       Method of Exercise. This Option shall be exercisable by
written notice which shall state the election to exercise the Option, the
number of Shares with respect to which the Option is being exercised, and such
other representations and agreements as to the Optionee’s investment intent
with respect to the Shares as may be required by the Company pursuant to the
provisions of the Plan. Such notice is attached hereto as Exhibit A. The
written notice shall be signed by the Optionee and shall be delivered in person
or by certified mail to the Secretary of the Company. The written notice shall
be


 


8





















 


accompanied by payment
of the Exercise Price. This Option shall be deemed to be exercised upon receipt
by the Company of such written notice accompanied by the Exercise Price.


 


(c)                        Compliance with Law. No Shares will be issued pursuant to the
exercise of any Option unless such issuance and such exercise shall comply with
all relevant provisions of law and the requirements of any stock exchange upon
which the Shares may then be listed. Assuming such compliance, for income tax
purposes the Shares shall be considered transferred to the Optionee on the date
on which the Option is exercised with respect to such shares.


 


3.               Method of
Payment.  Subject
to Section 8, payment of the Exercise Price shall be paid by (a) cash,
(b) check or (c) any combination of those methods of payment. In addition,
if there is a public market for the Shares, the Optionee may elect to pay the
Exercise Price through a special sale and remittance procedure under which the
Optionee provides irrevocable written instructions to a designated brokerage
firm to effect the immediate sale of a portion of the purchased Shares and
remit to the Company, out of the sale proceeds available on the settlement
date, an amount sufficient to cover the aggregate option price payable for the
purchased Shares plus all applicable Federal and State income and employment
taxes required to be withheld by the Company by reason of such purchase and/or
sale. The Optionee must also provide such irrevocable written instructions to
the Company to deliver the certificates for the purchased Shares directly to
such brokerage firm to effect the sale transaction. Notwithstanding the above,
the Company shall not be required to permit the Optionee to utilize the sale
and remittance procedure described above if the Company’s legal counsel advises
the Company that the procedure may violate any applicable law, regulation or
regulatory guidance.


 


4.               Optionee’s Representations.  In the event the Shares purchasable pursuant
to the exercise of this Option have not been registered under the Securities
Act of 1933, as amended, at the time this Option is exercised, Optionee shall,
if required by the Company, concurrently with the exercise of all or any
portion of this Option, deliver to the Company an investment representation
statement in a form reasonably required by the Company.


 


5.               Non-Transferability
of Option; Assignment by Company.  This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by Optionee; provided,
however, that any Nonstatutory Stock Option may be transferred by Optionee to
any member of Optionee’s immediate family, to a partnership the members of
which (other than Optionee) are all members of Optionee’s immediate family, or
to a family trust the beneficiaries of which (other than Optionee) are all
members of Optionee’s immediate family. The terms of this Option shall be
binding upon the executors, administrators, heirs, successors and assigns of
Optionee. The Company may assign any of its rights under this Option Agreement
to single or multiple assignees, and this Option Agreement shall inure to the
benefit of the successors and assigns of the Company.


 


6.               Restrictions on Transfer.  All
certificates representing Shares purchased under this Option Agreement may be
imprinted with an appropriate legend with respect to any applicable restriction
on transfer. The Company may issue appropriate stop-transfer instructions to
its transfer agent to ensure compliance with these transfer restrictions. If
the Company transfers its own securities, it may make appropriate notations to
the same effect in its own records. The Company shall not be required to
transfer on its books any Shares that have been sold or transferred in
violation of any of the provisions of the Plan or this Option Agreement, or to
treat as the owner of such Shares or to accord the right to vote or pay
dividends to any purchaser or transferee to whom such Shares has been sold or
transferred.


 


7.               Market
Stand-Off Agreement.  Optionee
hereby agrees that if so requested by the Company or any representative of the
underwriters in connection with the first registration statement of the Company
to become effective under the Securities Act which includes securities to be
sold on behalf of the Company to the public in an underwritten public offering,
Optionee shall not sell or otherwise transfer the Shares or any other
securities of the Company during the 180-day period following the effective
date of such registration statement. The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such 180-day period. Optionee agrees that the Company may
assign his or her obligation hereunder to any underwriter of the Company’s initial
public offering.


 


9





















 


8.               Acknowledgments of Optionee.


 


(a)                        NO RIGHT OF EMPLOYMENT. OPTIONEE ACKNOWLEDGES AND AGREES THAT
THE VESTING OF SHARES PURSUANT TO THE OPTION IS EARNED ONLY BY CONTINUING
CONSULTANCY OR EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF
BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE
FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE
MOSSIMO, INC. 2005 STOCK OPTION PLAN THAT IS INCORPORATED HEREIN BY REFERENCE,
SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT
OR CONSULTANCY BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE’S
RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S EMPLOYMENT OR CONSULTANCY
AT ANY TIME, WITH OR WITHOUT CAUSE.


 


(b)                       Receipt of Plan. Optionee acknowledges receipt of a copy
of the Plan and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to all of the terms
and provisions thereof. Optionee has reviewed the Plan and this Option in their
entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Option and fully understands all provisions of the Option. Optionee
hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions arising under the Plan
or this Option. Optionee further agrees to notify the Company upon any change
in the residence address indicated above.


 


9.               Notice.  Any notice required or permitted under this
Option Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery or upon deposit in the United States mail by
certified mail, with postage and fees prepaid, addressed to the party at its
address as shown below, or to such other address as such party may designate in
writing from time to time to the other party.


 


10.         Entire
Agreement; Governing Law.  The
Plan is incorporated herein by reference. The Plan and this Option Agreement
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Optionee with respect to the subject matter
hereof, and may not be modified adversely to the Optionee’s interest except by
means of a writing signed by the Company and Optionee. In case of conflict
between the provisions in the Plan and this Option Agreement, the provisions in
the Plan shall prevail. This Option Agreement is governed by Delaware law
except for that body of law pertaining to conflict of laws.


 


	
  Date:

  	
   

  	
   

  	
  MOSSIMO INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  



 


10