Document:

EXHIBIT 10.2

EXECUTION COPY

NON-QUALIFIED STOCK OPTION AGREEMENT

 

AGREEMENT made as of September 8, 2011, by and between Frederick’s of Hollywood Group Inc., a New York corporation (the “Company”), and Donald Jones (the “Employee”).

 

WHEREAS, effective on September 8, 2011 (the “Grant Date”), pursuant to the terms and conditions of the Company’s 2010 Long-Term Incentive Equity Plan (the “Plan”), Board of Directors of the Company (the “Board”) authorized the grant to the Employee of an option (the “Option”) to purchase an aggregate of 150,000 shares of the authorized but unissued common stock of the Company, $.01 par value (the “Common Stock”), conditioned upon the Employee’s acceptance thereof upon the terms and conditions set forth in this Agreement and subject to the terms of the Plan (capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Plan); and

 

WHEREAS, the Employee desires to acquire the Option on the terms and conditions set forth in this Agreement and subject to the terms of the Plan;

 

IT IS AGREED:

 

1.           Grant of Stock Option.  The Company hereby grants the Employee the Option to purchase all or any part of an aggregate of 150,000 shares of Common Stock (the “Option Shares”) on the terms and conditions set forth herein and subject to the provisions of the Plan.

 

2.           Non-Qualified Stock Option.  The Option represented hereby is not intended to be an Option which qualifies as an “Incentive Stock Option” under Section 422 of the Internal Revenue Code of 1986, as amended.

 

3.           Exercise Price.  The exercise price of the Option shall be $0.62 per share, subject to adjustment as hereinafter provided.

 

4.           Vesting and Exercisability.  Subject to the terms and conditions of the Plan, and provided that the Employee has remained continuously employed by the Company as of each vesting date except as otherwise provided herein, this Option shall vest and become exercisable in two (2)equal annual installments of 75,000 Option Shares on each of August 22, 2012 and August 22, 2013.  After a portion of the Option becomes exercisable, it shall remain exercisable except as otherwise provided herein, until the close of business on September 7, 2021 (the “Exercise Period”).

 

  

  

  

 

5.           Effect of Termination of Employment.

 

5.1           Termination Due to Death. If Employee’s employment by the Company terminates by reason of death, the portion of the Option, if any, that was exercisable as of the date of death may thereafter be exercised by the legal representative of the estate or by the legatee of the Employee under the will of the Employee for a period of one (1) year from the date of such death or until the expiration of the Exercise Period, whichever period is shorter. The portion of the Option, if any, that was not exercisable as of the date of death shall immediately expire.

 

5.2           Termination Due to Disability.  If Employee’s employment by the Company terminates by reason of “Disability” (as defined in the Employment Agreement, dated as of September 8, 2011, between the Company and Employee, or any successor agreement (“Employment Agreement”)), the portion of the Option, if any, that was exercisable as of the date of termination of employment by reason of such Disability may thereafter be exercised by the Employee or legal representative for a period of one (1) year from the date of such termination or until the expiration of the Exercise Period, whichever period is shorter.  The portion of the Option, if any, that was not exercisable as of the date of termination of employment shall immediately expire.

 

5.3           Termination for Cause.  If Employee’s employment is terminated for “Cause” (as defined in the Employment Agreement), (i) this Option, whether or not exercisable, shall immediately expire and (ii) the Company may require the Employee to pay to the Company the economic value of any Option Shares purchased hereunder by the Employee within the six (6) month period prior to the date of termination of employment.  For this purpose, the term “economic value” means the difference between the Fair Market Value (as defined in the Plan) of the Option Shares on the date of such termination of employment (or the sales price of such shares if the Option Shares were sold during such six (6) month period) and the Exercise Price of such shares.  In such event, the Employee hereby agrees to remit to the Company, in cash, by no later than thirty (30) days after the date of termination or the date established under the Employment Agreement for curing any conduct amounting to Cause has expired, whichever is later, an amount equal to the economic value as defined above.

  

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5.4           Termination by the Company Without Cause or by Employee for Good Reason.  If Employee’s employment is terminated by the Company without “Cause” (as defined in the Employment Agreement) or by Employee for “Good Reason” (as defined in the Employment Agreement), then the portion of the Option that was exercisable as of the date of termination of employment and any additional portion of the Option which would have otherwise vested on or prior to August 22, 2013 if employment had continued through that date shall continue to vest as scheduled and shall continue to be exercisable thereafter, absent the death of Employee (in which case the Option shall be exercisable by the Employee’s personal representative or heirs, as the case may be, within one year after the date of death of the Employee), until the expiration of the Exercise Period.

 

5.5           Other Termination.  If Employee’s employment is terminated for any reason other than (i) death, (ii) Disability, (iii) for Cause, (iv) without Cause by the Company or (v) by the Employee for Good Reason (a) prior to August 22, 2013, then the portion of the Option, if any, that was exercisable as of the date of termination of employment may thereafter be exercised by the Employee for a period of ninety (90) days from the date of termination of employment, and any remaining unvested portion of the Option shall expire on the date of termination or (b) on or after August 22, 2013, then the portion of the Option that was exercisable as of the date of termination of employment may thereafter be exercised by the Employee until the expiration of the Exercise Period, and any remaining unvested portion of the Option shall expire on the date of termination.

 

6.           Withholding Tax.  Not later than the date as of which an amount first becomes includible in the gross income of the Employee for Federal income tax purposes with respect to the Option, the Employee shall pay to the Company, or make arrangements satisfactory to the Board 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 (“Withholding Tax”).  The obligations of the Company under the Plan and pursuant to this Agreement shall be conditional upon such payment or arrangements with the Company and the Company shall, to the extent permitted by law, have the right to deduct any Withholding Taxes from any payment of any kind otherwise due to the Employee from the Company.

 

  

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7.           Adjustments.

 

7.1           In the event of a stock split, stock dividend, combination of shares, or any other similar change in the Common Stock of the Company as a whole, the Board shall make equitable, proportionate adjustments in the number and kind of shares covered by the Option and in the option price hereunder.

 

7.2           In the event of any reclassification or reorganization of the outstanding shares of Common Stock other than a change covered by Section 7.1 or that solely affects the par value of such shares of Common Stock, or in the case of any merger or consolidation of the Company with or into another corporation (other than a consolidation or merger in which the Company is the continuing corporation and that does not result in any reclassification or reorganization of the outstanding shares of Common Stock), the Employee shall have the right thereafter (until the expiration of the right of exercise of this Option) to receive upon the exercise hereof after such event, for the same aggregate Exercise Price payable hereunder immediately prior to such reclassification, reorganization, merger or consolidation, the amount and kind of consideration receivable by a holder of the number of shares of Common Stock of the Company obtainable upon exercise of this Option immediately prior to such event.  The provisions of this Section 7.2 shall similarly apply to successive reclassifications, reorganizations, mergers or consolidations, sales or other transfers.

 

8.           Method of Exercise.

 

8.1           Notice to the Company.  The Option shall be exercised in whole or in part by written notice in substantially the form attached hereto as Exhibit A directed to the Company at its principal place of business accompanied by full payment as hereinafter provided of the exercise price for the number of Option Shares specified in the notice and of the Withholding Taxes, if any.

 

8.2           Delivery of Option Shares.  The Company shall deliver a certificate for the Option Shares to the Employee as soon as practicable after payment therefor.

 

8.3           Payment of Purchase Price.  The Employee shall make cash payments by certified or bank check, in each case payable to the order of the Company; the Company shall not be required to deliver certificates for Option Shares until the Company has confirmed the receipt of good and available funds in payment of the purchase price thereof and of the Withholding Taxes, if any.

 

  

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9.            Nonassignability.  The Option shall not be assignable or transferable except by will or by the laws of descent and distribution in the event of the death of the Employee.  No transfer of the Option by the Employee by will or by the laws of descent and distribution shall be effective to bind the Company unless the Company shall have been furnished with written notice thereof and a copy of the will and such other evidence as the Company may deem necessary to establish the validity of the transfer and the acceptance by the transferee or transferees of the terms and conditions of the Option.

 

10.          Company Representations.  The Company hereby represents and warrants to the Employee that:

 

(i)           the Company, by appropriate and all required action, is duly authorized to enter into this Agreement and consummate all of the transactions contemplated hereunder; and

 

(ii)          the Option Shares, when issued and delivered by the Company to the Employee in accordance with the terms and conditions hereof, will be duly and validly issued and fully paid and non-assessable.

 

11.          Employee Representations.  The Employee hereby represents and warrants to the Company that:

 

(i)           the Employee is acquiring the Option and shall acquire the Option Shares for the Employee’s own account and not with a view towards the distribution thereof;

 

(ii)          the Employee has received a copy of all reports and documents required to be filed by the Company with the Commission pursuant to the Exchange Act within the last 24 months and all reports issued by the Company to its shareholders;

 

(iii)         the Employee understands that the Employee must bear the economic risk of the investment in the Option Shares, which cannot be sold by the Employee unless they are registered under the Securities Act of 1933 (the “1933 Act”) or an exemption therefrom is available thereunder and that the Company is under no obligation to register the Option Shares for sale under the 1933 Act;

 

  

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(iv)         in the Employee’s position with the Company, the Employee has had both the opportunity to ask questions and receive answers from the officers and directors of the Company and all persons acting on its behalf concerning the terms and conditions of the offer made hereunder and to obtain any additional information to the extent the Company possesses or may possess such information or can acquire it without unreasonable effort or expense necessary to verify the accuracy of the information obtained pursuant to clause (ii) above;

 

(v)          the Employee is aware that the Company shall place stop transfer orders with its transfer agent against the transfer of the Option Shares in the absence of registration under the 1933 Act or an exemption therefrom as provided herein;

 

(vi)         the Employee has received a copy of the Plan and understands Employee’s rights with respect to the Option Shares shall, in all respects, be subject to the terms and conditions of the Plan and this Agreement;

 

(vii)        the Employee is aware of and understands that Employee is subject to the Company’s Insider Trading Policy and has received a copy of such policy as of the date of this Agreement; and

 

(viii)       in the absence of an effective registration statement under the 1933 Act, the certificates evidencing the Option Shares shall bear the following legend:

 

“The shares represented by this certificate have been acquired for investment and have not been registered under the Securities Act of 1933.  The shares may not be sold or transferred in the absence of such registration or an exemption therefrom under said Act.”

 

12.           Restriction on Transfer of Option Shares.  Anything in this Agreement to the contrary notwithstanding, the Employee hereby agrees that he shall not sell, transfer by any means or otherwise dispose of the Option Shares acquired by the Employee without registration under the 1933 Act, or in the event that they are not so registered, unless (i) an exemption from the 1933 Act registration requirements is available thereunder, (ii) the Employee has furnished the Company with notice of such proposed transfer and the Company’s legal counsel, in its reasonable opinion, shall deem such proposed transfer to be so exempt; and (iii) such transfer is in compliance with the Company’s Insider Trading Policy, as in effect at such time.

  

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13.          Miscellaneous.

 

13.1           Notices.  All notices, requests, deliveries, payments, demands and other communications which are required or permitted to be given under this Agreement shall be in writing and shall be either delivered personally or sent by registered or certified mail, or by private courier, return receipt requested, postage prepaid to the parties at their respective addresses set forth herein, or to such other address as either shall have specified by notice in writing to the other.  Notice shall be deemed duly given hereunder when delivered or mailed as provided herein.

 

13.2           Plan Paramount; Conflicts with Plan.  This Agreement and the Option shall, in all respects, be subject to the terms and conditions of the Plan, whether or not stated herein.  In the event of a conflict between the provisions of the Plan and the provisions of this Agreement, the provisions of the Plan shall in all respects be controlling.

 

13.3           Shareholder Rights.  The Employee shall not have any of the rights of a shareholder with respect to the Option Shares until such shares have been issued after the due exercise of the Option.

 

13.4           Waiver.  The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other or subsequent breach.

 

13.5           Entire Agreement.  This Agreement and the Employment Agreement constitute the entire agreement between the parties with respect to the subject matter hereof.  This Agreement may not be amended except by writing executed by the Employee and the Company.

 

13.6           Binding Effect; Successors.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and, to the extent not prohibited herein, their respective heirs, successors, assigns and representatives.  Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto and as provided above, their respective heirs, successors, assigns and representatives any rights, remedies, obligations or liabilities.

 

13.7           Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to choice of law provisions.

  

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13.8           Headings.  The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Agreement.

 

13.9           Section 409A.  The Option granted hereunder is intended to be exempt from the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A ”).  To the extent that the Options or any payments or benefits provided hereunder are considered deferred compensation subject to Section 409A, the Company intends for this Agreement and the Option to comply with the standards for nonqualified deferred compensation established by Section 409A (the “409A Standards”).  Notwithstanding anything herein to the contrary, to the extent that any terms of this Agreement or the Option would subject the Employee to gross income inclusion, interest or an additional tax pursuant to Section 409A, those terms are to that extent superseded by the 409A Standards.  The Company reserves the right to amend the Option granted hereunder to cause such Option to comply with or be exempt from Section 409A.

 

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IN WITNESS WHEREOF, the parties hereto have signed this Stock Option Agreement as of the day and year first above written.

 

	
EMPLOYEE:

	 	FREDERICK’S OF HOLLYWOOD GROUP INC.
	  	 	  
	
/s/ Donald Jones

	 	
By:  /s/ Thomas J. Lynch

	
Name:  Donald Jones

	 	
Name:

	
Thomas J. Lynch

	  	 	
Title

	
Chief Executive Officer

	
Address:

	
    

	  
	
     

	  

 

  

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 EXHIBIT A

FORM OF NOTICE OF EXERCISE OF OPTION

	
   

	  
	DATE	 

Frederick’s of Hollywood Group Inc.

6255 Sunset Boulevard, 6th Floor

Hollywood, CA 90028

Attention:  The Board of Directors

 

    Re:        Purchase of Option Shares

Gentlemen:

In accordance with my Stock Option Agreement dated as of September 8, 2011 (“Agreement”) with Frederick’s of Hollywood Group Inc. (the “Company”), I hereby irrevocably elect to exercise the right to purchase _________ shares of the Company’s common stock, par value $.01 per share (“Common Stock”), which are being purchased for investment and not for resale.

As payment for my shares, enclosed is a certified or bank check payable to Frederick’s of Hollywood Group Inc. in the sum of $ .

I hereby represent, warrant to, and agree with, the Company that

(i)           I acquired the Option and shall acquire the Option Shares for my own account and not with a view towards the distribution thereof;

(ii)           I have received a copy of all reports and documents required to be filed by the Company with the Commission pursuant to the Exchange Act within the last 24 months and all reports issued by the Company to its shareholders;

(iii)           I understand that I must bear the economic risk of the investment in the Option Shares, which cannot be sold by me unless they are registered under the Securities Act of 1933 (the “1933 Act”) or an exemption therefrom is available thereunder and that the Company is under no obligation to register the Option Shares for sale under the 1933 Act;

(iv)           In my position with the Company, I have had both the opportunity to ask questions and receive answers from the officers and directors of the Company and all persons acting on its behalf concerning the terms and conditions of the offer made hereunder and to obtain any additional information to the extent the Company possesses or may possess such information or can acquire it without unreasonable effort or expense necessary to verify the accuracy of the information obtained pursuant to clause (ii) above;

(v)           I am aware that the Company shall place stop transfer orders with its transfer agent against the transfer of the Option Shares in the absence of registration under the 1933 Act or an exemption therefrom as provided herein;

  

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(vi)           I have received a copy of the Company’s 2010 Long-Term Incentive Equity Plan and understand my rights with respect to the Option Shares shall, in all respects, be subject to the terms and conditions of this Company’s 2010 Long-Term Incentive Equity Plan and this Agreement;

(vii)           I am aware of and understand that I am subject to the Company’s Insider Trading Policy and have received a copy of such policy; and

(viii)           in the absence of an effective registration statement under the 1933 Act, the certificates evidencing the Option Shares shall bear the following legend:

“The shares represented by this certificate have been acquired for investment and have not been registered under the Securities Act of 1933.  The shares may not be sold or transferred in the absence of such registration or an exemption therefrom under said Act.”

Kindly forward to me my certificate at your earliest convenience.

Very truly yours,

	
    

	  	
   

	
(Signature)

	  	
(Address)

	
    

	  	
    

	
(Print Name)

	  	
(Address)

	  	  	
     

	  	  	
(Social Security Number)

 

  

11EXHIBIT 10.3

EXECUTION COPY

 

RESTRICTED STOCK AGREEMENT

 

THIS RESTRICTED STOCK AGREEMENT (this “Agreement”) dated as of September 8, 2011, by and between Frederick’s of Hollywood Group Inc., a New York corporation (the “Company”), and Donald Jones (the “Employee”).

 

WHEREAS, on September 8, 2011, pursuant to the terms and conditions of the Company’s 2010 Long Term Incentive Equity Plan (the “Plan”), the Board of Directors of the Company (the “Board”) authorized the issuance to the Employee, effective on the date hereof, of 80,000 shares of the authorized but unissued common stock of the Company, $.01 par value (“Shares”), conditioned upon the Employee’s acceptance thereof upon the terms and conditions set forth in this Agreement and subject to the terms of the Plan; and

 

WHEREAS, the Employee desires to acquire the Shares on the terms and conditions set forth in this Agreement and subject to the terms of the Plan;

 

IT IS AGREED:

 

1.           Grant of Shares.

 

1.1          The Company hereby issues to the Employee 80,000 Shares on the terms and conditions set forth herein.

 

1.2          Subject to Section 3 below, the Shares shall be subject to forfeiture in the event of the termination of Employee’s employment prior to the following dates:  prior to August 22, 2012, all Shares shall be subject to forfeiture, on or after August 22, 2012 and prior to August 22, 2013, 40,000 Shares shall be subject to forfeiture, on or after August 22, 2013, no Shares shall be subject to forfeiture (each a “Restriction Period” with respect to the applicable number of Shares).

  

  

  

 

1.3          The Shares shall be represented by two separate stock certificates registered in the name of the Employee, each for 40,000 Shares.  Both of the certificates (“Share Certificates”) shall bear the legends set forth in Sections 6(vi) and 6(vii) of this Agreement.  The Share Certificates shall be deposited with the Company, together with two separate stock powers endorsed in blank by the Employee, which will permit transfer to the Company of the Shares represented by each such Share Certificate that is forfeited or shall not become vested in accordance with the terms of this Agreement and the Plan.

 

1.4          After issuance, the Shares shall constitute issued and outstanding shares of common stock of the Company for all corporate purposes, and the Employee shall have the right to vote such Shares, to receive and retain all cash dividends as the Board may, in its sole discretion, pay on such Shares, and to exercise all of the rights, powers and privileges of a holder of common stock with respect to such Shares, except that (a) the Employee shall not be entitled to delivery of a Share Certificate until the Shares represented by such Share Certificate vest in accordance with Section 1.5 below and (b) other than cash dividends as the Board, in its sole discretion, distributes, the Company will retain custody of all distributions (“Retained Distributions”) made or declared with respect to the Shares (and such Retained Distributions will be subject to the same restrictions, terms and conditions as applicable to the Shares) until such time, if ever, as the Shares with respect to which such Retained Distributions shall have been distributed have become vested.

 

1.5          If the Employee is still an employee of the Company at the end of a Restriction Period, all of the Shares that are no longer subject to forfeiture, and the Retained Distributions with respect thereto, shall vest and shall no longer be subject to forfeiture by the Employee.  After the date that any Shares become vested, the Company shall instruct its transfer agent to issue and deliver to the Employee a new certificate for the Shares, which certificate shall not bear the legend set forth in Section 6(vii).  If, at any time prior to the vesting of any Shares in accordance with the first sentence of this Section 1.5, the Employee’s employment with the Company is terminated for any reason, subject to the provisions of Section 3, then the Shares that have not then vested (and the Retained Distributions with respect thereto) shall be forfeited to the Company and the Employee shall not thereafter have any rights with respect to such Shares.  In such event, the Company is authorized by the Employee to complete the stock powers to transfer the Shares to the Company and deliver the Share Certificates (and the Retained Distributions with respect thereto) and stock powers to the Company’s transfer agent to return the Shares (and, if applicable, the Retained Distributions with respect thereto) to the status of authorized but unissued shares of common stock.

 

  

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1.6          “Employment”.  The Employee shall be considered to be employed by the Company pursuant to this Section 1 if the Employee is a full-time employee of the Company (or of any parent, subsidiary or affiliate of the Company) or, if the Board determines in its sole and absolute discretion, the Employee is rendering substantial services to the Company as a part-time employee, consultant or contractor of the Company (or of any parent, subsidiary or affiliate of the Company).  The Board shall have the sole and absolute discretion to determine whether the Employee has ceased to be employed by the Company and the effective date on which such employment terminated.

 

1.7          No Right to Employment.  Nothing in the Plan or in this Agreement shall confer on the Employee any right to continue in the employ of, or other relationship with, the Company (or with any parent, subsidiary or affiliate of the Company) or limit in any way the right of the Company (or of any parent, subsidiary or affiliate of the Company) to terminate the Employee’s employment or other relationship with the Company (or with any parent, subsidiary or affiliate of the Company) at any time, with or without cause.

 

2.           Withholding Tax.  Not later than the date as of which an amount first becomes includible in the gross income of the Employee for federal income tax purposes with respect to the Shares, the Employee shall pay to the Company, or make arrangements satisfactory to the Company 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.  Notwithstanding anything in this Agreement to the contrary, the obligations of the Company under the Plan and pursuant to this Agreement shall be conditional upon such payment or arrangements with the Company and 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 Employee from the Company.

 

  

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3.           Special Vesting in Certain Circumstances.  If Employee’s employment is terminated by the Company for any reason other than (i) death, (ii) Disability (as defined in the Employment Agreement, dated as of September 8, 2011 between the Company and the Employee, as it may be amended from time to time (“Employment Agreement”)) or (iii) for Cause (as defined in the Employment Agreement), or if Employee terminates his employment for Good Reason (as defined in the Employment Agreement), then all of the Shares that would otherwise have vested on August 22, 2012 and August 22, 2013 shall continue to vest as scheduled.

 

4.           Nonassignability of Shares.  The Shares shall not be assignable or transferable until they have vested.

 

5.           Company Representations.  The Company hereby represents and warrants to the Employee that:

 

(i)           the Company, by appropriate and all required action, is duly authorized to enter into this Agreement and consummate all of the transactions contemplated hereunder; and

 

(ii)          the Shares, when issued and delivered by the Company to the Employee in accordance with the terms and conditions hereof, will be duly and validly issued and fully paid and non-assessable.

 

6.           Employee Representations.  The Employee hereby represents and warrants to the Company that:

 

(i)           the Employee is acquiring the Shares for the Employee’s own account and not with a view towards the distribution thereof;

 

(ii)          the Employee has received a copy of all reports and documents required to be filed by the Company with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (“Exchange Act”) within the last twenty-four (24) months and all reports issued by the Company to its shareholders;

 

(iii)         the Employee understands that the Employee must bear the economic risk of the investment in the Shares, which cannot be sold by the Employee unless they are registered under the Securities Act of 1933, as amended (“Securities Act”), or an exemption therefrom is available thereunder; provided that the Employee understands that the Company is under no obligation to register the Shares for sale under the Securities Act;

 

  

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(iv)         in the Employee’s position with the Company, the Employee has had both the opportunity to ask questions and receive answers from the officers and directors of the Company and all persons acting on its behalf concerning the terms and conditions of the offer made hereunder and to obtain any additional information to the extent the Company possesses or may possess such information or can acquire it without unreasonable effort or expense necessary to verify the accuracy of the information obtained pursuant to clause (ii) above;

 

(v)          the Employee is aware that the Company shall place stop transfer orders with its transfer agent against the transfer of the Shares in the absence of registration under the Securities Act or an exemption therefrom as provided herein;

 

(vi)         in the absence of an effective registration statement under the Securities Act, the Share Certificates shall bear the following legend:

 

“The securities represented by this certificate have been acquired for investment and have not been registered under the Securities Act of 1933, as amended, or applicable state securities laws and may not be sold or transferred in the absence of such registration or pursuant to an exemption therefrom under said Act and such laws, supported by an opinion of counsel, reasonably satisfactory to the Company and its counsel, that such registration is not required.”

 

(vii)        the Employee understands that the Share Certificates shall also bear the following legend:

 

“The shares represented by this certificate have been acquired pursuant to a Restricted Stock Agreement, dated as of September 8, 2011, a copy of which is on file with the Company, and may not be transferred, pledged or disposed of except in accordance with the terms and conditions thereof.”

 

(viii)       the Employee has received a copy of the Plan and understands the Employee’s rights with respect to the Shares shall, in all respects, be subject to the terms and conditions of the Plan and this Agreement; and

 

  

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(ix)          the Employee is aware of and understands that the Employee is subject to the Company’s Insider Trading Policy and has received a copy of such policy as of the date of this Agreement.

 

7.           Restriction on Transfer of Shares.  Notwithstanding anything in this Agreement to the contrary, and in addition to the provisions of Section 4 of this Agreement, the Employee hereby agrees that Employee shall not sell, transfer by any means or otherwise dispose of the Shares acquired by Employee without registration under the Securities Act, or in the event that they are not so registered, unless (i) an exemption from the Securities Act registration requirements is available thereunder, (ii) the Employee has furnished the Company with notice of such proposed transfer and the Company’s legal counsel, in its reasonable opinion, shall deem such proposed transfer to be so exempt and (iii) such transfer is in compliance with the Company’s Insider Trading Policy, as in effect at such time.

 

8.           Miscellaneous.

 

8.1          Notices.  All notices, requests, deliveries, payments, demands and other communications that are required or permitted to be given under this Agreement shall be in writing and shall be either delivered personally or by private courier (e.g., Federal Express), or sent by registered or certified mail, return receipt requested, postage prepaid, to the parties at their respective addresses set forth herein, or to such other address as either party shall have specified by notice in writing to the other.  Notice shall be deemed duly given hereunder when delivered or mailed as provided herein.

 

8.2          Plan Paramount; Conflicts with Plan.  This Agreement shall, in all respects, be subject to the terms and conditions of the Plan, whether or not stated herein.  In the event of a conflict between the provisions of the Plan and the provisions of this Agreement, the provisions of the Plan shall in all respects be controlling.

 

8.3          Waiver.  The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any other or subsequent breach.

  

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8.4          Entire Agreement.  This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof.  This Agreement may not be amended except in writing executed by the Employee and the Company.

 

8.5          Binding Effect; Successors.  This Agreement shall inure to the benefit of and be binding upon the parties hereto and, to the extent not prohibited herein, their respective heirs, successors, assigns and representatives.  Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto and as provided above, their respective heirs, successors, assigns and representatives any rights, remedies, obligations or liabilities.

 

8.6          Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to choice of law provisions.

 

8.7          Headings.  The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Agreement.

 

8.8          Section 409A.  This Agreement is intended to comply with the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”).  To the extent that the Shares or any payments or benefits provided hereunder are not considered compliant with Section 409A, the parties agree that the Company shall take all actions necessary to make such payments and/or benefits become compliant.

 

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IN WITNESS WHEREOF, the parties hereto have signed this Restricted Stock Agreement as of the day and year first above written.

 

	
EMPLOYEE

	
FREDERICK’S OF HOLLYWOOD GROUP INC.

	
/s/ Donald Jones

	
 

	
By:

	
/s/ Thomas J. Lynch

	
Donald Jones

	
  Thomas J. Lynch

	  	
  Chief Executive Officer

	
Address of Employee:

	
Address of Company:

	
____________________

	
6255 Sunset Blvd., 6th Floor

	
____________________

	
Hollywood, CA 90028

 

  

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