EXHIBIT 99.3
NON-QUALIFIED OPTION TO PURCHASE
SHARES OF COMMON STOCK
OF J. BAKER, INC.
20,000 June 5, 1997
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No. of Shares Date
Pursuant to a vote ratified and confirmed at a meeting of its Board of
Directors held on June 10, 1997, J. Baker, Inc. (the "Company") hereby grants to
James D. Lee (the "Optionee") a Non-qualified Stock Option to purchase prior to
June 5, 2007 (the "Expiration Date") all or any part of 20,000 shares of common
stock of the Company (the "Option Shares") at a price of $1.00 per share subject
to the terms and conditions contained herein. This Option is intended to be, and
shall be treated as, a non-qualified stock option, and is not an incentive stock
option under the provisions of the Internal Revenue Code of 1986, as amended
(the "Code").
1. Vesting. Subject to the provisions of Section 3 hereof, this Option
shall become vested and exercisable with respect to the following whole number
of Option Shares according to the timetable set forth below and shall continue
to be exercisable by the Optionee at any time or times prior to the Expiration
Date:
Number of
Shares Becoming Cumulative
Years After Available for Number of
Date of Grant Exercise Shares Available
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Less than 1 year 0 0
At least 1 year 2,000 2,000
At least 2 years 3,000 5,000
At least 3 years 4,000 9,000
At least 4 years 5,000 14,000
At least 5 years 6,000 20,000
2. Manner of Exercise. The Optionee may exercise this Option only in
the following manner: From time to time prior to the Expiration Date of this
Option, the Optionee may give written notice to the Company of his election to
purchase some or all of the Option Shares purchasable at the time of such
notice. Said notice shall specify the number of shares to be purchased and shall
be accompanied by payment therefor in cash or, subject to the discretion of the
Company, in shares of the Company's common stock, valued at their fair market
value on the date of exercise as determined by the closing price of the
Company's common stock on the
NASDAQ stock market for the immediately preceding trading day. No certificates
for the shares so purchased will be issued to the Optionee until the Company has
completed all steps required by law to be taken in connection with the issue and
sale of the shares, including without limitation, the registration of such
shares under the Securities Act of 1933 and, if the Company deems it necessary
or appropriate, receipt of a representation from the Optionee upon each exercise
of this Option that he is purchasing the shares for his own account and not with
a view to any resale or distribution thereof, the legending of any certificate
representing said shares, and the imposition of a stop transfer order with
respect thereto, to prevent a resale or distribution in violation of Federal or
State securities laws. If requested upon the exercise of the Option,
certificates for shares may issued in the name of the Optionee jointly with
another person with rights of survivorship or in the name of the executor or
administrator of his estate, and the foregoing representations shall be modified
accordingly.
3. Transferability and Termination. Except as provided in the following
sentence, this Option is personal to the Optionee, is not transferable by the
Optionee in any manner by operation of law or otherwise, and is exercisable,
during the Optionee's lifetime, only by him.
(a) In the event the Optionee dies before the Expiration Date,
this Option may be exercised by the Optionee's personal representatives
prior to the earlier of (i) the first anniversary of his death or (ii)
the Expiration Date, but only to the extent that this Option was
exercisable by the Optionee on the date of his death.
(b) In the event the Optionee's employment terminates by
reason of Disability, this option shall be exercisable, to the extent
exercisable on the date of termination for a period of 12 months from
the date of termination or until the expiration date, if earlier.
(c) If the Optionee's employment terminates for Cause, any
option held by the Optionee shall immediately terminate and be of no
further force and effect. If the Optionee's employment terminates for
any reason other than death, Disability or Cause, this option may be
exercised, to the extent exercisable on the date of termination, for a
period of three (3) months from the date of termination or until the
Expiration Date, if earlier.
For purposes of this Option, "Disability" shall mean the Optionee's
inability to perform his normal required services for the Company and its
Subsidiaries for a period of six consecutive months by reason of the Optionee's
mental or physical disability as determined by the Company, in good faith.
For purposes of this Option, "Cause" shall mean the occurrence of one
or more of the following: (i) Optionee is convicted of, pleads guilty to, or
confesses to any felony or any act of fraud, misappropriation or embezzlement
which has an immediate and materially adverse effect on the Company or any
Subsidiary, as determined by the Board in good faith in its sole discretion,
(ii) Optionee engages in a fraudulent act to the material damage or prejudice of
the Company or any subsidiary or in conduct or activities materially damaging to
the property, business or reputation of the Company or any Subsidiary, all as
determined by the Board in good faith in its sole discretion, (iii) any material
act or omission by Optionee involving malfeasance or negligence in the
performance of Optionee's duties to the Company or any Subsidiary to the
material detriment of the Company or any Subsidiary, as determined by the Board
in good faith in its sole discretion, which has not been corrected by Optionee
within 30 days after written notice from the Company of any such act or
omission, (iv) failure by Optionee to comply in any material respect with the
terms of his employment agreement, if any, or any written policies or directives
of the Board as determined by the Board in good faith in its sole discretion,
which has not been corrected by Optionee within 30 days after written notice
from the Company of such failure, or (v) material breach by Optionee of his
noncompetition agreement with the Company, if any, as determined by the Board in
good faith in its sole discretion.
4. Option Shares. The shares of stock which are the subject of this
Option are shares of the Common Stock of the Company as constituted on the date
of this Option, subject to adjustment as provided in this Section 4. The terms
of this Option and the number of shares subject to this Option shall be
equitably adjusted in such manner as to prevent dilution or enlargement of
option rights in the following instances:
(a) the declaration of a dividend payable to the holders of
Common Stock in stock of the same class;
(b) a split-up of the Common Stock or a reverse split
thereof; and
(c) a recapitalization of the Company under which shares of
one or more different classes of stock are changed into or distributed
in exchange for or upon the Common Stock without payment of any
valuable consideration by the holders thereof.
The terms of any such adjustment shall be conclusively determined by the Board
of Directors.
5. Effect of Change of Control. In the case of the occurrence of
certain Change of Control Events, outstanding Options will become immediately
exercisable in full. A Change of Control Event includes (i) any person or group,
with certain exceptions, acquiring the beneficial ownership of 30% or more of
either the voting securities of the Company or the then outstanding shares of
the Company; (ii) a change in the composition of a majority of the Company's
Board of Directors as it is composed on the date hereof unless the selection or
nomination of each of the new members was approved by a majority of the members
of the Company's Board of Directors who were members on the date hereof; or
(iii) approval by the Company's stockholders of a consolidation or merger where
the stockholders of the Company would not beneficially own at least 80% of the
voting stock of the corporation issuing cash or securities, any plan for the
liquidation or dissolution of the Company, or the sale of all or substantially
all of the Company's assets; or (iv) the sale of the Company's Licensed Discount
Division in its entirety as a going concern or the discontinuance of the
operation of the Licensed Discount Division and the commencement of liquidation
of the Divisions licenses, inventory and fixed assets.
6. No Special Employment Rights. This Option will not confer upon the
Optionee any right with respect to continued employment by the Company or a
Subsidiary, nor will it interfere in any way with any right of the Optionee's
employer to terminate the Optionee's employment at any time.
7. Rights as a Shareholder. The Optionee shall have no rights as a
shareholder with respect to any shares of Common Stock that may be purchased by
exercise of this Option unless and until a certificate or certificates
representing such shares of Common Stock are duly issued and delivered to the
Optionee. No adjustment shall be made for dividends or other rights for which
the record date is prior to the date such stock certificate is issued.
8. Tax Withholding. No later than the date as of which part or all of
the value of any shares of Common Stock received by the Optionee first becomes
includable in the Optionee's gross income for Federal tax purposes, the Optionee
shall make arrangements with the Company regarding the payment of any Federal,
state or local taxes required to be withheld with respect to such income.
9. Miscellaneous. Notices hereunder shall be mailed or delivered to the
Company at its principal place of business, 555 Turnpike Street, Canton,
Massachusetts 02021 and shall be mailed or delivered to the Optionee at his
address set forth below, or in either case at such other address as one party
may subsequently furnish to the other party in writing. This Option shall be
governed by the laws of the Commonwealth of Massachusetts without giving effect
to the choice of law principles thereof.
J. BAKER, INC.
/s/Alan I. Weinstein
Name: Alan I. Weinstein
Title: President and C.E.O.
Receipt is acknowledged of the foregoing Option and its terms and
conditions are hereby agreed to:
Dated: June 5, 1997 /s/James D. Lee
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James D. Lee
1148 High Street
Westwood, MA 02090