EXHIBIT 99.3
As amended July 29, 1996
and May 3, 1999
STOCK OPTION AGREEMENT
Option No. 1
No. of Shares Subject to Option: 30,000
This AGREEMENT, dated May 15, 1992, is made between CHILDREN'S CONCEPT,
INC. (the "Company") and ROSA L. AUKBURG (the "Optionee"),
W I T N E S S E T H :
1. Grant of Option. Pursuant to resolution of the Board of Directors of the
---------------
Company dated May 14, 1992, the Company hereby grants to the Optionee, subject
to the terms and conditions herein set forth, the right and option to purchase
from the Company, all or any part of an aggregate of 30,000 shares of common
stock ($.01 par value) of the Company ("Stock") at the purchase price of $0.67
per share (the "Exercise Price"), such option to be exercisable and exercised as
hereinafter provided. This option shall not be treated as an incentive stock
option as defined in Section 422A(b) of the Internal Revenue Code of 1986, as
amended.
2. Terms and Conditions. It is understood and agreed that the option
--------------------
evidenced hereby is subject to the following terms and conditions:
(a) Expiration Date. The option shall expire ten (10) years after the
---------------
date indicated above;
(b) Vesting of Option. The option granted hereunder shall vest (the
-----------------
"Vested Shares") in accordance with the following schedule:
On or After Number of
This Date Shares
--------- ------
May 15, 1992 15,000
May 15, 1993 7,500
May 15, 1994 7,500
(c) Exercise of Option. Subject to the other terms of this Agreement
------------------
regarding the exercisability of the option, this option may be exercised on or
after the date shares
have vested and upon termination of the Company's "S" corporation status (the "S
exception"), but in no event shall the S exception remain in effect beyond three
(3) years from the date hereof.
Any exercise shall be accompanied by a written notice to the
Company specifying the number of shares as to which the option is being
exercised. Notation of any partial exercise shall be made by the Company on
Schedule 1 hereto;
(d) Payment of Purchase Price Upon Exercise. At the time of any
---------------------------------------
exercise, the purchase price of the shares as to which this option shall be
exercised shall be paid to the Company in cash.
(e) Exercise Upon Death or Termination of Employment. In the event of
------------------------------------------------
death of Optionee while an employee of the Company or any subsidiary of the
Company, this option may be exercised , to the extent that Optionee was entitled
to do so on the date of her death, by the person or persons to whom Optionee's
rights under this option pass by will or applicable law, or if no such person
has such right, by her executors or administrators, at any time, or from time to
time, but no later than ten (10) years from the date hereof or three (3) months
after Optionee's death, whichever date is earlier; provided, however, if the
option cannot be exercised because of the S exception, the right to exercise
this option shall terminate one (1) month after the expiration of the S
exception.
(f) Exercise Upon Termination of Employment. If Optionee's employment
---------------------------------------
shall terminate for any reasons other than death, all right to exercise this
option shall terminate on May 14, 2002; provided, however, if Optionee cannot
exercise the option because of the S exception, Optionee's right to exercise the
option shall terminate one (1) month after the expiration of the S exception.
(g) Non-Transferability. This option shall not be transferable other
-------------------
than by will or by the laws of the descent and distribution. During the lifetime
of Optionee, this option shall be exercisable only by her;
(h) Adjustments. In the event of any change in the Stock of the
-----------
Company by reason of any stock dividend, recapitalization, reorganization,
merger, consolidation, split-up, combination or exchange of shares, or any
rights offering to purchase Stock or securities of any type (including
convertible debt, options or warrants) convertible into, or entitling the holder
thereof to purchase Stock (the "Stock Change"), the number and kind of shares
subject to this option shall be appropriately adjusted consisted with the Stock
Change so the Optionee shall have the option to purchase the same percentage of
Stock after the Stock Change as Optionee had the option to purchase immediately
prior to the Stock Change;
(i) No Rights as Stockholder. Optionee shall have no right as a
------------------------
stockholder with respect to any shares of Stock subject to this option prior to
the date of issuance to her of a certificate or certificates for such shares;
(j) No Right to Continued Employment. This option shall not confer
--------------------------------
upon Optionee any right with respect to continuance of employment by the Company
or any subsidiary, nor shall it interfere in any way with the right of her
employer to terminate her employment under the terms of the Employment
Agreement;
(k) Compliance with Laws and Regulations. This option and the
------------------------------------
obligation of the Company to sell and deliver shares hereunder, shall be subject
to all applicable federal and state laws, rules and regulations and to such
approvals by any government or regulatory agency as may be required. The Company
shall not be required to issue or deliver any certificates for shares of Stock
prior to:
(i) the listing of such shares on any stock exchange on which the
Stock may then be listed, and
(ii) the completion of any registration or qualification of such
shares under any federal or state law, or any rule or regulation of any
government body which the Company shall reasonably determine to be necessary or
advisable. Moreover, this option may not be exercised if its exercise, or the
receipt of shares of Stock pursuant thereto, would be contrary to applicable
law.
3. Investment Representation. The Board of Directors of the Company may
-------------------------
require Optionee to furnish to the Company, prior to the issuance of any shares
upon the exercise of all or any part of the option, an agreement (in such form
as the Board of Directors may specify) in which Optionee represents that the
shares acquired by her upon exercise are being acquired for investment and not
for resale or with a view of distribution thereof.
4. Notices. Any notice hereunder to the Company shall be addressed to it at
-------
its office at the following address:
Children's Concept, Inc.
257 E. Lancaster Avenue
Suite 202
Wynnewood, Pennsylvania 19096
Attention: David Schlessinger
and any notice hereunder to Optionee shall be addressed to her at:
Ms. Rosa Aukburg
433 Levering Mill Road
Bala Cynwyd, Pennsylvania 19004
subject to the right of either party to designate at any time hereafter in
writing some other address.
5. Amendment. The Board of Directors of the Company shall have the right to
---------
amend this Agreement subject to the Optionee's consent if such amendment is not
favorable to the Optionee.
6. Withholding of Taxes. Whenever the Company proposes or is required to
--------------------
deliver or transfer shares in connection with the exercise of an option, the
Company shall have the right to:
(a) require the recipient to remit or otherwise make available to the
Company an amount sufficient to satisfy any federal, state and/or local
withholding tax requirements prior to the delivery or transfer of any
certificate or certificates for such shares; or
(b) take whatever other action it deems necessary to protect its
interest with respect to tax liabilities. The Company's obligation to make any
delivery or transfer of shares shall be conditioned on the Optionee's
compliance, to the Company's satisfaction, with any withholding requirement.
7. Counterparts. This Agreement has been executed in two counterparts each
------------
of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, _________________, has caused this Agreement to be
executed by an appropriate officer and Optionee has executed this Agreement,
both as of the day and year first above written.
/s/ Rosa Aukburg
--------------------------------
ROSA AUKBURG
CHILDREN'S CONCEPT, INC.
By: /s/ David Schlessinger
-----------------------------
David Schlessinger, President
SCHEDULE 1
Date of Exercise Number of Shares Aggregate Exercise Price
- ---------------- ---------------- ------------------------
June 2, 1999 25,000 $16,750.00