EXHBIT 99.1 STOCK OPTION #12021
SEATTLE FILMWORKS, INC.
STOCK OPTION AGREEMENT
THIS OPTION MAY NOT BE TRANSFERRED EXCEPT BY WILL OR UNDER THE LAWS OF DESCENT
AND DISTRIBUTION. THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF MAY
NOT BE OFFERED OR SOLD, PLEDGED (EXCEPT A PLEDGE PURSUANT TO THE TERMS OF WHICH
ANY OFFER OR SALE UPON FORECLOSURE WOULD BE MADE IN A MANNER THAT WOULD NOT
VIOLATE THE REGISTRATION PROVISIONS OF FEDERAL OR STATE SECURITIES LAWS) OR
OTHERWISE DISTRIBUTED FOR VALUE, NOR MAY THE SHARES OF COMMON STOCK ISSUED UPON
EXERCISE HEREOF BE TRANSFERRED ON THE BOOKS OF THE COMPANY, WITHOUT AN OPINION
OF COUNSEL, CONCURRED IN BY COUNSEL FOR THE COMPANY, THAT NO VIOLATION OF SAID
REGISTRATION PROVISIONS WOULD RESULT THEREFROM.
THIS AGREEMENT is entered into as of February 9, 1999 (the "Date of Grant"
between Seattle FilmWorks, Inc. Corporation, a Washington corporation (the
"Corporation"), Xxxx X. Xxxxxxxxxxxxxx (the "Optionee").
WITNESSETH THAT:
WHEREAS, the corporation has approved and adopted the 1987 Stock Option
Plan (the "Plan"), pursuant to which the Board of Directors is authorized to
grant to employees of the Corporation and other persons who are involved in the
Corporation's business, stock options to purchase common stock, $.01 par value,
of the Corporation (the "Common Stock");
WHEREAS, the Board of Directors authorized the grant to the Optionee of an
option to purchase 33,750 shares of Common Stock (the "Option");
NOW, THEREFORE, the Corporation agrees to offer to the Optionee the option
to purchase, upon the terms and conditions set forth herein and in the Plan,
33,750 shares of Common Stock.
1. Exercise Price. The exercise price for the Option shall be $3.875 per
share.
2. Vesting Schedule.
(a) The option vests and is exercisable as follows:
25% on the date one (1) year from the Date of Grant, 50% on the date two
(2) years from the Date of Grant, 75% on the date three (3) years from the Date
of Grant, and 100% on the date four (4) years from the Date of Grant.
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Vesting will cease on the Optionee's date of Termination of Employment with
the Corporation or in the case of Optionees who are not employees of the
Corporation, the date that the Optionee ceases to provide services to or on
behalf of the Corporation.
The vesting schedule for the Option is subject to acceleration in
accordance with the provisions of Section 5 (f) of the Plan.
3. Option Not Transferable. The Option is not transferable except by will
or the laws of descent and distribution.
4. Investment Intent. By accepting this Option, Optionee represents and
agrees for himself, and all persons who acquire rights in this Option in
accordance with the Plan through Optionee, that none of the shares of Common
Stock purchased upon exercise of this option will be distributed in violation of
applicable federal and state laws and regulations, and Optionee shall furnish
evidence satisfactory to the Corporation (including written and signed
representation letter and a consent to be bound by all transfer restrictions
imposed by applicable law, legend condition, or otherwise) to that effect, prior
to delivery of the purchased shares of Common Stock.
5. Termination of Option. A vested Option shall terminate, to the extent
not previously exercised, upon the occurrence of the first of the following
events:
(i) five years from the date of grant;
(ii) the expiration of 95 days from the date of the Optionee's
termination of employment with the Corporation (190 days if
the Optionee is an officer or director of the Corporation)
for any reason other than death or disability, or in the
case of Optionees who are not employees of the Corporation,
the expiration of 95 days from the date that the Optionee
ceases to provide services to or on behalf of the
Corporation; or
(iii)the expiration of one year from (A) the date of death of
the Optionee or (B) cessation of employment or provision of
services by reason of disability (as defined at Section 105
(d) (4) of the Internal Revenue Code 1986, as amended).
Other than pursuant to the provisions of Section 5 (f) of the Plan, each
unvested Option granted pursuant hereto shall terminate upon the Optionee's
termination of employment for any reason whatsoever including death or
disability.
6. Stock. In the case of any stock split, stock dividend or like change in
the nature of shares granted by this Agreement, the number of shares and option
price shall be proportionately adjusted as set forth in Section 5 (m) of the
Plan.
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7. Exercise of Option. Each exercise of this Option shall be by means of a
written notice of exercise delivered to the Secretary of the Corporation at its
principal executive office in Seattle, Washington, specifying the number of
shares of Common Stock to be purchased and accompanied by payment in cash, by
certified or cashier's check payable to the order of the Corporation of the
aggregate exercise price for the Common Stock to be purchased. In addition, an
Optionee may pay for all or any Stock purchased upon the exercise of an Option
by delivering to the Corporation shares of Stock previously held by such
optionee or, with the permission of the Committee, by having shares withheld
from the amount of shares of Stock to be received by the optionee. The shares of
Stock received by the Corporation or withheld by the Corporation as payment for
shares of Stock purchased shall have a fair market value (as established by the
Board of Directors) equal to the aggregate option exercise price (or portion
thereof). The Optionee agrees that he will also pay to the Corporation the
amount necessary for the Corporation to satisfy its withholding obligation
imposed by the Internal Revenue Code of 1986.
8. Optionee Acknowledgements: Optionee acknowledges that he has read and
understands the terms of this Agreement and that:
(a) The issuance of shares of Common Stock pursuant to the exercise of this
Option, and any resale of the shares of Common Stock, may only be effected in
compliance with applicable state and federal laws and regulations;
(b) He/she is not entitled to any rights as a shareholder with respect to
any shares of Common Stock issuable hereunder until he/she becomes a shareholder
of record;
(c) The share of Common Stock subject hereto may be adjusted in the event
of certain organic changes in the capital structure of the corporation or for
any other reason permitted by the plan;
(d) This Agreement does not constitute an employment agreement nor does it
entitle Optionee to any specific employment or to employment for a period of
time and that Optionee's continued employment if any, with the Corporation shall
be at will and is subject to termination in accordance with the corporation's
prevailing policies and any other agreement between Optionee and the
Corporation; and
(e) This Option shall not be treated as an Incentive Stock Option ("ISO").
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9. Professional Advice. The acceptance and exercise of the Option and the
sale of Common Stock issued pursuant to exercise of the Option may have
consequences under federal and state tax and securities laws which may vary
depending on the individual circumstances of the Optionee. Accordingly, the
Optionee acknowledges that he/she has been advised to consult his/her personal
legal and tax advisor in connection with this Agreement and his/her dealings
with respect to the Option of the Common Stock.
10. Notices. Any notice required or permitted to be made or given hereunder
shall be mailed or delivered personally to the addresses set forth below, or as
changed from time to time by written notice to the other:
Corporation: Seattle FilmWorks, Inc.
0000 00xx Xxxxxx, Xxxx
Xxxxxxx, XX 00000
Optionee: ---------------------------
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11. Agreement Subject to Plan. This Option and this Agreement evidencing
and confirming the same are subject to the terms and conditions set forth in the
Plan and in any amendments to the Plan existing nor or in the future, which
terms and conditions are incorporated herein by reference. A copy will be made
available upon request. Should any conflict exist between the provisions of the
Plan and those of this Agreement, those of the Plan shall govern and control.
This Agreement comprises the entire understanding between the Corporation and
the Optionee with respect to the Option and shall be construed and enforced
under the laws of the State of Washington.
12. Reserved Shares. The Corporation hereby warrants that a sufficient
number of shares of its Common Stock have been reserved and are available to
satisfy requirements of the Plan.
Dated as of the 10 day of March 1999 .
Seattle FilmWorks, Inc.
BY /s/ Xxxx X. Xxxxxxxxxxxxxx /s/ Xxxx X. Xxxxxxxxxxxxxx
Its President & CEO OPTIONEE
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