LETTER AGREEMENT
January 15, 1998
RTW, Inc.
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxxxx XX 00000
Xxxx X. Xxxxxxx
President and Chief Executive Officer
RTW, Inc.
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxxxxxx XX 00000
Re: Election to Partially Convert Non-Qualified Stock Option Agreement
into Incentive Stock Option Agreement
This letter agreement is entered into as of January 15, 1998 by RTW, Inc., a
Minnesota corporation ("RTW" or the "Company"), and Xxxx X. Xxxxxxx
("Xxxxxxx"). The Company and Xxxxxxx have entered into an employment letter
agreement dated November 24, 1997 (the "Employment Agreement"). Effective as
of November 24, 1997, the Company also granted to Xxxxxxx a non-qualified
stock option to purchase 500,000 shares of RTW, Inc. Common Stock (the
"Option Agreement").
Pursuant to Section 3(a) of the Employment Agreement and in accordance with
Section 1 of the Option Agreement, Xxxxxxx may, and desires to, prior to
February 1, 1998, elect to surrender a portion of the option shares under the
Option Agreement and have a separate Incentive Stock Option Agreement issued
to him for the same number of option shares as he surrenders.
NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, receipt of which is hereby acknowledged, RTW and Xxxxxxx
hereby agree as follows:
1. Xxxxxxx hereby surrenders the right to purchase 42,855 shares
pursuant to the Option Agreement and the Company agrees to issue an Incentive
Stock Option Agreement for 42,855 shares to Xxxxxxx.
2. Section 1 of the Option Agreement is amended to read as follows:
"1. GRANT OF OPTION. The Company hereby grants to the
Optionee the right and option (hereinafter called the
"Option") to purchase from the Company all or any part of
an aggregate amount of 457,145 shares of the Common Stock
of the Company (the "Option Shares") on the terms and
conditions herein set forth."
3. Section 4 of the Option Agreement is hereby amended to read as
follows:
"4. EXERCISE OF OPTION. Thereafter, subject to the terms and
conditions hereof, the Option may be exercised as follows:
(a) From the Employment Date, the Option may be
exercised as of 110,715 shares.
(b) From and after 12 months from the Option Date,
the Option may be exercised as to an additional
125,000 shares.
(c) From and after 24 months from the Option Date,
the Option may be exercised as to an additional
110,715 shares.
(d) From and after 36 months from the Option Date,
the Option may be exercised as to an additional
110,715 shares."
Accepted and agreed to by the undersigned as of the 15th day of
January, 1998.
RTW, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxx /s/ Xxxx X. Xxxxxxx
----------------------------- -------------------------
Its: Chief Financial Officer Xxxx X. Xxxxxxx
