COLUMBIA SPORTSWEAR COMPANY
STOCK OPTION AGREEMENT
Incentive Stock Option
This STOCK OPTION AGREEMENT is made between COLUMBIA SPORTSWEAR
COMPANY, an Oregon corporation (the "Company"), and ___________________ (the
"Optionee"), pursuant to the Company's 1997 Stock Incentive Plan (the "Plan").
The Company and the Optionee agree as follows:
1. Option Grant. The Company hereby grants to the Optionee on the terms and
conditions of this Agreement the right and the option (the "Option") to purchase
all or any part of ____ shares of the Company's Nonvoting Common Stock at a
purchase price of $_____ per share. The terms and conditions of the Option grant
set forth in the attached Exhibit A are hereby incorporated into and made a part
of this Agreement. The Option is intended to be an Incentive Stock Option, as
defined in Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
2. Grant Date. The Grant Date for this Option is ___________. The Option
shall continue in effect until the date ten years after the Grant Date (the
"Expiration Date") unless earlier terminated as provided in Sections 1 or 4 of
Exhibit A.
3. Exercise of Option. The Option shall not be exercisable with regard to
any shares of Nonvoting Common Stock until the earlier of (a) two months after
the Company or an "Affiliated Entity" has completed its initial firm
underwritten public offering of stock registered with the Securities and
Exchange Commission (the "Initial Public Offering"), or (b) the ninth
anniversary of the Grant Date. The Initial Public Offering and the ninth
anniversary of the grant date are each an "Exercise Event." Subject to the
occurrence of an Exercise Event, the Option shall become exercisable ratably
over a period of 60 months from the Grant Date. The term "Affiliated Entity"
includes only an entity controlled by or under common control with the Company
but only if (i) all or substantially all assets of the Company have been
transferred to such entity or (ii) the Company's nonvoting common stock is
convertible into or exchangeable for securities of such entity.
IN WITNESS WHEREOF, the parties have executed this Agreement in
duplicate as of the date written above.
COLUMBIA SPORTSWEAR COMPANY OPTIONEE
By:
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[signature]
Title:
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[print name]
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[address]
COLUMBIA SPORTSWEAR COMPANY
EXHIBIT A TO STOCK OPTION AGREEMENT
1. Termination of Service.
1.1 Unless otherwise determined by the Board of Directors of the
Company, if the Optionee's employment by or service with the Company terminates
for any reason other than because of total disability or death, the Option may
be exercised at any time prior to the Expiration Date or the expiration of 30
days after the date of the termination, whichever is the shorter period, but
only if and to the extent the Optionee was entitled to exercise the Option at
the date of termination.
1.2 If the Optionee's employment by or service with the Company
terminates because of death or total disability (as defined in Section
6(a)(iv)(B) and (C) of the Plan), the Option may be exercised at any time prior
to the Expiration Date or the expiration of 12 months after the date of
termination, whichever is the shorter period, but only if and to the extent the
Optionee was entitled to exercise the Option at the date of termination. If the
Optionee's employment or service is terminated by death, the Option shall be
exercisable only by the person or persons to whom the Optionee's rights under
the Option pass by the Optionee's will or by the laws of descent and
distribution of the state or country of the Optionee's domicile at the time of
death.
2. Method of Exercise of Option.
2.1 Unless the Board of Directors determines otherwise, to exercise
the Option, the Optionee must give written notice to the Company stating the
Optionee's intention to exercise, specifying the number of shares as to which
the Optionee desires to exercise the Option and the date on which the Optionee
desires to complete the transaction. Unless the Board of Directors determines
otherwise, on or before the date specified for completion of the purchase of
shares pursuant to the Option, the Optionee must pay the Company the full
purchase price of such shares in cash or, in whole or in part, in Nonvoting
Common Stock of the Company valued at fair market value. No shares shall be
issued until full payment for the shares has been made.
2.2 After exercise of all or a part of the Option, the Optionee shall
immediately upon notification of the amount due, if any, pay to the Company in
cash the amount necessary to satisfy any applicable federal, state and local tax
withholding requirements. If additional withholding is or becomes required
beyond any amount deposited before delivery of the certificates for the Option
shares, the Optionee shall pay such amount to the Company on demand. If the
Optionee fails to pay the amount demanded, the Company may withhold that amount
from other amounts payable by the Company to the Optionee, including salary or
compensation, subject to applicable law.
3. Nontransferability of Option. The Option may not be assigned or
transferred by the Optionee, either voluntarily or by operation of law, except
by will or by the laws of descent and distribution of the state or country of
the Optionee's domicile at the time of death.
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4. Changes in Capital Structure.
4.1 Stock Splits; Stock Dividends. If the outstanding Nonvoting Common
Stock of the Company is hereafter increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of any stock split, combination of shares or dividend payable
in shares, recapitalization or reclassification, appropriate adjustment shall be
made by the Board of Directors in the number and kind of shares as to which the
Option, or portions thereof then unexercised, shall be exercisable. Adjustments
shall be made without change in the total price applicable to the unexercised
portion of the Option and with a corresponding adjustment in the Option price
per share and shall neither (i) make the ratio, immediately after the event, of
the Option price per share to the fair market value per share more favorable to
the Optionee than that ratio immediately before the event nor (ii) make the
aggregate spread, immediately after the event, between the fair market value of
shares as to which the Option is exercisable and the Option price of such shares
more favorable to the Optionee than that aggregate spread immediately before the
event. The Board of Directors shall have no obligation to effect any adjustment
that would or might result in the issuance of fractional shares, and any
fractional shares resulting from any adjustment may be disregarded or provided
for in any manner determined by the Board of Directors. Any such adjustments
made by the Board of Directors shall be conclusive.
4.2 Mergers, Reorganizations, Etc. In the event of a merger,
consolidation or plan of exchange to which the Company is a party or a sale of
all or substantially all of the Company's assets (each, a "Transaction"), the
Board of Directors shall, in its sole discretion and to the extent possible
under the structure of the Transaction, select one of the following alternatives
for treating the Option:
4.2-1 The Option shall remain in effect in accordance with its
terms.
4.2-2 The Option shall be converted into an option to purchase
stock in the corporation that is the surviving or acquiring corporation in
the Transaction. The amount, type of securities subject thereto and
exercise price of the converted option shall be determined by the Board of
Directors of the Company, taking into account the relative values of the
companies involved in the Transaction and the exchange rate, if any, used
in determining shares of the surviving corporation to be issued to holders
of shares of the Company. Conversions shall be made without change in the
total price applicable to the unexercised portion of the Option and with a
corresponding adjustment in the Option price per share and shall neither
(i) make the ratio, immediately after the event, of the Option price per
share to the fair market value per share more favorable to the Optionee
than that ratio immediately before the event nor (ii) make the aggregate
spread, immediately after the event, between the fair market value of
shares as to which the Option is exercisable and the Option price of such
shares more favorable to the Optionee than that aggregate spread
immediately before the event. Unless otherwise determined by the Board of
Directors, the converted
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option shall be exercisable only to the extent that the exercisability
requirements relating to the Option have been satisfied.
4.2-3 The Board of Directors shall provide a 30-day period before
the consummation of the Transaction during which the Option may be
exercised to the extent then exercisable, and, upon the expiration of such
30-day period, the Option shall immediately terminate to the extent not
exercised. The Board of Directors may, in its sole discretion, accelerate
the exercisability of the Option so that it is exercisable in full during
such 30-day period.
4.3 Dissolution of the Company. In the event of the dissolution of the
Company, options shall be treated in accordance with Section 4.2-3.
5. Conditions on Obligations. The Company shall not be obligated to issue
shares of Nonvoting Common Stock upon exercise of the Option if the Company is
advised by its legal counsel that such issuance would violate applicable state
or federal laws, including securities laws. The Company will use its best
efforts to take steps required by state or federal law or applicable regulations
in connection with issuance of shares upon exercise of the Option.
6. Withholding. Upon notification of the amount due, if any, and prior to
or concurrently with delivery of the certificates representing the shares for
which the Option was exercised, Optionee shall pay to the Company amounts
necessary to satisfy any applicable federal, state, and local withholding tax
requirements. If additional withholding becomes required beyond any amount
deposited before delivery of the certificates, Optionee shall pay such amount to
the Company on demand. If Optionee fails to pay any amount demanded, the Company
shall have the right to withhold that amount from other amounts payable by the
Company to Optionee, including salary, subject to applicable law.
7. Successors of Company. This Agreement shall be binding upon and shall
inure to the benefit of any successor of the Company but, except as provided
herein, the Option may not be assigned or otherwise transferred by the Optionee.
8. Notices. Any notices under this Agreement must be in writing and will be
effective when actually delivered or, if mailed, three days after deposit into
the United States mails by registered or certified mail, postage prepaid. Mail
shall be directed to the addresses stated on the face page of this Agreement or
to such address as a party may certify by notice to the other party.
9. No Right to Employment or Service. Nothing in the Plan or this Agreement
shall (i) confer upon the Optionee any right to be employed or to continue in
the employment of or service to the Company; (ii) interfere in any way with the
right of the Company to terminate the Optionee's employment or service with the
Company at any time for any reason, with or without cause, or to decrease the
Optionee's compensation or benefits; or (iii) confer upon the Optionee any right
to continuation, extension, renewal, or modification of any compensation,
contract or arrangement with or by the Company.
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10. Tax Status; Restriction on Exercise or Transfer. If the Company is an S
corporation for federal tax purposes at the time the Optionee or the Optionee's
successor in interest exercises the Option, the Optionee or the Optionee's
successor in interest shall execute a stock transfer restriction agreement prior
to or concurrent with exercise of the Option in a form approved by the Company's
Board of Directors. The stock transfer restriction agreement will include only
those restrictions that the Board of Directors, in its sole discretion, deems
necessary or desirable to preserve the status of the Company. For so long as the
Company is an S corporation for federal tax purposes, the Option shall be
exercisable by the Optionee or succcessor in interest only if the Optionee or
successor in interest, as the case may be, is eligible to be a shareholder of
the Company without terminating the Company's S corporation election.
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