EXHIBIT 10
MATERIAL CONTRACTS
NON-QUALIFIED STOCK OPTION TO PURCHASE
SHARES OF XXXXXX*XXXXXX, INC.
XXXXXX*XXXXXX, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT dated the 27th day of June, 1995, to be effective January
31, 1995, between XXXXXX*XXXXXX, INC., a Washington corporation (hereinafter
the "Company"), and XXXXXXX XXXXXXXX (hereinafter the "Optionee").
1. GRANT OF OPTION/PURCHASE PRICE. 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 100,000
shares of common stock of the Company ("Stock") at the purchase price of
$0.79 per share.
2. ACCRUAL AND EXERCISE OF OPTION.
a. ACCRUAL OF INCREMENT. This option may be exercised in full (without
increments) at any time and the exercisability date is January 31,
1995 for purposes of this agreement.
b. THREE YEAR EXERCISE PERIOD. Each increment shall be assigned an
"exercisability date" which shall be the date said increment became
exercisable under Section 2(a). For the purpose of this agreement,
the "exercise period" with respect to an increment shall be the
period beginning on said increment's exercisability date and ending on
the earlier of (i) the date specified at Section 2(d), below, or
(ii) the third anniversary of said exercisability date. The Optionee
shall have the right to purchase any shares covered by an increment,
in the manner set forth in Section 2(c), below, during said
increment's exercise period. The right to purchase any shares covered
by an increment shall terminate and lapse as of the last day of said
increment's exercise period.
c. METHOD OF EXERCISE. During the increment's exercise period, Optionee
may exercise his rights hereunder with respect to said increment in
installments (equal or unequal), at any time or times, as determined
by Optionee; provided, this option with respect to an increment, in
whole or in part, Optionee must, during the exercise period, deliver
to the Company a notice of exercise along with the full cash purchase
price required at Section 1 of the shares to be purchased. Upon
receiving notice of exercise and the cash purchase price, the Company
shall prepare and issue to the Optionee a certificate for the number
of shares designated in the notice. Optionee may only exercise his
rights hereunder in sequential order. Thus, for example, there may be
no exercise with respect to the second increment while any portion of
the first increment is outstanding. For the purchase of this
Agreement, an increment will be treated as outstanding until such
increment is exercised in full or is
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expired by reason of termination and lapse under Section 2(b) above.
d. TERMINATION OF ACCRUALS/TERMINATION OF PURCHASE RIGHTS.
i) TERMINATION FOR CAUSE. Upon an occurrence of an event which
constitutes a basis for the termination of Optionee's employment
"for cause", all rights under this Option Agreement, both accrued
and unaccrued, shall terminate and lapse. Thus, upon the date
of said event, no unexerciseable increment shall thereafter
become exercisable and no further purchases with respect to
outstanding and exercisable increments may occur. For the
purposes of this Section 2(d)(i), any of the following shall
constitute a basis for a "for cause" termination:
(a) CONVICTION OF A CRIME. The conviction of the Optionee of
any (i) crime involving moral turpitude, or (ii) any felony.
(b) BREACH OF FIDUCIARY OBLIGATION. The Optionee's breach of
any fiduciary obligation owed to the Company.
(c) The Optionee's failure to diligently and satisfactorily
discharge his obligations of employment (for reasons other
than death or disability).
ii) TERMINATION OF EMPLOYMENT WITHOUT CAUSE. Upon the date of
Optionee's employment with the Company is terminated by Optionee
or Company without cause, (a) no exercisable increment under
Section 2(a) shall thereafter become exercisable, and (b)
Optionee shall have the right, exercisable within sixty (60) days
after said employment termination, to exercise this Option (with
respect to any increment exercisable on the date of said
employment termination) in the manner described at Section 2(c).
Upon the expiration of said sixty (60) day period, all rights
under this Option Agreement shall terminate and lapse. For
purposes of the foregoing, the date of employment termination
shall mean the earlier of the date on which the Optionee or the
Company gives notices to the other of Optionee's termination of
employment or the date said employment actually terminates.
iii) TERMINATION BY REASON OF DEATH OR DISABILITY. Upon the
Optionee's death or disability, (A) no unexerciseable increment
under Section 2(a) shall thereafter become exercisable, (b) the
Personal Representative (or other legal representative) of
Optionee's estate shall have the right, exercisable within
ninety (90) days after the date of Optionee's death or the date
of Optionee's
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disability, to exercise this option (with respect to any
increment exercisable on the date of death or disability) in
the manner described in Section 2(c). Upon the expiration of
said ninety (90) day period, all rights under this Option
Agreement shall terminate and lapse. For the purposes of
the foregoing, (A) Optionee's employment shall be considered
to have terminated by reason of disability if Optionee,
because of a physical or mental disability, will be unable
to perform the duties of his customary position of employment
with the Company for an indefinite period which the Company
determines to be of long and continued duration, and (B) the
date of disability shall be the date of said determination by
the Company.
iv) DISSOLUTION/MERGER OR SALE OF ASSETS. Optionee's rights in the
event of a dissolution, merger or sale of assets shall be as
set forth at Section 8.
e. NONTRANSFERABILITY. Except as specifically provided at Section 2(d),
this Option shall be exercisable only by Optionee, as permitted under
this Agreement, while Optionee is employed by the Company.
f. ADJUSTMENTS. In the event of any change in the common stock of the
Company by reason of any stock dividend, recapitalization,
reorganization, merger, consolidation, split-up, combination, or
exchange of shares, or of any similar change affecting the common
stock, then in any such event, the number and kind of shares subject
to this option and their purchase price per share may be appropriately
increased or decreased consistent with such change in such manner as
the Company's Board of Directors, in its sole discretion, may deem
equitable to prevent substantial dilution or enlargement of the rights
granted Optionee hereunder. Any adjustment so made or any decision
not to make an adjustment shall be final and binding upon Optionee.
g. NO RIGHTS AS SHAREHOLDER. Optionee shall have no rights as a
shareholder with respect to any shares of Stock subject to this option
prior to the date of issuance to him of a certificate or certificates
for such shares.
h. NO RIGHT TO CONTINUE EMPLOYMENT. This option shall not confer upon
Optionee any right with respect to continuance of employment by the
Company, nor interfere in any way with the right of the Company to
terminate his employment at any time.
i. COMPLIANCE WITH OTHER 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. In addition, the Company shall not be
required to issue or
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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,
in its sole discretion, shall determine to be necessary to be
advisable. This option may not be exercised and the Company shall
have no liability under this agreement if its exercise, or the
receipt of shares of Stock pursuant thereto, would be contrary to
any applicable law.
j. WITHHOLDING TAXES. Prior to the issuance of Stock pursuant to any
exercise, the Company shall (i) require the Optionee to remit to the
Company an amount sufficient to satisfy all withholdings and
employment taxes, and other obligations of the Company arising as a
result of Optionee's exercise, or (ii) make such other arrangements
for the payment of such obligations as the Board of Directors shall
determine.
3. RESTRICTIONS. Shares of common stock acquired pursuant to this Option
shall be subject to any and all federal and state securities laws and other
restrictions applicable to the common stock of the Company.
4. NOTICES. Any notice hereunder to the Company shall be addressed to it at
its offices. 00000 X. Xxxxxxx Xxxxxxx, Xxxx, Xxxxxxxxxx 00000, and any
notice hereunder to Optionee shall be addressed to him at the address
specified below; subject to the right of either party to designate at any
time hereafter in writing some other address. Notice shall be in writing
delivered in person (effective upon deliver) or by U.S. or certified
mail, return receipt requested (effective when properly addressed and
mailed).
5. GOVERNING LAW. This Agreement shall be interpreted, construed and governed
according to the laws of the State of Washington.
6. ATTORNEYS FEES. In the event that any party shall bring an action in
connection with the performance, breach or interpretation of this
agreement, or in any way relating to the transactions contemplated
hereby, the prevailing party in such action shall be entitled to recover
from the losing party all reasonable costs and expenses of litigation,
including attorneys fees, court costs, costs of investigation, accounting
and other costs reasonably related to such litigation, in such amount as
may be determined in the sole discretion of the court having jurisdiction
over such action.
7. ENTIRE AGREEMENT; AMENDMENT. This Agreement shall constitute the entire
agreement between the parties hereto respecting options hereunder and may
not be modified or amended, except by a written instrument signed by each
of the parties hereto, expressing such modification or amendment. This
Agreement completely supersedes any other agreement (oral or written)
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between the parties hereto respecting the options contemplated hereunder.
8. DISSOLUTION/MERGER/SALE OF ASSETS. Upon (i) the legal dissolution or
liquidation of the Company, (ii) a merger or consolidation in which the
Company is not the surviving company, or (iii) the sale of substantially
all of the Company's assets, any increment which has not yet become
exercisable pursuant to Section 2(a) shall automatically become
exercisable and Optionee shall have the right, exercisable within thirty
(30) days after the date of the shareholders of the Company approve said
dissolution, liquidation, merger or consolidation, or sale of assets, to
exercise this option, in whole or in part, by delivering to the Company,
within said thirty (30) day period, a written notice of exercise along with
the full cash purchase price required at Section 1 of the shares to be
purchased. Upon the expiration of said thirty (30) day period, all rights
under this Option Agreement shall terminate and lapse.
9. LEGAL AUTHORITY TO ISSUE STOCK. The inability of the Company to obtain
from any regulatory body having jurisdiction the authority deemed necessary
by counsel for the Company of the lawful issuance and sale of its stock
hereunder shall relieve the Company of any liability in respect of the
failure to issue or sell stock as to which the requisite authority has
not been obtained.
IN WITNESS WHEREOF, XXXXXX*XXXXXX, INC. has caused this Agreement to be
executed by its President and Optionee has executed this Agreement, both as of
the day and year first above written.
COMPANY: XXXXXX*XXXXXX, INC.
/s/ Xxxx X. Xxxxx
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OPTIONEE: /s/ Xxxxxxx X. Xxxxxxxx
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XXXXXXX XXXXXXXX
Address: 0000 X. Xxxxxxxxxx
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Xxxxxxx, XX 00000
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