DAKOTAH, INCORPORATED
NONSTATUTORY OPTION AGREEMENT
UNDER THE 1995 STOCK OPTION PLAN
Between:
DAKOTAH INCORPORATED (the "Company") and ORION FINANCIAL CORP., a South Dakota
corporation (the "Optionee"), dated January 1, 1996.
The Company hereby grants to the Optionee an option (the "Option")
under the Dakotah, Incorporated 1995 Stock Option Plan (the "Plan") to purchase
Two Hundred Forty Two Thousand Seven Hundred Forty Five (242,745) Shares (the
"Shares") of the Company's common stock under the terms and conditions set forth
below. The terms and conditions applicable to the Option are as follows:
1. Nonstatutory Option. The Option shall be a nonstatutory option and
is not intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code.
2. Purchase Price - The purchase price of the stock shall be $3.875 per
share ("Option Price") which is the Fair Market Value of the Stock on the date
of this Agreement.
3. Period of Exercise - The Option shall expire on the fifth
anniversary date of its grant (the "Expiration Date") unless otherwise
terminated as provided herein.
The Option will vest as follows:
(a) Prior to the first anniversary of the effective date of
this Agreement, the option may not be exercised.
(b) On and after the first anniversary of the effective date
of this Agreement, the option may be exercised for not in excess of
thirty-three and one-third percent (33-1/3%) of the shares originally
subject to the option;
(c) On or after the second anniversary of the effective date
of this Agreement, the Option may be exercised for not in excess of
sixty-six and two-thirds percent (66-2/3%) of the shares originally
subject to the option;
(d) On and after the third anniversary of the effective date
of this Agreement, the Option may be exercised at any time and from
time to time within its terms in whole or in part, but it shall not be
exercisable after the fifth anniversary of the date hereof.
4. Transferability - This Option is not transferable except by will or
the laws of descent and distribution and may be exercised during the lifetime of
the Optionee only by the Optionee.
5. Termination of Service as a Consultant - In the event that
Optionee's engagement as a consultant to the Company is terminated, the Option
will continue to vest and remains exercisable in accordance with the vesting
schedule until the Expiration Date by the Optionee; provided, that if the
Optionee's engagement as a consultant is terminated for cause, this Option shall
terminate immediately; further, provided, that if Troy Jones, Jr. voluntarily
terminates his position as Chief Executive Officer, the Option will terminate on
the date three months after the date of such termination. For the purposes
hereof, "cause" is defined as Troy Jones, Jr. (i) committing a materially
fraudulent or dishonest act in performance of his duties as Chief Executive
Officer of the Company or (ii) being convicted of a felony related to the
operation of the Company or having a significant adverse effect upon the
Company.
6. No Guarantee of Service as an Officer - This Agreement shall in no
way restrict the right of the Company or the Company's Board of Directors to
terminate Optionee's engagement at any time.
7. Registration. The Company agrees to register the Shares issuable
upon exercise of the Option on a Form S-8 or if such form is not available, on
such form which is available. Orion will cooperate with the Company and take
such action as is necessary to permit registration or qualification of the
Shares.
8. Method of Exercise; Use of Company Stock - The Option may be
exercised, subject to the terms and conditions of this Agreement, by written
notice to the Company. The notice shall be in the form attached to this
Agreement and will be accompanied by payment (in such form as the Company may
specify) of the full purchase price of the shares to be issued. The Company will
issue and deliver certificates representing the number of shares purchased under
the Option, registered in the name of the Optionee as soon as practicable after
receipt of the notice.
When exercising this Option, Optionee may make payment either in money
or by tendering shares of the Company Stock owned by the Optionee, or by a
combination of the two; provided, however, that (a) shares of the Company Stock
may be utilized only if, at the time of exercise, the Stock of the Company is
publicly traded, either on a stock exchange or nationally or locally over the
counter, and (b) the right to pay in the form of the Company Stock can be
utilized only twice in any calendar year. Where shares of Stock of the Company
are employed to pay all or part of the exercise price, the shares of said Stock
shall be valued at their Fair Market Value at the time of payment.
9. Withholding; Taxable Income - In any case where withholding is
required or advisable under federal, state or local law in connection with any
exercise by an Optionee hereunder, the Company is authorized to withhold
appropriate amounts from amounts payable to Optionee, or may require Optionee to
remit to the Company an amount equal to such appropriate amounts.
10. Merger, Consolidation or Acceleration Event - The terms of this
Agreement are subject to modification upon the occurrence of certain events as
described in Article XIII of the Plan.
11. Incorporation of Plan - This Agreement is made pursuant to the
provisions of the Plan, which Plan is incorporated by reference herein. Terms
used herein shall have the meaning employed in the Plan, unless the context
clearly requires otherwise. In the event of a conflict between the provisions of
the Plan and the provisions of this Agreement, the provisions of the Plan shall
govern.
DAKOTAH, INCORPORATED
By /s/ George C. Whyte
Its President
DAKOTAH, INCORPORATED
NOTICE OF EXERCISE OF STOCK OPTION ISSUED
UNDER THE 1995 STOCK OPTION PLAN
To: Stock Option Committee
DAKOTAH, INCORPORATED
_____________________
_____________________
I hereby exercise my Option dated _______ to purchase _____ shares of
$__ par value common stock of the Company at the option exercise price of
$______ per share. Enclosed is a certified or cashier's check in the total
amount of $______ , or payment in such other form as the Company has specified.
I represent to you that I am acquiring said shares for investment
purposes and not with a view to any distribution thereof. I understand that my
stock certificate may bear an appropriate legend restricting the transfer of my
shares and that a stop transfer order may be placed with the Company's transfer
agent with respect to such shares.
I request that my shares be issued to me as follows:
_______________________________________________
(Print your name in the form in which you wish to have the shares registered)
_______________________________________________
(Social Security Number)
_______________________________________________
(Street and Number)
_______________________________________________
(City) (State) (Zip Code)
Dated: _________________, 19__.
Signature: ______________________________