EXHIBIT 10.15
CARING PRODUCTS INTERNATIONAL, INC.
STOCK OPTION AGREEMENT
(Executive Officers and Directors)
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Optionee Name: Susan A. Schreter
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Optionee Address: 200 First Avenue West, Suite 200
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Seattle, Washington 98119
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Number of Shares of Exercise Price per
Common Stock: 450,000 Share: Determined in
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(subject to accordance with
adjustment in ----------------
accordance with Section 4 hereof
Section 3.2 hereof) ----------------
Date of Grant: August 27, 1997
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STOCK OPTION AGREEMENT (this "Agreement") made as of the Date of Grant
set forth above, between CARING PRODUCTS INTERNATIONAL, INC., a Delaware
corporation (collectively, with any wholly-owned subsidiaries, the "Company"),
and the Optionee identified above ("Optionee"), residing at the address set
forth above.
WHEREAS, the Optionee is the President and a director of the Company;
WHEREAS, the Board of the Directors of the Company, subject to the
approval of the stockholders, has authorized certain amendments (the
"Amendments") to the Company's 1996 Incentive Program (the "Program"), (i) to
increase the number of shares of Common Stock that may be issued or
transferred under the Program, (ii) to increase the maximum number of shares
for which options may be granted under the Program to any person during any
calendar year and (iii) to increase the maximum percentage of the total
number of outstanding awards under the Program to the total number of shares
of Common Stock (defined below) oustanding at any time;
WHEREAS, pursuant to the Program, as amended, the Company desires to
grant stock options to Optionee to purchase certain shares of its common stock,
par value $.01 per share (the "Common Stock");
WHEREAS, the Options (hereinafter defined) being granted by the
Company hereunder and the shares of Common Stock issuable upon the exercise of
such Options, if any, have not been registered under the Securities Act of 1933,
as amended (the "Act"), in reliance on an exemption from registration contained
in Section 4(2) of the Act;
WHEREAS, this Agreement consists of this document, the Program and
Amendment No. 1 to the Program, attached hereto as Exhibit A and Exhibit B,
respectively;
NOW, THEREFORE, the Company and the Optionee hereby agree as follows:
W I T N E S S E T H:
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1. DEFINITIONS. In this Agreement, except where the context
otherwise indicates, the following definitions apply:
1.1 Terms defined in the Program shall have the same meanings
when used herein as defined therein.
1.2 The term "Optionee" when used herein shall include the
Optionee's legal representative when the context requires.
2. REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS OF THE OPTIONEE.
2.1 The Optionee's address set forth above is true and correct.
2.2 The Optionee has had an opportunity to ask questions and
receive answers from the officers and directors of the Company, or a person or
persons acting on its behalf, concerning the terms and conditions of this
Agreement and the business and affairs of the Company. The Optionee has a
sufficient business and personal relationship with one or more of the officers
and directors of the Company, and has sufficient business or financial
experience, so as to be able to protect his or her own interests in connection
with the issuance of the Options (as hereinafter defined) and the issuance of
any Common Stock upon any exercise of the Options.
2.3 The Optionee acknowledges that the Options and the Common
Stock to be issued upon the exercise of the Options, if any, are speculative
investments and involve a substantial degree of risk of loss by the Optionee.
The Optionee represents and warrants to the Company that he or she is acquiring
the Options, and the Common Stock to be issued upon the exercise of the Options
(if the Options are exercisable and exercised) solely for investment purposes
and not with a view towards distribution or transfer. The Optionee acknowledges
that the Options may or may not become exercisable, and accordingly may or may
not be of any value, based on numerous circumstances and conditions, many of
which may be beyond the control of Optionee.
2.4 The Optionee acknowledges that the Options and the Common
Stock to be issued upon the exercise of the Options constitute a part of the
Optionee's compensation arrangement with the Company.
2.5 The Optionee confirms that neither the Company nor any
officer, director or representative thereof has made any representation,
prediction, or forecast as to the value or possible future value of the Options
or the Common Stock. The Optionee has not been induced to accept the Options by
any representation or promise by or on behalf of the Company.
2.6 The Optionee has had an opportunity to consult with his or
her legal, tax and investment advisors, to the extent the Optionee deems
necessary, concerning the Options.
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2.7 This Agreement consists of this document and the terms and
provisions contained in the Program, as it may be amended from time to time,
which are hereby incorporated by reference herein and made a part hereof.
Unless otherwise expressly stated herein, in the case of any conflict or
inconsistency between the terms of this document and the terms of the Program,
the terms of the Program shall control.
3. GRANT OF OPTIONS.
3.1 The Company, subject to the terms of the Program, hereby
grants to the Optionee as of the date hereof, as a matter of separate inducement
and agreement and not in lieu of salary or other compensation for services,
100,000 incentive stock options ("Incentive Options") and 350,000 non-qualified
stock options (collectively, the "Options") to purchase in the aggregate 450,000
shares of Common Stock of the Company, as set forth in the box on the first page
hereof (the "Shares"), or such lesser number as may be required by the terms of
Section 3.2 below.
3.2 In the event that either (i) the number of shares of Common
Stock issuable to the Optionee upon the exercise of the Options granted
hereunder, plus the number of shares of Common Stock issuable upon the exercise
of all other stock options held by the Optionee ("Optionee's Total Options"), or
(ii) the number of shares of Common Stock issuable upon the exercise of stock
options granted to William H.W. Atkinson on the date hereof, plus the number of
shares of Common Stock issuable upon the exercise of all other stock options
held by Mr. Atkinson (Atkinson's Total Options"), exceeds 7.7% of the total
number of shares of Common Stock issued and outstanding (excluding shares
issuable upon exercise of outstanding options and warrants) upon completion of a
public offering of the Company's equity securities (the "Public Offering"), then
the number of Options to be granted to the Optionee hereunder and the number of
options to be granted to Mr. Atkinson shall be reduced pro rata in order that
neither the Optionee's Total Options nor Atkinson's Total Options shall exceed
7.7% of the total number of shares of Common Stock issued and outstanding upon
completion of the Public Offering.
4. EXERCISE PRICE. The exercise price (the "Exercise Price") of
the Options is the greater of (i) the price to the public in the Public
Offering or (ii) the closing bid price on the principal U.S. securities
exchange on which the Common Stock is trading on the date of the Public
Offering, subject to adjustment as provided in Section 4(b) of the Program.
5. TAX TREATMENT. The Optionee understands that certain of the
Incentive Options granted under this Agreement may qualify for special tax
treatment under Section 422 of the Internal Revenue Code of 1986, as amended to
date and as may be amended from time to time (the "Code"). It is the intention
of the parties hereto that the maximum number of Incentive Options granted
hereunder be treated as Incentive Stock Options within the meaning of Section
422 of the Code. To the maximum extent possible, and subject to Section
422(d)(2) of the Code, such of the Incentive Options granted hereunder which are
the earliest to become exercisable, shall be deemed the Incentive Options as to
which Section 422 of the Code shall apply. The Company makes no representation
to Optionee regarding the tax treatment of the Incentive Options or of the
effect of any exercise of the Incentive Options.
6. OPTIONS NON-TRANSFERABLE. The Options shall not be transferable
by the Optionee otherwise than by will, or by the laws of descent and
distribution, and shall be exercised during the lifetime of the Optionee only by
the Optionee. Neither the Options nor any interest therein may be transferred,
sold, assigned, pledged or hypothecated by the Optionee during the Optionee's
lifetime, whether by operation of law or otherwise, or be made subject to
execution, attachment or similar process.
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7. VESTING DATE OF OPTIONS. The Options shall be and become
exercisable at such time as the Amendments to the Program become effective. The
Amendments will become effective only upon satisfaction of the following: (i)
the approval of the Amendments by the Company's stockholders under applicable
law and regulatory requirements, and (ii) the completion of the Public Offering.
8. EXERCISE OF OPTIONS. The Options may be exercised only in
accordance with the provisions of the Program. The Options may be exercised
before or after the exercise of any other options granted to the Optionee under
the Program or any of the Company's other stock option programs or compensation
plans.
9. TERMINATION OF OPTIONS. Subject to the terms hereof, all rights
of the Optionee in and to the Options, to the extent that they have not been
exercised, shall terminate on the date which is the fifth annual anniversary of
the Date of Grant set forth above, or, if sooner, three (3) months after the
Optionee's termination as an employee of the Company for any reason, including
voluntary resignation (or such shorter period as required by the Vancouver Stock
Exchange (the "VSE"), if any). Notwithstanding the foregoing, in the event of
the death of Optionee or the termination of his or her employment by the Company
by reason of disability (within the meaning of Section 22(e)(3) of the Code),
the three (3) month period referenced in the preceding sentence shall be one (1)
year (or such shorter period as required by the VSE, if any). The Optionee
acknowledges that, notwithstanding the provisions of this paragraph authorizing
the Options to be exercised within one (1) year after death, under applicable
laws, regulations and rules now in effect, the Options shall not qualify for
special tax treatment under Section 422 of the Code if they are exercised later
than three (3) months after the termination of Optionee's employment on account
of death.
10. DEATH OF OPTIONEE. Options granted hereunder and outstanding on
the date of Optionee's death may be exercised, to the extent otherwise
exercisable pursuant to Section 7, by Optionee's personal representative or his
or her transferees by will or intestate distribution at any time prior to the
termination of such Options pursuant to Section 9 above. The Plan Administrator
may require an indemnity and/or such evidence or other assurances as it may deem
necessary in connection with an exercise by a legal representative, guardian, or
beneficiary.
11. FRAUD, DISHONESTY, OR SIMILAR ACTS. Notwithstanding anything
contained herein to the contrary, if Optionee's employment by the Company is
terminated for cause or it is determined by the Plan Administrator that fraud,
dishonesty, or similar acts were committed by Optionee at any time while in the
employ of the Company, or that the Optionee has at any time disclosed to any
person, firm, corporation or other entity any of the Company's "proprietary
information" (defined below) without the express written consent of the Board of
Directors or except as such disclosure may have been required in connection with
the Optionee's service as an employee of the Company, all option and other
rights with respect to all Options granted to Optionee hereunder shall
immediately terminate and be null and void. For the purposes of this Section
11, the term "proprietary information" shall mean all confidential or secret
customer lists, prospective customer lists, trade secrets, processes, computer
programs, object codes, source codes, inventions, improvements, manufacturing or
systems techniques, formulas, development or experimental work, work in process,
business, data disclosed to the Company by or for the benefit of the Company's
customers, information relating to the Company's business contracts (including
without limitation contracts with service providers, medical insurers and claims
administrators), marketing and competitive strategies, and any other secret or
confidential matter relating or pertaining to the products, services, sales or
other business of the Company.
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12. RESTRICTION ON EXERCISE AFTER TERMINATION. Notwithstanding
anything herein to the contrary, the exercise of the Options after termination
of employment by Optionee shall be subject to satisfaction of the conditions
precedent that the Optionee neither (i) takes other employment with or renders
services to any business in contravention of any then-applicable Non-Competition
Agreement with the Company or any Affiliate of the Company, nor (ii) conducts
himself or herself in a manner adversely affecting the Company.
13. RESERVE. The Company shall at all times during the term of the
Options reserve such number of shares of its Common Stock as will be sufficient
to satisfy the requirements of this Agreement.
14. WITHHOLDING TAXES. The Optionee acknowledges that it is a
condition to the obligation of the Company to deliver the Shares, upon the
exercise of the Options, to pay the Company such amount, if any, as may be
requested by the Company for the purpose of satisfying any liability for any
federal, state or local income, or other taxes required by law to be withheld
with respect to such delivery; provided that the Optionee may elect, in
accordance with applicable law, to pay a portion or all of such withholding
taxes in shares of Common Stock held by the Optionee for at least six (6) months
and the Optionee hereby authorizes the Company to withhold and agrees to
surrender back to the Company, on or about the date such withholding tax is
determinable, shares previously owned by the Optionee or a portion of the shares
that were or otherwise would be distributed to the Optionee pursuant hereto so
qualifying and having a fair market value equal to the amount of such
withholding taxes to be paid in shares.
15. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing contained herein shall
be construed to require the Company to continue to employ the Optionee for any
particular period of time and the Optionee shall not be deemed to have any right
to continued employment or to employment for any particular period of time by
virtue hereof.
16. GOVERNING LAW. The Program, this Agreement and all action taken
under each shall be governed, as to construction and administration, by the laws
of the State of Delaware.
17. RESTRICTED SHARES. The Optionee acknowledges that the Options
and Shares have not been registered in accordance with the Act or applicable
state Blue Sky laws, and that the Options and Shares may not be sold or
transferred and must be held indefinitely, unless they are subsequently
registered under the Act or an exemption from registration is available. The
Optionee understands and acknowledges that the Company is under no obligation to
register the Options and Shares or to comply with any exemption under the Act or
to supply or file any information which would facilitate sales of the Shares.
The Optionee acknowledges that stop transfer instructions will be given to the
Company's transfer agent(s) with respect to the Shares and that there will be
affixed to the certificates evidencing ownership of the Shares, or any
substitutions therefor, appropriate restrictive legends.
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IN WITNESS WHEREOF, the Company and the Optionee have duly executed
this Agreement as of the day and year first above written.
CARING PRODUCTS INTERNATIONAL, INC.
By: /s/ William H.W. Atkinson
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Name: William H.W. Atkinson
Title: Chief Executive Officer and Chairman
ACCEPTED AND AGREED:
/s/ Susan A. Schreter
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Susan A. Schreter
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