COST-U-LESS, INC.
DIRECTOR STOCK OPTION AGREEMENT
____________ SHARES OF COMMON STOCK
Cost-U-Less, Inc. (the "Company") hereby grants to ______________ (the
"Optionee"), in connection with the Optionee's service as a director of the
Company, the right and option to purchase _________ shares of the Company's
Common Stock at an exercise price of ______ per share.
DATE OF GRANT: The date of grant of the option is ______________.
TERMS: The term of the option is ten years from date of grant, unless
sooner terminated.
EXERCISE; PAYMENT FOR SHARES: This Option may be exercised in whole or in
part at any time and from time to time; provided, however, that no fewer than
100 shares (or the remaining shares then purchasable under this option, if less
than 100 Shares) may be purchased upon any exercise of option rights hereunder
and that only whole shares will be issued pursuant to the exercise of this
Option. This option may be exercised by giving written notice, signed by the
person exercising the option, to the Company stating the number of shares with
respect to which the option in being exercised, accompanied by payment in full
for such Shares, which payment may be made by the delivery of:
(a) Cash, personal check, bank certified or cashier's check;
(b) Unless the Board of Directors in its sole discretion determines
otherwise, shares of the capital stock of the Company held by the Optionee for a
period of at least six months having a fair market value at the time of
exercise, as determined in good faith by the Board of Directors, equal to the
exercise price; or
(c) A properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company the amount of sale
or loan proceeds to pay the exercise price.
TERMINATION: If the service of the Optionee as a Director of the Company
ceases for any reason, other than death, and unless by its terms this option
sooner terminates or expires, then you may exercise this option for two years
thereafter, but this Option shall terminate at the end of such period following
such cessation as to all shares for which it has not theretofore been exercised.
DEATH OF OPTIONEE: If the Optionee shall die while a Director or within two
years following cessation of the Optionee's service as a Director, this Option
may be exercised within two years after such death or cessation, whichever shall
first occur, by the personal representative
of the Optionee's estate or by the person or persons to whom the Optionee's
rights under this Option shall pass by will or by the applicable laws of descent
and distribution.
TRANSFER OF OPTION: This Option and the rights and privileges conferred
hereby may not be transferred, assigned, pledged or hypothecated in any manner
(whether by operation of law or otherwise) other than by will, or by the
applicable laws of descent and distribution and shall not be subject to
execution, attachment or similar process. Any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this Option or of any right or
privilege conferred hereby, contrary to the provisions of this Agreement, or the
sale or levy or any attachment or similar process upon the rights and privileges
conferred hereby shall be null and void.
Vesting: This option shall be exercisable with respect to the number of
shares set forth below on and after the respective dates indicated:
Number of Shares % of Total Shares Date
LIMITATION AS TO DIRECTORSHIP: Neither the granting of this Option nor any
other action taken pursuant to this Agreement shall constitute or be evidence of
any agreement or understanding, express or implied, that the Optionee has a
right to continue as a director for any period of time or an any particular rate
of compensation.
REGULATORY APPROVAL AND COMPLIANCE:
(a) The Company shall not be required to issue any certificate or
certificates for shares upon the exercise of this Option, or record the Optionee
as a holder of record of shares, without obtaining to the complete satisfaction
of the Board of Directors the approval of all regulatory bodies deemed necessary
by the Board of Directors, and without complying, to the Board of Directors'
complete satisfaction, with all rules and regulations under federal, state or
local law deemed applicable by the Board of Directors.
(b) As a condition to the exercise of this Option, the Company may require
the Options, to represent and warrant at the time of any such exercise that the
shares are being purchased only for investment and without any present intention
to sell or distribute such shares, if, in the opinion of counsel for the
Company, such representation is required by any relevant provision of federal or
state securities laws. At the option of the Company, a stop transfer order
against any shares may be placed on the official stock books and records of the
Company, and a legend indicating that the shares may not be pledged, sold or
otherwise transferred unless an opinion of counsel is provided (concurred in by
counsel for the Company) stating that such transfer is not in violation of any
applicable law or regulation, may be stamped on the stock
certificate in order to assure exemption from registration. The board of
Directors may also require such other action or agreement by the Optionee as may
from time to time be necessary to comply with the federal and state securities
laws. This provision shall not obligate the Company to undertake registration of
this Option or any shares issued hereunder.
CAPITAL ADJUSTMENTS:
(a) The number and class of shares covered by this option and the exercise
price per share hereof (but not the total price) shall be proportionately
adjusted for any stock dividends, stock splits, recapitalizations, combinations
or exchanges of shares, split-ups, split-offs, spinoffs, or other similar
changes in capitalization.
(b) Except as provided in subsection (c) below, upon a merger (other than
a merger of the Company in which the holders of Common Stock immediately prior
to the merger have the same proportionate ownership of Common Stock in the
surviving corporation immediately after the merger), consolidation, acquisition
of property or stock, separation, reorganization (other than a mere
reincorporation or the creation of a holding company) or liquidation of the
Company, as a result of which the shareholders of the Company receive cash,
stock or other property in exchange for or in connection with their shares of
Common Stock, this Option shall terminate, but the Optionee shall have the right
immediately prior to any such merger, consolidation, acquisition of property or
stock, separation, reorganization or liquidation to exercise this Option in
whole or in part.
(c) If the shareholders of the Company receive capital stock of another
corporation ("Exchange Stock") in exchange for their shares of Common Stock in
any transaction involving a merger, consolidation, acquisition of property or
stock, separation or reorganization, this Option shall be converted into an
option to purchase shares of Exchange Stock unless the Company and the
corporation issuing the Exchange Stock, in their sole discretion, determine that
this option shall not be converted into an option to purchase shares of Exchange
Stock but instead shall terminate in accordance with the provisions of
subsection (b) above; provided, however, that this Option shall be converted
automatically into Exchange stock in (i) a merger of the Company in which the
holders of common stock immediately prior to the merger have the same
proportionate ownership of Common Stock in the surviving corporation immediately
after the merger, (ii) a mere reincorporation, or (iii) the creation of a
holding company. The number and class of shares covered by this Option and the
exercise price per share hereof (but not the total price) shall be determined by
adjusting the number of shares and price hereunder in the same proportion as
used for determining the number of shares of Exchange Stock the holders of the
Common Stock receive in such merger, consolidation, acquisition of property or
stock, separation or reorganization.
(d) In the event of any adjustment in the number of shares covered by
this Option, any fractional shares resulting from such adjustment shall be
disregarded and this Option shall cover only the number of full shares resulting
from such adjustment.
(e) All such adjustments shall be made by the Board of Directors, and its
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive.
Status of Shareholders Neither the Optionee nor any person or persons to
whom your rights and privileges under this option may pass shall be, or have any
of the rights or privileges of, a shareholder of the Company with respect to any
of the shares issuable upon the exercise of this Option unless and until this
option has been exercised.
Dated this _____ day of ____________.
COST-U-LESS, INC.
By
---------------------------------
Its
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ACCEPTANCE AND ACKNOWLEDGMENT
I, a resident of the State of _____________________ accept the stock option
described above granted by Cost-U-Less, Inc., and acknowledge receipt of a copy
of this Agreement.
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Taxpayer I.D. Number
Address
________________________________________________________________________________
NOTICE OF EXERCISE OF DIRECTOR STOCK OPTION
________________________________________________________________________________
To: Cost-U-Less, Inc.
I, a resident of the State of ________________ hereby exercise my stock option
granted by Cost-U-Less, Inc.("Company") on ___________, subject to all the terms
and provisions thereof, and notify the Company of my desire to purchase
____________ shares of Common Stock of the Company (the "Securities") at the
exercise price of ______ per share which were offered to me pursuant to said
option.
I hereby represent and warrant that (1) I have been furnished with a copy
of the Director Stock option Agreement and all information which I deem
necessary to evaluate the merits and risks of the purchase of the Securities;
and (2) I have been given the opportunity to obtain any additional information I
deem necessary to verify the accuracy of any information obtained concerning the
Securities and the Company.
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Taxpayer I.D. Number
SCHEDULE 1
OPTIONS GRANTED TO DIRECTORS AS OF MAY 1, 1998
PURSUANT TO DIRECTOR STOCK OPTION AGREEMENTS (VESTING)
NAME OPTIONS GRANTED DATE OF GRANT PURCHASE PRICE
John Anderson 2,951 July 28, 1993 $10.16/share
Terry Buckley 2,951 February 24, 1998 $10.16/share
David Enger 2,951 July 28, 1993 $10.16/share
Wayne Keener 2,951 July 28, 1993 $10.16/share
Gary Nettles 2,951 April 30, 1997 $10.16/share
Michael J. Rose 2,951 April 30, 1997 $10.16/share
George Textor 2,951 February 24, 1998 $10.16/share