DIRECT FOCUS, INC.
INCENTIVE STOCK OPTION AGREEMENT
Direct Focus, Inc. (the "Company") has granted to ___________ (the
"Optionee"), an option to purchase a total of ________ shares of Common Stock,
at the price determined as provided herein, and in all respects subject to the
terms, definitions and provisions of the 1995 Stock Option Plan (the "Plan")
adopted by the Company which is incorporated herein by reference. The Terms
defined in the Plan shall have the same defined meanings herein.
1. NATURE OF THE OPTION. This Option is an incentive stock option and
is intended to qualify for a special tax benefit to the Optionee.
2. EXERCISE PRICE. The exercise price is _________ U.S. for each share
of Common Stock, which price is not less than the fair market value per share
of the Common Stock on the date of grant.
3. EXERCISE OF OPTION. This Option shall be exercisable during its term
in accordance with the provisions of the Plan as follows:
(i) RIGHT TO EXERCISE.
(a) This Option shall be exercisable, only when the Option is
vested as defined in Term of Option, Section 8.
(b) This Option may not be exercised for a fraction of a share.
(c) In the event of Optionee's death or divorce, the
exercisability of the Option is governed by the provisions of the Plan.
(ii) METHOD OF EXERCISE. This Option shall be exercisable by written
notice which shall state the election to exercise the option, the number of
Shares in respect of which the Option is being exercised, and such other
representations and agreements as to the Optionee's investment intent with
respect to such shares of Common Stock as may be required by the Company
pursuant to the provisions of the Plan. Such written notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary or Assistant Secretary of the Company. The written notice shall be
accompanied by payment of the exercise price as provided in Section 5 below.
No Shares will be issued pursuant to the exercise of an Option unless such
issuance and such exercise shall comply with all relevant provisions of law and
the requirements of any stock exchange upon which the Shares may then be listed.
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4. OPTIONEE'S REPRESENTATIONS. In the event the Shares purchasable
pursuant to the exercise of the Option have not been registered under the
Securities Act of 1933, as amended, at the time this Option is exercised,
Optionee shall, concurrently with the exercise of all or any portion of this
Option, deliver to the Company the Optionee's Investment Representation
Statement in such form as may be required in the opinion of the Company's
legal counsel to comply with applicable state and federal securities laws.
5. METHOD OF PAYMENT. Payment of the exercise price shall be in cash.
Any Common Stock delivered in full or partial payment for the exercise price
shall be valued at the fair market value thereof the day of exercise. If the
value of the Common Stock delivered in payment of the exercise price exceeds the
exercise price, no fractional shares will be issued and Optionee will receive
cash in the amount of such excess.
6. RESTRICTIONS ON EXERCISE. This Option may not be exercised if the
issuance of such Shares upon such exercise of the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, or the rules,
regulations or listing requirements of any stock exchange upon which the shares
are listed or included.
7. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution or
pursuant to a qualified domestic relations order as defined by Section 414(p) of
the Internal Revenue Code or Title I of the Employee Retirement Income Security
Act or the rules thereunder, and may be exercised during the lifetime of
Optionee only by the Optionee. The terms of this Option shall be binding upon
the executors, administrators, heirs, successors and assigns of the Optionee.
8. TERM OF OPTION. The term of this Option shall be in accordance with
the provisions of the Plan as follows:
(i) VESTING PERIOD OF OPTION. This Option shall vest 1/3 each year
from grant date.
(ii) EXERCISABLE PERIOD. This Option may not be exercised more than
5 years from the date of grant of this Option, and may be exercised during such
term only in accordance with the Plan and the terms of this Option. This option
is only exercisable during their employment/term with the Company.
9. TAXATION UPON EXERCISE OF OPTION. Optionee understands that pursuant
to certain provisions of the Internal Revenue Code of 1986, as amended, upon
exercise of this Option, Optionee may recognize income for tax purposes in an
amount equal to the excess of the then fair market value of the shares over the
exercise price. The Company will be required to withhold tax from Optionee's
current compensation with respect to such income; to the extent
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that Optionee's current compensation is insufficient to satisfy the withholding
tax liability, the Company may require the Optionee to make a cash payment to
cover such liability as a condition of exercise of this Option.
DATE OF GRANT:
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DIRECT FOCUS, INC.
By
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Its
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Optionee acknowledges receipt of a copy of the Plan, a copy of which is
annexed hereto, and represents that Optionee is familiar with the terms and
provisions thereof. Optionee further acknowledges that if the Plan has not been
approved by the Company's shareholders on the date of grant of the Option, this
Option is not exercisable until such approval has been obtained.
Dated:
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(Optionee)
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