Stock Option Agreement


  EXHIBIT 10.12
  DETWILER, MITCHELL & CO.
 STOCK OPTION AGREEMENT
 
                  (NOTE: The options granted hereunder are subject to approval by the stockholders of the
Company)
                   This certifies that, for value received, James K. Mitchell (“Option
Holder”) shall have the right set forth herein (the “Option”), subject to the terms and conditions set forth below, to purchase from DETWILER, MITCHELL & CO. (“DMC”), in whole or in part that number of fully paid and
nonassessable shares (the “Shares”) of Common Stock of DMC set forth in Section I below and at a purchase price per share (the “Exercise Price”) set forth in Section I below.  The number, character and Exercise Price of such
Shares are subject to adjustment as provided in Section II(11) below and all references to “Shares” and “Exercise Price” herein shall be deemed to include any such adjustment or series of adjustments.
  I.               GRANT INFORMATION.

	  Date of Grant:
 	  November 6, 2002
 
	  
 	  
 
	 Name of Option Holder:
 	  James K. Mitchell
 
	  
 	  
 
	  Social Security Number:
 	  On File
 
	  
 	  
 
	  Type of Option:
 	  Nonstatutory (“NSO”)
 
	  
 	  
 
	  Number of Shares of Common Stock Covered by the Option:
 	  300,000
 
	  
 	  
 
	  Exercise Price per Share:
 	  1.00
 
	  
 	  
 
	 Vesting Start Date:
 	  November 6, 2003
 
	  
 	  
 
	  Vesting Schedule:
 	  
 
	  
 	  Number of and Date Shares Vested:
 	  50,000 Shares on November 6, 2003
 
	  
 	  Number of and Date Shares Vested:
 	  100,000 Shares on November 6, 2004
 
	  
 	  Number of and Date Shares Vested:
 	  100,000 Shares on November 6, 2005
 
	  
 	  Number of and Date Shares Vested:
 	  50,000 Shares on November 6, 2005
 
	  
 	  
 	  
 
	 Expiration Date:
 	  Five Years After Date of Grant
 
	  
 	  
 

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   I.                 TERMS AND CONDITIONS
                      1.  Stockholder Approval.  Your Option is effective immediately subject, however, to
the approval of the Option, the issuance of the shares underlying the Option and this Agreement by the stockholders of DMC at or prior to the next Annual Meeting of Stockholders. 
                      2.  Vesting.  Your Option vests during your Service on the dates specified in the
vesting schedule on the first page of this Stock Option Agreement.  Vesting will cease if your Service terminates for any reason.
                      3.  Service; Leaves of Absence.  Your Service shall cease when you cease to be
actively employed by, or a consultant or adviser to DMC (or any subsidiary) (the “Company”), as determined in the sole discretion of the DMC Board.  For purposes of your Option, your Service does not terminate when you go on a bona
fide leave of absence, that was approved by the Company in writing, if the terms of the leave provide for continued service crediting, or when continued service crediting is required by applicable law. Your Service terminates in any event when
the approved leave ends, unless you immediately return to active work.  The Company determines which leaves count toward Service, and when your Service terminates for all purposes under this Agreement.
                     4.  Term of Option.  Your Option expires on the fifth anniversary of the Date of
Grant, and will expire earlier if your Service terminates as follows:

	  
 	                      (a)  Regular Termination.  If
your Service terminates for any reason except death or Disability, then your Option will expire at the close of business at Company headquarters on the date 30 days after your termination date.  During that 30-day period, you may exercise that
portion of your Option that was vested on the date that your Service terminated.
 
	  
 	  
 
	  
 	                      (b)  Cause.  If your Service
terminates for Cause or if you resign from your employment, your Option will expire immediately.
 
	  
 	  
 
	  
 	            For purposes of this Section, “Cause” means (i) your continued failure to perform substantially your duties
as set by the Company at the date of this Agreement (other than as a result of sickness, accident or similar cause beyond your reasonable control) after your receipt of a written warning and have been given thirty (30) days to improve; (ii) willful
and material misconduct, which is demonstrably and materially injurious to the Company or any of its subsidiaries, including willful and material failure to perform your duties as an officer or employee of the Company or any of its subsidiaries or a
material breach of this Agreement; (iii) conviction of or plea of nolo contendere to a felony; and (iv) conviction of an act of fraud against, or the misappropriation of property belonging to, the Company or any of its subsidiaries, or any
employee, customer, or supplier of the Company or any of its subsidiaries.
 
	  
 	  
 
	  
 	                     (c)  Death.  If you die while in
Service, then your Option will expire at the close of business at Company headquarters on the date six (6) months after the date of
 
	  
 	  
 

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 	  death.  During that six-month period, your estate or heirs may exercise that portion of your Option that was vested on the date of death.
 
	  
 	  
 
	  
 	                      (d)  Disability.  If your Service
terminates because of your Disability, then your Option will expire at the close of business at Company headquarters on the date six (6) months after your termination date.  During that six-month period, you may exercise that portion of
your Option that was vested on the date of your Disability.
 
	  
 	  
 
	  
 	           “Disability” means that you are unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment.
 
	  
 	  
 

                      5.  Exercise of Option.

	  
 	                      (a)  Legal
Restrictions.  By signing this Agreement, you agree not to exercise this Option or sell any Common Stock acquired upon exercise of this Option at a time when applicable laws, regulations or Company or underwriter trading policies
prohibit exercise or sale and to comply with any such laws, regulations or policies deemed applicable to such exercise or sale by counsel to the Company.  In particular, the Company shall have the right to designate one or more periods of time,
each of which shall not exceed 180 days in length, during which this Option shall not be exercisable if the Company determines (in its sole discretion) that such limitation on exercise could in any way facilitate a lessening of any restriction on
transfer pursuant to the Securities Act with respect to any issuance of securities by the Company, facilitate the registration or qualification of any securities by the Company under the Securities Act or any state securities laws, or facilitate the
perfection of any exemption from the registration or qualification requirements of the Securities Act for the issuance or transfer of any securities.  Such limitation on exercise shall not alter the vesting schedule set forth in this Agreement
other than to limit the periods during which this Option shall be exercisable.  Notwithstanding the foregoing, if a limitation is imposed and such limitation would cause a forfeiture of your exercise right because your option would expire
during such limitation period, then the vesting schedule and expiration date of your option shall be extended 30 days beyond the limitation period to allow for exercise of your option.
 
	  
 	  
 
	  
 	                     (b)  Method of Exercise. 
To exercise your Option, you must execute the Notice of Exercise, attached hereto as Exhibit A.  You must submit this form, together with full payment, at the address given on the form.  Your Notice of Exercise must specify how
many shares you wish to purchase.  Your Notice of Exercise will be effective when it is received by the Company.  If someone else wants to exercise your Option after your death, that person must prove to the Company’s satisfaction
that he or she is entitled to do so.
 
	  
 	  
 
	  
 	                      (c)  Form of Payment. 
When you submit Exhibit A, you must include payment of the aggregate Exercise Price for the Common Stock you are purchasing.  Payment may be made in one (or a combination) of the following forms.
 
	  
 	  
 
	  
 	  •
 	  Your personal cheque, a cashier’s cheque or a money order.
 
	  
 	  
 	  
 
				

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 	  •
 	  Shares of Common Stock which you have owned for six months and which are surrendered to the Company.  The value of such Common Stock, determined as of the effective date of
the Option exercise, will be applied to the Exercise Price.
 
	  
 	  
 	  
 
	  
 	  •
 	  To the extent that a public market for Common Stock exists as determined by the Company, by delivery (on a form approved by the Company) of an irrevocable direction to a
securities broker to sell Common Stock and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price.
 
	  
 	  
 	  
 
	  
 	 •
 	  To the extent that a public market for Common Stock exists as determined by the Company, by delivery (on a form approved by the Company) of an irrevocable direction to a
securities broker or lender to pledge Common Stock, as security for a loan, and to deliver all or part of the loan proceeds to the Company in payment of the aggregate Exercise Price.
 
	  
 	  
 	  
 
	  
 	  •
 	  Any other form of legal consideration approved by the Board.
 
	  
 	  
 
	  
 	                      (d)  Withholding Taxes. 
You will not be allowed to exercise your Option unless you make acceptable arrangements to pay any withholding or other taxes that may be due as a result of the exercise of, or other dealing in, the Option or the sale of Common Stock acquired upon
exercise of your Option.
 
	  
 	  
 
				

                     6.  Market Stand-Off. In connection
with any underwritten public offering by the Company of its equity securities pursuant to an effective registration statement filed under the US Securities Act of 1933, you shall not, directly or indirectly, engage in any transaction prohibited by
the underwriter, nor shall you sell, make any short sale of, contract to sell, transfer the economic risk of ownership in, loan, charge, pledge, grant any option for the purchase of, or otherwise dispose of or transfer for value or agree to engage
in any of the foregoing transactions with respect to any Shares without the prior written consent of the Company or its underwriters, for such period of time after the effective date of such registration statement as may be requested by the Company
or such underwriters.  Such period of time shall not exceed one hundred eighty (180) days and may be required by the underwriter as a condition of the offering.  By signing this Stock Option Agreement you agree to execute and deliver such
other agreements as may be reasonably requested by the Company or the underwriter which are consistent with the foregoing or which are necessary to give further effect thereto.  To enforce the provisions of this Section 5, the Company may
impose stop-transfer instructions with respect to the Shares until the end of the applicable stand-off period.
                      7.  Only Vested Shares Purchasable.  You may not exercise your Option as to any
share before such share it is vested as provided in Section I above. 
                     8.  Transfer of Option.  Prior to your death, only you may exercise your
Option.  You cannot transfer or assign your Option.  For instance, you may not sell your Option or use it as security for a loan.  If you attempt to do any of these things, your Option will immediately become invalid.  You may,
however, dispose of your Option in your will. 
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                       Regardless of any marital property settlement
agreement, the Company is not obligated to honor a notice of exercise from your spouse or former spouse, nor is the Company obligated to recognize such individual’s interest in your Option in any other way.
                      9.  No Retention Rights.  Your Option does not give you the right to be retained by
the Company (or any subsidiaries) in any capacity.  The Company reserves the right to terminate your Service at any time and for any reason.
                      10.  Stockholder Rights.  You, or your estate or heirs, have no rights as a
Stockholder of the Company until a certificate for your Common Stock has been issued.  No adjustments are made for dividends or other rights if the applicable record date occurs before your stock certificate is issued.
                     11.  Adjustments to Common Stock.

	  
 	                      (a)  Adjustments. In the event of a
subdivision of the outstanding Shares, a declaration of a dividend payable in Shares, a declaration of a dividend payable in a form other than Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of
the outstanding Shares (by reclassification or otherwise) into a lesser number of Shares, a recapitalization, a spin-off or a similar occurrence, the Committee shall make such adjustments as it, in its sole discretion, deems appropriate in one or
more of:
 
	  
 	  
 
	  
 	                      (1)          The number of shares subject to the
Option; or
 
	  
 	  
 
	  
 	                      (2)          The Exercise Price under the
outstanding Option.
 
	  
 	  
 

 Except as provided in this Section 11, you shall have no rights whatsoever as a result of any
issue by the Company of stock of any class or securities convertible into stock of any class, any subdivision or consolidation of shares of stock of any class, the payment of any stock dividend or any other increase or decrease in the number of
shares of stock of any class.

	  
 	                      (b)  Dissolution or Liquidation.  To
the extent not previously exercised, your Option shall terminate immediately prior to the dissolution or liquidation of the Company.
 
	  
 	  
 
	  
 	                      (c)  Reorganizations.  If the Company
is a party to a merger or other reorganization, your Option shall be subject to the agreement of merger or reorganization.  Such agreement shall provide for one or more of the following, in all cases without your consent being
required:
 
	  
 	  
 
	                                     
     (1)          The continuation of the Option, if the Company is a surviving corporation;
 
	  
 	  
 
	                                      
     (2)          The assumption of the outstanding Option by the surviving corporation or its parent or subsidiary;
 
	  
 	  
 

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     (3)          The substitution by the surviving corporation or its parent or subsidiary of its own awards for the Option; or
 
	  
 	  
 
	                                     
     (4)          Full exercisability and/or vesting and/or accelerated expiration of the Option.
 
	  
 	  
 
	  
 	                      (d)  Reservation of Rights.  Except
as provided in this Section 11, you shall have no rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend or any other increase or decrease in the number of shares of stock of any
class.  Any issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of
Shares subject to your Option.  The grant of your Option shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to issue or sell any
shares of stock of any class, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets.
 
	  
 	  
 

                     12.  Applicable Law.  This Agreement will be interpreted and enforced under the laws
of the state of Delaware.
                      This Agreement and your Employment Agreement
constitute the entire understanding between you and the Company regarding your Option.  Any prior agreements, commitments or negotiations concerning your Option are superseded.

	  
 	  By signing below, you agree to all of the terms and conditions described in this Stock Option Agreement, including the attached Notice of Exercise.
 

   

	  Option Holder:
 	  /s/ JAMES K. MITCHELL
 
	  
 	 
 
	   
 	  (Signature)
 
	  
 	  
 
	 Company:
 	 /s/ ROBERT SHARP
 
	  
 	 
 
	  
 	 (Signature)
 
	  
 	  
 
	 Title:
 	 Chairman of the Compensation Committee of Detwiler Mitchell & Co.
 
	  
 	  
 

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