EXHIBIT 99.4
INTERCHANGE CORPORATION
2000 INCENTIVE EQUITY PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Stock Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
Optionee:
Address:
You ("Optionee") have been granted an option to purchase Common Stock of
the Company, subject to the terms and conditions of the Plan and this Stock
Option Agreement. The terms of your grant are set forth below:
Date of Grant:
Initial Vesting Date:
Exercise Price per Share:
Total Number of Shares Granted:
Total Exercise Price:
Type of Option: __ Incentive Stock Option
___ Non-Qualified Stock Option
Term/Expiration Date:
Exercise and Vesting Schedule:
The Shares subject to this Option shall vest _______________.
Termination Period:
Except as otherwise provided herein, this Option may be exercised, to the
extent vested, for three (3) months after Optionee ceases to be a "Service
Provider" (as defined in the Plan), but in no event later than the
Term/Expiration Date as provided above.
Option Grant 2000 Plan
II. AGREEMENT
1. Grant of Option. The Company hereby grants to the Optionee an Option to
purchase the Common Stock (the "Shares") set forth in the Notice of Grant, at
the exercise price per share set forth in the Notice of Grant (the "Exercise
Price"). Notwithstanding anything to the contrary anywhere else in this Option
Agreement, this grant of an Option is subject to the terms, definitions and
provisions of the INTERCHANGE Corporation 2000 Equity Incentive Plan (the
"Plan") adopted by the Company, which is incorporated herein by reference.
If designated in the Notice of Grant as an Incentive Stock Option, this
Option is intended to qualify as an Incentive Stock Option as defined in Section
422 of the Code; provided, however, that to the extent that the aggregate Fair
Market Value of stock with respect to which Incentive Stock Options (within the
meaning of Code Section 422, but without regard to Code Section 422(d)),
including the Option, are exercisable for the first time by the Optionee during
any calendar year (under the Plan and all other incentive stock option plans of
the Company or any Subsidiary) exceeds $100,000, such options shall be treated
as not qualifying under Code Section 422, but rather shall be treated as
Non-Qualified Stock Options to the extent required by Code Section 422. The rule
set forth in the preceding sentence shall be applied by taking options into
account in the order in which they were granted. For purposes of these rules,
the Fair Market Value of stock shall be determined as of the time the option
with respect to such stock is granted.
2. EXERCISE OF OPTION.
2.1 RIGHT TO EXERCISE. This Option is exercisable as follows:
a. This Option shall be exercisable cumulatively according to
the vesting schedule set out in the Notice of Grant. For purposes of this Stock
Option Agreement, Shares subject to this Option shall vest based on Optionee's
continued status as a Service Provider, unless provided for otherwise.
b. This Option may not be exercised for a fraction of a Share.
c. In the event of Optionee's death, disability or other
termination of the Optionee's status as a Service Provider, the exercisability
of the Option is governed by Section 3 below.
d. In no event may this Option be exercised after the date of
expiration of the term of this Option as set forth in the Notice of Grant.
2.2 METHOD OF EXERCISE.
a. This Option shall be exercisable by written Notice (in the
form attached as Exhibit A). The Notice must state the number of Shares for
which the Option is being exercised, and such other representations and
agreements with respect to such shares of Common Stock as may be required by the
Company pursuant to the provisions of the Plan. The Notice must be signed by the
Optionee and shall be delivered in person or by certified mail to the
Option Grant 2000 Plan
2
Secretary of the Company. The Notice must be accompanied by payment of the
Exercise Price, including payment of any applicable withholding tax. This Option
shall be deemed to be exercised upon receipt by the Company of such written
Notice accompanied by the Exercise Price and payment of any applicable
withholding tax.
b. No Shares shall be issued pursuant to the exercise of an
Option unless such issuance and such exercise comply with all relevant
provisions of law and the requirements of any stock exchange upon which the
Shares may then be listed. Assuming such compliance, for income tax purposes the
Shares shall be considered transferred to the Optionee on the date on which the
Option is exercised with respect to such Shares.
2.3 OPTIONEE'S REPRESENTATIONS. If the Shares purchasable pursuant
to the exercise of this Option have not been registered under the Securities Act
of 1933, as amended (the "Securities Act"), at the time this Option is
exercised, Optionee shall, if required by the Company, concurrently with the
exercise of all or any portion of this Option, deliver to the Company his or her
Investment Representation Statement in the form attached hereto as Exhibit B.
2.4 LOCK-UP PERIOD. Optionee hereby agrees that if so requested by
the Company or any representative of the underwriters (the "Managing
Underwriter") in connection with any registration of the offering of any
securities of the Company under the Securities Act, Optionee shall not sell or
otherwise transfer any Shares or other securities of the Company during the
180-day period (or such longer period as may be requested in writing by the
Managing Underwriter and agreed to in writing by the Company) (the "Market
Standoff Period") following the effective date of a registration statement of
the Company filed under the Securities Act; provided, however, that such
restriction shall apply only to the first registration statement of the Company
to become effective under the Securities Act that includes securities to be sold
on behalf of the Company to the public in an underwritten public offering under
the Securities Act. The Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such Market Standoff Period.
2.5 METHOD OF PAYMENT. Payment of the Exercise Price shall be by any
of the following, or a combination thereof, at the election of the Optionee:
a. cash;
b. check;
c. with the consent of the Administrator, a full recourse
promissory note bearing interest (at no less than such rate as shall then
preclude the imputation of interest under the Code) and payable upon such terms
as may be prescribed by the Administrator;
d. with the consent of the Administrator, surrender of other
shares of Common Stock of the Company which (A) in the case of shares acquired
pursuant to the exercise of a Company option, have been owned by the Optionee
for more than six (6) months on the date of surrender, and (B) have a Fair
Market Value on the date of surrender equal to the Exercise Price of the Shares
as to which the Option is being exercised;
Option Grant 2000 Plan
3
e. with the consent of the Administrator, surrendered Shares
issuable upon the exercise of the Option having a Fair Market Value on the date
of exercise equal to the aggregate Exercise Price of the Option or exercised
portion thereof;
f. with the consent of the Administrator, property of any kind
which constitutes good and valuable consideration; or
g. with the consent of the Administrator, delivery of a notice
that the Optionee has placed a market sell order with a broker with respect to
Shares then issuable upon exercise of the Option and that the broker has been
directed to pay a sufficient portion of the net proceeds of the sale to the
Company in satisfaction of the aggregate Exercise Price; provided, that payment
of such proceeds is then made to the Company upon settlement of such sale.
3. TERMINATION OF RELATIONSHIP.
3.1 Cessastion of Service. If Optionee ceases to be a Service
Provider (other than for cause or by reason of the Optionee's death or the total
and permanent disability of the Optionee as defined in Code Section 22(e)(3)),
Optionee may exercise this Option during the Termination Period set out in the
Notice of Grant, to the extent the Option was vested at the date of such
termination. However, the Option shall terminate: (i) immediately upon
termination if the Optionee is terminated for cause; (ii) upon the expiration of
the Termination Period, and (iii) immediately upon termination to the extent
that Optionee was not vested in this Option at the date on which Optionee ceases
to be a Service Provider.
3.2 Disability of Optionee. If Optionee ceases to be a Service
Provider as a result of his or her total and permanent disability as defined in
Code Section 22(e)(3), Optionee may exercise the Option to the extent the Option
was vested at the date on which Optionee ceases to be a Service Provider, but
only within twelve (12) months from such date (and in no event later than the
expiration date of the term of this Option as set forth in the Notice of Grant).
To the extent that the Option is not vested at the date on which Optionee ceases
to be a Service Provider, or if Optionee does not exercise such Option within
the time specified herein, the Option shall terminate.
3.3 Death of Optionee. If Optionee ceases to be a Service Provider
as a result of the death of Optionee, the vested portion of the Option may be
exercised at any time within twelve (12) months following the date of death (and
in no event later than the expiration date of the term of this Option as set
forth in the Notice of Grant) by Optionee's estate or by a person who acquires
the right to exercise the Option by bequest or inheritance. To the extent that
Optionee is not vested in the Option at the date of death, or if the Option is
not exercised within the time specified herein, the Option shall terminate.
4. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner except by will or by the laws of descent or distribution. It may be
exercised during the lifetime of Optionee only by Optionee. The terms of this
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.
5. TERM OF OPTION. This Option may be exercised only within the term set
out in the Notice of Grant.
Option Grant 2000 Plan
4
6. RESTRICTIONS ON SHARES. Optionee hereby agrees that Shares purchased
upon the exercise of the Option shall be subject to such terms and conditions as
the Administrator shall determine in its sole discretion, including, without
limitation, restrictions on the transferability of Shares, the right of the
Company to repurchase Shares, and a right of first refusal in favor of the
Company with respect to permitted transfers of Shares. Such terms and conditions
may, in the Administrator's sole discretion, be contained in the Exercise Notice
with respect to the Option or in such other agreement as the Administrator shall
determine and which the Optionee hereby agrees to enter into at the request of
the Company.
Option Grant 2000 Plan
[Signature page follows]
5
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which shall constitute one
document.
INTERCHANGE CORPORATION
By:________________________________
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THE OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT
AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING
GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE
COMPANY'S 2000 EQUITY INCENTIVE PLAN WHICH IS INCORPORATED HEREIN BY
REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO
CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR SHALL IT
INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR
WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that he
is familiar with the terms and provisions thereof. Optionee hereby accepts this
Option subject to all of the terms and provisions hereof. Optionee has reviewed
the Plan and this Option in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Option and fully understands all
provisions of the Option. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator upon
any questions arising under the Plan or this Option. Optionee further agrees to
notify the Company upon any change in the residence address indicated below.
Dated: __________________ ___________________________________________
[Name]
Residence Address:
Option Grant 2000 Plan
6
EXHIBIT A
INTERCHANGE CORPORATION
2000 EQUITY INCENTIVE PLAN
EXERCISE NOTICE
INTERCHANGE Corporation
Attention: Chief Executive Officer
1. Exercise of Option. Effective as of today, ___________, _____, the
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
_________ shares of the Common Stock (the "Shares") of INTERCHANGE Corporation
(the "Company") under and pursuant to the INTERCHANGE Corporation 2000 Equity
Incentive Plan (the "Plan") and the [ ] Incentive [ ] Non-Qualified Stock Option
Agreement dated _____________, _____, (the "Option Agreement").
2. Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Plan and the Option Agreement. Optionee agrees
to abide by and be bound by their terms and conditions.
3. Rights as Stockholder. Until the stock certificate evidencing such
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to Shares subject to the Option, notwithstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such stock certificate
promptly after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 15 of the Plan.
Optionee shall enjoy rights as a stockholder until such time as
Optionee disposes of the Shares or the Company and/or its assignee(s) exercises
the Right of First Refusal hereunder. Upon such exercise, Optionee shall have no
further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions of
this Agreement, and Optionee shall forthwith cause the certificate(s) evidencing
the Shares so purchased to be surrendered to the Company for transfer or
cancellation.
4. Optionee's Rights to Transfer Shares.
4.1 Company's Right of First Refusal. Before any Shares held by
Optionee or any permitted transferee (each, a "Holder") may be sold, pledged,
assigned, hypothecated, transferred, or otherwise disposed of (including
transfer by gift or operation of law and, collectively, "Transfer" or
"Transferred"), the Company or its assignee(s) shall have a right of first
refusal to purchase the Shares on the terms and conditions set forth in this
Section (the "Right of First Refusal").
Option Grant 2000
4.2 Notice of Proposed Transfer. The Holder of the Shares shall
deliver to the Company a written notice (the "Notice") stating: (i) the Holder's
bona fide intention to sell or otherwise Transfer such Shares; (ii) the name of
each proposed purchaser or other transferee ("Proposed Transferee"); (iii) the
number of Shares to be Transferred to each Proposed Transferee; and (iv) the
bona fide cash price or other consideration for which the Holder proposes to
Transfer the Shares (the "Offered Price"), and the Holder shall offer the Shares
at the Offered Price to the Company or its assignee(s).
4.3 Exercise of Right of First Refusal. Within thirty (30) days
after receipt of the Notice, the Company and/or its assignee(s) may elect in
writing to purchase all, but not less than all, of the Shares proposed to be
Transferred to any one or more of the Proposed Transferees. The purchase price
will be determined in accordance with subsection (c) below.
4.4 Purchase Price. The purchase price ("Purchase Price") for the
Shares repurchased under this Section shall be the Offered Price. If the Offered
Price includes consideration other than cash, the cash equivalent value of the
non-cash consideration shall be determined by the Board of Directors of the
Company in good faith.
4.5 Payment. Payment of the Purchase Price shall be made, at the
option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding indebtedness of the Holder to the Company
(or, in the case of repurchase by an assignee, to the assignee), or by any
combination thereof within thirty (30) days after receipt of the Notice or in
the manner and at the times set forth in the Notice.
4.6 Holder's Right to Transfer. If all of the Shares proposed in the
Notice to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee(s) as provided in this Section, then the Holder may
sell or otherwise Transfer such Shares to that Proposed Transferee at the
Offered Price or at a higher price, provided that such sale or other Transfer is
consummated within one hundred twenty (120) days after the date of the Notice
and provided further that any such sale or other Transfer is effected in
accordance with any applicable securities laws and the Proposed Transferee
agrees in writing that the provisions of this Section and the Restricted Stock
Purchase Agreement, as applicable, shall continue to apply to the Shares in the
hands of such Proposed Transferee. If the Shares described in the Notice are not
Transferred to the Proposed Transferee within such period, a new Notice shall be
given to the Company, and the Company and/or its assignees shall again be
offered the Right of First Refusal as provided herein before any Shares held by
the Holder may be sold or otherwise Transferred.
4.7 Exception for Certain Family Transfers. Anything to the contrary
contained in this Section notwithstanding, the Transfer of any or all of the
Shares during the Optionee's lifetime or on the Optionee's death by will or
intestacy to the Optionee's Immediate Family or a trust for the benefit of the
Optionee's Immediate Family shall be exempt from the Right of First Refusal. As
used herein, "Immediate Family" as used herein shall mean spouse, lineal
descendant or antecedent, father, mother, brother or sister or stepchild
(whether or not adopted). In such case, the transferee or other recipient shall
receive and hold the Shares so Transferred subject to the provisions of this
Section (including the Right of First Refusal) and
Option Grant 2000
2
there shall be no further Transfer of such Shares except in accordance with the
terms of this Section.
5. Termination of Right of First Refusal. The Right of First Refusal shall
terminate as to all Shares upon the first to occur of (i) ninety (90) days after
a sale of Common Stock of the Company to the general public pursuant to a
registration statement filed with and declared effective by the Securities and
Exchange Commission under the Securities Act of 1933, as amended (a "Public
Offering"), or (ii) a sale of the Company (whether by merger, consolidation,
sale or all or substantially all of the Company's assets or sale of all of the
Company's capital stock) which is approved by the holders of the Company's
securities representing at least fifty percent (50%) of the combined voting
power of all outstanding securities of the Company.
6. Company Call Right.
(a) If Optionee ceases to be a Service Provider (as defined in the
Plan) for any reason, including for cause, death, and disability, the Company
shall have the right to purchase from Optionee, or Optionee's personal
representative, as the case may be, any or all of the Shares then owned by the
Optionee at a price equal to the Fair Market Value (as defined in the Plan) of
the Shares on the date on which the Optionee ceases to be a Service Provider
(the "Call Right").
(b) The Company may exercise the Company Call Right by delivering
personally or by registered mail to Optionee (or his transferee or legal
representative, as the case may be), within ninety (90) days of the date on
which Optionee ceases to be a Service Provider, a notice in writing indicating
the Company's intention to exercise the Company Call Right and setting forth a
date for closing not later than thirty (30) days from the mailing of such
notice. The closing shall take place at the Company's office. At the closing,
the holder of the certificates for the Shares being transferred shall deliver
the stock certificate or certificates evidencing the Shares, and the Company
shall deliver the purchase price therefor.
(c) At its option, the Company may elect to make payment for the
Shares to a bank selected by the Company. The Company shall avail itself of this
option by a notice in writing to Optionee stating the name and address of the
bank, date of closing, and waiving the closing at the Company's office.
(d) If the Company does not elect to exercise the Company Call Right
conferred above by giving the requisite notice within ninety (90) days following
the date on which Optionee ceases to be a Service Provider, the Company Call
Right shall terminate.
(e) The Company Call Right shall terminate as to all Shares upon the
first to occur of (i) ninety (90) days after a Public Offering, or (ii) a sale
of the Company (whether by merger, consolidation, sale of all or substantially
all of the Company's assets or sale of all of the Company's capital stock) which
is approved by the holders of the Company's securities representing at least
fifty (50%) of the combined voting power of all outstanding securities of the
Company.
7. Tax Consultation. Optionee understands that Optionee may suffer adverse
tax consequences as a result of Optionee's purchase or disposition of the
Shares. Optionee
Option Grant 2000
3
represents that Optionee has consulted with any tax consultants Optionee deems
advisable in connection with the purchase or disposition of the Shares and that
Optionee is not relying on the Company for any tax advice.
8. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. Optionee understands and agrees that the Company shall
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by state or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN
THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL
OPTIONS HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN
THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER
OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND
RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE
SHARES.
(b) Stop-Transfer Notices. Optionee agrees that, in order to ensure
compliance with the restrictions referred to herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, and
that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.
Option Grant 2000
4
9. Successors and Assigns. The Company may assign any of its rights under
this Agreement to single or multiple assignees, and this Agreement shall inure
to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
Optionee and his or her heirs, executors, administrators, successors and
assigns.
10. Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's Board of Directors or the committee thereof that is responsible for
the administration of the Plan (the "Administrator"), which shall review such
dispute at its next regular meeting. The resolution of such a dispute by the
Administrator shall be final and binding on the Company and on Optionee.
11. Governing Law; Severability. This Agreement shall be governed by and
construed in accordance with the laws of the State of California excluding that
body of law pertaining to conflicts of law. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.
12. Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
13. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
14. Delivery of Payment. Optionee herewith delivers to the Company the
full Exercise Price for the Shares, as well as any applicable withholding tax.
Option Grant 2000
5
15. Entire Agreement. The Plan and Stock Option Agreement are incorporated
herein by reference. This Agreement, the Plan, the Stock Option Agreement and
the Investment Representation Statement and the Restricted Stock Purchase
Agreement constitute the entire agreement of the parties and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof.
Submitted by: Accepted by:
OPTIONEE: INTERCHANGE CORPORATION.
__________________________________
By: ______________________________
Its: _____________________________
Address:
__________________________________
__________________________________
__________________________________
Option Grant 2000
6
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE :
COMPANY : INTERCHANGE CORPORATION
SECURITY : COMMON STOCK
AMOUNT :
DATE :
In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:
1. Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
2. Optionee acknowledges and understands that the Securities constitute
"restricted securities" under the Securities Act and have not been registered
under the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of Optionee's
investment intent as expressed herein. In this connection, Optionee understands
that, in the view of the Securities and Exchange Commission, the statutory basis
for such exemption may be unavailable if Optionee's representation was
predicated solely upon a present intention to hold these Securities for the
minimum capital gains period specified under tax statutes, for a deferred sale,
for or until an increase or decrease in the market price of the Securities, or
for a period of one year or any other fixed period in the future. Optionee
further understands that the Securities must be held indefinitely unless they
are subsequently registered under the Securities Act or an exemption from such
registration is available. Optionee further acknowledges and understands that
the Company is under no obligation to register the Securities. Optionee
understands that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel
satisfactory to the Company and any other legend required under applicable state
securities laws.
3. Optionee is familiar with the provisions of Rule 701 and Rule 144, each
promulgated under the Securities Act, which, in substance, permit limited public
resale of "restricted securities" acquired, directly or indirectly from the
issuer thereof, in a non-
Option Grant 2000
public offering subject to the satisfaction of certain conditions. Rule 701
provides that if the issuer qualifies under Rule 701 at the time of the grant of
the Option to the Optionee, the exercise will be exempt from registration under
the Securities Act. In the event the Company becomes subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
ninety (90) days thereafter (or such longer period as any market stand-off
agreement may require) the Securities exempt under Rule 701 may be resold,
subject to the satisfaction of certain of the conditions specified by Rule 144,
including: (1) the resale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934); and, in the case of
an affiliate, (2) the availability of certain public information about the
Company, (3) the amount of Securities being sold during any three (3) month
period not exceeding the limitations specified in Rule 144(e), and (4) the
timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the
time of grant of the Option, then the Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires the
resale to occur not less than one year after the later of the date the
Securities were sold by the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144; and, in the case of
acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than two (2) years, the satisfaction of
the conditions set forth in sections (1), (2), (3) and (4) of the paragraph
immediately above.
4. Optionee further understands that in the event all of the applicable
requirements of Rule 701 or 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.
Signature of Optionee:
Date: _______________________, ____ _______________________________________
Option Grant 2000
2