CLOVIS ONCOLOGY, INC.
Exhibit 10.6
2009 EQUITY INCENTIVE PLAN
Unless otherwise defined herein, the terms defined in the 2009 Equity Incentive Plan (the
“Plan”) shall have the same defined meanings in this Stock Option Agreement (the “Option
Agreement”).
I. NOTICE OF STOCK OPTION GRANT
Name:
Address:
The undersigned Participant has been granted an Option to purchase Common Stock of the
Company, subject to the terms and conditions of the Plan and this Option Agreement, as follows:
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| Vesting Commencement Date: |
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| Exercise Price per Share: | $ |
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| Total Number of Shares Granted: |
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| Total Exercise Price : | $ |
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| Type of Option: | Incentive Stock Option / Nonstatutory Stock Option | |||||
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Vesting Schedule:
This Option shall be exercisable, in whole or in part, according to the following vesting
schedule:
Twenty-five percent (25%) of the Shares subject to the Option shall vest on the one (1) year
anniversary of the Vesting Commencement Date, and one forty-eighth (1/48th) of the
Shares subject to the Option shall vest each month thereafter on the same day of the month as the
Vesting Commencement Date (and if there is no corresponding day, on the last day of the month),
subject to Participant continuing to be a Service Provider through each such date.
Termination Period:
This Option shall be exercisable for three (3) months after Participant ceases to be a Service
Provider, unless such termination is due to Participant’s death or Disability, in which case this
Option shall be exercisable for twelve (12) months after Participant ceases to be a Service
Provider. Notwithstanding the foregoing sentence, in no event may this Option be exercised after
the Term/Expiration Date as provided above and this Option may be subject to earlier termination as
provided in Section 13(c) of the Plan.
II. AGREEMENT
1. Grant of Option. The Administrator of the Company hereby grants to the Participant
named in the Notice of Stock Option Grant in Part I of this Agreement (“Participant”), an option
(the “Option”) to purchase the number of Shares set forth in the Notice of Stock Option Grant, at
the exercise price per Share set forth in the Notice of Stock Option Grant (the “Exercise Price”),
and subject to the terms and conditions of the Plan, which is incorporated herein by reference.
Subject to Section 18(c) of the Plan, in the event of a conflict between the terms and conditions
of the Plan and this Option Agreement, the terms and conditions of the Plan shall prevail.
If designated in the Notice of Stock Option Grant as an Incentive Stock Option (“ISO”), this
Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code.
Nevertheless, to the extent that it exceeds the $100,000 rule of Code Section 422(d), this Option
shall be treated as a Nonstatutory Stock Option (“NSO”). Further, if for any reason this Option
(or portion thereof) shall not qualify as an ISO, then, to the extent of such nonqualification,
such Option (or portion thereof) shall be regarded as a NSO granted under the Plan. In no event
shall the Administrator, the Company or any Parent or Subsidiary or any of their respective
employees or directors have any liability to Participant (or any other person) due to the failure
of the Option to qualify for any reason as an ISO.
2. Exercise of Option.
(a) Right to Exercise. This Option shall be exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Stock Option Grant and with the
applicable provisions of the Plan and this Option Agreement.
Notwithstanding anything in the Plan or this Option Agreement to the contrary, the Participant
shall be permitted to exercise the Option at any time prior to the time such Option vests (such
exercise being referred to as an “Early Exercise”). In such event, upon exercise of the Option,
the Participant will receive Restricted Stock, subject to the same vesting schedule set forth above
and otherwise subject to the terms of Section 8 of the Plan and the Exercise Notice in the form
attached as Exhibit A (the “Exercise Notice”), where the purchase price of such Restricted
Stock shall be the exercise price paid by the Participant for such Restricted Stock. The
Participant acknowledges that the filing of any election under Section 83(b) of the Code in
connection with an Early Exercise shall be the sole responsibility of the Participant.
(b) Method of Exercise. This Option shall be exercisable by delivery of an Exercise
Notice or in a manner and pursuant to such procedures as the Administrator may determine, which
shall state the election to exercise the Option, the number of Shares with respect to which the
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Option is being exercised, and such other representations and agreements as may be required by
the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price
as to all Exercised Shares, together with any applicable tax withholding. This Option shall be
deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice
accompanied by the aggregate Exercise Price, together with any applicable tax withholding.
No Shares shall be issued pursuant to the exercise of an Option unless such issuance and such
exercise comply with Applicable Laws. Assuming such compliance, for income tax purposes the Shares
shall be considered transferred to Participant on the date on which the Option is exercised with
respect to such Shares.
3. Participant’s Representations. In the event the Shares have not been registered
under the Securities Act of 1933, as amended, at the time this Option is exercised, Participant
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.
4. Lock-Up Period. Participant hereby agrees that Participant shall not offer,
pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or
dispose of, directly or indirectly, any Common Stock (or other securities) of the Company or enter
into any swap, hedging or other arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of any Common Stock (or other securities) of the Company
held by Participant (other than those included in the registration) for a period specified by the
representative of the underwriters of Common Stock (or other securities) of the Company not to
exceed one hundred and eighty (180) days following the effective date of any registration statement
of the Company filed under the Securities Act (or such other period as may be requested by the
Company or the underwriters to accommodate regulatory restrictions on (i) the publication or other
distribution of research reports and (ii) analyst recommendations and opinions, including, but not
limited to, the restrictions contained in NASD Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any
successor provisions or amendments thereto).
Participant agrees 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. In addition, if requested by the Company or the representative of the
underwriters of Common Stock (or other securities) of the Company, Participant shall provide,
within ten (10) days of such request, such information as may be required by the Company or such
representative in connection with the completion of any public offering of the Company’s securities
pursuant to a registration statement filed under the Securities Act. The obligations described in
this Section 4 shall not apply to a registration relating solely to employee benefit plans on Form
S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration relating
solely to a Commission Rule 145 transaction on Form S-4 or similar forms that may be promulgated in
the future. The Company may impose stop-transfer instructions with respect to the shares of Common
Stock (or other securities) subject to the foregoing restriction until the end of said one hundred
and eighty (180) day (or other) period. Participant agrees that any transferee of the Option or
shares acquired pursuant to the Option shall be bound by this Section 4.
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5. Method of Payment. Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Participant:
(a) cash;
(b) check;
(c) consideration received by the Company under a formal cashless exercise program adopted by
the Company in connection with the Plan;
(d) by delivery of a notice of “net exercise” to the Company, in a form provided by the
Company, pursuant to which the Participant shall receive the number of shares of Common Stock
underlying the Options so exercised reduced by the number of shares of Common Stock equal to the
aggregate exercise price of the Options divided by the Fair Market Value on the date of exercise;
or
(e) surrender of other Shares which (i) shall be valued at its Fair Market Value on the date
of exercise, and (ii) must be owned free and clear of any liens, claims, encumbrances or security
interests, if accepting such Shares, in the sole discretion of the Administrator, shall not result
in any adverse accounting consequences to the Company.
6. Restrictions on Exercise. This Option may not be exercised until such time as the
Plan has been approved by the stockholders of the Company, or if the issuance of such Shares upon
such exercise or the method of payment of consideration for such shares would constitute a
violation of any Applicable Law.
7. Non-Transferability of Option.
(a) This Option may not be transferred in any manner otherwise than by will or by the laws of
descent or distribution and may be exercised during the lifetime of Participant only by
Participant. The terms of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of Participant.
(b) Further, until the Company becomes subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act, or after the Administrator determines that it is, will, or may no longer
be relying upon the exemption from registration of Options under the Exchange Act as set forth in
Rule 12h-1(f) promulgated under the Exchange Act (the “Reliance End Date”), Participant shall not
transfer this Option or, prior to exercise, the Shares subject to this Option, in any manner other
than (i) to persons who are “family members” (as defined in Rule 701(c)(3) of the Securities Act of
1933, as amended) through gifts or domestic relations orders, or (ii) to an executor or guardian of
Participant upon the death or disability of Participant. Until the Reliance End Date, the Options
and, prior to exercise, the Shares subject to this Option, may not be pledged, hypothecated or
otherwise transferred or disposed of, including by entering into any short position, any “put
equivalent position” or any “call equivalent position” (as defined in Rule 16a-1(h) and Rule
16a-1(b) of the Exchange Act, respectively), other than as permitted in clauses (i) and (ii) of
this paragraph.
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8. Term of Option. This Option may be exercised only within the term set out in the
Notice of Stock Option Grant, and may be exercised during such term only in accordance with the
Plan and the terms of this Option.
9. Tax Obligations.
(a) Tax Withholding. Participant agrees to make appropriate arrangements with the
Company (or the Parent or Subsidiary employing or retaining Participant) for the satisfaction of
all Federal, state, local and foreign income and employment tax withholding requirements applicable
to the Option exercise. Participant acknowledges and agrees that the Company may refuse to honor
the exercise and refuse to deliver the Shares if such withholding amounts are not delivered at the
time of exercise.
(b) Notice of Disqualifying Disposition of ISO Shares. If the Option granted to
Participant herein is an ISO, and if Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (i) the date two (2) years after the Date of
Grant, or (ii) the date one (1) year after the date of exercise, Participant shall immediately
notify the Company in writing of such disposition. Participant agrees that Participant may be
subject to income tax withholding by the Company on the compensation income recognized by
Participant.
(c) Code Section 409A. Under Code Section 409A, an Option that vests after December
31, 2004 (or that vested on or prior to such date but which was materially modified after October
3, 2004) that was granted with a per Share exercise price that is determined by the Internal
Revenue Service (the “IRS”) to be less than the Fair Market Value of a Share on the date of grant
(a “discount option”) may be considered “deferred compensation.” An Option that is a “discount
option” may result in (i) income recognition by Participant prior to the exercise of the Option,
(ii) an additional twenty percent (20%) federal income tax, and (iii) potential penalty and
interest charges. The “discount option” may also result in additional state income, penalty and
interest tax to the Participant. Participant acknowledges that the Company cannot and has not
guaranteed that the IRS will agree that the per Share exercise price of this Option equals or
exceeds the Fair Market Value of a Share on the date of grant in a later examination. Participant
agrees that if the IRS determines that the Option was granted with a per Share exercise price that
was less than the Fair Market Value of a Share on the date of grant, Participant shall be solely
responsible for Participant’s costs related to such a determination.
10. Entire Agreement; Governing Law. The Plan is incorporated herein by reference.
The Plan and this Option Agreement constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior undertakings and agreements of
the Company and Participant with respect to the subject matter hereof, and may not be modified
adversely to the Participant’s interest except by means of a writing signed by the Company and
Participant. This Agreement is governed by the internal substantive laws but not the choice of law
rules of Colorado.
11. No Guarantee of Continued Service. PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE
PROVIDER AT THE WILL OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING
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PARTICIPANT) AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING
SHARES HEREUNDER. PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR
IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY
PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE RIGHT OF THE
COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) TO TERMINATE PARTICIPANT’S
RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.
Participant acknowledges receipt of a copy of the Plan and represents that he or she is
familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of
the terms and provisions thereof. Participant 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. Participant 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. Participant further agrees to notify the Company upon any
change in the residence address indicated below.
PARTICIPANT
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CLOVIS ONCOLOGY, INC. | |||||
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EXHIBIT A
2009 EQUITY INCENTIVE PLAN
EXERCISE NOTICE
1. Exercise of Option. Effective as of today, ________________, ____, the undersigned
(“Participant”) hereby elects to exercise Participant’s option (the “Option”) to purchase
________________ shares of the Common Stock (the “Shares”) of Clovis Oncology, Inc. (the “Company”)
under and pursuant to the 2009 Equity Incentive Plan (the “Plan”) and the Stock Option Agreement
dated ___________, _____ (the “Option Agreement”).
2. Delivery of Payment. Participant herewith delivers to the Company the full
purchase price of the Shares, as set forth in the Option Agreement, and any and all withholding
taxes due in connection with the exercise of the Option.
3. Representations of Participant. Participant acknowledges that Participant has
received, read and understood the Plan and the Option Agreement and agrees to abide by and be bound
by their terms and conditions.
4. Rights as Stockholder. Except in the event of an Early Exercise (as such term is
defined in the Option Agreement), until the issuance of the Shares (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 the
Common Stock subject to an Award, notwithstanding the exercise of the Option. The Shares shall be
issued to Participant as soon as practicable after the Option is exercised in accordance with the
Option Agreement. No adjustment shall be made for a dividend or other right for which the record
date is prior to the date of issuance except as provided in Section 13 of the Plan.
In the event of an Early Exercise, Participant will have the rights of a stockholder with
respect to the Restricted Stock to the extent set forth in Section 8 of the Plan.
5. Company’s Right of First Refusal. Before any Shares held by Participant or any
transferee (either being sometimes referred to herein as the “Holder”) may be sold or otherwise
transferred (including transfer by gift or operation of law), 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 5 (the “Right of First Refusal”).
(a) 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).
(b) Exercise of Right of First Refusal. At any time within thirty (30) days after
receipt of the Notice, the Company and/or its assignee(s) may, by giving written notice to the
Holder, elect to purchase all, but not less than all, of the Shares proposed to be transferred to
any one or more of the Proposed Transferees, at the purchase price determined in accordance with
subsection (c) below.
(c) Purchase Price. The purchase price (“Purchase Price”) for the Shares purchased by
the Company or its assignee(s) under this Section 5 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.
(d) 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.
(e) ▇▇▇▇▇▇’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 5, 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 and twenty (120) days after the date of the Notice, that
any such sale or other transfer is effected in accordance with any applicable securities laws and
that the Proposed Transferee agrees in writing that the provisions of this Section 5 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 before any Shares held by the Holder may be sold or otherwise transferred.
(f) Exception for Certain Family Transfers. Anything to the contrary contained in
this Section 5 notwithstanding, the transfer of any or all of the Shares during the Participant’s
lifetime or on the Participant’s death by will or intestacy to the Participant’s immediate family
or a trust for the benefit of the Participant’s immediate family shall be exempt from the
provisions of this Section 5. “Immediate Family” as used herein shall mean spouse, lineal
descendant or antecedent, father, mother, brother or sister. In such case, the transferee or other
recipient shall receive and hold the Shares so transferred subject to the provisions of this
Section 5, and there shall be no further transfer of such Shares except in accordance with the
terms of this Section 5.
(g) Termination of Right of First Refusal. The Right of First Refusal shall terminate
as to any Shares upon the earlier of (i) the first sale of Common Stock of the Company to the
general public, or (ii) a Change in Control in which the successor corporation has equity
securities that are publicly traded (the “ROFR Lapse Date”).
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6. Company’s Repurchase Right. If, prior to the ROFR Lapse Date, the Holder ceases to
be a Service Provider for any reason then, at any time during the sixty (60) day period following
the date of such cessation, or if longer, the sixty (60) day period following the date upon which
the Holder acquired the Shares, the Company shall have the right to repurchase the Shares at a per
share price equal to the Fair Market Value (the “Repurchase Right”). The Repurchase Right shall be
exercisable upon written notice to the Holder indicating the number of shares of Stock to be
repurchased and the date on which the repurchase is to be effected, such date to be not more than
thirty (30) days after the date of such notice. To the extent not otherwise held in book entry
form by the Company, the certificates representing the Shares to be repurchased in connection with
the exercise of the Repurchase Right shall be delivered to the Company prior to the close of
business on the date specified for the repurchase.
7. Tax Consultation. Participant understands that Participant may suffer adverse tax
consequences as a result of Participant’s purchase or disposition of the Shares. Participant
represents that Participant has consulted with any tax consultants Participant deems advisable in
connection with the purchase or disposition of the Shares and that Participant is not relying on
the Company for any tax advice.
8. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. Participant 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 the Company or 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 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 A RIGHT OF FIRST REFUSAL 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.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER FOR A PERIOD OF TIME FOLLOWING THE EFFECTIVE DATE OF
THE UNDERWRITTEN PUBLIC OFFERING OF THE COMPANY’S SECURITIES SET FORTH IN AN
AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES AND MAY NOT
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BE SOLD OR OTHERWISE DISPOSED OF BY THE HOLDER PRIOR TO THE EXPIRATION OF SUCH PERIOD
WITHOUT THE CONSENT OF THE COMPANY OR THE MANAGING UNDERWRITER.
(b) Stop-Transfer Notices. Participant 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 Exercise Notice 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.
9. Successors and Assigns. The Company may assign any of its rights under this
Exercise Notice to single or multiple assignees, and this Exercise Notice shall inure to the
benefit of the successors and assigns of the Company. Subject to the restrictions on transfer
herein set forth, this Exercise Notice shall be binding upon Participant and his or her heirs,
executors, administrators, successors and assigns.
10. Interpretation. Any dispute regarding the interpretation of this Exercise Notice
shall be submitted by Participant or by the Company forthwith to 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 all parties.
11. Governing Law; Severability. This Exercise Notice is governed by the internal
substantive laws, but not the choice of law rules, of Colorado. In the event that any provision
hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Exercise Notice shall continue in full force and effect.
12. Entire Agreement. The Plan and Option Agreement are incorporated herein by
reference. This Exercise Notice, the Plan, the Option Agreement and the Investment Representation
Statement constitute the entire agreement of the parties with respect to the subject matter hereof
and supersede in their entirety all prior undertakings and agreements of the Company and
Participant with respect to the subject matter hereof, and may not be modified adversely to the
Participant’s interest except by means of a writing signed by the Company and Participant.
Submitted by:
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PARTICIPANT
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CLOVIS ONCOLOGY, INC. | |||||
Signature
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Address:
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EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
PARTICIPANT
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COMPANY
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: | CLOVIS ONCOLOGY, INC. | ||
SECURITY
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AMOUNT
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DATE
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In connection with the purchase of the above-listed Securities, the undersigned Participant
represents to the Company the following:
(a) Participant 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. Participant is acquiring these Securities for investment for
Participant’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”).
(b) Participant 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 Participant’s investment intent as expressed herein. In this connection,
Participant understands that, in the view of the Securities and Exchange Commission, the statutory
basis for such exemption may be unavailable if Participant’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 (1) year or any other fixed period in the future.
Participant 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. Participant further acknowledges and understands that the Company is under no
obligation to register the Securities. Participant understands that the certificate evidencing the
Securities shall be imprinted with any legend required under applicable state securities laws.
(c) Participant 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-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 Participant, the exercise shall 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 the applicable conditions specified by Rule 144,
including in the case of affiliates (1) the availability of certain public information about the
Company, (2) the amount of Securities being sold during any three (3) month period not exceeding
specified limitations, (3) the resale being made in an unsolicited “broker’s transaction”,
transactions directly with a “market maker” or “riskless principal transactions” (as those terms
are defined under the Securities Exchange Act of 1934) 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 may require (i) the availability of current public information about
the Company; (ii) the resale to occur more than a specified period after the purchase and full
payment (within the meaning of Rule 144) for the Securities; and (iii) in the case of the sale of
Securities by an affiliate, the satisfaction of the conditions set forth in sections (2), (3) and
(4) of the paragraph immediately above.
(d) Participant 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 shall 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 shall 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. Participant understands that no assurances can be given that any such other
registration exemption shall be available in such event.
| PARTICIPANT | ||
| Signature | ||
| Print Name | ||
| Date |
-2-