Exhibit 10.2
Acquisition Agreement
Reliance Technologies
PLAN AND AGREEMENT OF PURCHASE
This plan and agreement of purchase (Plan) has been adopted as a reorganization
under Section 368(b) of the Internal Revenue Code and entered into in Dallas,
Texas, this fifth day of March, 1999, between CBQ, Inc., a Colorado corporation
referred to in this Agreement as either the Purchaser or CBQ, and Reliance
Technologies, Inc., a Texas corporation, and the shareholders of Reliance
Technologies, Inc., all of whom are sometimes collectively referred to in this
Agreement as the Shareholders.
CBQ will acquire (at the Closing) from the Shareholders 100% of the issued and
outstanding capital stock of Reliance Technologies, Inc. in exchange for shares
of voting stock of CBQ. Under this Plan, Reliance Technologies, Inc. will become
a subsidiary of CBQ.
ARTICLE I
EXCHANGE OF VOTING CAPITAL STOCK
1.01. Transfer and Delivery of Reliance Technologies, Inc. Shares. At the
closing Shareholders will transfer and deliver to CBQ certificates evidencing
100% of the issued and outstanding Capital stock of Reliance Technologies, Inc.
duly endorsed in blank so as to effect transfer by delivery.
1.02. Issuance and Delivery of CBQ Shares. In exchange for the transfer by
Shareholders to CBQ of 100% of the issued and outstanding Reliance Technologies,
Inc. capital shares hereunder, CBQ will forthwith cause to be issued and
delivered to the Shareholders 1,000,000 restricted common shares of CBQ
(Collectively, the CBQ Shares).
1.03. CBQ will establish at closing The Reliance Technology Stock Option Plan,
Exhibit 4 to this Agreement, and will contribute 100,000 shares to this
Incentive Stock Option Plan for key employees of Reliance Technologies, Inc.
1.04. CBQ will fund or will have funded the Business Plan of Reliance
Technology, Inc., in the cumulative amount of $250,000, within twelve (12)
months of the Closing Date. Funded will mean that CBQ has arranged equity
financing from any source. It may involve equipment or services provided by
outside suppliers.
1.05. Right of Recission. Should CBQ not fund or arrange funding as described in
1.04 above, then Reliance Technologies, Inc. reserves the right to rescind this
Agreement in its entirety. If rescinded, all CBQ Shares issued in 1.02 above
shall be transferred and delivered to CBQ; the certificates duly endorsed in
blank so as to effect transfer by delivery. Any rights, including shares issued
from those rights, granted under the Reliance Technology Stock Option Plan in
1.03 above shall be immediately void and of no effect. In addition, all monies
funded under 1.04 above are due and payable to CBQ. This Right of Recission will
expire Midnight twelve (12) months from the Date of Closing.
1.04. Closing Date. The Closing Date will be March 15, 1999 at 10:00 AM at the
offices of CBQ in Dallas, Texas unless otherwise determined by Mutual agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS AND ACQUIRED
CORPORATION
2.01. Organization and Standing. Reliance Technologies, Inc. is a corporation
duly organized, validly existing and in good standing under the laws of Texas,
with all Corporate powers necessary to own property and carry on its business as
it is now being conducted. Copies of the articles of incorporation and bylaws of
Reliance Technologies, Inc. delivered to Purchaser herewith are complete and
accurate as of the Closing Date.
2.02. Balance Sheet. A balance sheet and related statements of operations, cash
flows and equity of Reliance Technologies, Inc. dated as of and for the three
year or lesser period, if inception occurred within three years, ended December
31, 1998, shall forthwith be delivered to CBQ. Reliance Technologies, Inc. shall
cause these financial statements to be (a) audited in accordance with Generally
Accepted Auditing Standards, (b) prepared in accordance with Generally Accepted
Accounting Principles applied on a consistent basis fairly presenting the
financial position of Reliance Technologies, Inc. and (c) prepared to as to
comply with Regulation S X and the time periods set forth in Form 8 KSB, that
being within 75 days after the Closing Date. Reliance Technologies, Inc. shall
also deliver to CBQ within the aforesaid 75 day period any other audited and/or
unaudited financial statements required under Regulation S X, Form 8 KSB or
otherwise by applicable securities laws. (The foregoing audited and unaudited
financial statements are collectively referred to herein as the Balance Sheet.)
2.03. Capitalization. Reliance Technologies, Inc. has an outstanding
capitalization, which is all in the hands of the Shareholders, all of which has
been fully paid for and is non assessable. There are no outstanding
subscriptions, options, contracts, commitments or demands relating to the
capital stock of Reliance Technologies, Inc. or any other agreements of any
character under which Reliance Technologies, Inc. or the Shareholders would be
obligated to issue or purchase shares of Reliance Technologies, Inc. capital
stock, except as described and disclosed on Exhibit 1 to this Agreement.
2.04. Title to Assets. Reliance Technologies, Inc. has good and marketable title
to all of its assets, all as set forth in the Balance Sheet, none of which are
subject to any mortgage, pledge, lien, charge, security interest, encumbrance or
restriction whatsoever except those that: (a) are disclosed on the Balance Sheet
and/or the footnotes thereto or (b) do not materially and adversely affect the
value of the asset. Further, the assets of Reliance Technologies, Inc. are in
good condition and repair.
2.05. Schedule of Assets. Reliance Technologies, Inc. shall forthwith deliver to
Purchaser a schedule of assets containing, as of the Closing Date, a true and
complete: (a) description of all software licensing and sublicensing agreements
in favor of or made by Reliance Technologies, Inc.; (b) description of any real
property in which Reliance Technologies, Inc. has a leasehold interest; (c) list
of all capitalized equipment of Reliance Technologies, Inc. that sets forth any
liens, claims, encumbrances, charges, restrictions, covenants and conditions
concerning the listed items; (d) list of all machinery, tools, and equipment in
which Reliance Technologies, Inc. has a leasehold interest, with a description
of each interest; (e) list of all patents, patent licenses, trademarks,
trademark registrations, trade names, copyrights and copyright registrations
owned by Reliance Technologies, Inc.; and (f) list of all interests in
subsidiaries and/or joint ventures.
2.06. Liabilities. Except as set forth in the Balance Sheet, Reliance
Technologies, Inc. presently has no outstanding indebtedness other than
liabilities incurred in the ordinary course of business. Reliance Technologies,
Inc. is not in default with respect to any terms or conditions of any
indebtedness. Further, Reliance Technologies, Inc. has not made any assignment
for the benefit of creditors, nor has any involuntary or voluntary petition in
bankruptcy been filed by or against Reliance Technologies, Inc..
2.07. Litigation. Reliance Technologies, Inc. is not a party to, nor has it been
threatened with, any litigation or governmental proceeding that, if decided
adversely to it, would have a material and adverse effect on its operations or
business, or on the financial condition, net worth, prospects or business of
Reliance Technologies, Inc. To the best of the Reliance Technologies, Inc.'s
knowledge, it is not aware of any facts that might result in any action, suit or
other proceeding that would result in any material and adverse change in the
business or financial condition of Reliance Technologies, Inc.
2.08. Compliance with Law and Instruments. The business and operations of
Reliance Technologies, Inc. are not infringing on or otherwise acting adversely
to any copyrights, trademark rights, patent rights or licenses owned by any
other person, and there is not any pending claim or threatened action with
respect to such rights. Reliance Technologies, Inc. is not obligated to make any
payments in the form of royalties, fees or otherwise to any owner of any patent,
trademark, trade name or copyright, except as set forth on Exhibit 2.
2.09. Contractual Obligations. Reliance Technologies, Inc. is not a party to or
bound by any written or oral: (a) contract not made in the ordinary course of
business, (b) bonus, pension, profit sharing, retirement, stock option,
hospitalization, group insurance or similar plan providing employee benefits
other than in the ordinary course of business, except as disclosed on Exhibit 3
to this Agreement, (c) any real or personal property lease other than in the
ordinary course of business or (d) deed of trust, mortgage, conditional sales
contract, security agreement, pledge agreement, trust receipt or any other
agreement subjecting any of the assets or properties of Reliance Technologies,
Inc. to a lien or encumbrance. Reliance Technologies, Inc. has performed all
obligations required to be performed by it under any of the contracts and leases
to which it is a party as of the Closing Date and is not in material breach
under any of the contracts, leases or other arrangements by which it is bound.
None of the parties with whom Reliance Technologies, Inc. has contractual
arrangements are in default of their obligations.
2.10. Changes in Compensation. Since the date of the Balance sheet, Reliance
Technologies, Inc. has not granted any general pay increase to employees or
changed the rate of compensation, commission or bonus payable to any officer,
employee, director, gent or stockholder, other than in the normal course of
business.
2.11. Records. All of the account books, minute books, stock certificate books
and stock transfer ledgers of Reliance Technologies, Inc. are current and
accurate.
2.12. Authority. The execution and performance of this Agreement have been duly
authorized by all requisite corporate action. This Agreement constitutes a valid
and binding obligation of Reliance Technologies, Inc. and the Shareholders in
accordance with its terms. No provision of the articles of incorporation,
bylaws, minutes, share certificates or contracts prevents Reliance Technologies,
Inc. and/or the Shareholders from delivering the Reliance Technologies, Inc.
shares to CBQ in the manner contemplated under the Plan.
2.13. Taxes. Reliance Technologies, Inc. has filed all income tax returns and,
in each jurisdiction where qualified or incorporated, all income tax and
franchise tax returns that are required to be filed. Reliance Technologies, Inc.
has paid all taxes as shown on the returns as have become due, and has paid all
assessments received that have become due.
2.14. Brokers. All negotiations on the part of Reliance Technologies, Inc. and
the Shareholders related to the Plan have been accomplished solely by Reliance
Technologies, Inc. and the Shareholders without the assistance of any person
employed as a broker or finder. Reliance Technologies, Inc. and the Shareholders
have done nothing to give rise to any valid claims for a broker's commission,
finder's fee or any similar charge.
2.15. Full Disclosure. As of the Closing Date, Reliance Technologies, Inc. and
the Shareholders have disclosed all events, conditions and facts materially
affecting the business and prospects of Reliance Technologies, Inc. The
Shareholders and Reliance Technologies, Inc. have not withheld knowledge of any
event, condition or fact that they have reasonable grounds to know may
materially affect the business and prospects of Reliance Technologies, Inc. None
of the representations and warranties made by the Shareholders or Reliance
Technologies, Inc. in this Agreement or in any instrument, writing or other
document furnished to CBQ contains any untrue statement of a material fact, or
fails to state a material fact.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
3.01. Organization and Standing. CBQ is a corporation duly organized, validly
existing and in good standing under the laws of Colorado, with all corporate
powers necessary to own property and carry on its business as it is now being
conducted. Copies of the articles of incorporation and bylaws of CBQ delivered
to the Shareholders and Reliance Technologies, Inc. herewith are complete and
accurate as of the Closing Date.
3.02. Subsidiaries. CBQ has subsidiaries.
3.03. Capitalization. CBQ has an authorized capitalization consisting of
500,000,000 common shares, $.0001 par value per share, and 100,000,000 preferred
shares, $.001 par value per share. As of the Closing Date, the number of common
shares and preferred shares outstanding is as set forth in the Form 8K A as of
February 2, 1999; all of which issued and outstanding shares are fully paid for
and non assessable. CBQ has granted and registered 280,000 S 8 options; and
granted, subject to vesting, 300,000 options to outside parties at an option
price of closing market bid price or greater.
3.04. Due Delivery. The CBQ Shares issued to the Shareholders have been validly
authorized and issued and are fully paid for and non assessable. No CBQ
shareholder has any preemptive right of subscription or purchase with respect to
these shares.
3.05. Authority. The execution and performance of this Agreement have been duly
authorized by all requisite corporate action. This Agreement constitutes a valid
and binding obligation of CBQ in accordance with its terms. No provision of the
articles of incorporation, bylaws, minutes, share certificates or contracts
prevents CBQ from delivering the CBQ shares in the manner contemplated under the
Plan.
3.06. Brokers. All negotiations on the part of CBQ related to the Plan have been
accomplished solely by CBQ without the assistance of any person employed as a
broker or finder. CBQ has done nothing to give rise to any valid claims for a
broker's commission, finder's fee or any similar charge.
3.07. Full Disclosure. As of the Closing Date, CBQ has disclosed all events,
conditions and facts materially affecting the business and prospects of CBQ, and
CBQ has not withheld knowledge of any event condition or fact that it has
reasonable grounds to know may materially affect the business and prospects of
CBQ. None of the representations and warranties made by CBQ in this Agreement or
in any instrument, writing or other document furnished to the Shareholders or
Reliance Technologies, Inc. contains any untrue statement of a material fact, or
fails to state a material fact.
ARTICLE IV
SURVIVAL OF WARRANTIES AND WARRANTIES
4.01. Nature and Survival of Representations and Warranties. All statements of
fact contained in this Agreement or in any memorandum, certificate, letter,
document or other instrument delivered by or on behalf of any of the parties
hereto to any other party pursuant to this Agreement shall be deemed
representations and warranties made by the delivering party to the other parties
under this Agreement. The covenants, representations and warranties of the
parties shall survive the Closing Date for a period of one year, and then they
shall lapse and be of no further effect.
4.02. Expenses. The parties to this Agreement shall pay their own expenses
incurred hereunder and in regards of the transactions contemplated hereby,
including, but not limited to, all fees and expenses of their respective counsel
and accountants.
ARTICLE V
COMPLIANCE WITH SECURITIES LAWS
5.01. Acknowledgments of the Shareholders. The Shareholders acknowledge,
understand and agree that: (a) The certificates representing the CBQ Shares will
each bear a legend restricting transfer in accordance with the exemptions from
registration under the Securities Act of 1933, as amended, which CBQ has relied
upon in the issuance of the CBQ Shares. (b) The CBQ Shares have not been
registered under the Securities Act of 1933, as amended, or any applicable state
law (collectively, the Securities Act). (C) The CBQ Shares may not be sold,
offered for sale, transferred, pledged, hypothecated or otherwise disposed of
except in compliance with the Securities Act of 1933 or 1934. (d) The legal
consequences of the foregoing mean that the Shareholders must bear the economic
risk of the investment in the CBQ Shares for the requisite period of time. (e)
No federal or state agency has made any finding or determination as to the
fairness of an investment in CBQ, or any recommendation or endorsement of this
investment.
5.02. Further Representations and Warranties of Shareholders. Shareholders each
individually represent and warrant to CBQ as follows: (a) I have the financial
ability to bear the economic risks of my investment, have adequate means of
providing for my current needs and personal contingencies, and have no need for
liquidity in this investment; and, further, I have evaluated the high risks of
investing in CBQ and have such knowledge and experience in financial and
business matters in general and in particular with respect to this type of
investment that I am capable of evaluating the merits and risks of an investment
in the CBQ Shares. (b) I have been given the opportunity to ask questions of and
receive answers from CBQ concerning the terms and conditions of this investment,
and to obtain additional information necessary to verify the accuracy of the
information I desired in order to evaluate my investment, and in evaluating the
suitability of this investment I have not relied upon any representation or
other information (whether oral or written), other than that furnished to me by
CBQ or its representatives; further, I have had the opportunity to discuss with
my professional, legal, tax and financial advisers the suitability of an
investment in the CBQ Shares for my particular tax and financial situation; and,
further, in making the decision to purchase the CBQ Shares, I have relied solely
upon independent investigations made by me or on my behalf. (C) I am acquiring
the CBQ Shares solely for my own personal account, for investment purposes only,
and am not purchasing with a view to, or for, the resale, distribution,
subdivision or fractionalization thereof.
ARTICLE VI
MISCELLANEOUS
6.01. Amendments. This Agreement may be amended or modified at any time, but
only by an instrument in writing executed by Reliance Technologies, Inc., CBQ
and each of the individual Shareholders.
6.02. Waiver. The Shareholders of Reliance Technologies, Inc. and/or CBQ may, in
writing, (a) extend the time for performance of any of the obligations of any
other party to this Agreement, (b) waive any inaccuracies or misrepresentations
contained in this Agreement or in any document delivered pursuant to this
Agreement by any other party and/or (C) waive compliance with any of the
covenants, or performance of any obligations, contained in this Agreement by any
other party.
6.03. Assignment. (a) Neither this Agreement nor any right created hereby shall
be assignable by any party without the prior written consent of the other
parties, except by the laws of succession. (b) This Agreement shall be binding
on and inure to the benefit of the respective successors and assigns of the
parties. Nothing in this Agreement, expressed or implied, is intended to confer
upon any person, other than the parties and their permitted successors and
assigns, any rights or remedies under this Agreement.
6.04. Notices. Any notice or other communication required or permitted by this
Agreement must be in writing and shall be deemed to be properly given when
delivered in person to an officer of the other party, or to the party
individually when deposited in the U.S. Mails for transmittal by certified or
registered mail, postage prepaid, or when deposited with a public telegraph
company for transmittal, charges prepaid, or when delivered via facsimile;
provided, however, that the communication is addressed as follows:
in case of Reliance Technologies, Inc. and the Shareholders:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; (▇▇▇) ▇▇▇ ▇▇▇▇; and
in case of CBQ:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇.
▇▇▇▇▇. ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; (▇▇▇) ▇▇▇ ▇▇▇▇
6.05. Headings. Paragraph and other headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
6.06. Entire Agreement. This Agreement contains the entire agreement between the
parties relating to the subject matter hereof. It may be executed in any number
of counterparts, but the aggregate of such counterparts constitute only one and
the same instrument.
6.07. Partial Invalidity. In the event that any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if it never contained any such invalid, illegal or unenforceable
provisions.
6.08. Controlling Law. The validity, interpretation and performance of this
Agreement shall be controlled by and construed under the laws of the State of
Texas, and venue for any lawsuit shall be in Dallas County, Texas.
6.09. Attorney's Fees. If any action at law or in equity, including any action
for declaratory relief, is brought to enforce or interpret the provisions of
this Agreement, the prevailing party shall be entitled to recover reasonable
attorney's fees from the other party. The attorney's fees may be ordered by the
court in the trial of any action described in this paragraph or may be enforced
in a separate action brought for determining attorney's fees.
6.10. Specific Performance. The parties declare that it is impossible to measure
in money the damages that will accrue to a party or its successors as a result
of any other parties' failure to perform any of the obligations under this
Agreement; therefore, if a party or its successor institutes any action or
proceeding to enforce the provisions of this Agreement, any party opposing such
action or proceeding agrees that specific performance may be sought and obtained
for any breach of this Agreement.
6.11. Arbitration. Any dispute relating to the interpretation or performance of
this Agreement shall be resolved at the request of either party through binding
arbitration. Arbitration shall be conducted in Dallas, Texas in accordance with
the then existing rules of the American Arbitration Association. Judgment upon
any award by the arbitrators may be entered by any state or federal court having
jurisdiction. It is the intent of the parties to this Agreement that to
arbitrate be irrevocable.
Purchaser: CBQ, Inc.:
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CEO
Acquired Corporation: Reliance Technologies, Inc.
By: /s/ Authorized Representative
Name:
Title:
Shareholders or Shareholder Agent:
By: /s/ Authorized Rep. By: /s/ Authorized Rep.
Shareholder Shareholder
By: /s/ Authorized Rep. By: /s/ Authorized Rep.
Exhibit 1
Subscriptions, Options, Contracts, Commitments or Demands relating to the
Capital Stock of Reliance Technologies, Inc.
Acquired Corporation: Reliance Technologies, Inc.
By: /s/ Authorized Rep.
Exhibit 2
Payments in the form of Royalties, Fees or otherwise to any owner of any Patent,
Trademark, Trade Name or Copyright
Acquired Corporation: Reliance Technologies, Inc.
By: /s/ Authorized Rep.
EXHIBIT 3
Bonus, Pension, Profit Sharing, Retirement, Stock Option Plans
Acquired Corporation: Reliance Technologies, Inc.
By: /s/ Authorized Rep.
Exhibit 4
The Reliance Technology Stock Option Plan
Memorandum
To: (Name of Employee)
From: Reliance Technologies, Inc., subsidiary of CBQ, Inc.
Date: (Month, Day, Year)
Subject: Incentive Stock Option Plan and Agreement
I am pleased to inform you that the Board of Directors of CBQ, Inc., through its
Executive Committee, has granted to you certain incentive stock options under
CBQ Inc.'s Reliance Technology 1999 Incentive Stock Option Plan (the Plan),
subject to your execution and return of both copies of the enclosed Stock Option
Agreement (the Option Agreement).
A total of 100,000 shares of common stock of CBQ, Inc. (the Company) have been
reserved for issuance under the Plan to key employee's of the Company. The
Company is authorized to issue 500,000,000 shares of common stock.
The options granted to you are to purchase shares of the Company's common stock
at the price of $ per share. The date of grant of these options is the date of
this notice, and it is the determination of the Executive Committee that on this
date the fair market value of the Company's common stock is $ per share.
Beginning 13 months from the date of this notice, the options will vest at a
rate of one fifth (1/5) per year and will be fully vested five years from the
date of this notice.
Enclosed is a copy of the Plan and two copies of the Option Agreement. These
documents govern the options granted to you, and you are advised to carefully
review all the provisions of both documents. After you have reviewed the
documents, you may speak with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, the Company's CEO or ▇▇▇▇ ▇▇▇▇▇,
President of RelianceTechnologies, Inc., to discuss any questions or comments
you may have. If the Plan and the Option Agreement are in order, please sign
both copies of the Option Agreement and return them to the Company. The Company
will then sign both copies and return one fully executed copy to you for your
records.
Your options are in all respects limited and conditioned as provided in the Plan
and the Option Agreement. At the time or times when you wish to exercise your
options, in whole or in part, please refer to the provisions of the Plan and the
Option Agreement dealing with methods and formalities of exercise of your
options.
Ten of the most frequently asked questions regarding Incentive Stock Option
Plans are asked and answered below:
1. What is an incentive stock option? An incentive stock option ("ISO") is the
grant by a corporation to an employee of a right to purchase shares of the
corporation's stock over a period of time at a price that is fixed at the time
the ISO is granted.
2. Who may be granted an ISO? Only an employee of the Company or certain related
companies may be granted an ISO.
3. How is the purchase price of an ISO determined? The purchase price of an ISO
is the fair market value of a share of the Company's stock at the time the ISO
is granted. Because the Company is a closely held corporation with no resale
market for its shares, determination of fair market value will be made by the
Company's Board of Directors. Whatever the fair market value is at the time the
ISO is granted will be the purchase price for all shares subject to the ISO over
the entire period during which the employee may exercise the ISO.
4. What are the benefits of an ISO? An ISO gives an employee the opportunity to
share in the appreciation in the value of the Company's stock. For example,
assume that the Company grants an ISO to an employee on July 1, 1995 to purchase
1000 shares of its common stock over a period of five years in annual
installments of 200 shares per year beginning on July 1, 1996. If at the time of
the grant the fair market value of the Company's stock is $10 per share, and at
the end of year one the fair market value of the Company's stock is $20 per
share, the employee would purchase stock worth $4,000 for $2,000 under the Plan.
5. What are the tax consequences of an ISO? An employee does not recognize
taxable income at the time the ISO is granted to him. Neither does he recognize
taxable income at the time the ISO is exercised, unless he fails to hold the
shares purchased pursuant to the ISO for the statutorily prescribed ISO holding
period, that is the later of two years from the date the ISO is granted or one
year from the date that the shares are transferred to the employee. Provided
that the employee holds the shares for the minimum holding period, he generally
will only recognize taxable income upon the sale of the stock, that will be
based on the difference between his basis (the price he paid for the stock) and
his sale price. This amount will be taxed as capital gains income.
6. How is an ISO exercised? Each employee who is granted an ISO will receive a
copy of the Plan and must sign a Stock Option Agreement ("Option Agreement").
The Plan contains the general terms and conditions governing the grant and
exercise of ISOs, while the Option Agreement will govern the specifics of each
employee's ISOs, including the vesting schedule. Under the Plan and the Option
Agreement an employee who elects to exercise his vested ISOs must notify the
Company in writing of his election, specify the number of shares he wishes to
purchase, sign and submit to the Company an Investor Representation Letter (a
copy of which is attached to each Option Agreement) and pay the entire purchase
price for the shares with respect to which the ISOs are being exercised.
7. What if an ISO is not exercised at the time it vests? Each employee's Option
Agreement will contain a vesting schedule that specifies: (1) the period of time
over which the ISOs vest; (2) the number of shares with respect to which the
ISOs vest each year; (3) the time in which the employee must elect to exercise
those ISOs that have vested; and (4) whether or not vested but unexercised ISOs
may be exercised by the employee at a later date. It is the Company's present
intention to require employees to exercise vested ISOs within three months after
they vest.
8. What if an employee's employment is terminated or if he dies or becomes
disabled? If an employee's employment with the Company is terminated, he may at
any time within one month after such termination exercise only those ISO's that
he could have exercised as of his last day of employment. If any employee's
employment is terminated because of death or disability, the one month period is
extended to six months.
9. May an ISO be transferred by an employee to someone else? It is the Company
present intention to prohibit any transfer other than a transfer to a deceased
employee's estate or heirs upon his death, in that case the estate or heirs
would have six months after the employee's death to exercise those ISO's that he
could have exercised as of his date of death.
10. Will all Option Agreements be identical? No.
Incentive Stock Option Plan Agreement
Incentive Stock Option Plan of Reliance
Technologies, Inc., a Wholly owned Subsidiary of CBQ, Inc.
Adopted as of (Month, Day, Year)
1. Purpose of the Plan. The purpose of the Reliance Technology 1999 Incentive
Stock Option Plan (the Plan) is to encourage and enable selected employees of
Reliance Technologies, Inc., a subsidiary corporation (the Subsidiary), to
acquire or expand a proprietary interest in CBQ, Inc., the parent corporation
(the Company). Subsidiary corporation and parent corporation are those terms as
defined in Section 424 of the Internal Revenue Code of 1986, as amended (the
Code). To accomplish this objective, the Plan provides a means whereby eligible
employees may receive stock options that qualify as "incentive stock options"
under Section 422A of the Internal Revenue Code as added by the Economic
Recovery Tax Act of 1981 and as it may be amended from time to time (Section
422A).
2. Eligible Employees. Key employees, including officers and directors who are
employees of the Subsidiary are eligible to receive an option or options under
the Plan.
3. Stock Subject to the Plan. An aggregate of 100,000 authorized but unissued,
or treasury, shares of the common stock of the Company, or such number and class
of securities as adjusted to give effect to the anti dilution provisions
contained in Paragraph 6.2 hereof, may be sold upon the exercise of options
granted under the Plan. In the event that any option outstanding under the Plan
expires, or is terminated for any reason, unexercised in whole or in part, prior
to the end of the period during which options may be granted under the Plan, the
shares of stock allocable to the unexercised portion of such option may again be
subjected to option under the Plan.
4. Administration. The Plan shall be administered by the Executive Committee
(the "Committee") appointed by the Board of Directors of the Company. The
Committee shall consist of one (1) officer or director from the Company and two
(2) officers or directors from the Subsidiary. Subject to the general purposes,
terms and conditions of the Plan, the Committee shall have full power to
implement and carry out the Plan in all ways permissible under the applicable
provisions of the Code, including, but not limited to, the following: (1) to
construe and interpret the Plan; (2) to prescribe, amend and rescind rules and
regulations relating to the Plan; and (3) to make all other determinations
necessary or advisable for the administration of the Plan. The Committee shall
determine which employees should be granted options under the Plan, the number
of shares of stock covered by each option, and the terms and conditions of each
option.
5. Granting of Options. Options shall be granted within 10 years from the
effective date of the Plan. Each option shall be evidenced by a written Stock
Option Agreement executed by the Company and the employee to whom such option is
granted. An option shall be deemed to have been granted only when the Stock
Option Agreement has been duly executed by the Company and the employee to whom
such option is granted has been notified of the granting of the option.
6. Terms and Conditions of Options. Each option shall be subject to the
following terms and conditions:
6.1 Option Price. The option price, that shall be approved by the Committee,
shall be determined in accordance with the applicable provisions of the Code and
shall in no event be less than the fair market value of the Company's common
stock at the time the option is granted. If an employee owns more than 10% of
the outstanding stock of the Company, the option price shall be at least 110% of
the fair market value of the stock. The fair market value for the purposes of
the Plan shall be determined by the Committee in accordance with reasonable
criteria that do not conflict with the applicable provisions of the Code.
6.2 Adjustments. In the event that the common stock of the Company is changed by
reason of any stock split, reverse stock split, recapitalization, or other
change in the capital structure of the Company, or converted into or exchanged
for other securities as a result of any merger, consolidation or reorganization,
or in the event that the outstanding number of shares of common stock of the
Company is increased through payment of a stock dividend, appropriate
proportionate adjustments shall be made in the number and class of shares of
stock subject to the Plan, and the number and class of shares of stock subject
to any option outstanding under the Plan; provided, however, that the Company
shall not be required to issue fractional shares as a result of any such
adjustment. Any such adjustment shall be made by the Committee, whose
determination shall be conclusive. If there is any other change in the number or
kind of the outstanding shares of common stock of the Company, or of any other
security into which such stock shall have been changed or for which it shall
have been exchanged, and if the Committee, in its sole discretion, determines
that such change equitably requires any adjustment in the options then
outstanding under the Plan, such adjustment shall be made in accordance with the
determination of the Committee. No adjustments shall be required by reason of
the issuance or sale by the Company for cash or other consideration of
additional shares of its common stock or securities convertible into or
exchangeable for shares of its common stock. All adjustments shall be made in
such a manner that each option which is adjusted will continue to qualify under
Section 422A as an incentive stock option.
6.3 Other Rights in Event of Certain Reorganizations. New option rights may be
substituted for the option rights granted under the Plan, or the Company's
duties as to options outstanding under the Plan may be assumed, by an employer
corporation other than the Company, or by a parent or subsidiary of such
employer corporation, in connection with any merger, consolidation, acquisition,
separation, reorganization, liquidation or like occurrence in which the Company
is involved, in such a manner that will allow the then outstanding options to
continue to qualify as incentive stock options under Section 422A and to the
full extent permitted thereby. Despite the foregoing provisions of this Section
6(3), in the event such employer corporation, or parent or subsidiary of such
employer corporation, refuses to substitute new option rights for, and
substantially equivalent to, the option rights granted under this Agreement, or
to assume the option rights granted under this Agreement, as permitted by the
Code, the option rights granted under this Agreement shall terminate and
thereupon become null and void: (1) upon the reorganization, dissolution or
liquidation of the Company, or similar occurrence; or (2) upon any merger,
consolidation, acquisition or separation, or similar occurrence, if the Company
is not the surviving corporation; provided, however, that each optionee shall
have the right, immediately prior to or concurrently with such reorganization,
dissolution, liquidation, merger, consolidation, acquisition, separation, or
similar occurrence, and upon at least 10 days' written notice thereof, to
exercise any unexpired option rights granted hereunder to the extent such option
rights are exercisable at the time of mailing of such notice, but in any event
subject to the time limitations for exercise of options provided in the Code.
In the event that the Committee, in its sole discretion, determines that it is
desirable to offer its shares to the public pursuant to a registration statement
filed with the Securities and Exchange Commission under the Securities Act of
1933, as amended, or pursuant to an exemption under such Act, the Secretary of
the Company shall notify all optionees affected of such determination in
writing. In that event, all outstanding options shall become null and void 30
days after such notice is mailed, but each affected optionee shall, during such
30 day period, have the right to exercise any unexpired option rights granted
under this Agreement to the extent such option rights are exercisable at the
time of mailing of such notice, but in any event subject to the time limitations
for exercise of options provided in the Code.
6.4 Option Exercise Period. Each option granted under the Plan shall become
exercisable on a date or in installments, and shall expire on a date, determined
by the Committee, but in no event shall an option expire later than 10 years
from the date such option is granted, and in the case of an employee who owns
more than 10% of the outstanding stock of the Company, in no event shall an
option expire later than five (5) years from the date such option is granted.
6.5 Nonassignability of Option Rights. No option granted under the Plan shall be
assignable or otherwise transferable by the optionee except by will or by the
laws of descent and distribution. During the life of an optionee, his or her
option shall be exercisable only by him or her.
6.6 Other Provisions. Each option granted under the Plan may contain such other
terms, provisions, and conditions not inconsistent with the Plan as may be
determined by the Committee, and shall include such provisions and conditions as
are necessary to qualify the option under Section 422A as an incentive stock
option.
7. Amendment, Suspension, or Termination of the Plan. The Committee may at any
time amend, suspend, or terminate the Plan. However, the Committee may not,
without approval of the holders of a majority of the combined issued and
outstanding voting shares of the Company, increase the aggregate number of
shares of stock subject to the Plan (except as provided in Section 6.2 of this
Agreement), and neither the amendment, suspension, nor termination of the Plan
shall, without the consent of the optionee, alter or impair any rights or
obligations under any option granted under the Plan (except as provided in
Section 6.2 or Section 6.3 in this Agreement). No option may be granted during
any period of suspension or after termination of the Plan.
8. Action by Executive Committee. Any and all action authorized or required
under Sections 1 through 7 of the Plan to be taken by the Committee may be taken
by the Executive Committee of the Board of Directors of the Company if there be
one and if the Board of Directors of the Company has duly delegated its
authority to the Executive Committee to take such action.
9. Limit on Stock Subject to Options. Options shall not be granted to any
individual pursuant to this Plan, the effect of which would be to permit such
person to first exercise options, in any calendar year, for the purchase of
shares having a fair market value in excess of ($500,000) (determined at the
time of the grant of the options).
10. Non Exclusivity of Plan. Neither the adoption of the Plan by the Board of
Directors of the Company, the submission of the Plan to the shareholders of the
Company for their approval, nor any provision of the Plan shall be construed as
creating any limitation on the power of the Board of Directors of the Company to
adopt additional compensation arrangements from time to time as it may deem
desirable, including, without limitation, the granting of stock options and
bonuses otherwise than under the Plan, and such arrangements may be either
generally applicable or applicable only in specific cases.
11. Effective Date of the Plan. The effective date of this Plan is . On this
date the approval of both the shareholders and the Committee of directors of the
Company was duly obtained. Options may be granted and exercised under the Plan
only after there has been compliance with all applicable federal and state
securities laws.
Stock Option Agreement
Options granted under the Reliance Technology 1999 Incentive Stock Option Plan.
This Stock Option Agreement (Agreement) is entered into as of _____________
between _________________ , a Texas Resident, residing at ___________________
(Employee) and CBQ, Inc., a Colorado Corporation with its principal place of
business at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (Company).
General
On ______________ , the Company adopted an incentive stock option plan
designated as the Reliance Technology 1999 Incentive Stock Option Plan (the
Plan), pursuant to the options that qualify as "incentive stock options" under
Section 422A of the Internal Revenue Code (the Code) as added by the Economic
Recovery Act of 1981 and as it may be amended from time to time (Section 422A)
may be granted to selected key employees of the Company or any of its
affiliates.
On the date of this Agreement the Employee is a bona fide employee of the
Company or one of its affiliates, as defined in the Plan.
The Executive Committee (the Committee) regards the Employee as a key employee,
as contemplated by the Plan, has determined that it would be to the advantage
and interest of the Company and its shareholders to grant to the Employee the
option rights provided for within this Agreement as an inducement to remain in
the service of the Company and as an incentive for increased efforts during such
service, and has instructed the Company's officers to issue such option rights
as provided in the Plan.
The Executive Committee has approved of the granting to the Employee of the
option rights evidenced by this Agreement.
In consideration for the mutual promises, covenants, and Agreements made below,
the parties, intending to be legally bound, agree as follows:
Agreement
1. Grant of Option Rights. Subject to the Employee's continued employment, as
provided in this Agreement, the Company hereby grants to the Employee the option
rights specified below (the "Option Rights"):
1.1 The number of shares of the Company's stock that are subject to the Option
Rights is shares of the Company's common stock (the Shares).
1.2 The option exercise price, which is not less than the fair market value of
the Shares as of the date hereof, and in the case of an Employee who owns 10% or
more of the Company's stock, not less than 110% of the fair market value of the
Shares as of the date of this Agreement, is $ per Share.
1.3 The Option Rights may be exercised during the time periods, and as to the
number of Shares with respect to when the Option is exercisable during each such
time period, as follows:
1.3.1 Option Rights for up to 20% of the Shares may be exercised at any time or
times, from and including the date that is 12 months from the date hereof to and
including the Expiration Date;
1.3.2 Option Rights for up to an additional 20% of the Shares may be exercised
at any time or times, from and including the date that is 24 months from the
date of this Agreement to and including the Expiration Date;
1.3.3 Option Rights for up to an additional 20% of the Shares, may be exercised
at any time or times, from and including the date that is 36 months from the
date of this Agreement to including the Expiration Date;
1.3.4 Option Rights for up to an additional 20% of the Shares, may be exercised
at any time or times, from and including the date that is 48 months from the
date of this Agreement to including the Expiration Date; and
1.3.5 Option Rights for up to an additional 20% of the Shares, may be exercised
at any time or times, from and including the date that is 60 months from the
date of this Agreement to including the Expiration Date.
1.4 The minimum number of Shares with respect to which the Option Rights may be
exercised is the lesser of 20 Shares or the total number of Shares with respect
to when the Option Rights may be exercised during any given time period.
1.5 To exercise any of the Option Rights, the Employee must have remained in the
employ of the Company or one of its affiliates continuously through the exercise
date, except as otherwise provided in Section 3 below. The granting of the
Option Rights shall impose no obligation on the Company or any of its affiliates
to continue the employment of the Employee, and shall not lessen or affect the
right of the Company or any affiliate that employs the Employee to terminate
such employment or to change the duties, compensation, or other terms of
employment of the Employee. Any Option Rights that are not exercised on or
before the Expiration Date (as defined in Section 3 below) shall automatically
terminate and become null and void.
2. Fractional Shares; Compliance with Laws. In no event shall the Company be
required to issue fractional shares upon the exercise of any Option Rights
granted under this Agreement. No Option Rights may be exercised, and the Company
shall not be required to issue or deliver any certificate(s) for any of the
Shares until there has been compliance with all then applicable requirements of
law, including such registration or other proceedings under federal and state
securities laws as may in the Company's opinion be necessary or appropriate.
3. Necessity of Employment When Option is Exercised. The Option Rights, to the
extent they have not expired or been exercised, shall terminate and become null
and void on the date that the Employee ceases, for any reason, to be an employee
of the Company or one of its affiliates, and shall not be exercisable on or
after such date, except that:
3.1 In the event of the termination of such employment for any reason other than
the death or disability of the Employee, the Employee may, at any time within a
period of one month after such termination of employment, exercise any or all of
the Option Rights to the extent the Option Rights were exercisable under the
provisions of Section 1 in this Agreement on the date of the termination of such
employment.
3.2 In the event of the death of disability of the Employee while in the employ
of the Company, the Employee, the personal representatives of the Employee or
any person or persons who acquired any such Option Rights from the Employee by
will or the applicable laws of descent and distribution may, at any time within
a period of three months after the death or disability of the Employee, exercise
any or all of the Option Rights to the extent the Option Rights were exercisable
under the provisions of Section 1 within this Agreement on the date of the death
or disability of the Employee.
In no event may any Option Rights be exercised by any person or entity after the
date immediately preceding the 10th anniversary date of this Agreement, or the
date on which the Option Rights terminate pursuant to this Section 3 or any
other provision of this Agreement. Each such date is referred to in this
Agreement as the Expiration Date. References throughout this Agreement to the
Employee shall be deemed, where appropriate, to include any person entitled to
exercise the Option Rights after the death of the Employee under the terms of
Section 3.1 or Section 3.2.
4. Nonassignability of Option Rights. The Option Rights: (1) shall, except as
provided in Section 3 of this Agreement, be exercisable only by the Employee;
(2) shall not be transferred, assigned, pledged or hypothecated in any manner
whatsoever, whether voluntarily, involuntarily or by operation of law; and (3)
shall not be subject to execution, attachment or similar process. Upon any
attempt to transfer, assign, pledge, hypothecate, or otherwise dispose of the
Option Rights contrary to the provisions of this Agreement, the Option Rights
shall immediately become null and void.
5. Adjustments. Appropriate proportionate adjustments shall be made by the
Company in the number and class of Shares subject to the Option Rights and the
exercise price of the Option Rights in the event that: (1) the common stock of
the Company is changed by reason of any stock split, reverse stock split,
recapitalization, or other change in the capital structure of the Company, or
converted into or exchanged for other securities as a result of any merger,
consolidation or reorganization; or (2) the outstanding number of shares of
common stock of the Company is increased through payment of a stock dividend;
provided, however, that the Company shall not be required to issue fractional
Shares as a result of any such adjustment. If there is any other change in the
number or kind of the outstanding shares of capital stock of the Company, or of
any other security into which such stock shall have been changed or for which it
shall have been exchanged, and if the Committee, in its sole discretion,
determines that such change equitably requires any adjustment in the Option
Rights granted under this Agreement, such adjustment shall be made in accordance
with the determination of the Committee. No adjustments shall be required by
reason of the issuance or sale by the Company for cash or other consideration of
additional sales of its capital stock or securities convertible into or
exchangeable for shares of its capital stock. All adjustments shall be made in
such a manner that will allow the Option Rights to continue to qualify under
Section 422A as "Incentive Stock Option" rights.
New option rights may be substituted for the Option Rights, or the Company's
duties under this Agreement may be assumed by an employer corporation other than
the Company, or by a parent or subsidiary of such employer corporation, in
connection with any merger, consolidation, acquisition, separation,
reorganization, liquidation, or like occurrence, where the Company is involved,
in such a manner that will allow the Option Rights to continue to qualify as
"incentive stock option" rights under Section 422A and to the full extent
permitted thereby. Notwithstanding the foregoing provisions of this Paragraph 5,
in the event such employer corporation, or parent or subsidiary of such employer
corporation, refuses to substitute new option rights for, and substantially
equivalent to, the option rights, or to assume the Options Rights, as permitted
by the Code, the Option Rights shall terminate and therefore become null and
void: (1) upon the reorganization; dissolution or liquidation of the Company, or
similar occurrence; or (2) upon any merger, consolidation, acquisition, or
separation, or similar occurrence, if the Company is not the surviving
corporation; provided, however, that the Employee shall have the right,
immediately prior to or concurrently with such reorganization, dissolution,
liquidation, merger, consolidation, acquisition, separation or similar
occurrence, and upon at least 10 days' written notice thereof, to exercise any
unexpired Option Rights granted under this Agreement to the extent the Option
Rights are exercisable at the time of mailing of such notice, but subject,
nevertheless, to the condition that no Option Rights granted under this
Agreement may be exercised after the Expiration Date.
In the event that the Board of Directors, in its discretion, determines that it
is in the best interests of the Company to offer its shares of capital stock to
the public pursuant to a registration statement filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, or pursuant to
an exemption under such Act, the Secretary of the Company shall notify the
Employee in writing of such determination. In that event, all outstanding Option
Rights shall become null and void 30 days after such notice is mailed, but the
Employee shall during such 30 day period, have the right to exercise any
unexpired Option Rights granted to him or her under this Agreement to the extent
such Option Rights are exercisable at the time of mailing of such notice, but in
any event subject to the time limitations for exercise of the Option Rights
provided in the Code.
6. Method of Exercise; Rights of Optionee in Stock. The Option Rights shall be
exercisable upon delivery to the Company of an executed Investment
Representation Letter attached hereto as Exhibit A, accompanied by payment in
cash to the Company of the option exercise price as to the Shares being
purchased. Neither the Employee nor his/her personal representatives, heirs, or
legatees shall have any rights or privileges of a shareholder of the Company in
respect to the Shares issuable upon the exercise of the Option Rights, unless
and until certificate(s) representing such shares shall have been issued and
delivered in accordance with the terms hereof.
7. Notices. Any notice to be given under the terms of this Agreement shall be
mailed, telegraphed or delivered, and confirmed, to the Company, in care of its
Secretary, at the principal office of the Company, and any notice to be given to
the Employee shall be mailed, telegraphed or delivered, and confirmed, to him or
her at the address given beneath his/her signature hereto, or at such other
address as either party may hereafter designate in writing to the other. Any
such notice shall be deemed to have been duly given 48 hours after the deposit
in the United States mail, addressed as mentioned before, registered or
certified and postage and registry or certification fee prepaid.
8. Date of Grant. The Option Rights shall be deemed to have been granted on the
date when the Company executed this Agreement and notified the Employee of the
granting of the Option Rights. Such date is within 10 years from the Effective
Date as defined in the Plan.
9. Option Rights Governed by Plan and Internal Revenue Code. The provisions of
the Plan shall be deemed to be incorporated in and to have been made a part of
this Agreement, and shall be deemed to be controlling in the event that any of
the provisions of this Agreement are inconsistent. This Agreement shall be
deemed to include such other provisions not set forth in the Plan or herein, or
inconsistent with any provisions set forth in the Plan or herein, as may be
necessary to qualify the option granted under this Agreement as an "incentive
stock option" under Section 422A.
10. Acquisition for Investment. By accepting this Stock Option Agreement, the
Employee represents, covenants, and warrants for himself/herself, his/her
personal representatives, heirs, and legatees that such stock Option Rights are
being acquired with no view to any distribution and that, upon each issuance of
Shares in accordance with this Agreement, the Employee, his personal
representatives, heirs, or legatees receiving such Shares shall, if requested,
represent in writing to the Company that such Shares are being acquired with no
view to any distribution or shall make such other representations in writing to
the Company, with respect to the further transfer of such Shares, as may be
deemed by the Company to be necessary or appropriate under the applicable
federal and state securities laws. The Company, at its sole discretion, may take
all reasonable steps (including the affixing of an appropriate legend on
certificates embodying such Shares) to assure itself against any resale or
distribution not in compliance with federal or state securities laws.
11. Persons Bound. Subject to the provisions against assignment set forth in
Section 4 hereof, this Agreement shall be binding upon and inure to the benefit
of any successor or successors of the Company, and the personal representatives,
heirs, and legatees of the Employee.
12. Stock Restriction Agreement. By executing this Agreement, the Employee
agrees to be bound by all the terms and conditions of the form of Stock
Restriction Agreement of the Company that is in existence immediately prior to
the date that any Option Rights are exercised, a copy of which shall be
delivered to him prior to his exercise of the Option Rights. The Stock
Restriction Agreement shall include provisions that: (1) prohibit the Employee
from transferring any Shares to a third party without first offering the Shares
to the Company and its other shareholders for purchase; and (2) grant the
Company and its other shareholders options to purchase any or all of the Shares
of an Employee who dies, becomes disabled or files for bankruptcy or whose
employment with the Company is terminated.
The Company has caused this Agreement to be executed on its behalf by an officer
of the Company, on the date set forth above, and the Employee has executed this
Agreement on or as of such date, which date is the time of the granting of the
Option Rights.
We have carefully reviewed this contract and agree to and accept its terms and
conditions. We are executing this Agreement as of the day and year first written
above.
Employee: CBQ,
Inc.
By By
Name Name
Executive Committee:
Exhibit A
Investment Representation Letter(Month, Day, Year)
To the Board of Directors of CBQ, Inc.
Gentlemen:
I am the holder of certain incentive stock options rights (the "Option Rights")
granted to me pursuant to a certain Stock Option Agreement dated between CBQ,
Inc. (the "Company") and me (the Agreement). Pursuant to Section 6 of the
Agreement, the Company is hereby notified of my election to exercise my Options
Rights to purchase shares of common stock of the Company (the Shares) at the
price and on the terms provided for in the Agreement. A check in the amount of $
, representing the aggregate purchase price for the Shares is being delivered to
you together with this letter.
In connection with the foregoing, I hereby make the following representations,
warranties and covenants on which the Company is entitled to rely:
1. I have received a copy of the Reliance Technology 1999 Incentive Stock Option
Plan adopted as of (Plan) and the Agreement, have read and understand the Plan
and the Agreement and agree to be bound by their respective terms and
conditions.
2. I am acquiring the Shares solely for my own account (and not directly or
indirectly for the account of any other person whatsoever), for investment and
not with a view to or for sale in connection with any distribution of the
Shares.
3. I have either (1) a pre existing personal or business relationship with the
Company or any one of its partners, officers, directors, or controlling persons,
or (2) such knowledge and experience in financial and business matters that I am
capable of evaluating the merits and risks of acquiring the Shares.
4. I have had access to such information concerning the Company, including
financial information, as I deem necessary to enable me to make an informed
decision concerning my acquisition of the Shares.
5. I am aware that I must bear the economic risk of investment in the Shares for
an indefinite period of time because the Shares have not been registered under
the Securities Act of 1933 ("1933 Act") or any state securities act, and the
Shares cannot be sold unless they are subsequently registered under the 1933
Act, applicable state securities acts, or exemptions from such registrations are
available.
6. I am aware that the Shares are subject to restrictions on transfer imposed by
the 1933 Act and applicable state securities acts, and that the Company shall
place on the certificates representing the Shares legends setting forth such
restrictions.
7. I confirm the terms of Section 12 of the Agreement that requires me to become
a party to, and be bound by the terms and conditions of, a certain Stock
Restriction Agreement to be entered into between the Company and me with respect
to the Shares, a copy of which has been provided to me for my review.
8. I am a resident.
Very truly yours,
(Signature)
(Name and Address)
(SSN)