EXHIBIT 10.33
SKILLED HEALTHCARE GROUP, INC.
2004 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Stock Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
[Optionee]
[Address]
You ("Optionee") have been granted an option to purchase Common Stock
of the Company, subject to the terms and conditions of the Plan and this Stock
Option Agreement. The terms of your grant are set forth below:
Date of Grant:
Vesting Commencement Date:
Exercise Price per Share: $______ per share
Total Number of Shares Granted:
Total Exercise Price: $______
Type of Option: _____ Incentive Stock Option
_____ Non-Qualified Stock Option
Term/Expiration Date:
Exercise and Vesting Schedule:
-----------------------------
The Shares subject to this Option shall vest according to the following
schedule:
[Insert Vesting Schedule]
Termination Period:
------------------
This Option may be exercised, to the extent vested, for three (3)
months after Optionee ceases to be a Service Provider, or such longer period as
may be applicable upon the death or disability of Optionee as provided herein
(or, if not provided herein, then as provided in the Plan), but in no event
later than the Term/Expiration Date as provided above.
II. AGREEMENT
1. Grant of Option. The Company hereby grants to the Optionee an Option
to purchase the Common Stock (the "Shares") set forth in the Notice of Grant, at
the exercise price per share set forth in the Notice of Grant (the "Exercise
Price"). Notwithstanding anything to the contrary anywhere else in this Option
Agreement, this grant of an Option is subject to the terms, definitions and
provisions of the Skilled Healthcare Group, Inc. 2004 Equity Incentive Plan (the
"Plan") adopted by the Company, which is incorporated herein by reference.
If designated in the Notice of Grant as an Incentive Stock
Option, this Option is intended to qualify as an Incentive Stock Option as
defined in Section 422 of the Code; provided, however, that to the extent that
the aggregate Fair Market Value of stock with respect to which Incentive Stock
Options (within the meaning of Code Section 422, but without regard to Code
Section 422(d)), including the Option, are exercisable for the first time by the
Optionee during any calendar year (under the Plan and all other incentive stock
option plans of the Company or any Subsidiary) exceeds $100,000, such options
shall be treated as not qualifying under Code Section 422, but rather shall be
treated as Non-Qualified Stock Options to the extent required by Code Section
422. The rule set forth in the preceding sentence shall be applied by taking
options into account in the order in which they were granted. For purposes of
these rules, the Fair Market Value of stock shall be determined as of the time
the option with respect to such stock is granted.
2. Exercise of Option. This Option is exercisable as follows:
(a) Right to Exercise.
(i) This Option shall be exercisable cumulatively
according to the vesting schedule set out in the Notice of Grant. For purposes
of this Stock Option Agreement, Shares subject to this Option shall vest based
on Optionee's continued status as a Service Provider.
(ii) This Option may not be exercised for a fraction
of a Share.
(iii) In the event of Optionee's death, disability or
other termination of the Optionee's status as a Service Provider, the
exercisability of the Option is governed by Sections 7, 8 and 9 below.
(iv) In no event may this Option be exercised after
the date of expiration of the term of this Option as set forth in the Notice of
Grant.
(b) Method of Exercise. This Option shall be exercisable by
written Notice (in the form attached as Exhibit A). The Notice must state the
number of Shares for which the Option is being exercised, and such other
representations and agreements with respect to such shares of Common Stock as
may be required by the Company pursuant to the provisions of the Plan. The
Notice must be signed by the Optionee and shall be delivered in person or by
certified mail to the Secretary of the Company. The Notice must be accompanied
by payment of the Exercise Price, including payment of any applicable
withholding tax. This Option shall be
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deemed to be exercised upon receipt by the Company of such written Notice
accompanied by the Exercise Price and payment of any applicable withholding tax.
No Shares shall be issued pursuant to the exercise of an
Option unless such issuance and such exercise comply with all relevant
provisions of law and the requirements of any stock exchange upon which the
Shares may then be listed. Assuming such compliance, for income tax purposes the
Shares shall be considered transferred to the Optionee on the date on which the
Option is exercised with respect to such Shares.
3. Optionee's Representations. If the Shares purchasable pursuant to
the exercise of this Option have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), at the time this Option is exercised,
Optionee shall, if required by the Company, concurrently with the exercise of
all or any portion of this Option, deliver to the Company his or her Investment
Representation Statement in the form attached hereto as Exhibit B.
4. Lock-Up Period. Optionee hereby agrees that if so requested by the
Company or any representative of the underwriters (the "Managing Underwriter")
in connection with any registration of the offering of any securities of the
Company under the Securities Act, Optionee shall not sell or otherwise transfer
any Shares or other securities of the Company during the 180-day period (or such
longer period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the "Market Standoff Period") following
the effective date of a registration statement of the Company filed under the
Securities Act; provided, however, that such restriction shall apply only to the
first registration statement of the Company to become effective under the
Securities Act that includes securities to be sold on behalf of the Company to
the public in an underwritten public offering under the Securities Act. The
Company may impose stop-transfer instructions with respect to securities subject
to the foregoing restrictions until the end of such Market Standoff Period.
5. Method of Payment. Payment of the Exercise Price shall be by any of
the following, or a combination thereof, at the election of the Optionee:
(a) cash;
(b) check;
(c) with the consent of the Administrator, surrender of other
shares of Common Stock of the Company which (A) in the case of Shares acquired
from the Company, have been owned by the Optionee for more than six (6) months
on the date of surrender, and (B) have a Fair Market Value on the date of
surrender equal to the Exercise Price of the Shares as to which the Option is
being exercised;
(d) with the consent of the Administrator, property of any
kind which constitutes good and valuable consideration;
(e) with the consent of the Administrator, through the
delivery of a notice that the Holder has placed a market sell order with a
broker with respect to Shares then issuable upon
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exercise of the Option, and the broker pays a sufficient portion of the net
proceeds of the sale to the Company in satisfaction of the Option exercise
price; or
(f) with the consent of the Administrator, any combination of
the foregoing methods of payment.
6. Restrictions on Exercise. This Option may not be exercised until the
Plan has been approved by the stockholders of the Company. If the issuance of
Shares upon such exercise or if the method of payment for such shares would
constitute a violation of any applicable federal or state securities or other
law or regulation, then the Option may also not be exercised. The Company may
require Optionee to make any representation and warranty to the Company as may
be required by any applicable law or regulation before allowing the Option to be
exercised.
7. Termination of Relationship. If Optionee ceases to be a Service
Provider (other than by reason of the Optionee's death or the total and
permanent disability of the Optionee as defined in Code Section 22(e)(3)),
Optionee may exercise this Option during the Termination Period set out in the
Notice of Grant, to the extent the Option was vested at the date of such
termination. To the extent that Optionee was not vested in this Option at the
date on which Optionee ceases to be a Service Provider, or if Optionee does not
exercise this Option within the time specified herein, the Option shall
terminate.
8. Disability of Optionee. If Optionee ceases to be a Service Provider
as a result of his or her total and permanent disability as defined in Code
Section 22(e)(3), Optionee may exercise the Option to the extent the Option was
vested at the date on which Optionee ceases to be a Service Provider, but only
within twelve (12) months from such date (and in no event later than the
expiration date of the term of this Option as set forth in the Notice of Grant).
To the extent that the Option is not vested at the date on which Optionee ceases
to be a Service Provider, or if Optionee does not exercise such Option within
the time specified herein, the Option shall terminate.
9. Death of Optionee. If Optionee ceases to be a Service Provider as a
result of the death of Optionee, the vested portion of the Option may be
exercised at any time within twelve (12) months following the date of death (and
in no event later than the expiration date of the term of this Option as set
forth in the Notice of Grant) by Optionee's estate or by a person who acquires
the right to exercise the Option by bequest or inheritance. To the extent that
the Option is not vested at the date of death, or if the Option is not exercised
within the time specified herein, the Option shall terminate.
10. Non-Transferability of Option. This Option may not be transferred
in any manner except by will or by the laws of descent or distribution . It may
be exercised during the lifetime of Optionee only by Optionee. The terms of this
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.
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11. Term of Option. This Option may be exercised only within the term
set out in the Notice of Grant.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original and all of which shall constitute one
document.
SKILLED HEALTHCARE GROUP, INC.
By:________________________________
Name:______________________________
Title:_______________________________
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THE OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR
EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING
HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER).
OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS
AGREEMENT, NOR IN THE COMPANY'S 2004 EQUITY INCENTIVE PLAN WHICH IS
INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT
WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE
COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE
COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTANCY AT
ANY TIME, WITH OR WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that
he is familiar with the terms and provisions thereof. Optionee hereby accepts
this Option subject to all of the terms and provisions hereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option. Optionee
further agrees to notify the Company upon any change in the residence address
indicated below.
Dated: __________________ ____________________________________________
[OPTIONEE]
Residence Address:
_____________________________________________
_____________________________________________
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EXHIBIT A
SKILLED HEALTHCARE GROUP, INC.
2004 EQUITY INCENTIVE PLAN
EXERCISE NOTICE
Skilled Healthcare Group, Inc.
Attention: Secretary
1. Exercise of Option. Effective as of today, ___________, _____, the
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
_________ shares of the Common Stock (the "Shares") of Skilled Healthcare Group,
Inc., a Delaware corporation (the "Company") under and pursuant to the Skilled
Healthcare Group, Inc. 2004 Equity Incentive Plan (the "Plan") and the [ ]
Incentive [ ] Non-Qualified Stock Option Agreement dated _____________, _____,
(the "Option Agreement").
2. Representations of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Plan and the Option Agreement. Optionee agrees
to abide by and be bound by their terms and conditions.
3. Rights as Stockholder. Until the stock certificate evidencing such
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to Shares subject to the Option, notwithstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such stock certificate
promptly after the Option is exercised. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock
certificate is issued.
Optionee shall enjoy rights as a stockholder until such time
as Optionee disposes of the Shares or the Company and/or its assignee(s)
exercises the Right of First Refusal or Call Right hereunder. Upon such
exercise, Optionee shall have no further rights as a holder of the Shares so
purchased except the right to receive payment for the Shares so purchased in
accordance with the provisions of this Agreement, and Optionee shall forthwith
cause the certificate(s) evidencing the Shares so purchased to be surrendered to
the Company for transfer or cancellation.
4. Optionee's Rights to Transfer Shares.
(a) Company's Right of First Refusal. Before any Shares held
by Optionee or any permitted transferee (each, a "Holder") may be sold, pledged,
assigned, hypothecated, transferred, or otherwise disposed of (including
transfer by gift or operation of law and, collectively, "Transfer" or
"Transferred"), the Company or its assignee(s) shall have a right of first
refusal to purchase the Shares on the terms and conditions set forth in this
Section (the "Right of First Refusal").
(i) 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).
(ii) Exercise of Right of First Refusal. Within
thirty (30) days after receipt of the Notice, the Company and/or its assignee(s)
may elect in writing to purchase all, but not less than all, of the Shares
proposed to be Transferred to any one or more of the Proposed Transferees. The
purchase price will be determined in accordance with subsection (iii) below.
(iii) Purchase Price. The purchase price ("Purchase
Price") for the Shares repurchased under this Section shall be the Offered
Price. If the Offered Price includes consideration other than cash, the cash
equivalent value of the non-cash consideration shall be determined by the Board
of Directors of the Company in good faith.
(iv) 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.
(v) Holder's Right to Transfer. If all of the Shares
proposed in the Notice to be transferred to a given Proposed Transferee are not
purchased by the Company and/or its assignee(s) as provided in this Section,
then the Holder may sell or otherwise Transfer such Shares to that Proposed
Transferee at the Offered Price or at a higher price, provided that such sale or
other Transfer is consummated within one hundred twenty (120) days after the
date of the Notice and provided further that any such sale or other Transfer is
effected in accordance with any applicable securities laws and the Proposed
Transferee agrees in writing that the provisions of this Section shall continue
to apply to the Shares in the hands of such Proposed Transferee. If the Shares
described in the Notice are not Transferred to the Proposed Transferee within
such period, a new Notice shall be given to the Company, and the Company and/or
its assignees shall again be offered the Right of First Refusal as provided
herein before any Shares held by the Holder may be sold or otherwise
Transferred.
(b) Exception for Certain Family Transfers. Anything to the
contrary contained in this Section notwithstanding, the Transfer of any or all
of the Shares during the Optionee's lifetime or on the Optionee's death by will
or intestacy to the Optionee's Immediate Family or a trust for the benefit of
the Optionee's Immediate Family shall be exempt from the Right of First Refusal.
As used herein, "Immediate Family" as used herein shall mean spouse, lineal
descendant or antecedent, father, mother, brother or sister or stepchild
(whether or not adopted). In such case, the transferee or other recipient shall
receive and hold the Shares so Transferred subject to the provisions of this
Section (including the Right of First Refusal) and there shall be no further
Transfer of such Shares except in accordance with the terms of this Section.
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(c) Termination of Right of First Refusal. The Right of First
Refusal shall terminate as to all Shares upon a sale of Common Stock of the
Company to the general public pursuant to a registration statement filed with
and declared effective by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.
(d) Company Call Right.
(i) If Optionee ceases to be a Service Provider (as
defined in the Plan) for any reason, including for cause, death, and disability,
the Company shall have the right to purchase from Optionee, or Optionee's
personal representative, as the case may be, any or all of the Shares then owned
by the Optionee at a price equal to the [FAIR MARKET VALUE (AS DEFINED IN THE
PLAN)] of the Shares on the date on which the Optionee ceases to be a Service
Provider (the "Company Call Right").
(ii) The Company may exercise the Company Call Right
by delivering personally or by registered mail to Optionee (or his transferee or
legal representative, as the case may be), within ninety (90) days of the date
on which Optionee ceases to be a Service Provider, a notice in writing
indicating the Company's intention to exercise the Company Call Right and
setting forth a date for closing not later than thirty (30) days from the
mailing of such notice. The closing shall take place at the Company's office. At
the closing, the holder of the certificates for the Shares being transferred
shall deliver the stock certificate or certificates evidencing the Shares, and
the Company shall deliver the purchase price therefor.
(iii) If the Company does not elect to exercise the
Company Call Right conferred above by giving the requisite notice within ninety
(90) days following the date on which Optionee ceases to be a Service Provider,
the Company Call Right shall terminate.
(iv) The Company Call Right shall terminate as to all
Shares upon the first to occur of (i) a Public Offering, or (ii) [A SALE OF THE
COMPANY (WHETHER BY MERGER, CONSOLIDATION, SALE OF ALL OR SUBSTANTIALLY ALL OF
THE COMPANY'S ASSETS OR SALE OF ALL OF THE COMPANY'S CAPITAL STOCK) WHICH IS
APPROVED BY THE HOLDERS OF THE COMPANY'S SECURITIES REPRESENTING AT LEAST
[FIFTY-ONE (51%)] OF THE COMBINED VOTING POWER OF ALL OUTSTANDING SECURITIES OF
THE COMPANY].]
5. Tax Consultation. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
6. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. Optionee understands and agrees that the Company
shall cause the legends set forth below or legends substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the Shares
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together with any other legends that may be required by state or federal
securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN
THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL
AND CALL RIGHT OPTIONS HELD BY THE ISSUER OR ITS ASSIGNEE(S)
AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE
ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE
OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER
RESTRICTIONS AND RIGHT OF FIRST REFUSAL AND CALL RIGHT ARE
BINDING ON TRANSFEREES OF THESE SHARES.
(b) Stop-Transfer Notices. Optionee agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate "stop transfer" instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i)
to transfer on its books any Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Agreement or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.
7. Successors and Assigns. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Optionee and his or her heirs, executors, administrators, successors and
assigns.
8. Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's Board of Directors or the committee thereof that administers the Plan
(the "Administrator"), which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Administrator shall be final
and binding on the Company and on Optionee.
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9. Governing Law; Severability. This Agreement shall be governed by and
construed in accordance with the laws of the State of California excluding that
body of law pertaining to conflicts of law. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.
10. Notices. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
11. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
12. Delivery of Payment. Optionee herewith delivers to the Company the
full Exercise Price for the Shares, as well as any applicable withholding tax.
13. Entire Agreement. The Plan and Stock Option Agreement are
incorporated herein by reference. This Agreement, the Plan, the Stock Option
Agreement and the Investment Representation Statement constitute the entire
agreement of the parties and supersede in their entirety all prior undertakings
and agreements of the Company and Optionee with respect to the subject matter
hereof.
Submitted by: Accepted by:
OPTIONEE: SKILLED HEALTHCARE GROUP, INC.
a Delaware Corporation
__________________________________ By: _______________________________________
Its: _____________________________________
Address:
_______________________________________
_______________________________________
_______________________________________
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EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE :
COMPANY : SKILLED HEALTHCARE GROUP, INC.
SECURITY : COMMON STOCK
AMOUNT :
DATE :
In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Securities. Optionee
is acquiring these Securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(b) Optionee acknowledges and understands that the Securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this connection,
Optionee understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Optionee's representation was predicated solely upon a present intention to hold
these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register
the Securities. Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not required in
the opinion of counsel satisfactory to the Company and any other legend required
under applicable state securities laws.
(c) Optionee is familiar with the provisions of Rule 701 and
Rule 144, each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at
the time of the grant of the Option to the Optionee, the exercise will be exempt
from registration under the Securities Act. In the event the Company becomes
subject to the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any
market stand-off agreement may require) the Securities exempt under Rule 701 may
be resold, subject to the satisfaction of certain of the conditions specified by
Rule 144, including: (1) the resale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934); and,
in the case of an affiliate, (2) the availability of certain public information
about the Company, (3) the amount of Securities being sold during any three (3)
month period not exceeding the limitations specified in Rule 144(e), and (4) the
timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701
at the time of grant of the Option, then the Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires the
resale to occur not less than one year after the later of the date the
Securities were sold by the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144; and, in the case of
acquisition of the Securities by an affiliate, or by a non-affiliate who
subsequently holds the Securities less than two (2) years, the satisfaction of
the conditions set forth in sections (1), (2), (3) and (4) of the paragraph
immediately above.
(d) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules 144
and 701 are not exclusive, the Staff of the Securities and Exchange Commission
has expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.
Signature of Optionee:
_____________________________________
Date: _______________________, 2004
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