EXHIBIT 4.2
COMPETITIVE COMPANIES, INC.
STOCK OPTION AGREEMENT
(2012 Stock Incentive Plan)
Competitive Companies, Inc. (the "COMPANY"), pursuant to the 2012 Stock
Incentive Plan (as such plan may be amended and/or restated, the "PLAN"), hereby
grants to Optionee listed below ("OPTIONEE"), an option to purchase the number
of shares of the Company's Common Stock ("SHARES") set forth below, subject to
the terms and conditions of the Plan and this Stock Option Agreement. Unless
otherwise defined herein, the terms defined in the Plan shall have the same
defined meanings in this Stock Option Agreement.
BACKGROUND
A. Optionee is serving as Chief Executive Officer, President, Chief
Financial Officer, and Treasurer of the Company (the "Employee") and the Company
desires to award Employee for his or her services to the Company; and
B. The Company has adopted the 2012 Stock Incentive Plan (the "Plan")
pursuant to which shares of common stock, $0.001 par value, of the Company have
been reserved for issuance under the Plan; and
I. NOTICE OF STOCK OPTION GRANT
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OPTIONEE: Xxxxxxx X. Xxxx
DATE OF STOCK OPTION AGREEMENT: April 17, 2014
DATE OF GRANT: April 17, 2014
VESTING COMMENCEMENT DATE: April 17, 2014
EXERCISE PRICE PER SHARE: $0.025
TOTAL NUMBER OF SHARES UNDERLYING THE OPTION GRANT: 10,000,000 Shares
TOTAL EXERCISE PRICE: $250,000
TERM/EXPIRATION DATE: April 17, 2019
TYPE OF OPTION: x Incentive Stock Option Non-Qualified
Stock Option
VESTING SCHEDULE: This Option shall vest and become exercisable only to the
extent that all, or any portion of it, has vested in Optionee. Except as
otherwise provided herein, the Option shall vest in Optionee (hereinafter
referred to singularly as a "Vesting Date" and collectively as "Vesting Dates"),
provided that the Optionee is an officer, director, consultant, or employee of
the Company on the scheduled Vesting Date, until the Option is fully vested, as
set forth in the following schedule ("Vesting Schedule"):
NO. OF SHARES TO BE VESTED VESTING DATE
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4,000,000 April 17, 2014
4,000,000 April 17, 2015
2,000,000 April 17, 2016
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II. AGREEMENT
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1. GRANT OF OPTION. The Company hereby irrevocably grants from the Plan
to Optionee an Option to purchase the number of Shares set forth in the Notice
of Stock Option Grant ("Notice of Grant"), at the exercise price per Share set
forth in the Notice of Grant (the "Exercise Price") and subject to the Vesting
Schedule. Notwithstanding anything to the contrary anywhere else in this Stock
Option Agreement, the Option is subject to the terms, definitions and provisions
of 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 Optionee during any
calendar year, 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 forth in the Notice of
Grant. For purposes of this Stock Option Agreement, Shares
subject to this Option shall vest as provided in the Vesting
Schedule set forth in the Notice of Grant.
(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 Optionee's status as a director, officer,
employee, or consultant of the Company, as the case may be,
the exercisability of the Option is governed by Section 7
below and the Termination Provisions set forth in the Notice
of Grant.
(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 (substantially 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 as may be required by the Company pursuant to the
provisions of the Plan. The Notice must be signed by 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 PLUS payment of any applicable withholding tax. This Option shall
be deemed to be exercised upon receipt by the Company of such written
Notice accompanied by the Exercise Price and payment of any applicable
withholding tax. 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
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 or
any applicable state laws 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 and shall make such other
written representations as are deemed necessary or appropriate by the Company
and/or its counsel.
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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 or any applicable state laws, 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 and these restrictions shall be
binding on any transferee of such Shares.
5. METHOD OF PAYMENT. Payment of the Exercise Price shall be payable in
US dollars by any of the following, or a combination thereof, at the election of
Optionee:
(a) cash;
(b) uncertified, or certified check; bank draft; or
(c) with the consent of the Company's Board of Directors (the
"Board"), which has been granted;
(i) by delivery of shares of Common Stock in payment
of all or any part of the Exercise Price, which shares shall
be valued for this purpose at the Fair Market Value (as such
term is defined in the Plan) on the date such Option is
exercised; or;
(ii) by instructing the Company to withhold from the
Shares of Common Stock issuable upon exercise of the option,
sufficient shares of Common Stock to pay all or any part of
the Exercise Price and/or any related withholding tax
obligations, which shares shall be valued for this purpose at
the Fair Market Value or in such other manner as may be
authorized from time to time by the Board ("Cashless
Exercise").
All Shares that shall be purchased upon the exercise of the Option as
provided herein shall be fully paid and non-assessable.
6. RESTRICTIONS ON EXERCISE. 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 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. In the case Optionee ceases to be a
director, officer, employee, or consultant ("Severance"), this Stock Option
Agreement shall terminate with respect to all unvested Options on the date of
the Severance, and with respect to vested Options, on the earlier of (i) the
Expiration Date or (ii) one (1) year from the date of Severance if the Optionee
was disabled (within the meaning of Section 22(e)(3) of the Internal Revenue
Code) at the time of his or her Severance or (iii) one (1) year from the date of
Severance if the Optionee's death caused the Severance or (iv) ninety (90) days
immediately subsequent to his or her Severance for any other reason.
8. 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 Optionee.
9. TERM OF OPTION. This Option may be exercised only within the term
set forth in the Notice of Grant.
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10. RESTRICTIONS ON SHARES. Optionee hereby agrees that Shares
purchased upon the exercise of the Option shall be subject to such terms and
conditions as the Board or the Administrator shall determine in its sole
discretion, including, without limitation, restrictions on the transferability
of Shares, the right of the Company to repurchase Shares, the right of the
Company to require that Shares be transferred in the event of certain
transactions, a right of first refusal in favor of the Company with respect to
permitted transfers of Shares, tag-along rights and take-along rights. Such
terms and conditions may, in the Administrator's sole discretion, be contained
in the Exercise Notice with respect to the Option or in such other agreement as
the Board or the Administrator shall determine and which Optionee hereby agrees
to enter into at the request of the Company.
11. NO RIGHT TO EMPLOYMENT. Nothing in the Plan or in this Stock Option
Agreement shall confer upon Optionee any right to serve or continue as an
employee, director or consultant of the Company or any Parent or Subsidiary, or
shall interfere with or restrict in any way the rights of the Company or any
Parent or Subsidiary, which are hereby expressly reserved, to discharge Optionee
at any time for any reason whatsoever, with or without cause, except to the
extent expressly provided otherwise in a written employment agreement between
Optionee and the Company or any Parent or Subsidiary.
12. AMENDMENT. This Option may not be modified or amended without the
written consent of the Company and Optionee. In the event that this Option is
inconsistent with that certain report (the "Report") regarding executive
compensation currently being prepared by the Company's auditors, Xxxxxxx
Xxxxxxxxxx & Co., the Company and Optionee agree to negotiate in good faith to
modify and amend this Option in accordance with the Report.
This Stock Option 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.
COMPETITIVE COMPANIES, INC.
By:
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Name: Xxxxxxx X. Xxxx
Title:Chief Executive Officer
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO
THE OPTION HEREOF IS EARNED ONLY BY CONTINUING AS A BOARD MEMBER OR
EXECUTIVE OFFICER OR CONSULTANT OF THE COMPANY 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 STOCK OPTION AGREEMENT, NOR IN THE
COMPANY'S 2012 STOCK INCENTIVE PLAN WHICH IS INCORPORATED HEREIN BY
REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT WITH RESPECT TO
CONTINUATION AS A BOARD MEMBER OR EXECUTIVE OFFICER OR CONSULTANT OF
THE COMPANY OR ANY PARENT OR SUBSIDIARY, NOR SHALL IT INTERFERE IN ANY
WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE
AS A BOARD MEMBER OR EXECUTIVE OFFICER OR CONSULTANT AT ANY TIME, WITH
OR WITHOUT CAUSE AND WITH OR WITHOUT PRIOR NOTICE.
Optionee acknowledges receipt of a copy of the Plan and represents that
he or she 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 Committee
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: April 17, 2014 By:
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Name: Xxxxxxx X. Xxxx
ADDRESS:19206 Xxxxxxx Xxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
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EXHIBIT A
COMPETITIVE COMPANIES, INC.
2012 STOCK INCENTIVE PLAN
EXERCISE NOTICE
Competitive Companies, Inc.
Attention: Legal Department c/o 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 Competitive Companies, Inc., a
Nevada corporation (the "COMPANY") under and pursuant to the 2012 Stock
Incentive Plan (as such plan may be amended and/or restated, the "PLAN") and the
Stock Option Agreement dated April 17, 2014 (the "OPTION AGREEMENT").
Capitalized terms used herein without definition shall have the meanings given
in the Option Agreement or the Plan.
DATE OF GRANT: __________
NUMBER OF SHARES AS TO WHICH OPTION IS EXERCISED: __________
EXERCISE PRICE PER SHARE: $_________
TOTAL EXERCISE PRICE: __________
CERTIFICATE TO BE ISSUED IN NAME OF: __________
CASH PAYMENT DELIVERED HEREWITH: $_________
IF CASHLESS EXERCISE, NUMBER OF SHARES ISSUABLE:
TYPE OF OPTION: [x] Incentive Stock Option [ ] Non-Qualified Stock Option
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.
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No adjustment will be made for a dividend or other right for which the record
date is prior to the date the stock certificate is issued, except as provided in
Section 14 of the Plan. Optionee shall enjoy rights as a stockholder until such
time as Optionee disposes of the Shares or the Company and/or its assignee(s)
exercises the Right of First Refusal or the Take- Along Right hereunder (each as
defined below). Upon such exercise, Optionee shall have no further rights as a
holder of such Shares except the right to receive payment for such Shares in
accordance with the provisions of this Exercise Notice. Optionee shall forthwith
cause the certificate(s) evidencing the Shares so purchased to be surrendered to
the Company for transfer or cancellation.
4. COMPANY'S RIGHT OF FIRST REFUSAL. Before any Shares held by Optionee
(including, for purposes of Sections 4 and 5 hereof, any permitted transferee
holding Shares) may be sold, pledged, assigned, hypothecated, transferred, or
otherwise disposed of (including transfer by gift or operation of law)
(collectively, a "TRANSFER"), 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 4 (the "RIGHT OF FIRST REFUSAL"), subject to Sections 4(f) and 4(g)
of this Exercise Notice.
(A) NOTICE OF PROPOSED TRANSFER. Optionee shall deliver to the Company
a written notice (the "NOTICE") stating: (i) Optionee'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 Optionee proposes to Transfer the Shares (the
"OFFERED PRICE"). Optionee shall offer the Shares at the Offered Price to the
Company or its assignee(s).
(B) EXERCISE OF RIGHT OF FIRST REFUSAL. Within five (5) days after
receipt of the Notice, the Company and/or its assignee(s) may elect in writing
to purchase all, but not less than all, of the Shares proposed to be transferred
to any one or more of the Proposed Transferees. The purchase price will be
determined in accordance with subsection (c) below.
(C) PURCHASE PRICE. The purchase price (the "ROFR 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 Company's Board of
Directors (the "Board") in good faith.
(D) PAYMENT. Payment of the ROFR 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 Optionee 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.
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(E) OPTIONEE'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 Optionee 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 (i) the provisions hereof, including without limitation
the provisions of Sections 4 and 5 shall continue to apply to the Shares in the
hands of such Proposed Transferee and (ii) that such Proposed Transferee will
not transfer the Shares to any other purchaser or transferee unless such future
purchaser or transferee agrees in writing to be bound by the provisions hereof,
including without limitation the provisions of Sections 4 and 5 hereof. 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.
(F) EXCEPTION FOR CERTAIN FAMILY TRANSFERS. Anything to the contrary
contained in this Section 4 notwithstanding, the Transfer of any or all of the
Shares during Optionee's lifetime or on Optionee's death by will or intestacy to
Optionee's Immediate Family or a trust for the benefit of Optionee's Immediate
Family shall be exempt from the Right of First Refusal. As used herein,
"IMMEDIATE FAMILY" 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 hereof, including without limitation the
provisions of Sections 4 and 5 hereof, and there shall be no further Transfer of
such Shares except in accordance with the terms hereof.
(G) TERMINATION OF RIGHT OF FIRST REFUSAL. The Right of First Refusal
shall terminate as to the Shares upon the Public Trading Date of the Shares. For
the purposes of the Stock Option Agreement and this Exercise Notice, the "Public
Trading Date" of the Shares is the date on which the Shares first become freely
tradable under the Securities Act of 1933, as amended (the "Act"), either
pursuant to Rule 144 or another provision of the Act. The holder of the Shares
may apply to have all restrictive transfer legends removed from the certificates
evidencing the Shares without delivering a notice to the Company pursuant to
Section 4(a) of this Exercise Notice, provided that the request for legend
removal is made at such times and in such manner that removal is accomplished in
compliance with the Act and the rules and regulations promulgated under the Act.
5. COMPANY TAKE-ALONG RIGHT.
(A) APPROVED SALE. If the Board shall deliver a notice to Optionee (a
"SALE EVENT NOTICE") stating that the Board has approved a sale of all or a
portion of the Company (an "APPROVED SALE") and specifying the name and address
of the proposed parties to such transaction and the consideration payable in
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connection therewith, Optionee shall (i) consent to and raise no objections
against the Approved Sale or the process pursuant to which the Approved Sale was
arranged, (ii) waive any dissenter's rights and other similar rights, and (iii)
if the Approved Sale is structured as a sale of securities, agree to sell
Optionee's Shares on the terms and conditions of the Approved Sale which terms
and conditions shall treat all stockholders of the Company equally (on a pro
rata basis), except that shares having a liquidation preference may, if so
provided in the documents governing such shares, receive an amount of
consideration equal to such liquidation preference in addition to the
consideration being paid to the holders of Shares not having a liquidation
preference. Notwithstanding the foregoing, the sale of the Shares in an Approved
Sale shall be further subject to the terms of the Plan.
Optionee will take all necessary and desirable lawful actions as
directed by the Board and the stockholders of the Company approving the Approved
Sale in connection with the consummation of any Approved Sale, including without
limitation, the execution of such agreements and such instruments and other
actions reasonably necessary to (A) provide the representations, warranties,
indemnities, covenants, conditions, non-compete agreements, escrow agreements
and other provisions and agreements relating to such Approved Sale and, (B)
effectuate the allocation and distribution of the aggregate consideration upon
the Approved Sale, PROVIDED, that this Section 5 shall not require Optionee to
indemnify the purchaser in any Approved Sale for breaches of the
representations, warranties or covenants of the Company or any other
stockholder, except to the extent (x) Optionee is not required to incur more
than its pro rata share of such indemnity obligation (based on the total
consideration to be received by all stockholders that are similarly situated and
hold the same class or series of capital stock) and (y) such indemnity
obligation is provided for and limited to a post-closing escrow or holdback
arrangement of cash or stock paid in connection with the Approved Sale.
(b) COSTS. Optionee will bear Optionee's PRO RATA share (based upon the
amount of consideration to be received) of the reasonable costs of any sale of
Shares pursuant to an Approved Sale to the extent such costs are incurred for
the benefit of all selling stockholders of the Company and are not otherwise
paid by the Company or the acquiring party. Costs incurred by Optionee on
Optionee's own behalf will not be considered costs of the transaction hereunder.
(C) SHARE DELIVERY. At the consummation of the Approved Sale, Optionee
shall, if applicable, deliver certificates representing the Shares to be
transferred, duly endorsed for transfer and accompanied by all requisite stock
transfer taxes, if any, and the Shares to be transferred shall be free and clear
of any liens, claims or encumbrances (other than restrictions imposed by this
Exercise Notice) and Optionee shall so represent and warrant.
(D) TERMINATION OF COMPANY TAKE-ALONG RIGHT. The Take-Along Right shall
terminate as to the Shares upon the Public Trading Date of the Shares, as
defined in Section 4(g) of this Exercise Notice.
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6. 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.
7. 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 or any applicable state laws, 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, 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.
8. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
(a) LEGENDS. Optionee understands and agrees that the Company shall
cause the legends set forth below or legends substantially equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any other legends that may be required by state or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY APPLICABLE
STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER THE ACT AND SUCH LAWS OR, IN THE
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL
OPTIONS HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN
THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER
OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE
PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND
RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE
SHARES UNTIL THE SHARES FIRST BECOME FREELY TRADEABLE IN OPEN
MARKET TRANSACTIONS IN A PUBLIC TRADING MARKET UNDER THE ACT.
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(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 Exercise Notice or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.
9. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Exercise Notice to single or multiple assignees, and this Exercise
Notice shall inure to the benefit of the successors and assigns of the Company.
Subject to the restrictions on transfer herein set forth, this Exercise Notice
shall be binding upon Optionee and his or her heirs, executors, administrators,
successors and assigns.
10. REMEDIES CUMULATIVE. All rights and remedies under this Agreement
are cumulative, and none is intended to be exclusive of another. The Company
shall have all rights and remedies available to it at law or in equity against
the Optionee in the event of a breach of this Agreement by the Optionee. No
delay or omission in insisting upon the strict observance of performance of any
provision of this Agreement, or in exercising any right or remedy, shall be
construed as a waiver or relinquishment of such provision, nor shall it impair
such right or remedy. Every right and remedy may be exercised from time to time
and as often as deemed expedient.
11. GOVERNING LAW; SEVERABILITY. This Exercise Notice shall be governed
by and construed in accordance with the laws of the State of Nevada excluding
that body of law pertaining to conflicts of law. Should any provision of this
Exercise Notice be determined by a court of law to be illegal or unenforceable,
the other provisions shall nevertheless remain effective and shall remain
enforceable.
12. NOTICES. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
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13. FURTHER INSTRUMENTS. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Exercise Notice.
14. DELIVERY OF PAYMENT. Optionee herewith delivers to the Company the
full Exercise Price for the Shares, as well as any applicable withholding tax.
15. ENTIRE AGREEMENT. The Plan and Option Agreement are incorporated
herein by reference. This Exercise Notice, the Plan, the Option Agreement and
the Investment Representation Statement constitute the entire agreement of the
parties and supersede in their entirety all prior undertakings and agreements of
the Company and Optionee with respect to the subject matter hereof.
Accepted by: Submitted by:
COMPETITIVE COMPANIES, INC. OPTIONEE
By: By:
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Xxxxxx Xxxxxxx Xxxxxx Xxxxxxx
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City State Zip Code City State Zip Code
A-7
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE : _______________________________________
COMPANY : Competitive Companies, Inc.
SECURITY : Options to purchase Common Stock
AMOUNT : _________ shares
DATE : _______________________________________
In connection with the purchase of the above-listed shares of Common
Stock (the "SECURITIES") of Competitive Companies, Inc. (the "COMPANY"), the
undersigned (the "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. Optionee 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 Optionee, the exercise will be
exempt from registration under the Securities Act.
B-1
(d) In the event the Company becomes subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, 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, in the case of an affiliate, (i) 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, as amended), (ii) the availability of certain public
information about the Company, (iii) the amount of Securities being sold during
any three (3) month period not exceeding the limitations specified in Rule
144(e), and (iv) the timely filing of a Form 144, if applicable.
(e) 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 beginning
ninety (90) days after the Company becomes subject to the reporting requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, in
certain limited circumstances subject to the provisions of Rule 144, which
requires the resale to occur not less than six months after the later of (1) 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 (2) the
availability of certain public information about the Company (subject to certain
exceptions); and, in the case of a sale of the Securities by an affiliate, the
satisfaction of the conditions set forth in sections (i), (ii), (iii) and (iv)
of paragraph (d) of this Statement.
(f) 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.
(g) Optionee understands and acknowledges that the Company will rely
upon the accuracy and truth of the foregoing representations and Optionee hereby
consents to such reliance.
Signature of Optionee:
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Date: ___________________,______
B-2
