Energy and Power Solutions, Inc. 2007 STOCK AWARD PLAN STOCK OPTION AGREEMENT
Energy and Power Solutions,
Inc.
2007 STOCK AWARD
PLAN
Unless
otherwise defined herein, the terms defined in the 2007 Stock Award Plan shall
have the same defined meanings in this Stock Option Agreement.
I. NOTICE
OF STOCK OPTION GRANT
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Name:
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Address:
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The
undersigned Optionee has been granted an Option to purchase Common Stock of the
Company, subject to the terms and conditions of the Plan and this Option
Agreement, as follows:
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Date
of Grant:
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____________________________________________ | |
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Vesting
Commencement Date:
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(Same
as date of grant – fill in)______________________
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Exercise
Price per Share:
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$____________________________________________
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Total
Number of Shares Granted:
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____________________________________________ | |
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Total
Exercise Price:
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$____________________________________________
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Type
of Option:
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Incentive
Stock Option
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Nonstatutory
Stock Option
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Expiration
Date: As provided in Section 3 of the Stock Option
Agreement.
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Vesting
Schedule: This Option shall be vested according to the
following vesting schedule:
25% of the Shares subject to the
Option shall vest on the first anniversary of the Vesting Commencement
Date, subject to Optionee continuing to be a Service Provider on such
dates and 2.0833% monthly thereafter.
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Termination
Period: To the extent vested, this Option shall be
exercisable during its term as provided in Section 3 of the Stock
Option Agreement.
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Exercise
Schedule: Same as the Vesting Schedule; provided that
the Option may not be exercised after the expiration of its
term.
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1. Grant of Option. The
Administrator of the Company hereby grants to the Optionee named in the Notice
of Stock Option Grant (the “Optionee”), an option (the
“Option”) to purchase
the number of Shares set forth in the Notice of Stock Option Grant, at the
exercise price per Share set forth in the Notice of Stock Option Grant (the
“Exercise Price”), and
subject to the terms and conditions of the Plan, which is incorporated herein by
reference. Subject to Section 16(c) of the Plan, in the event of
a conflict between the terms and conditions of the Plan and this Option
Agreement, the terms and conditions of the Plan shall prevail. To the
extent that Optionee holds, or will hold as a result of such exercise, capital
stock constituting more than 1% or more of the Company’s outstanding capital
stock (based on the Company’s outstanding capital stock, warrants, convertible
securities, stock options and shares reserved for issuance under the Plan, in
each case on an as-converted-to-common-stock basis), the grant of the Option is
further subject to the Optionee entering into a certain voting agreement with
certain of the existing shareholders of the Company (the “Voting Agreement”)
attached hereto as Exhibit A, whereby, Optionee agrees to vote its Company Stock
(as defined in the Voting Agreement) in the manner set forth in the Voting
Agreement, and, in addition, to grant the Company an irrevocable proxy coupled
with an interest, pursuant to the relevant provisions of the California
Corporations Code (or, in the event the Company changes its state of
incorporation, pursuant to any comparable law of the Company’s state of
incorporation), to vote, or to execute and deliver written consents or otherwise
act in respect of the Shares (as defined in the Voting Agreement) in the manner
required therein, as fully, to the same extent and with the same effect as
Optionee might or could do under applicable laws or regulations governing the
rights and powers of shareholders of a corporation incorporated under the laws
of the Company’s state of incorporation.
If
designated in the Notice of Stock Option Grant as an Incentive Stock Option
(“ISO”), this Option is
intended to qualify as an Incentive Stock Option as defined in Section 422
of the Code. Nevertheless, to the extent that the Option exceeds the
$100,000 rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option (“NSO”).
2. Exercise of
Option.
(a) Right to Exercise. This
Option shall be exercisable during its term in accordance with the Vesting
Schedule set out in the Notice of Stock Option Grant and with the applicable
provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This
Option shall be exercisable by delivery of an exercise notice in the form
attached as Exhibit B (the
“Exercise Notice”)
which shall state the election to exercise the Option, the number of Shares with
respect to which the Option is being exercised, and such other representations
and agreements as may be required by the Company.
The
Option shall be deemed exercised when the Company receives (i) written or
electronic delivery of an executed exercise notice (in accordance with this
Option Agreement and in a form provided by the Company, including the Exercise
Notice attached hereto as Exhibit B) from the Optionee (or other person entitled
to exercise the Option), (ii) full payment for the Shares with respect to
which the Option is exercised, (iii) payment of any required tax withholding;
(iv) an executed copy of the Voting Agreement in the form attached hereto as
Exhibit A, if
required pursuant to Section 1 hereof and (v) any other documents required
by this Option Agreement or the Exercise Notice. Full payment may
consist of any consideration and method of payment permitted by this Option
Agreement. Shares issued upon exercise of an Option shall be issued
in the name of the Optionee or, if requested by the Optionee, in the name of the
Optionee and his or her spouse. Until the Shares are 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 the Shares,
notwithstanding the exercise of the Option. The Company shall issue
(or cause to be issued) such Shares 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 Shares are issued, except as
provided in Section 13 of the Plan.
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Exercise
of this Option in any manner shall result in a decrease in the number of Shares
thereafter available for sale under the Option, by the number of Shares as to
which the Option is exercised.
(c) Legal Compliance. No
Shares shall be issued pursuant to the exercise of an Option unless such
issuance and such exercise complies with Applicable Laws. 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. This Option may not be exercised until such time as the
Plan has been approved by the stockholders of the Company.
3. Term. Optionee may not
exercise the Option before the commencement of its term or after its term
expires. During the term of the Option, Optionee may only exercise
the Option to the extent vested. The term of the Option commences on
the Date of Xxxxx and expires upon the earliest
of the following:
(a) With
respect to the unvested portion of the Option, upon termination of your
continuous service as a Service Provider;
(b) With
respect to the vested portion of the Option, ninety (90) days after the
termination of your continuous service as a Service Provider for any reason
other than your Disability, death or termination for cause;
(c) With
respect to the vested portion of the Option, immediately upon the termination of
your continuous service as a Service Provider for “Cause,” as determined by the
Administrator, in its sole discretion;
(d) With
respect to the vested portion of the Option, twelve (12) months after the
termination of your continuous service as a Service Provider due to your
Disability or death;
(e) Immediately
prior to the close of certain Corporate Transactions, pursuant to
Section 13 of the Plan; or
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(f) The
day before the tenth (10th) anniversary of the Date of Xxxxx.
(g) Notwithstanding
the foregoing, if the Participant's continuous service as a Service Provider
terminates as provided in Sections 3(b), 3(d) and 3(e), and the Participant is
precluded either by federal or state securities laws from either (i) receiving
the Shares upon the exercise of the Participant's Option or (ii) selling the
Shares received upon the exercise of the Participant's Option, so that the
Participant has less than thirty (30) days during the period from the
termination of Participant's continuous service as a Service Provider to the
expiration date of the Option in which the Participant would be permitted under
federal or state securities laws to either exercise the Option and receive the
Shares or to sell the Shares received upon the exercise of the Option, then the
period for exercising this Option following the termination of Participant's
continuous service as a Service Provider shall automatically be extended so that
the Participant has a period of thirty (30) days in which to exercise the
Participant's Option measured from the date the Company may legally issue the
Shares subject to the Option to Participant and the Participant may legally sell
such Shares. In no event shall the Option be exercisable after the maximum term
provided for the Option. The determination of whether the Company is precluded
by federal or state securities laws from issuing the Shares upon the exercise of
the Option or the Participant is precluded from selling the Shares subject to
the Option by federal or state securities laws shall be made by the Plan
Administrator and such determination shall be final, binding and
conclusive.
4. Method of Payment. Payment
of the aggregate Exercise Price shall be by any of the following, or a
combination thereof, at the election of the Optionee:
(a) cash
or check;
(b) consideration
received by the Company under a formal cashless exercise program adopted by the
Company in connection with the Plan; or
(c) surrender
of other Shares which, (i) in the case of Xxxxxx acquired from the Company,
either directly or indirectly, have been owned by the Optionee for such period
of time on the date of surrender that will avoid an expense for financial
accounting purposes, and (ii) have a Fair Market Value on the date of
surrender equal to the aggregate Exercise Price of the Exercised
Shares. Shares from this Option may be used to pay the exercise price
if (i) the Company, in its sole discretion, at the time of exercise, permits
such consideration and (ii) such exercise will not increase the compensation
expense for financial accounting purposes related to this Option.
5. Optionee’s
Representations. In the event the Shares have not been
registered under the Securities Act of 1933, as amended, at the time this Option
is exercised, the 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 C.
6. Lock-Up Period. Optionee
hereby agrees that Optionee shall not offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any Common Stock (or other
securities) of the Company or enter into any swap, hedging or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of any Common Stock (or other securities) of the Company held by
Optionee (other than those included in the registration) for a period specified
by the representative of the underwriters of Common Stock (or other securities)
of the Company not to exceed one hundred eighty (180) days following the
effective date of any registration statement of the Company filed under the
Securities Act plus such additional period as may reasonably be requested by the
Company or such underwriter to accommodate regulatory restrictions on
(i) the publication or other distribution of research reports or
(ii) analyst recommendations and opinions, including (without limitation)
the restrictions set forth in Rule 2711(f)(4) of the National Association
of Securities Dealers and Rule 472(f)(4) of the New York Stock Exchange, as
amended, or any similar successor rules. The Market Stand-Off shall
in any event terminate two years after the date of the Company’s initial public
offering. In the event of the declaration of a stock dividend, a
spin-off, a stock split, an adjustment in conversion ratio, a recapitalization
or a similar transaction affecting the Company’s outstanding securities without
receipt of consideration, any new, substituted or additional securities which
are by reason of such transaction distributed with respect to any Shares subject
to the Market Stand-Off, or into which such Shares thereby become convertible,
shall immediately be subject to the Market Stand-Off. In order to
enforce the Market Stand-Off, the Company may impose stop-transfer instructions
with respect to the Shares acquired under this Agreement until the end of the
applicable stand-off period. The Company’s underwriters shall be
beneficiaries of the agreement set forth in this Section 6. This
Section 6 shall not apply to Shares registered in the public offering under the
Securities Act.
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Optionee
agrees to execute and deliver such other agreements as may be reasonably
requested by the Company or the underwriter which are consistent with the
foregoing or which are necessary to give further effect thereto. In
addition, if requested by the Company or the representative of the underwriters
of Common Stock (or other securities) of the Company, Optionee shall provide,
within ten (10) days of such request, such information as may be required
by the Company or such representative in connection with the completion of any
public offering of the Company’s securities pursuant to a registration statement
filed under the Securities Act. The obligations described in this
Section shall not apply to a registration relating solely to employee benefit
plans on Form S-8 or similar forms that may be promulgated in the future,
or a registration relating solely to a Commission Rule 145 transaction on
Form S-4 or similar forms that may be promulgated in the
future. Optionee agrees that any transferee of the Option or shares
acquired pursuant to the Option shall be bound by this Section.
7. Non-Transferability of
Option. Other than as set forth in the Plan, this Option may
not be transferred in any manner otherwise than by will or by the laws of
descent or distribution and may be exercised during the lifetime of Optionee
only by Optionee. The terms of the Plan and this Option Agreement
shall be binding upon the executors, administrators, heirs, successors and
assigns of the Optionee.
8. Tax
Obligations.
(a) Withholding Taxes. Optionee
agrees to make appropriate arrangements with the Company (or the Parent or
Subsidiary employing or retaining Optionee) for the satisfaction of all Federal,
state, local and foreign income and employment tax withholding requirements
applicable to the Option exercise. Optionee acknowledges and agrees
that the Company may refuse to honor the exercise and refuse to deliver Shares
if such withholding amounts are not delivered at the time of
exercise.
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(b) Notice of Disqualifying Disposition of ISO
Shares. If the Option granted to Optionee herein is an ISO,
and if Optionee sells or otherwise disposes of any of the Shares acquired
pursuant to the ISO on or before the later of (1) the date two years after
the Date of Grant, or (2) the date one year after the date of exercise, the
Optionee shall immediately notify the Company in writing of such
disposition. Optionee agrees that Optionee may be subject to income
tax withholding by the Company on the compensation income recognized by the
Optionee.
9. Entire Agreement; Governing
Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and
Optionee with respect to the subject matter hereof, and may not be modified
adversely to the Optionee’s interest except by means of a writing signed by the
Company and Optionee. This agreement is governed by the internal
substantive laws but not the choice of law rules of California.
10. No Guarantee of Continued
Service. OPTIONEE
ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING
SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL
OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR
ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES
THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING
SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF
CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY
PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR
THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS A SERVICE
PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.
Optionee
acknowledges receipt of a copy of the Plan and represents that he or she is
familiar with the terms and provisions thereof, and hereby accepts this Option
subject to all of the terms and provisions thereof. 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.
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OPTIONEE
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ENERGY
AND POWER SOLUTIONS, INC.
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Signature
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By
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Print
Name
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Title
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Residence
Address
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EXHIBIT
A
Voting Agreement
A-1
EXHIBIT
B
Energy and Power Solutions,
Inc.
2007 STOCK AWARD
PLAN
EXERCISE NOTICE
Energy
and Power Solutions, Inc.
000
Xxxxxxxxx Xxxxxx
Suite
A-120
Costa
Mesa, CA 92626
Attention:
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 Energy and
Power Solutions, Inc. (the “Company”) under and pursuant
to the 2007 Stock Award Plan (the “Plan”) and the Stock Option
Agreement dated ____________, ____ (the “Option
Agreement”).
2. Delivery of Payment and Required
Documents. Optionee herewith delivers to the Company the full
purchase price of the Shares, as set forth in the Option Agreement, and any and
all withholding taxes due in connection with the exercise of the
Option. In addition, Optionee delivers the Investment Representation
Statement, the executed Voting Agreement in the form attached to the Option
Agreement as Exhibit A and any other documents required by the
Company.
3. Representations of
Optionee. Optionee acknowledges that Optionee has received,
read and understood the Plan and the Option Agreement and agrees to abide by and
be bound by their terms and conditions.
4. Rights as
Stockholder. Until the issuance of the Shares (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Shares shall be
issued to the Optionee as soon as practicable after the Option is exercised in
accordance with the Option Agreement. No adjustment shall be made for
a dividend or other right for which the record date is prior to the date of
issuance except as provided in Section 13 of the Plan.
5. Transfer Restrictions; Company’s Right of
First Refusal and Vested Share Repurchase Right. Shares
held upon the exercise of this Option shall not be transferable, except as
otherwise provided in Section 12(a) of the Plan. Before any Shares
held by Optionee or any transferee may be sold or otherwise 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 Section 12(b) of the
Plan. In the event the Optionee ceases to be a Service Provider, the
Company shall have a vested Share repurchase right as provided in Section 12(c)
of the Plan.
B-1
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. 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 the Company or by state or federal securities
laws:
The
Securities Represented hereby have not been registered under the securities act
of 1933 (the “Act”) and
may not be offered, sold or otherwise transferred, pledged or hypothecated
unless and until registered under the act or, in the opinion of the company
counsel satisfactory to the issuer of these securities, such offer, sale or
transfer, pledge or hypothecation is in compliance therewith.
The
securities represented by this certificate are subject to the terms and
conditions of a Voting Agreement between the registered owner hereof and certain
holders of securities of the Company, and to the irrevocable proxy coupled with
an interest granted thereunder, a copy of which Agreement has been deposited
with the Company at its principal business office.
the
shares represented by this certificate are subject to certain restrictions on
sale and transfer and a right of first refusal and repurchase held by the issuer
or its assignee(s) and may not be sold, assigned, transferred, encumbered or in
any way disposed of except as set forth in the plan, a copy of which may be
obtained at the principal office of the issuer. Such transfer
restrictions and right of first refusal are binding on transferees of these
shares.
The
shares represented by this certificate are subject to restrictions on transfer
for a period not to exceed 180 days following the effective date of the
underwritten public offering of the company’s securities and may not be sold or
otherwise disposed of by the holder without consent of the company or the
managing underwriter.
(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.
B-2
8. 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.
9. Interpretation. Any dispute
regarding the interpretation of this Exercise Notice shall be submitted by
Optionee or by the Company forthwith to the Administrator which shall review
such dispute at its next regular meeting. The resolution of such a
dispute by the Administrator shall be final and binding on all
parties.
10. Governing Law;
Severability. This Exercise Notice is governed by the internal
substantive laws but not the choice of law rules, of California. In
the event that any provision hereof becomes or is declared by a court of
competent jurisdiction to be illegal, unenforceable or void, this Option
Agreement will continue in full force and effect.
11. Entire Agreement. The Plan
and Option Agreement are incorporated herein by reference. This
Exercise Notice, the Plan, the Option Agreement and the Investment
Representation Statement constitute the entire agreement of the parties with
respect to the subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Optionee with respect to the
subject matter hereof, and may not be modified adversely to the Optionee’s
interest except by means of a writing signed by the Company and
Optionee.
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OPTIONEE
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ENERGY
AND POWER SOLUTIONS, INC.
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Signature
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By
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Print
Name
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Title
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Residence
Address
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B-3
EXHIBIT
C
INVESTMENT REPRESENTATION
STATEMENT
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OPTIONEE:
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COMPANY:
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Energy
and Power Solutions, Inc.
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SECURITY:
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Common
Stock
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AMOUNT:
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DATE:
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In
connection with the purchase of the above-listed Securities, the undersigned
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 any 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 month period not exceeding the limitations specified in
Rule 144(e), and (4) the timely filing of a Form 144, if
applicable.
C-1
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 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:
__________, ____
C-2
