EXHIBIT 10.28
FORM OF INCENTIVE STOCK OPTION AGREEMENT
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THIS AGREEMENT, dated ___________, 1997 is made by and between COMPS
InfoSystems, Inc., a Delaware corporation hereinafter referred to as "Company,"
and ___________, an employee of the Company or a Parent Corporation or
Subsidiary of the Company, hereinafter referred to as "Employee" or "Optionee":
WHEREAS, the Company wishes to afford the Employee the opportunity to
purchase shares of its $.0l par value non-voting Class B Common Stock; and
WHEREAS, the Company wishes to carry out the Plan (the terms of which
are hereby incorporated by reference and made a part of this Agreement); and
WHEREAS, the Administrator, appointed to administer the Plan, has
determined that it would be to the advantage and best interest of the Company
and its shareholders to grant the Incentive Stock Option provided for herein to
the Employee as an inducement to perform future services for the Company, its
Parent Corporations or its Subsidiaries and as an incentive for increased
efforts during such service, and has advised the Company thereof and instructed
the undersigned officers to issue said Option;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
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DEFINITIONS
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Whenever the following terms are used in this Agreement, they shall
have the meaning specified below unless the context clearly indicates to the
contrary. The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
1.1 - Administrator
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"Administrator" shall mean: (a) prior to the Initial Public Offering,
the Board, or, in the sole and absolute discretion of the Board, the Committee;
and (b) after the Initial Public Offering, the Committee.
1.2 - Board
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"Board" shall mean the Board of Directors of the Company.
1.3 - Code
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"Code" shall mean the Internal Revenue Code of 1986, as amended.
1.4 - Committee
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"Committee" shall mean the Stock Option Committee of the Board,
appointed as provided in the Plan.
1.5 - Common Stock
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"Common Stock" shall mean the Company's non-voting Class B Common
Stock, par value $.0l per share.
1.6 - Company
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"Company" shall mean COMPS InfoSystems, Inc.
1.7 - Director
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"Director" shall mean a member of the Board.
1.8 - Exchange Act
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.9 - Initial Public Offering
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"Initial Public Offering" shall mean the closing of the sale of the
Company's securities pursuant to an underwritten public offering.
1.10 - Officer
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"Officer" shall mean an officer of the Company, as defined in Rule
16a-l(f) under the Exchange Act, as such Rule may be amended in the future.
1.11 - Option
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"Option" shall mean the incentive stock option to purchase Common
Stock of the Company granted under this Agreement.
1.12 - Parent Corporation
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"Parent Corporation" shall mean any corporation in an unbroken chain
of corporations ending with the Company if each of the corporations other than
the Company then owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one (1) of the other
corporations in such chain.
1.13 - Plan
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"Plan" shall mean the Amended and Restated Stock Option Plan of COMPS
InfoSystems, Inc.
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1.14 - Rule 16b-3
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"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange
Act, as such Rule may be amended in the future.
1.15 - Secretary
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"Secretary" shall mean the Secretary of the Company.
1.16 - Securities Act
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"Securities Act" shall mean the Securities Act of 1933, as amended.
1.17 - Subsidiary
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"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one (1) of the other corporations in such chain.
1.18 - Termination of Employment
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"Termination of Employment" shall mean the time when the employee-
employer relationship between the Optionee and the Company, a Parent Corporation
or a Subsidiary is terminated for any reason, with or without cause, including,
but not by way of limitation, a termination by resignation, discharge, death or
retirement, but excluding any termination where there is a simultaneous
reemployment by the Company, a Parent Corporation or a Subsidiary. The
Administrator, in its absolute discretion, shall determine the effect of all
other matters and questions relating to Termination of Employment, including,
but not by way of limitation, the question of whether a Termination of
Employment resulted from a discharge for good cause, and all questions of
whether particular leaves of absence constitute Terminations of Employment;
provided, however, that a leave of absence shall constitute a Termination of
Employment if, and to the extent that, such leave of absence interrupts
employment for purposes of Section 422(a)(2) of the Code and the then applicable
regulations and revenue rulings under said Section.
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GRANT OF OPTION
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2.1 - Grant of Option
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In consideration of the Employee's agreement to remain in the employ
of the Company, its Parent Corporations or its Subsidiaries and for other good
and valuable consideration, including the Company's desire to reward future
services and contributions of the Employee, on the date hereof the Company
irrevocably grants to the Employee the option to purchase any part or all of an
aggregate of ________ shares of its $.0l par value non-voting Class B Common
Stock upon the terms and conditions set forth in this Agreement.
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2.2 - Purchase Price
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The purchase price of the shares of stock covered by the Option shall
be $.30 per share without commission or other charge.
2.3 - Consideration to Company
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In consideration of the granting of this Option by the Company, the
Employee agrees to render faithful and efficient services to the Company, a
Parent Corporation or a Subsidiary, with such duties and responsibilities as the
Company shall from time to time prescribe, for a period of at least one (1) year
from the date this Option is granted. Nothing in this Agreement or in the Plan
shall confer upon the Employee any right to continue in the employ of the
Company, any Parent Corporation or any Subsidiary or shall interfere with or
restrict in any way the rights of the Company, its Parent Corporations and its
Subsidiaries, which are hereby expressly reserved, to discharge the Employee at
any time for any reason whatsoever, with or without cause.
2.4 - Adjustments in Option
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In the event that the outstanding shares of the stock subject to the
Option are changed into or exchanged for a different number or kind of shares of
the Company or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split up, stock
dividend or combination of shares, the Administrator shall make an appropriate
and equitable adjustment in the number and kind of shares as to which the
Option, or portions thereof then unexercised, shall be exercisable, to the end
that after such event the Employee's proportionate interest shall be maintained
as before the occurrence of such event. Such adjustment in the Option shall be
made without change in the total price applicable to the unexercised portion of
the Option (except for any change in the aggregate price resulting from
rounding-off of share quantities or prices) and with any necessary corresponding
adjustment in the Option price per share; provided, however, that each such
adjustment shall be made in such manner as not to constitute a "modification"
within the meaning of Section 424(h)(3) of the Code. Any such adjustment made
by the Administrator shall be final and binding upon the Employee, the Company
and all other interested persons.
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PERIOD OF EXERCISABILITY
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3.1 - Commencement of Exercisability
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(a) Subject to Sections 3.5 and 5.6, the Option shall become
exercisable in five (5) cumulative installments as follows:
(i) The first installment shall consist of twenty percent
(20%) of the shares covered by the Option and shall become exercisable upon
the first anniversary of the date the Option is granted.
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(ii) The second installment shall consist of twenty percent
(20%) of the shares covered by the Option and shall become exercisable upon
the second anniversary of the date the Option is granted.
(iii) The third installment shall consist of twenty percent
(20%) of the shares covered by the Option and shall become exercisable upon
the third anniversary of the date the Option is granted.
(iv) The fourth installment shall consist of twenty percent
(20%) of the shares covered by the Option and shall become exercisable upon
the fourth anniversary of the date the Option is granted.
(v) The fifth installment shall consist of twenty percent
(20%) of the shares covered by the Option and shall become exercisable upon
the fifth anniversary of the date the Option is granted.
(b) No portion of the Option which is unexercisable at Termination of
Employment shall thereafter become exercisable.
3.2 - Duration of Exercisability
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The installments provided for in Section 3.1 are cumulative. Each
such installment which becomes exercisable pursuant to Section 3.1 shall remain
exercisable until it becomes unexercisable under Section 3.3.
3.3 - Expiration of Option
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The Option may not be exercised to any extent by anyone after the
first to occur of the following events:
(a) The expiration of ten (10) years from the date the Option was
granted; or
(b) If the Employee owned (within the meaning of Section 424(d) of
the Code), at the time the Option was granted, more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company, any
Subsidiary or any Parent Corporation, the expiration of five (5) years from the
date the Option was granted; or
(c) The time of the Employee's Termination of Employment unless such
Termination of Employment results from his death, his retirement, his disability
(within the meaning of Section 22(e)(3) of the Code) or his being discharged not
for good cause; or
(d) The expiration of three (3) months from the date of the
Employee's Termination of Employment by reason of his retirement or his being
discharged not for good cause, unless the Employee dies within said three-month
period; or
(e) The expiration of one (1) year from the date of the Employee's
Termination of Employment by reason of his disability (within the meaning of
Section 22(e)(3) of the Code); or
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(f) The expiration of one (1) year from the date of the Employee's
death; or
(g) The effective date of either the merger or consolidation of the
Company with or into another corporation, or the acquisition by another
corporation or person of all or substantially all of the Company's assets or
eighty percent (80%) or more of the Company's then outstanding voting stock, or
the liquidation or dissolution of the Company, unless the Administrator waives
this provision in connection with such transaction. At least ten (10) days
prior to the effective date of such merger, consolidation, acquisition,
liquidation or dissolution, the Administrator shall give the Employee notice of
such event if the Option has then neither been fully exercised nor become
unexercisable under this Section 3.3.
3.4 - Acceleration of Exercisability
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In the event of the merger or consolidation of the Company with or
into another corporation, or the acquisition by another corporation or person of
all or substantially all of the Company's assets or eighty percent (80%) or more
of the Company's then outstanding voting stock, or the liquidation or
dissolution of the Company, the Administrator may, in its absolute discretion
and upon such terms and conditions as it deems appropriate, provide by
resolution, adopted prior to such event and incorporated in the notice referred
to in Section 3.3(g), that at some time prior to the effective date of such
event this Option shall be exercisable as to all the shares covered hereby,
notwithstanding that this Option may not yet have become fully exercisable under
Section 3.1(a); provided, however, that this acceleration of exercisability
shall not take place if:
(a) This Option becomes unexercisable under Section 3.3 prior to said
effective date; or
(b) In connection with such an event, provision is made for an
assumption of this Option or a substitution therefor of a new option by an
employer corporation, or a parent or subsidiary of such corporation, so that
such assumption or substitution complies with the provisions of Section 424(a)
of the Code; and provided, further, that nothing in this Section 3.4 shall make
this Option exercisable if it is otherwise unexercisable by reason of Section
3.5 or Section 5.6.
The Administrator may make such determinations and adopt such rules
and conditions as it, in its absolute discretion, deems appropriate in
connection with such acceleration of exercisability, including, but not by way
of limitation, provisions to ensure that any such acceleration and resulting
exercise shall be conditioned upon the consummation of the contemplated
corporate transaction, and determinations regarding whether provisions for
assumption or substitution have been made as defined in subsection (b) above.
3.5 - Limitation on Exercisability
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Notwithstanding any other provision of this Agreement, the aggregate
fair market value (determined at the time the Option is granted) of the shares
of the Company's stock with respect to which "incentive stock options" (within
the meaning of Section 422 of the Code) are exercisable for the first time by
the Employee during any calendar year (under the Plan and all
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other incentive stock option plans of the Company, any Subsidiary and any Parent
Corporation) shall not exceed $100,000.
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EXERCISE OF OPTION
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4.1 - Person Eligible to Exercise
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During the lifetime of the Employee, only he may exercise the Option
or any portion thereof. After the death of the Employee, any exercisable
portion of the Option may, prior to the time when the Option becomes
unexercisable under Section 3.3, be exercised by his personal representative or
by any person empowered to do so under the Employee's will or under the then
applicable laws of descent and distribution.
4.2 - Partial Exercise
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Any exercisable portion of the Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time prior to
the time when the Option or portion thereof becomes unexercisable under Section
3.3; provided, however, that each partial exercise shall be for not less than
One Thousand (1000) shares (or the minimum installment set forth in Section 3.1,
if a smaller number of shares) and shall be for whole shares only.
4.3 - Manner of Exercise
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The Option, or any exercisable portion thereof, may be exercised
solely by delivery to the Secretary or his office of all of the following prior
to the time when the Option or such portion becomes unexercisable under Section
3.3:
(a) Notice in writing signed by the Employee or the other person then
entitled to exercise the Option or portion, stating that the Option or portion
is thereby exercised, such notice complying with all applicable rules
established by the Administrator; and
(i) Full payment (by cashiers check or wire transfer) for the
shares with respect to which such Option or portion is exercised; or
(ii) With the consent of the Administrator, (A) shares of the
Company's Common Stock owned by the Employee duly endorsed for transfer to
the Company or (B) subject to the timing requirements of Section 4.4,
shares of the Company's Common Stock issuable to the Employee upon exercise
of the Option, with a fair market value (as determined under Section 4.2(b)
of the Plan) on the date of Option exercise equal to the aggregate purchase
price of the shares with respect to which such Option or portion is
exercised; or
(iii) With the consent of the Administrator; a promissory note
bearing interest (at no less than such rate as shall then preclude the
imputation of interest under the Code or successor provision) and payable
upon such terms as may be prescribed by the Administrator. The
Administrator may also prescribe the form of such note and the
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security to be given for such note. That Option may not be exercised,
however, by delivery of a promissory note or by a loan from the Company
when or where such loan or other extension of credit is prohibited by law;
or
(iv) With the consent of the Administrator, any combination of
the consideration provided in the foregoing subparagraphs (i) - (iii); and
(b) A bona fide written representation and agreement, in a form
satisfactory to the Administrator, signed by the Employee or other person then
entitled to exercise such Option or portion, stating that the shares of stock
are being acquired for his own account, for investment and without any present
intention of distributing or reselling said shares or any of them except as may
be permitted under the Securities Act and then applicable rules and regulations
thereunder, and that the Employee or other person then entitled to exercise such
Option or portion will indemnify the Company against and hold it free and
harmless from any loss, damage, expense or liability resulting to the Company if
any sale or distribution of the shares by such person is contrary to the
representation and agreement referred to above. The Administrator may, in its
absolute discretion, take whatever additional actions it deems appropriate to
insure the observance and performance of such representation and agreement and
to effect compliance with the Securities Act and any other federal or state
securities laws or regulations. Without limiting the generality of the
foregoing, the Administrator may require an opinion of counsel acceptable to it
to the effect that any subsequent transfer of shares acquired on an Option
exercise does not violate the Securities Act, and may issue stop-transfer orders
covering such shares. Share certificates evidencing stock issued on exercise of
this Option shall bear an appropriate legend referring to the provisions of this
subsection (c) and the agreements herein. The written representation and
agreement referred to in the first sentence of this subsection (c) shall,
however, not be required if the shares to be issued pursuant to such exercise
have been registered under the Securities Act, and such registration is then
effective in respect of such shares;
(c) Full payment to the Company (or other employer corporation) of
all amounts which, under federal, state or local tax law, it is required to
withhold upon exercise of the Option; with the consent of the Administrator, (i)
shares of the Company's Common Stock owned by the Employee duly endorsed for
transfer or (ii) subject to the timing requirements of Section 4.4, shares of
the Company's Common Stock issuable to the Employee upon exercise of the Option,
valued in accordance with Section 4.2(b) of the Plan at the date of Option
exercise, may be used to make all or part of such payment; and
(d) In the event the Option or portion shall be exercised pursuant to
Section 4.1 by any person or persons other than the Employee, appropriate proof
of the right of such person or persons to exercise the Option.
4.4 - Certain Timing Requirements
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Shares of the Company's Common Stock issuable to the Employee upon
exercise of the Option may be used to satisfy the Option price or the tax
withholding consequences of such exercise only (i) during the period beginning
on the third (3rd) business day following the date of release of the quarterly
or annual summary statement of sales and earnings of the Company and ending on
the twelfth (12th) business day following such date or (ii) pursuant to an
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irrevocable written election by the Employee to use shares of the Company's
Common Stock issuable to the Employee upon exercise of the Option to pay all or
part of the Option price or the withholding taxes (subject to the approval of
the Administrator) made at least six (6) months prior to the payment of such
Option price or withholding taxes.
4.5 - Conditions to Issuance of Stock Certificates
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The shares of stock deliverable upon the exercise of the Option, or
any portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Company. Such shares shall
be fully paid and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of the Option or portion thereof prior to fulfillment of all of the
following conditions:
(a) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Administrator shall, in its absolute
discretion, determine to be necessary or advisable; and
(b) The payment to the Company (or other employer corporation) of all
amounts which, under federal, state or local tax law, it is required to withhold
upon exercise of the Option; and
(e) The lapse of such reasonable period of time following the
exercise of the Option as the Administrator may from time to time establish for
reasons of administrative convenience.
4.6 - Rights as Shareholder
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The holder of the Option shall not be, nor have any of the rights or
privileges of, a shareholder of the Company in respect of any shares purchasable
upon the exercise of any part of the Option unless and until certificates
representing such shares shall have been issued by the Company to such holder.
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OTHER PROVISIONS
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5.1 - Administration
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The Administrator shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret or revoke
any such rules. All actions taken and all interpretations and determinations
made by the Administrator in good faith shall be final and binding upon the
Employee, the Company and all other interested persons. No member of the
Administrator shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or the Option. In
the event the Administrator is the Committee, the Board shall have no right to
exercise any of the rights or duties of the Committee under the Plan and this
Agreement.
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5.2 - Option Not Transferable
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Neither the Option nor any interest or right therein or part thereof
shall be liable for the debts, contracts or engagements of the Employee or his
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law by
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that this Section 5.2
shall not prevent transfers by will or by the applicable laws of descent and
distribution.
5.3 - Shares to Be Reserved
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The Company shall at all times during the term of the Option reserve
and keep available such number of shares of stock as will be sufficient to
satisfy the requirements of this Agreement.
5.4 - Notices
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Any notice to be given under the terms of this Agreement to the
Company shall be addressed to the Company in care of its Secretary, and any
notice to be given to the Employee shall be addressed to him at the address
given beneath his signature hereto. By a notice given pursuant to this Section
5.4, either party may hereafter designate a different address for notices to be
given to him. Any notice which is required to be given to the Employee shall,
if the Employee is then deceased, be given to the Employee's personal
representative if such representative has previously informed the Company of his
status and address by written notice under this Section 5.4. Any notice shall be
deemed duly given when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid, deposited (with postage prepaid) in a post office or
branch post office regularly maintained by the United States Postal Service.
5.5 - Titles
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Titles are provided herein for convenience only and are not to serve
as a basis for interpretation or construction of this Agreement.
5.6 - Shareholder Approval
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The Plan will be submitted for approval by the Company's shareholders
within twelve (12) months after the date the Plan was initially adopted by the
Board. This Option may not be exercised to any extent by anyone prior to the
time when the Plan is approved by the shareholders, and if such approval has not
been obtained by the end of said twelve-month period, this Option shall
thereupon be cancelled and become null and void. The Company shall take such
actions as may be necessary to satisfy the requirements of Rule 16b-3(b).
5.7 - Notification of Disposition
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The Employee shall give prompt notice to the Company of any
disposition or other transfer of any shares of stock acquired under this
Agreement if such disposition or transfer
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is made (a) within two (2) years from the date of granting the Option with
respect to such shares or (b) within one (1) year after the transfer of such
shares to him. Such notice shall specify the date of such disposition or other
transfer and the amount realized, in cash, other property, assumption of
indebtedness or other consideration, by the Employee in such disposition or
other transfer.
5.8 - Construction
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This Agreement shall be administered, interpreted and enforced under
the laws of the State of Delaware.
5.9 - Conformity to Securities Laws
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The Employee acknowledges that the Plan is intended to conform to the
extent necessary with all provisions of the Securities Act and the Exchange Act
and any and all regulations and rules promulgated by the Securities and Exchange
Commission thereunder, including without limitation Rule 16b-3. Notwithstanding
anything herein to the contrary, the Plan shall be administered, and the Option
is granted and may be exercised, only in such a manner as to conform to such
laws, rules and regulations. To the extent permitted by applicable law, the
Plan and this Agreement shall be deemed amended to the extent necessary to
conform to such laws, rules and regulations.
5.10 - Company's Right to Repurchase Shares
---- ------------------------------------
Upon Termination of Employment, the Company shall have the option to
repurchase all (but not less than all) of the shares of stock which have been
purchased by the Employee pursuant to exercise of the Option and which the
Employee then holds. The repurchase price payable by the Company if it
exercises its repurchase option shall be the greater of the purchase price of
the shares pursuant to Section 2.2 or the fair market value of the shares of
stock on the date of repurchase, determined in accordance with Section 4.2 of
the Plan, except that if at the date of such repurchase, the Company's common
stock is not publicly traded, the fair market value of the shares of stock shall
be determined for purposes of this Section 5.10 on the basis of the following
formula: eight (8) times the Company's pre-tax earnings for the Company's most
recently audited fiscal year divided by the number of outstanding shares of the
Company's common stock (including shares issuable upon the conversion of
outstanding shares of preferred stock) on the date of repurchase.
The Company's repurchase option shall be exercisable by giving written
notice to the Employee within thirty (30) calendar days after the Termination of
Employment provided, however, that in the event that the Optionee exercises the
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Option after the Optionee's Termination of Employment but prior to the
expiration of the Option pursuant to the provisions of Section 3.3, the
Company's repurchase option shall be exercisable by giving written notice within
thirty (30) calendar days after the exercise of the Option by the Optionee. In
the event that the Company exercises its option to repurchase shares of stock
from the Optionee pursuant to this Section 5.10, Optionee's shares of stock
shall automatically be cancelled, and Optionee shall have no further right,
claim or title to such shares, other than the right to receive the
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repurchase price provided for in this Section 5.10. Upon receipt of a general
release and the stock certificates representing the shares, the Company shall
forward payment for such shares.
5.11 - Restrictions on Transfer of Shares
---- ----------------------------------
(a) There can be no valid transfer (as hereinafter defined) of any
shares of stock purchased on exercise of the Option, or any interest in such
shares, by any holder of such shares or interests unless such transfer is solely
for cash consideration and is made in compliance with the following provisions:
(i) Before there can be a valid transfer of any shares or any
interest therein, the record holder of the shares to be transferred (the
"Offered Shares") shall give written notice (by registered or certified
mail) to the Company. Such notice shall specify the identity of the
proposed transferee, the cash price offered for the Offered Shares by the
proposed transferee and the other terms and conditions of the proposed
transfer. The date such notice is mailed shall be hereinafter referred to
as the "notice date" and the record holder of the Offered Shares shall be
hereinafter referred to as the "Offeror."
(ii) For a period of thirty (30) calendar days after the notice
date, the Company shall have the option to purchase all (but not less than
all) of the Offered Shares at the purchase price and on the terms set forth
in subsection (a)(iii) of this Section 5.11. This option shall be
exercisable by the Company by mailing (by registered or certified mail)
written notice of exercise to the Offeror prior to the end of said thirty
(30) days.
(iii) The price at which the Company may purchase the Offered
Shares pursuant to the exercise of such option shall be the lower of (a)
the cash price offered for the Offered Shares by the proposed transferee
(as set forth in the notice required under subsection (a)(i) of this
Section 5.11) or (b) the greater of the purchase price of the shares
pursuant to Section 2.2 or fair market value of the shares of stock on the
notice date, determined in accordance with Section 4.2 of the Plan, except
that if at the notice date, the Company's common stock is not publicly
traded, the fair market value of the shares of stock shall be determined
for purposes of this Section 5.11 on the basis of the following formula:
eight (8) times the Company's pre-tax earnings for the Company's most
recently audited fiscal year divided by the number of outstanding shares of
the Company's common stock (including shares issuable upon the conversion
of outstanding shares of preferred stock) on the notice date. The
Company's notice of exercise of such option shall be accompanied by full
payment for the Offered Shares and, upon such payment by the Company, the
Company shall acquire full right, title and interest to all of the Offered
Shares.
(iv) If, and only if, the option given pursuant to subsection
(a)(ii) of this Section 5.11 is not exercised, the transfer proposed in the
notice given pursuant to subsection (a)(i) of this Section 5.11 may take
place; provided, however, that such transfer must, in all respects, be
exactly as proposed in said notice except that such transfer may not take
place either before the tenth (10th) calendar day after the expiration of
said thirty-day option exercise period or after the ninetieth (90th)
calendar day after the
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expiration of said thirty-day option exercise period, and if such transfer
has not taken place prior to said ninetieth (90th) day, such transfer may
not take place without once again complying with subsection (a) of this
Section 5.11.
(b) As used in this Section 5.11, the term "transfer" means any sale,
encumbrance, pledge, gift or other form of disposition or transfer of shares of
the Company's stock or any legal or equitable interest therein; provided,
however, that the term "transfer" does not include a transfer of such shares or
interests by will or by the applicable laws of descent and distribution or a
gift of such shares if the transferee or donee agrees to be bound by the
provisions of this Section 5.11.
(c) None of the shares of the Company's stock purchased on exercise
of the Option shall be transferred on the Company's books nor shall the Company
recognize any such transfer of any such shares or any interest therein unless
and until all applicable provisions of this Section 5.11 have been complied with
in all respects. The certificates of stock evidencing shares of stock purchased
on exercise of the Option shall bear an appropriate legend referring to the
transfer restrictions imposed by this Section 5.11 and to the repurchase option
provided for in Section 5.10.
5.12 - Company's Right to Non-Disclosure of Financial Information
---- ----------------------------------------------------------
The Company shall have the right not to disclose the Company's
financial information as long as the Company's common stock is not publicly
traded. Whether an optionee or shareholder, the Employee agrees that Employee's
access to the Company's financial information and financial records will be
strictly prohibited as long as the Company's common stock is not publicly
traded. Access to such financial information may only be granted by the
Company's President or Chairman, in his or her sole discretion.
5.13 - Lock-up in Event of Initial Public Offering
---- -------------------------------------------
The Optionee agrees that, during a period of 180 days from the date of
the Initial Public Offering, Optionee will not, without the prior written
consent of the underwriter(s) of the Initial Public Offering, directly or
indirectly, sell, offer to sell, grant any option for the sale of, or otherwise
dispose of or transfer, any shares of Common Stock issuable upon exercise of the
Option.
5.14 - Dispute Resolution
---- ------------------
Any controversy or claim arising out of or relating to this Agreement,
or the breach thereof, that cannot be resolved between the parties in a timely
manner shall be resolved by binding arbitration before a single neutral
arbitrator. The arbitrator shall be selected from the American Arbitration
Association through its procedures. All rules governing the arbitration shall
be the rules as set forth by the American Arbitration Association. The
arbitrator is bound to rule only on whether or not there has been a violation of
the terms of this Agreement and to render an award, if any, that is consistent
with the terms of this Agreement. Neither party to this Agreement is entitled
to any legal recourse or rights or remedies other than those provided within
this Agreement. The arbitrator may apportion the costs of the arbitration,
including arbitrator's
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fees, among the parties, but shall have no power to award attorneys' fees. Each
party shall be responsible for its own attorneys' fees.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto.
By
--------------------------------------
President
By
--------------------------------------
Secretary
-------------------------------
Employee
-------------------------------
Address
Employee's Taxpayer
Identification Number:
-------------------------------
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