Exhibit 10.5
SMOKY MARKET FOODS, INC. 2006 STOCK INCENTIVE PLAN
NONSTATUTORY STOCK OPTION
AWARD AGREEMENT
Participant:______________________________
Date of Grant:____________________________
Number of Option Shares:__________________
Option Exercise Price Per Share: [$_____]
This Award Agreement (this "Agreement") is entered into as of the [_____]
day of [__________,] 200_, between Smoky Market Foods, Inc., a Nevada
corporation, (the "Company"), and [NAME OF PARTICIPANT] ("Participant").
WHEREAS, the Company maintains the Smoky Market Foods, Inc. 2006 Stock
Incentive Plan (the "Plan") and the Board of Directors of the Company has
approved the grant to the Participant of an option to purchase shares of common
stock of the Company (the "Shares") described below; and
WHEREAS, the Participant is an employee, director or consultant of the
Company and desires to accept such options on the terms and conditions set forth
below and in the Plan.
NOW, THEREFORE, in consideration of the premises, covenants and agreements
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. GRANT OF NONSTATUTORY STOCK OPTION. The Company hereby grants to the
Participant an Option (the "Option") to purchase all or any part of an aggregate
amount of [__________ (_____)] shares of the common stock of the Company
("Shares") at a purchase price ("Option Exercise Price") of [$_____] per Share,
on the terms and conditions set forth below and in the Plan. The Option is NOT
intended to constitute an "incentive stock option" as that term is used in the
Plan and Section 422 of the Code. THE PARTICIPANT SHOULD CONSULT A TAX ADVISER
BEFORE ACCEPTING OR EXERCISING THIS OPTION OR DISPOSING OF THE SHARES. For
purposes of this Agreement, references to the Participant's status as an
"employee" or to the Participant's "employment" and similar references shall,
unless otherwise required by governing law, include the Participant's service as
a director or consultant for the Company (provided the services provided by the
Participant as a consultant are within the scope of consultant services eligible
for use of a Registration Statement on Form S-8).
2. VESTING SCHEDULE. Subject to the limitations of this Agreement and the
Plan, to the extent that it has not previously expired under Section 3 below,
the Option shall vest and become exercisable over [____________] pursuant to the
following vesting schedule:
(a) The right to purchase [_____ PERCENT (___%)] of the total number
of Shares subject to this Option shall vest and become exercisable on
[__________], provided the Participant is still employed by the Company on that
date; and
(b) The right to purchase an additional [_____ PERCENT (___%)] of the
total number of Shares subject to this Option shall vest and become exercisable
on each [__________] thereafter, provided the Participant is still employed by
the Company on the applicable vesting date. If the Participant remains employed
by the Company through [__________], the Option shall be vested and exercisable
as to 100% of the Option Shares listed above.
Any Options that are not vested on the date the Participant ceases for any
reason to be employed in any capacity with the Company (whether such termination
of employment is voluntary or involuntary, with or without cause, on account of
death, or otherwise) shall be forfeited and cancelled.
3. EXPIRATION OF OPTION. The Option shall expire (and to the extent it
previously has become vested under Section 2 above, it shall cease to be
exercisable) upon the first to occur of the following:
(a) The [____] anniversary of the Date of Grant specified above;
(b) In the event of the Participant's termination of employment with
the Company on account of death or "permanent and total disability" as defined
in Section 22(e)(3) of the Code ("Disability"), one year after the date of such
termination of employment; or
(c) In the event of the Participant's voluntary or involuntary
termination of employment with the Company for any reason other than death or
Disability, three (3) months after the effective date of termination of
employment (unless the Participant dies during such three-month period, in which
case the three-month period shall be extended to one year from the date of
termination of employment).
4. EXERCISE OF OPTION. The Participant may exercise all or any portion of
the Option that has become vested and exercisable by delivering written notice
substantially in the form attached hereto as EXHIBIT "A" (including the
Investment Representation Statement included therein) to the [__________] of the
Company at the Company's headquarters prior to the close of business on the last
regular business day of the Company prior to the date the Option expires. The
notice of exercise shall:
(a) State the number of Shares with respect to which the Option is
being exercised, and the name, address and social security number of the
Participant or other purchaser if the Participant is deceased;
(b) Contain any representations and agreements as to the Participant's
or other recipient's investment intent with respect to the Shares exercised as
may be reasonably required by the Company upon advice of counsel; and
(c) Be signed by the person or persons entitled to exercise the Option
and, if the Option is being exercised by any person or persons other than the
Participant after his death, be accompanied by proof satisfactory to counsel for
the Company of the right of such person or persons to exercise the Option.
The notice of exercise shall also be accompanied by payment in full of the
Option Exercise Price for the number of Shares being acquired plus any
applicable withholding taxes, which payment shall be made in cash, by certified
check, bank draft or postal or express money order payable to the Company.
5. LOCK-UP PERIOD. The Participant 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, the Participant shall not
sell or otherwise transfer any Shares or other securities of the Company during
the 180-day period (or such other 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. Such restriction shall apply only to
the first registration statement of the Company to become effective under the
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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.
6. TRANSFER OF OPTION. The Option is not transferable, and during the
Participant's life, may be exercised only by him or her. Notwithstanding the
foregoing, the Participant may assign or transfer the Option with the consent of
the Board of Directors (each transferee thereof, a "Permitted Assignee") (a) to
the Participant's spouse, children, or grandchildren (including any adopted step
children and grandchildren); (b) to a trust or partnership for the benefit of
one or more person referred to in clause (a); or (c) for charitable donations;
provided that such Permitted Assignee shall be bound by and subject to all of
the terms and conditions of the Plan and this Agreement relating to the
transferred Award and shall execute an agreement satisfactory to the Company
evidencing such obligations; and provided further that such Participant shall
remain bound by the terms and conditions of the Plan. Any transfer in violation
of this Section 6 shall be null and void. Upon the Participant's death, the
Option may be exercised, if at all, only by the personal representatives,
executors or administrators of the Participant's estate.
7. SECURITIES LAW RESTRICTIONS. Notwithstanding any contrary provision in
this Agreement, except as waived on a case by case basis by the Company in its
sole discretion, no person may exercise the Option unless the Shares to be
acquired are then registered under the Securities Act of 1933 (the "Act"), and
any other applicable securities laws of any state, or the Company receives an
opinion of counsel (which may be counsel for the Company) reasonably acceptable
to the Company stating that the exercise of the Option and the issuance of
Shares pursuant to the exercise is exempt from such registration requirements.
The inability of the Company to obtain from any regulatory body having
jurisdiction the authority deemed by the Company's counsel to be necessary to
the lawful issuance and sale of any Shares hereunder shall relieve the Company
of any liability in respect of the non-issuance or sale of such Shares as to
which such requisite authority shall not have been obtained. The Company may, as
a condition precedent to the exercise of the Option, require the Participant
(or, in the event of the Participant's death, his legal representatives) to
enter into such agreements or to make such updated representations as may be
required to make lawful the exercise of the Option and the ultimate disposition
of the Shares acquired by such exercise.
If at the time of exercise, as applicable, of this Option, the Option and
the Shares are not subject to an effective Registration Statement on Form S-8,
the Participant represents, warrants and covenants that: (a) the Participant is
acquiring the Option and, upon exercise of the Option, the Shares solely for
investment purposes and for an indefinite and indeterminate time without the
intent of making any sale, distribution or disposition thereof; (b) the
Participant has been advised and understands that neither the Option nor the
Shares have been registered for sale pursuant to federal and state securities
laws and that the Option and the Shares are "restricted securities" under such
laws; (c) the Option is nontransferable, the Shares received upon exercise of
the Option may not be sold, transferred, encumbered or otherwise disposed of
without registration or exemption under such securities laws, and the Option and
Shares must be held indefinitely; (d) the Participant is accepting and acquiring
the Option and upon exercise will be acquiring the Shares for investment for the
Participant'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"); and (e) upon exercise of the
Option, the Shares received will be subject to stop transfer instructions and
bear such restrictive legends as the Company may reasonably require for purposes
of securities law compliance.
The Participant further represents, warrants and covenants that he or she
is familiar with the Company, has access to and has received all information
that he or she considers necessary or appropriate for deciding whether to invest
in the Option and Shares, has had an opportunity to ask questions and receive
answers from the Company regarding the terms and conditions of the Option and
the Shares as well as the business, prospects and financial condition of the
Company, and has had the chance to obtain all information necessary to verify
any such information.
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8. TAXES. The Option may not be exercised unless the Participant has paid
or made provision satisfactory to the Company for payment of all federal, state
and local income taxes, and any other taxes, which the Company may be obligated
to collect as a result of the issuance or transfer of Shares upon such exercise
of the Option. To the extent the Company reasonably believes that it is required
to withhold any amount to cover any taxes in connection with the exercise of the
Option, the Company is hereby authorized to withhold The Company is hereby
authorized to withhold such amount from any compensation or other amounts owed
or that may become owed by the Company to the Participant.
9. NO STOCKHOLDER RIGHTS. The Participant shall have no rights as a
stockholder with respect to any Shares covered by the Option until the date as
of which such Shares are issued following exercise of such Option. No adjustment
shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or any other distributions for which the record
date is prior to the date as of which such stock is issued. Neither the Company
nor its directors, officers or other employees have any fiduciary, equitable,
implied contractual or other non-contractual duty with respect to the Option,
and no such person shall be liable for any failure of the Shares to appreciate
or otherwise achieve a value in excess of the Option Exercise Price.
10. NO EMPLOYMENT RIGHTS. THE PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE
VESTING OF OPTIONS PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY
CONTINUING AS AN EMPLOYEE OF THE COMPANY AT THE WILL OF THE COMPANY (NOT THROUGH
THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). THE PARTICIPANT 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 AN EMPLOYEE FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT
INTERFERE IN ANY WAY WITH THE PARTICIPANT'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE THE PARTICIPANT'S RELATIONSHIP AS AN EMPLOYEE AT ANY TIME, WITH OR
WITHOUT CAUSE.
11. [intentionally left blank]
12. OTHER PROVISIONS. The Company may, as a condition precedent to the
exercise of the Option, require the Participant (or, in the event of the
Participant's death, his or her legal representatives, legates or distributees)
to enter into such agreements or to make such representations as may be required
to make lawful the exercise of the Option and the ultimate disposition of the
shares acquired by such exercise.
13. NOTICES. Any notice which either of the parties hereto is required or
permitted to give to the other must be in writing and may be given by personal
delivery or by mailing the same by registered or certified mail, return receipt
requested, to the party to which or to whom the notice is directed, at the
address each party designates in writing, or in the absence of any such written
designation by the Participant at his or her last known address on the records
of the Company. The Participant further agrees to notify the Company upon any
change in the residence address indicated below.
14. GOVERNING LAW. All transactions contemplated hereunder and all rights
of the parties hereto shall be governed as to validity, construction,
enforcement and in all other respects by the laws and decisions of the State of
Nevada, without regard to principles of conflicts of law.
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15. AMENDMENT. Except as permitted by the Plan, this Agreement shall not be
modified or amended except by written agreement signed by all of the parties
hereto.
16. RELATIONSHIP TO PLAN AND INTERPRETATION. The Option and this Agreement
are subject to the terms of the Plan, a current copy of which has been provided
to the Participant, together with the Plan Summary. The Participant acknowledges
receipt of a copy of the Plan and Plan Summary 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. The Participant has reviewed
the Plan, this Award Agreement and Plan Summary in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Award
Agreement and fully understands all provisions of the Option.
In the event of any conflict between the terms of the Plan and this
Agreement, the provisions of this Agreement shall be controlling. Capitalized
terms that are not otherwise defined herein shall have the meaning set forth in
the Plan unless the context requires otherwise. Any provision of this Agreement
which is invalid, prohibited, or unenforceable in any jurisdiction, shall not
invalidate the remainder of the provision or the remaining provisions of the
Agreement. Wherever necessary to implement the intent of the parties hereto,
references herein to the singular shall be interpreted as the plural, and vice
versa, and the feminine, masculine or neuter gender shall be treated as one of
the other genders. The titles of the sections of this Agreement are inserted
only as a matter of convenience and for reference, and in no way define, limit
or describe the scope of this Agreement or the intent of any provisions hereof.
17. ENTIRE AGREEMENT. Subject to the Plan, this Agreement contains all of
the representations, declarations and statements from either party to the other
and expresses the entire understanding between the parties with respect to the
transactions provided for herein. All prior memoranda, letters, statements and
agreements concerning the Option, Shares and this subject matter, if any, are
merged in and replaced by this Agreement.
18. BINDING EFFECT. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective legal representatives,
successors and assigns. The Participant hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board of Directors
upon any questions arising under the Plan or this Option.
19. DISPUTE RESOLUTION. With respect to any future claim, dispute, suit, or
action connected with, relating to, or otherwise arising under or with respect
to this Agreement or the Plan: (a) the party substantially prevailing in such
dispute, claim, or action shall be entitled to recover all reasonable attorneys
fees and out-of-pocket litigation costs; and (b) each of the Company and
Participant expressly and irrevocably:
(i) Consents, submits, and subjects himself and any such claim, suit,
dispute, or action to the exclusive personal and subject matter jurisdiction of
the United States District Court for the District of _________ and the ________
State courts located in _____________County, ______ ("_____ Courts");
(ii) Agrees that the _______ Courts shall have exclusive jurisdiction
over all such claims, disputes, suits, and actions and that venue properly lies
in such _____ Courts as to any such claim, dispute, suit, or action;
(iii) Waives any objection to venue, subject matter jurisdiction, and
personal jurisdiction in the Utah Courts;
(iv) Covenants and agrees not to plead or assert any such objection;
and
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(v) Consents to service of process by first class mail to his most
recent address as set forth in the books and records of the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
Company:
SMOKY MARKET FOODS, INC.
By:_________________________________
Name:_______________________________
Its:________________________________
Participant:
[NAME OF PARTICIPANT]
____________________________________
Name:_______________________________
Address:
____________________________________
____________________________________
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EXHIBIT "A"
-----------
SMOKY MARKET FOODS, INC. 2006 STOCK INCENTIVE PLAN
EXERCISE NOTICE
Smoky Market Foods, Inc.
[COMPANY ADDRESS]
Attention: [PRESIDENT OR CEO]
1. EXERCISE OF OPTION. Effective as of today, [___________, ____,] the
undersigned ("Participant") hereby elects to exercise the Participant's Option
to purchase [________] shares of the common stock (the "Shares") of Smoky Market
Foods, Inc. (the "Company") under and pursuant to the Smoky Market Foods, Inc.
2006 Stock Incentive Plan (the "Plan") and the Award Agreement dated
[__________] (the "Award Agreement").
2. DELIVERY OF PAYMENT. Participant herewith delivers to the Company the
full purchase price of the Shares as set forth in the Award Agreement, plus all
applicable withholding taxes that the Company has indicated are due upon
exercise.
3. REPRESENTATIONS OF PARTICIPANT. Participant acknowledges that he or she
has received, read and understood the Plan, the Award Agreement and the Plan
Summary and agrees to abide by and be bound by their terms and conditions.
Participant has also executed and is delivering to the Company the attached
Investment Representation Statement on which the Company is relying in issuing
the Shares.
4. RIGHTS AS SHAREHOLDER. 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 shareholder shall exist with respect to the Shares,
notwithstanding the exercise of the Option. The Shares shall be issued to the
Participant as soon as practicable after the Option is exercised. No adjustment
shall be made for a dividend or other right for which the record date is prior
to the date of issuance.
5. TAX CONSULTATION/WITHHOLDING. The Participant understands that he or she
may suffer adverse tax consequences as a result of the exercise of the Option or
the disposition of the Shares. The Participant represents that he or she has
consulted with any tax consultants he or she deems advisable in connection with
the purchase or disposition of the Shares and that he or she is not relying on
the Company or its agents for any tax advice. To the extent the Company
reasonably believes that it is required to withhold any amount to cover any
taxes in connection with the exercise of the Option, the Company is hereby
authorized to withhold such amount from any compensation or other amounts owed
or that may become owed by the Company to the Participant.
6. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
(a) LEGENDS. The Participant understands and agrees that, unless (i)
the Participant is not, and has not for 90 days, been an affiliate of the
Company, and (ii) a Registration Statement on Form S-8 (and similar state
qualifications) is effective with respect to the Shares, 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:
A-1
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY
STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD
OR OFFERED FOR SALE OR OTHERWISE TRANSFERRED, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR
AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER AND
ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE ACT AND ANY STATE SECURITIES LAWS.
(b) STOP-TRANSFER NOTICES. The Participant 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.
7. 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 the Participant and his or her heirs, executors, personal
representatives, administrators, successors and assigns.
8. INTERPRETATION. Any dispute regarding the interpretation of this
Exercise Notice shall be submitted by the Participant or by the Company
forthwith to the Committee which shall review such dispute at its next regular
meeting. The resolution of such a dispute by the Committee shall be final and
binding on all parties.
9. GOVERNING LAW; SEVERABILITY. This Exercise Notice is governed by the
laws of the State of _______.
10. ENTIRE AGREEMENT. The Plan and Award Agreement are incorporated herein
by reference. This Exercise Notice, the Plan, the Award Agreement and the
Investment Representation Statement attached hereto 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 the
Participant with respect to the subject matter hereof, and may not be modified
adversely to the Company's interest except by means of a writing signed by the
Company.
A-2
Submitted by: Accepted by:
PARTICIPANT SMOKY MARKET FOODS, INC.
___________________________________ By: _________________________________
Signature Name: _______________________________
Title: ______________________________
___________________________________
Print Name
ADDRESS: ADDRESS:
------- -------
___________________________________ _____________________________________
___________________________________ _____________________________________
_____________________________________
Date Received
A-3
INVESTMENT REPRESENTATION STATEMENT
PARTICIPANT:
COMPANY: SMOKY MARKET FOODS, INC.
SECURITY: COMMON STOCK
AMOUNT:
DATE:
In connection with the purchase of the above-listed shares of common stock
of Smoky Market Foods, Inc. ("the Securities"), the undersigned Participant
represents to the Company the following:
(a) The Participant 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. The
Participant is acquiring these Securities for investment for Participant'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) The Participant 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 Participant's investment intent as expressed herein. In this
connection, the Participant understands that, in the view of the Securities and
Exchange Commission, the statutory basis for such exemption may be unavailable
if the Participant'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. The Participant 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.
The Participant further acknowledges and understands that the Company is under
no obligation to register the Securities. The Participant 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) The Participant 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
Participant, 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, as amended, 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, as amended); 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.
(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) The Participant 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
Rule 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. The Participant understands that no assurances can be given
that any such other registration exemption will be available in such event.
(e) The Participant is a resident of the State of [NAME OF STATE].
Signature of Participant:
_______________________________
Date: _________________________
(2)
