Exhibit 10.2
CLAREMONT TECHNOLOGY GROUP, INC.
1992 STOCK INCENTIVE PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Incentive Plan are
to attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees and Consultants
of the Company and to promote the success of the Company's business.
Options granted hereunder may be either "incentive stock options," as
defined in Section 422 of the Internal Revenue Code of 1986, as amended, or
"nonqualified stock options," at the discretion of the Board and as reflected in
the terms of the written option agreement. In addition, shares of the Company's
Common Stock may be Sold hereunder independent of any Option grant.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "BOARD" shall mean the Committee, if one has been appointed, or
the Board of Directors of the Company, if no Committee is appointed.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" shall mean the Common Stock of the Company.
(d) "COMPANY" shall mean Claremont Technology Group, Inc., an Oregon
corporation.
(e) "COMMITTEE" shall mean the Committee appointed by the Board of
Directors in accordance with Section 4.(a) of the Plan, if one is appointed.
(f) "CONSULTANT" shall mean any person (other than an Employee as
defined in Section 2.(h)) who is engaged by the Company or any Subsidiary to
render consulting services and is compensated for such consulting services and
any director of the Company whether compensated for such services or not.
(g) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" shall mean the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of sick leave, military leave, or any other
leave of absence approved by the Board; provided that such leave is for a period
of not more than ninety days or reemployment upon the expiration of such leave
is guaranteed by contract or statute.
(h) "EMPLOYEE" shall mean any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.
(i) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
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(j) "INCENTIVE STOCK OPTION" shall mean an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
(k) "NONQUALIFIED STOCK OPTION" shall mean an Option not intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(l) "OPTION" shall mean a stock option granted pursuant to the Plan.
(m) "OPTIONED STOCK" shall mean the Common Stock subject to an
Option.
(n) "OPTIONEE" shall mean an Employee or Consultant who receives an
Option.
(o) "PARENT" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424 of the Code.
(p) "PLAN" shall mean this Stock Incentive Plan.
(q) "SALE" or "SOLD" shall include, with respect to the sale of
Shares under the Plan, the sale of Shares for consideration in the form of cash
or notes, as well as a grant of Shares without consideration, except past or
future services.
(r) "SHARE" shall mean a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(s) "SUBSIDIARY" shall mean a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424 of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of Shares which may be optioned and/or
Sold under the Plan is 2,500,000 shares of Common Stock. The Shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
shall, unless the Plan shall have been terminated, become available for future
Option grants and/or Sales under the Plan. If Shares Sold under the Plan or
purchased upon the exercise of an Option are repurchased by the Company pursuant
to restrictions applicable to such Shares, the number of Shares repurchased
shall, unless the Plan shall have been terminated, become available for future
Option grants and/or Sales under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE. The Plan shall be administered by the Board of
Directors of the Company.
(i) Subject to subparagraph 4.(a)(ii), the Board of Directors
may appoint a Committee consisting of not less than two (2) members of the Board
of Directors to administer the Plan on behalf of the Board of Directors, subject
to such terms and conditions as the Board of Directors may prescribe. Once
appointed, the Committee shall continue to serve until otherwise
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directed by the Board of Directors. From time to time the Board of Directors
may increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies however caused, or remove all members of the Committee
and thereafter directly administer the Plan.
Members of the Board who are either eligible for Options and/or Sales or
have been granted Options or Sold Shares may vote on any matters affecting the
administration of the Plan or the grant of any Options or Sale of any Shares
pursuant to the Plan, except that no such member shall act upon the granting of
an Option or Sale of Shares to himself, but any such member may be counted in
determining the existence of a quorum at any meeting of the Board during which
action is taken with respect to the granting of Options or Sale of Shares to
him.
(ii) Notwithstanding the foregoing subparagraph 4.(a)(i), if
and in any event the Company registers any class of any equity security pursuant
to Section 12 of the Securities Exchange Act of 1934, from the effective date of
such registration until six (6) months after the termination of such
registration, any grants of Options to officers or directors shall only be made
by the Board if each member of the Board is a disinterested person, or if every
member of the Board is not a disinterested person, by a committee of two or more
directors, each of whom is a disinterested person. A "disinterested person" is
a director who has not, during the one year period prior to service as an
administrator of the Plan, or during such service, been granted or awarded
equity securities pursuant to the Plan or any other plan of the Company or any
of its affiliates, with these qualifications:
(A) participation in a formula plan meeting the
conditions in paragraph (c)(2)(ii) of SEC Rule 16b-3 shall not
disqualify a director from being a disinterested person;
(B) participation in an ongoing securities acquisition
plan meeting the conditions in paragraph (d)(2)(i) of SEC Rule 16b-3
shall not disqualify a director from being a disinterested person;
(C) an election to receive an annual retainer fee in either
cash or an equivalent amount of securities, or partly in cash and partly in
securities, shall not disqualify a director from being a disinterested
person; and
(D) participation in a plan shall not disqualify a
director from being a disinterested person for the purpose of
administering another plan that does not permit participation by
directors.
(b) POWERS OF THE BOARD. Subject to the provisions of the Plan, the
Board shall have the authority, in its discretion: (i) to grant Incentive Stock
Options in accordance with Section 422 of the Code, or Nonqualified Stock
Options; (ii) to authorize Sales of Shares of Common Stock hereunder; (iii) to
determine, upon review of relevant information and in accordance with
Section 8.(b) of the Plan, the fair market value of the Common Stock; (iv) to
determine the exercise/purchase price per Share of Options to be granted or
Shares to be Sold, which exercise/purchase price shall be determined in
accordance with Section 8.(a) of the Plan; (v) to determine the Employees or
Consultants to whom, and the time or times at which, Options shall be granted
and the number of Shares to be represented by each Option; (vi) to determine the
Employees or Consultants to whom, and the time or times at which, Shares shall
be Sold and the number of
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Shares to be Sold; (vii) to interpret the Plan; (viii) to prescribe, amend and
rescind rules and regulations relating to the Plan; (ix) to determine the terms
and provisions of each Option granted (which need not be identical) and, with
the consent of the holder thereof, modify or amend each Option; (x) to determine
the terms and provisions of each Sale of Shares (which need not be identical)
and, with the consent of the purchaser thereof, modify or amend each Sale;
(xi) to accelerate or defer (with the consent of the Optionee) the exercise date
of any Option, consistent with the provisions of Section 9 of the Plan; (xii) to
accelerate or defer (with the consent of the Optionee or purchaser of Shares)
the vesting restrictions applicable to Shares Sold under the Plan or pursuant to
Options granted under the Plan; (xiii) to authorize any person to execute on
behalf of the Company any instrument required to effectuate the grant of an
Option or Sale of Shares previously granted or authorized by the Board; (xiv) to
determine the restrictions on transfer, vesting restrictions, repurchase rights,
or other restrictions applicable to Shares issued under the Plan; (xv) to
effect, at any time and from time to time, with the consent of the affected
Optionees, the cancellation of any or all outstanding Options under the Plan and
to grant in substitution therefor new Options under the Plan covering the same
or different numbers of Shares, but having an Option price per Share consistent
with the provisions of Section 8 of this Plan as of the date of the new Option
grant; and (xvi) to make all other determinations deemed necessary or advisable
for the administration of the Plan.
(c) EFFECT OF BOARD'S DECISION. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan or Shares Sold under the
Plan.
5. ELIGIBILITY.
(a) PERSONS ELIGIBLE. Options may be granted and/or Shares Sold only
to Employees and Consultants. Incentive Stock Options may be granted only to
Employees. An Employee or Consultant who has been granted an Option or Sold
Shares may, if he is otherwise eligible, be granted an additional Option or
Options or Sold additional Shares.
(b) ISO LIMITATION. No Incentive Stock Option may be granted to an
Employee which, when aggregated with all other Incentive Stock Options granted
to such Employee by the Company or any Parent or Subsidiary, would result in
Shares having an aggregate fair market value (determined for each Share as of
the date of grant of the Option covering such Share) in excess of $100,000
becoming first available for purchase upon exercise of one or more Incentive
Stock Options during any calendar year.
(c) SECTION 5.(b) LIMITATIONS. Section 5.(b) of the Plan shall apply
only to an Incentive Stock Option evidenced by an "Incentive Stock Option
Agreement" which sets forth the intention of the Company and the Optionee that
such Option shall qualify as an Incentive Stock Option. Section 5.(b) of the
Plan shall not apply to any Option evidenced by a "Nonqualified Stock Option
Agreement" which sets forth the intention of the Company and the Optionee that
such Option shall be a Nonqualified Stock Option.
(d) NO RIGHT TO CONTINUED EMPLOYMENT. The Plan shall not confer upon
any Optionee any right with respect to continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with his right
or the Company's right to terminate his employment or consulting relationship at
any time.
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6. TERM OF PLAN. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
stockholders of the Company as described in Section 17 of the Plan. It shall
continue in effect for a term of ten (10) years, unless sooner terminated under
Section 13 of the Plan.
7. TERM OF OPTION. The term of each Incentive Stock Option shall be ten
(10) years from the date of grant thereof or such shorter term as may be
provided in the Stock Option Agreement. The term of each Nonqualified Stock
Option shall be ten (10) years and one (1) day from the date of grant thereof or
such other term as may be provided in the Stock Option Agreement. However, in
the case of an Incentive Stock Option granted to an Optionee who, at the time
the Incentive Stock Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5)
years from the date of grant thereof or such shorter time as may be provided in
the Incentive Stock Option Agreement.
8. EXERCISE/PURCHASE PRICE AND CONSIDERATION.
(a) EXERCISE/PURCHASE PRICE. The per-Share exercise/purchase price
for the Shares to be issued pursuant to exercise of an Option or a Sale (other
than a Sale which is a grant for which no purchase price is payable) shall be
such price as is determined by the Board, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the
grant of such Incentive Stock Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than one
hundred ten percent (110%) of the fair market value per Share on the date of the
grant.
(B) granted to any other Employee, the per Share
exercise price shall be no less than one hundred percent (100%) of the fair
market value per Share on the date of grant.
(ii) In the case of a Nonqualified Stock Option or Sale granted
or Sold to any person, the per Share exercise/purchase price shall be no less
than eighty-five percent (85%) of the fair market value per Share on the date of
grant or authorization of Sale, unless otherwise expressly determined by the
Board of Directors. Any determination to sell stock at less than fair market
value on the date of the grant or authorization of Sale shall be accompanied by
an express finding by the Board of Directors specifying that the sale is in the
best interest of the Company, and specifying both the fair market value and the
grant or sale price of the stock.
(iii) In the case of an Option granted or Sale authorized on or
after the effective date of registration of any class of equity security of the
Company pursuant to Section 12 of the Exchange Act and prior to six (6) months
after the termination of such registration, the per Share exercise/purchase
price shall be no less than one hundred percent (100%) of the fair market value
per Share on the date of grant or authorization of Sale.
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(b) FAIR MARKET VALUE. The fair market value per Share shall be
determined by the Board in its discretion; provided, however, that where there
is a public market for the Common Stock, the fair market value per Share shall
be the closing price of the Common Stock for the date of grant or authorization
of Sale, as reported in THE WALL STREET JOURNAL (or, if not so reported, as
otherwise reported by the National Association of Securities Dealers Automated
Quotation (NASDAQ) System) or, in the event the Common Stock is listed on a
stock exchange the fair market value per Share shall be the closing price on
such exchange on the date of grant of the Option or authorization of Sale, as
reported in THE WALL STREET JOURNAL.
(c) CONSIDERATION. The consideration to be paid for the Shares to be
issued upon exercise of an Option or pursuant to a Sale, including the method of
payment, shall be determined by the Board and may consist entirely of cash,
check, promissory note, other Shares of Common Stock having a fair market value
on the date of surrender equal to the aggregate exercise/purchase price of the
Shares as to which said option shall be exercised or Sale consummated, or any
combination of such methods of payment for the issuance of Shares.
9. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Board, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8.(c) of the Plan.
Each Optionee who exercises an Option shall, upon notification of the amount due
(if any) and prior to or concurrent with delivery of the certificate
representing the Shares, pay to the Company amounts necessary to satisfy
applicable federal, state and local tax withholding requirements. An Optionee
must also provide a duly executed copy of any stock transfer agreement then in
effect and determined to be applicable by the Board. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, 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. No adjustment will be made for a dividend or other
right for which the record date is prior to the date the stock certificate is
issued, except as provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) TERMINATION OF STATUS AS AN EMPLOYEE OR CONSULTANT. If an
Employee or Consultant ceases to serve as an Employee or Consultant (as the case
may be), he may, but only within three (3) months (or with respect to
Nonqualified Stock Options, such other period of time not exceeding the
limitations of Section 7 above as is determined by the Board at the time of
grant
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of the Nonqualified Stock Option) after the date he ceases to be an Employee or
Consultant (as the case may be) of the Company, exercise his Option to the
extent that he was entitled to exercise it at the date of such termination. To
the extent that he was not entitled to exercise the Option at the date of such
termination, or if he does not exercise such Option (which he was entitled to
exercise) within the time specified herein, the Option shall terminate.
(c) DISABILITY OF OPTIONEE. Notwithstanding the provisions of
Section 9.(b) above, in the event an Employee or Consultant is unable to
continue his employment or consulting relationship (as the case may be) with the
Company as a result of his total and permanent disability (as defined in
Section 22(e)(3) of the Code), he may, but only within twelve (12) months (or
with respect to Nonqualified Stock Options, such other period of time not
exceeding the limitations of Section 7 above as is determined by the Board at
the time of grant of the Nonqualified Stock Option) from the date of
termination, exercise his Option to the extent he was entitled to exercise it at
the date of such termination. To the extent that he was not entitled to
exercise the Option at the date of termination, or if he does not exercise such
Option (which he was entitled to exercise) within the time specified herein, the
Option shall terminate.
(d) DEATH OF OPTIONEE. In the event of the death of an Optionee
during the term of the Option who is at the time of his death an Employee or
Consultant of the Company and who shall have been in Continuous Status as an
Employee or Consultant since the date of grant of the Option, the Option may be
exercised, at any time within twelve (12) months (or such other period of time
not exceeding the limitations of Section 7 above as is determined by the Board
at the time of grant of the Option) following the date of death, by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise as of
the date of death.
10. NONTRANSFERABILITY OF OPTIONS. An Option may not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised during the
lifetime of the Optionee only by the Optionee.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject to any
required action by the stockholders of the Company, the number of shares of
Common Stock covered by each outstanding Option and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or Sales made or which have been returned
to the Plan upon cancellation or expiration of an Option, as well as the price
per share of Common Stock covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company; provided, however, that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Board, whose determination in that respect shall be final, binding
and conclusive. Except as expressly provided herein, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock subject to an
Option.
In the event of the proposed dissolution or liquidation of the Company, the
Option will terminate immediately prior to the consummation of such proposed
action, unless otherwise provided
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by the Board. The Board may, in the exercise of its sole discretion in such
instances, declare that any Option shall terminate as of a date fixed by the
Board and give each Optionee the right to exercise his Option as to all or any
part of the Optioned Stock, including Shares as to which the Option would not
otherwise be exercisable. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, the Option shall be assumed or an equivalent
option shall be substituted by such successor corporation or a parent or
subsidiary of such successor corporation, unless the Board determines, in the
exercise of its sole discretion and in lieu of such assumption or substitution,
that the Optionee shall have the right to exercise the Option as to all of the
Optioned Stock, including Shares as to which the Option would not otherwise be
exercisable. If the Board makes an Option fully exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the Board
shall notify the Optionee that the Option shall be fully exercisable for a
period of thirty (30) days from the date of such notice or such shorter period
as the Board may specify in the notice, and the Option will terminate upon the
expiration of such period.
12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date on which the Board makes the determination granting
such Option. Notice of the determination shall be given to each Employee or
Consultant to whom an Option is so granted within a reasonable time after the
date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable;
provided, however, that if required to qualify the Plan under Rule 16b-3
promulgated under Section 16 of the Securities Exchange Act of 1934, as amended,
no amendment shall be made more than once every six months that would change the
amount, price or timing of the option grants, other than to comport with changes
in the Internal Revenue Code of 1986, as amended, or the rules and regulations
promulgated thereunder; and provided, further, that, if required to qualify the
Plan under rule 16b-3, no amendment shall be made without the approval of the
stockholders of the Company in the manner described in Section 17 of the Plan if
the amendment would:
(i) increase the number of Shares subject to the Plan, other
than in connection with an adjustment under Section 11 of the Plan;
(ii) make a change in the designation of the class of Employees
or Consultants eligible to be granted Options; or
(iii) if the Company has a class of equity security registered
under Section 12 of the Exchange Act at the time of such revision or amendment,
cause any material increase in the benefits accruing to participants under the
Plan.
(b) STOCKHOLDER APPROVAL. If any amendment requiring stockholder
approval under Section 13.(a) of the Plan is made subsequent to the first
registration of any class of equity security by the Company under Section 12 of
the Exchange Act, such stockholder approval shall be solicited as described in
Section 17.(a) of the Plan.
(c) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already granted, and such
Options shall remain in full force and
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effect as if this Plan had not been amended or terminated, unless mutually
agreed otherwise between the Optionee and the Board, which agreement must be in
writing and signed by the Optionee and the Company.
14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option or a Sale unless the exercise of such
Option or consummation of the Sale and the issuance and delivery of such Shares
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, applicable state
securities laws, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange (including NASDAQ) upon
which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option or a Sale, the Company may
require the person exercising such Option or to whom Shares are being Sold to
represent and warrant at the time of any such exercise or Sale that the Shares
are being purchased only for investment and without any present intention to
sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required by any of the aforementioned relevant
provisions of law.
15. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is 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 failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
16. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
17. STOCKHOLDER APPROVAL. Continuance of the Plan shall be subject to
approval by the stockholders of the Company within twelve months before or after
the date the Plan is adopted. If such stockholder approval is obtained at a
duly held stockholders' meeting, it may be obtained by the affirmative vote of
the holders of a majority of the outstanding shares of the Company, such holders
being present or represented and entitled to vote thereon. If and in the event
that the Company registers any class of any equity security pursuant to
Section 12 of the Exchange Act, the approval of such stockholders of the Company
shall be:
(a) SOLICITATION.
(i) solicited substantially in accordance with Section 14(a)
of the Exchange Act and the rules and regulations promulgated thereunder, or
(ii) solicited after the Company has furnished in writing to
the holders entitled to vote substantially the same information concerning the
Plan as that which would be required by the rules and regulations in effect
under Section 14(a) of the Exchange Act at the time such information is
furnished; and
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(b) TIME. Obtained at or prior to the first annual meeting of
stockholders held subsequent to the first registration of any class of equity
securities of the Company under Section 12 of the Exchange Act.
If such stockholder approval is obtained by written consent, it must
be obtained by the written consent of stockholders of the Company in compliance
with the requirements of applicable state law.
18. Six Month Holding Period for Affiliates. If the Company registers any
class of any equity security pursuant to Section 12 of the Exchange Act, then
from the effective date of such registration until six (6) months after the
termination of such registration (the Public Period), these limits will apply to
each officer, director and beneficial owner of ten percent (10%) or more of any
class of equity securities of the Company (Affiliates.) During the Public
Period, any Affiliate shall hold Shares Sold hereunder at least six months from
the date of Sale. During the Public Period, at least six months must elapse
from the date of grant of an Option to an Affiliate to the date the Affiliate
disposes of the Shares acquired upon exercise of the Option, or (if the Option
is disposed of other than by exercise) to the date of disposition of the Option
itself.
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