Exhibit 4.1
KNOWLEDGE WELL LIMITED
1998 SHARE OPTION PLAN
1. Purposes of the Plan. The purposes of this Share Plan are:
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. to attract and retain the best available personnel for positions of
substantial responsibility;
. to provide additional incentive to Employees, Directors and
Consultants; and
. to promote the success of the Company's business.
Options granted under the Plan may be Incentive Share Options or Non-
statutory Share Options, as determined by the Administrator at the time of
grant.
2. Definitions. As used herein, the following definitions shall apply:
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(a) "Administrator" means the Board or any of its Committees as shall
be administering the Plan, in accordance with
Section 4 of the Plan.
(b) "Applicable Laws" means the legal requirements relating to the
administration of share option plans under United
States state corporate laws, United States federal
and state securities laws, the Code, any stock
exchange or quotation system on which the Ordinary
Shares are listed or quoted and the applicable
laws of Ireland.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the United States Internal Revenue Code of
1986, as amended.
(e) "Committee" means a Committee appointed by the Board in
accordance with Section 4 of the Plan.
(f) "Company" means Knowledge Well Limited a company
incorporated under the laws of Ireland.
(g) "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render
services and who is compensated for such services.
(h) "Continuous means that the employment relationship,
Status as an directorship or consulting relationship with the
Employee, Company, any Parent or Subsidiary is not
Director or interrupted or terminated. Continuous Status as an
Consultant" Employee, Director or Consultant shall not be
considered interrupted in the case
of (i) any leave of absence approved by the
Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any
Subsidiary, or any successor. A leave of absence
approved by the Company shall include sick leave,
military leave, or any other personal leave. For
purposes of Incentive Share Options, no such leave
may exceed 90 days, unless reemployment upon
expiration of such leave is guaranteed by statute
or contract, including Company policies. If
reemployment upon expiration of a leave of absence
approved by the Company is not so guaranteed, on
the 181st day of such leave any Incentive Share
Option held by the Optionee shall cease to be
treated as an Incentive Share Option and shall be
treated for tax purposes as a Non-statutory Share
Option.
(i) "Director" means a member of the Board.
(j) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(k) "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent
or Subsidiary of the Company. Neither service as a
Director nor payment of a director's fee by the
Company shall be sufficient to constitute
"employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "Fair Market means, as of any date, the value of
Value" Ordinary Shares determined as follows:
(i) If the Ordinary Shares are listed, quoted or
traded on any established stock exchange
(including without limitation, the
Alternative Investment Market of the London
Stock Exchange Limited and the Developing
Companies Market of The Irish Stock Exchange
Limited) or a national market system in the
United States of America (including without
limitation the Nasdaq National Market or
The Nasdaq SmallCap Market of the Nasdaq
Stock Market) the Fair Market Value of an
Ordinary Share shall be the closing sales
price for such Ordinary Share (or the
closing bid, if no sales were reported) as
quoted on such system or exchange (or the
exchange with the greatest volume of trading
in Ordinary Shares) on the last market
trading day prior to the day of
determination, as reported in The Financial
Times, The Irish Times or The Wall Street
Journal (as applicable) or such other source
as the Administrator deems reliable;
(ii) If the Ordinary Shares are regularly quoted
by a recognized securities dealer but
selling prices are not reported, the Fair
Market Value of an Ordinary Share shall be
the mean between the high bid and low asked
prices for the Ordinary Shares on the last
market trading day prior to the day of
determination, as reported in The Financial
Times, The Irish Times or The Wall Street
Journal or such other source as the
Administrator deems reliable;
(iii) In the absence of an established market for
the Ordinary Shares, the Fair Market Value
shall be determined in good faith by the
Administrator;
(iv) In no event shall the Fair Market Value be
less than the par value of the Ordinary
Shares.
(n) "Incentive Share means an Option intended to qualify
Option" as an incentive stock option within the meaning of
Section 422 of the Code and the regulations
promulgated thereunder.
(o) "Non-statutory means an Option not intended to
Share Option" qualify as an Incentive Share Option.
(p) "Notice of Grant" means a written notice evidencing certain terms and
conditions of an individual Option grant. The
Notice of Grant is part of the Option Agreement.
(q) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange
Act and the rules and regulations promulgated
thereunder.
(r) "Option" means an option to purchase Ordinary Shares granted
pursuant to the Plan.
(s) "Option means a written agreement between
Agreement" the Company and an Optionee evidencing the terms
and conditions of an individual Option grant. The
Option Agreement is subject to the terms and
conditions of the Plan.
(t) "Option Exchange means a program whereby outstanding
Program" options are surrendered in exchange for options
with a lower exercise price.
(u) "Optioned Share" means the Ordinary Shares subject to an Option.
(v) "Optionee" means an Employee, Director or Consultant who holds
an outstanding Option.
(w) "Ordinary Shares" means the ordinary shares in the capital of the
Company.
(x) "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of
the Code.
(y) "Plan" means this 1998 Share Option Plan.
(z) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of
the Code.
3. Shares Subject to the Plan. Subject to the provisions of Section 12 of the
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Plan, the maximum aggregate number of Ordinary Shares which may be optioned
and sold under the Plan shall not exceed 4,000,000 Ordinary Shares. The
Ordinary Shares may be authorized, but unissued. If an Option expires or
becomes unexercisable without having been exercised in full, or is
surrendered pursuant to an Option Exchange Program, the unpurchased
Ordinary Shares which were subject thereto shall become available for
future grant or sale under the Plan (unless the Plan has terminated);
provided, however, that Ordinary Shares that have actually been issued
under the Plan shall not be returned to the Plan and shall not become
available for future distribution under the Plan.
4. Administration of the Plan
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(a) Procedure
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The Plan shall be administered by the Board or a Committee appointed by the
Board, which Committee shall be constituted to comply with Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of the Plan, and in
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the case of a Committee, subject to the specific duties delegated by the
Board to such Committee, and subject to the approval of any relevant
authorities the Administrator shall have the authority, in its discretion:
(i) to determine the Fair Market Value of the Ordinary Shares, in
accordance with Section 2(m) of the Plan;
(ii) to select the Employees, Directors and Consultants to whom Options
may be granted hereunder;
(iii) to determine whether and to what extent Options are granted
hereunder;
(iv) to determine the service periods for which the Options have been
granted;
(v) to determine the number of Ordinary Shares to be covered by each
Option granted hereunder;
(vi) to approve forms of agreement for use under the Plan;
(vii) to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any Option granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the
time or times when Options may be exercised (which may be based on
performance criteria), any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding
any Option or the Ordinary Shares relating thereto, based in each
case on such factors as the Administrator, in its sole discretion,
shall determine;
(viii) to reduce the exercise price of any Option to the then current Fair
Market Value if the Fair Market Value of the Orindary Shares covered
by such Option shall have declined since the date the Option was
granted;
(ix) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan;
(x) to prescribe, amend and rescind rules and regulations relating to
the Plan, including rules and regulations relating to sub-plans
established for the purpose of qualifying for preferred tax
treatment under foreign tax laws;
(xi) to modify or amend each Option (subject to Section 14(c) of the
Plan), including the discretionary authority to extend the post-
termination exercisability period of Options longer than is
otherwise provided for in the Plan;
(xii) to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Option previously
granted by the Administrator;
(xiii) to institute an Option Exercise Program;
(xv) to allow Optionees to satisfy withholding tax obligations by
electing to have the Company withhold from the Ordinary Shares to be
issued upon exercise of an Option that number of Ordinary Shares
having a Fair Market Value equal to the amount required to be
withheld. The Fair Market Value of the Ordinary Shares to be
withheld shall be determined on the date that the amount of tax to
be withheld is to be determined. All elections by Optionees to have
Ordinary Shares withheld for this purpose shall be made in such form
and under such conditions as the Administrator may deem necessary or
advisable;
(xv) to determine the terms and restrictions applicable to Options; and
(xvi) to make all other determinations deemed necessary or advisable for
administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's decisions,
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determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.
5. Eligibility. Non-statutory Share Options may be granted to Employees,
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Directors and Consultants. Incentive Share Options may be granted only to
Employees. If otherwise eligible, an Employee, Director or Consultant who
has been granted an Option may be granted additional Options.
6. Limitations.
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(a) Each Option shall be designated in the Notice of Grant as either an
Incentive Share Option or a Non-statutory Share Option. However,
notwithstanding such designations, to the extent that the aggregate
Fair Market Value:
(i) of Ordinary Shares subject to an Optionee's Incentive Share
Options granted by the Company, any Parent or Subsidiary, which
(ii) become exercisable for the first time during any calendar year
(under all plans of the Company or any Parent or Subsidiary)
exceeds US$100,000, such excess Options shall be treated as Non-
statutory Share Options. For purposes of this Section 6(a),
Incentive Share Options shall be taken into account in the order in
which they were granted, and the Fair Market Value of the Ordinary
Shares shall be determined as of the time of grant.
(b) Subject to Applicable Laws, neither the Plan nor any Option shall
confer upon an Optionee any right with respect to continuing the
Optionee's employment relationship, directorship or consulting
relationship with the Company, nor shall they interfere in any way
with the Optionee's right or the Company's right to terminate such
employment relationship, directorship or consulting relationship at
any time, with or without cause.
7. Term of Plan. Subject to Section 18 of the Plan, the Plan shall become
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effective upon the earlier to occur of its adoption by the Board or its
approval by the shareholders of the Company as described in Section 18 of
the Plan. It shall continue in effect for a term of ten (10) years unless
terminated earlier under Section 14 of the Plan.
8. Term of Option. The term of each Option shall be stated in the Notice of
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Grant; provided, however, that in the case of an Incentive Share Option,
the term shall be no more than ten (10) years from the date of grant.
Moreover, in the case of an Incentive Share Option granted to an Optionee
who, at the time the Incentive Share Option is granted, owns a number of
Ordinary Shares representing more than ten per cent (10%) of the voting
power of all classes of shares of the Company or any Parent or Subsidiary,
the term of the Incentive Share Option shall be no more than five (5) years
from the date of grant.
9. Option Exercise Price and Consideration.
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(a) Exercise Price. The per share exercise price for the Ordinary Shares
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to be issued pursuant to exercise of an Option shall be determined by
the Administrator, subject to the following:
(i) In the case of an Incentive Share Option:
(A) granted to an Employee who, at the time the Incentive
Share Option is granted, owns a number of Ordinary Shares
representing more than ten per cent (10%) of the voting
power of all classes of shares of the Company or any
Parent or Subsidiary, the exercise price shall be no less
than 110% of the Fair Market Value per share on the date
of grant;
(B) granted to an Employee other than an Employee described
in paragraph (A) immediately above, the exercise price
shall be no less than 100% of the Fair Market Value per
share on the date of grant.
(ii) In the case of a Non-statutory Share Option, the exercise price
shall be determined by the Administrator subject to Applicable
Laws.
(iii) Notwithstanding the foregoing, Options may be granted with a
per share exercise price other than as required above pursuant
to a merger or other corporate transaction.
(b) Waiting Period and Exercise Dates. At the time an Option is granted,
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the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied
before the Option may be exercised. In so doing, the Administrator
may specify that an Option may not be exercised until the completion
of a service period.
(c) Form of Consideration. The Administrator shall determine the
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acceptable form of consideration for exercising an Option, including
the method of payment, subject to compliance with Applicable Laws.
In the case of an Incentive Share Option, the Administrator shall
determine the acceptable form of consideration at the time of grant,
subject to compliance with Applicable Laws. Such consideration may
consist entirely of:
(i) cash;
(ii) check:
(iii) promissory note;
(iv) delivery of a properly executed exercise notice together with
such other documentation as the Administrator and the broker,
if applicable, shall require to effect an exercise of the
Option and delivery to the Company of the sale or loan proceeds
required to pay the exercise price;
(v) other Ordinary Shares which (aa) in the case of Ordinary Shares
acquired upon exercise of an option have been owned by the
Optionee for more than six (6) months on the date of surrender;
and (bb) have a Fair Market Value on the date of surrender
equal to the aggregate exercise price
of the Ordinary Shares as to which such Option shall be
exercised;
(vi) any combination of the foregoing methods of payment; or
(vii) such other consideration and method of payment for the issuance
of Ordinary Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
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(a) Procedure for Exercise Rights as a Shareholder. Any Option
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granted hereunder shall be exercisable according to the terms of the
Plan and at such times and under such conditions as determined by the
Administrator and set forth in the Option Agreement.
An Option may not be exercised for a fraction of an Ordinary Share.
An Option shall be deemed exercised when the Company receives: (i)
written notice of exercise (in accordance with the Option Agreement)
from the person entitled to exercise the Option, and (ii) full
payment for the Ordinary Shares with respect to which the Option is
exercised. Full payment may consist of any consideration and method
of payment authorized by the Administrator and permitted by the
Option Agreement and the Plan and permitted under the Applicable
Laws. Ordinary Shares issued upon exercise of an Option shall be
issued in the name of the Optionee or, if requested by the Optionee,
in the name of the Optionee and his or her spouse or in the name of a
nominee of the Optionee. Until the share certificate evidencing such
Ordinary Shares is issued (as evidenced by the entry of the name of
the purchaser of such Option Shares in the Register of Members of the
Company) no right to vote or receive dividends or any other rights as
a shareholder shall exist with respect to the Optioned Share,
notwithstanding the exercise of the Option. The Company shall issue
(or cause to be issued) such share certificate promptly after the
Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the share
certificate is issued, except as provided in Section 12 of the Plan.
Exercising an Option in any manner shall decrease the number of
Ordinary Shares thereafter available, both for the purposes of the
Plan and for sale under the Option, by the number of Ordinary Shares
as to which the Option is exercised.
(b) Termination of Employment Relationship, Directorship or
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Consulting Relationship. Upon termination of an Optionee's Continuous
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Status as an Employee, Director or Consultant, other than upon the
Optionee's death or Disability, the Optionee may exercise his or her
Option, but only within such period of time as is specified in the
Notice of Grant, and only to the extent that the Optionee was
entitled to exercise it at the date of termination (but in no event
later than the expiration of the term of such Option as set forth in
the Notice of Grant). In the absence of a specified time in the
Notice of Grant, the Option shall remain exercisable for 90 days
following the Optionee's termination of Continuous Status as an
Employee, Director or Consultant. In the case of an Incentive Share
Option, such period of time shall not exceed ninety (90) days from
the date of termination. If, at the date of termination, the Optionee
is not entitled to exercise his or her entire Option, the Ordinary
Shares covered by the unexercisable portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Ordinary Shares
covered by such Option shall revert to the Plan.
(c) Disability of Optionee. In the event that an Optionee's Continuous
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Status as an Employee, Director or Consultant terminates as a result
of the Optionee's Disability, the Optionee may exercise his or her
Option at any time within twelve (12) months from the date of such
termination, but only to the extent that the Optionee was entitled to
exercise it at the date of such termination (but in no event later
than the expiration of the term of such Option as set forth in the
Notice of Grant). If, at the date of termination, the Optionee is
not entitled to exercise his or her entire Option, the Ordinary
Shares covered by the unexercisable portion of the Option shall
revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the
Option shall terminate, and the Ordinary Shares covered by such
Option shall revert to the Plan.
(d) Death of Optionee. In the event of the death of an Optionee, the
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Option may be exercised at any time within twelve (12) months
following the date of death (but in no event later than the
expiration of the term of such Option as set forth in the Notice of
Grant), 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 that the Optionee was entitled to exercise the Option at
the
date of death. If, at the time of death, the Optionee was not
entitled to exercise his or her entire Option, the Ordinary Shares
covered by the unexercisable portion of the Option shall immediately
revert to the Plan. If, after death, the Optionee's estate or a
person who acquired the right to exercise the Option by bequest or
inheritance does not exercise the Option within the time specified
herein, the Option shall terminate, and the Ordinary Shares covered
by such Option shall revert to the Plan.
11. Non-Transferability of Options. Unless determined otherwise by the
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Administrator, 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. If the Administrator makes an Option
transferable, such Option shall contain such additional terms and
conditions as the Administrator deems appropriate.
12. Adjustments Upon Changes in Capitalization, Dissolution, Merger, Asset
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Sale or Change of Control.
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(a) Changes in Capitalization. Subject to any required action by the
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shareholders of the Company, the number of Ordinary Shares covered by
each outstanding Option, and the number of Ordinary Shares which have
been authorized for issuance under the Plan but as to which no
Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price
per Ordinary Share covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number
of issued Ordinary Shares resulting from a share subdivision, reverse
share subdivision, scrip dividend, combination or reclassification of
Ordinary Shares, or any other increase or decrease in the number of
issued Ordinary Shares effected (subject to Applicable Laws) 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 any class,
or securities convertible into shares of any class, shall affect, and
no adjustment by reason thereof shall be made with respect to, the
number or price of Ordinary Shares subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed dissolution
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or liquidation of the Company,
to the extent than an Option has not been previously exercised, it
will terminate immediately prior to the consummation of such proposed
action. 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 or her
Option as to all or any part of the Optioned Share, including
Ordinary Shares as to which the Option would not otherwise be
exercisable.
(c) Merger or Asset Sale. In the event of a merger of the Company with
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or into another corporation, or the sale of substantially all of the
assets of the Company, each outstanding Option shall be assumed or an
equivalent option shall be substituted by the successor corporation
or a Parent or Subsidiary of the successor corporation. In the event
that the successor corporation refuses to assume or substitute for
the options, the Optionee shall fully vest in and have the right to
exercise the Option as to all of the Optioned Shares, including
Ordinary Shares as to which it would not otherwise be vested or
exercisable. If an Option becomes fully vested and exerciseable in
lieu of assumption or substitution in the event of a merger or sale
of assets, the Administrator shall notify the Optionee that the
Option shall be fully exercisable for a period of fifteen (15) days
from the date of such notice, and the Option will terminate upon the
expiration of such period. For the purposes of this paragraph, the
Option shall be considered assumed if, following the merger or sale
of assets, the Option confers the right to purchase, for each
Ordinary Share of Optioned Share subject to the Option immediately
prior to the merger or sale of assets, the consideration (whether
share, cash or other securities or property) received in the merger
or sale of assets by holders of Ordinary Shares for each Ordinary
Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Ordinary
Shares); provided, however, that if such consideration received in
the merger or sale of assets was not solely ordinary share(s) (or its
equivalent) of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation,
provide for the consideration to be received upon the exercise of the
Option, for each Ordinary Share of Optioned Share subject to the
Option, to be solely ordinary share(s) (or its equivalent) of the
successor corporation or its Parent equal in fair market value to the
per share consideration received by holders of Ordinary Shares in the
merger or sale of assets.
13. Date of Grant. The date of grant of an Option shall be, for all purposes,
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the date on which the Administrator makes the determination granting such
Option, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.
14. Amendment and Termination of Plan
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(a) Amendment and Termination. The Board may at any time amend, alter,
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suspend or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain shareholder approval
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of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
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suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and
the Administrator, which agreement must be in writing and signed by
the Optionee and the Company.
15. Conditions Upon Issuance of Shares.
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(a) Legal Compliance. Ordinary Shares shall not be issued pursuant to
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the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Ordinary Shares shall comply with
Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of an
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Option, the Company may require the person exercising such Option to
represent and warrant at the time of any such exercise that the
Ordinary Shares are being purchased only for investment and without
any present intention to sell or distribute such Ordinary Shares if,
in the opinion of counsel for the Company, such a representation is
required.
16. Liability of Company.
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(a) Inability to Obtain Authority. The inability of the Company to
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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 Ordinary Shares hereunder, shall
relieve the Company of any liability in respect of the failure to
issue or sell such Ordinary Shares as to which such requisite
authority shall not have been obtained.
(b) Grants Exceeding Allotted Ordinary Shares. If the Optioned Share
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covered by an Option exceeds, as of the date of grant, the number of
Ordinary Shares which may be issued under the Plan without additional
shareholder approval, such Option shall be void with respect to such
excess Optioned Share, unless shareholder approval of an amendment
sufficiently increasing the number of Ordinary Shares subject to the
Plan is timely obtained in accordance with Section 14(b) of the Plan.
17. Reservation of Ordinary Shares. The Company, during the term of this
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Plan, will at all times reserve and keep available such number of
authorized Ordinary Shares as shall be sufficient to satisfy the
requirements of the Plan.
18. Shareholder Approval. Continuance of the Plan shall be subject to
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approval by the shareholders of the Company within twelve (12) months
before or after the date the Plan is adopted. Such shareholder approval
shall be obtained in the manner and to the degree required under Applicable
Laws.
KNOWLEDGE WELL LIMITED
1998 SHARE OPTION PLAN
SHARE OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Option Agreement.
I. NOTICE OF SHARE OPTION GRANT
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[Optionee's Name and Address]
You have been granted an option to purchase Ordinary Shares of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Grant Number ___________________________
Date of Grant___________________________
Vesting Commencement Date ___________________________
Exercise Price per Ordinary Share $
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Total Number of Ordinary Shares
Granted ___________________________
Total Exercise Price $
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Type of Option: ___ Incentive Share Option
___ Non-statutory Share
Option
Term/Expiration Date: ___________________________
Vesting Schedule:
- ----------------
This Option may be exercised, in whole or in part, in accordance with the
following schedule:
Service Period:
- --------------
The service period in respect of which this Option has been granted is as
follows:
Termination Period:
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This Option may be exercised for 90 days after termination of the Optionee's
employment relationship, directorship or consulting relationship with the
Company. Upon the death or Disability of the Optionee, this Option may be
exercised for such longer period as provided in the Plan. In the event of the
Optionee's change in status from Employee to Consultant or Consultant to
Employee, this Option Agreement shall remain in effect. In no event shall this
Option be exercised later than the Term/Expiration Date as provided above.
II. AGREEMENT
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1. Grant of Option. The Plan Administrator of the Company hereby grants to
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the Optionee named in the Notice of Grant attached as Part I of this Agreement
(the "Optionee") an option (the "Option") to purchase the number of Ordinary
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the Plan, which are incorporated herein by reference. Subject to
Section 14(c) of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option Agreement,
the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as as Incentive Share Option ("ISO"), this
Option is intended to qualify as an incentive share option under Section 422 of
the Code. However, if this Option is intended to be an Incentive Share Option,
to the extent that it exceeds the $100,000 rule of Code Section 422(d) it shall
be treated as a Non-statutory Share Option ("NSO").
2. Exercise of Option
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(a) Right to Exercise. This Option is exercisable during its term in
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accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement. In the event
of the Optionee's death, Disability or other termination of the Optionee's
employment relationship, directorship or consulting relationship, the
exercisability of the Option is governed by the applicable provisions of
the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of an exercise
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notice, in the form attached as Exhibit A (the "Exercise Notice"), which
---------
shall state the election to exercise the Option, the number of Ordinary
Shares in respect of which the Option is being exercised (the "Exercised
Shares"), and such other representations and agreements as may be required
by the Company pursuant to the provisions of the Plan. The Exercise Notice
shall be signed by the Optionee and shall be delivered by hand or by
certified mail or courier to the Secretary of the
Company. The Exercise Notice shall be accompanied by payment of the
aggregate Exercise Price as to all Exercised Shares. This Option shall be
deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price.
No Ordinary Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with Applicable Laws. Assuming
such compliance, for income tax purposes, the Exercised Shares shall be
considered transferred to the Optionee on the date the Option is exercised
with respect to such Exercised Shares.
3. Optionee's Representations. In the event the Ordinary Shares have not been
---------------------------
registered under the Securities Act of 1933, as amended, at the time this
Option is exercised the Optionee shall, if required by the Company,
concurrently with the exercise of all or any portion of this Option,
deliver to the Company his or her Investment Representation Statement in
the form attached hereto as Exhibit B.
4. Lock-Up Period. The Optionee hereby agrees that, if so requested by the
---------------
Company or any representative of the underwriters (the "Managing
Underwriter") in connection with any registration of the offering of any
securities of the Company under the Securities Act, the Optionee shall not
sell or otherwise transfer any Ordinary Shares or other seucrities 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 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.
5. Method of Payment. Payment of the aggregate Exercise Price shall be by any
-----------------
of the following, or a combination thereof, at the election of the
Optionee:
(a) cash; or
(b) check; or
(c) delivery of a properly executed Exercise Notice together with such
other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay
the Exercise Price.
6. Non-Transferability of Option. This Option may not be transferred in any
-----------------------------
manner otherwise than by will or by the laws of descent or distribution on
intestacy and may be exercised during the lifetime of Optionee only by the
Optionee. The terms of the Plan and this Option Agreement shall be binding
upon the executors, administrators, heirs, successors and assigns of the
Optionee.
7. Term of Option. This Option may be exercised only within the term set out
--------------
in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
8. Tax Consequences. Some of the United States federal tax consequences
----------------
relating to this Option, as of the date of this Option, are set forth
below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND IS BASED ON THE TAX
LAWS AND REGULATIONS IN EFFECT AS OF FEBRUARY 28, 1998 WHICH LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX
ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
OPTIONEES WHO ARE RESIDENTS OF IRELAND OR MAY BE OTHERWISE SUBJECT TO TAX
LAWS OF OTHER JURISDICTIONS SHOULD CONSULT A TAX ADVISER WITH RESPECT TO
SUCH TAX LAWS BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercising the Option.
---------------------
(i) Non-statutory Share Option. The Optionee may incur regular
--------------------------
United States federal income tax and certain state income tax
liabilities upon exercise of an NSO. The Optionee will be
treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the
Fair Market Value of the Exercised Shares on the date of
exercise over their aggregate Exercise Price. If the Optionee
is an Employee or a former Employee, the Company will be
required to withhold from his or her compensation or collect
from the Optionee and pay to the applicable taxing authorities
an amount in cash equal to a percentage of this compensation
income at the time of exercise, and may refuse to honor the
exercise and refuse to deliver Ordinary Shares if such
withholding amounts are not delivered at the time of exercise.
(ii) Incentive Share Option. If this Option qualifies as an ISO, the
----------------------
Optionee will have no regular United States federal income tax
or state income tax liability upon its exercise, although the
excess, if any, of the Fair Market Value of the Exercised Shares
on the date of exercise over their aggregate Exercise Price will
be treated as an adjustment to alternative minimum taxable
income for United States federal tax purposes and may subject
the
Optionee to alternative minimum tax in the year of exercise. In
the event that the Optionee undergoes a change of status from
Employee to Consultant, any Incentive Share Option of the
Optionee that remains unexercised shall cease to qualify as an
Incentive Share Option and will be treated for tax purposes as a
Non-statutory Share Option on the ninety-first (91st) day
following such change of status.
(b) Disposition of Shares.
---------------------
(i) NSO. If the Optionee holds NSO Ordinary Shares between 12 and
----
18 months, any gain realised on disposition of the Ordinary
Shares will be treated as long-term capital gains taxed at a
maximum rate of 28% for federal income tax purposes. If the
Optionee holds the NSO Ordinary Shares for more than 18 months
after exercise, any long-term capital gain will be taxed at a
maximum rate of 20%. Even more favourable rates may apply after
the year 2000 on an elective basis and for securities held for
more than five years from such date under certain circumstances.
(ii) ISO. If the Optionee holds ISO Ordinary Shares for at least one
---
year after exercise and two years after the grant date, any gain
realised on disposition of the Ordinary Shares will be treated
as long-term capital gains taxed at a maximum rate of 28% for
federal income tax purposes. If the Optionee holds the ISO
Ordinary Shares for at least 18 months after exercise and two
years after the grant date, any long-term capital gain will be
taxed at a maximum rate of 20% for most taxpayers. Even more
favourable rates may apply after the year 2000 for securities
held for more than five years from such date under certain
circumstances. If the Optionee disposes of ISO Ordinary Shares
within one year after exercise or two years after the grant
date, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the
extent of the excess, if any, of the lesser of (A) the
difference between the Fair Market Value of the Ordinary Shares
acquired on the date of exercise and the aggregate Exercise
Price, or (B) the difference between the sale price of such
Ordinary Shares and the aggregate Exercise Price. Any additional
gain or loss will be treated as long term or short term capital
gain, depending on the holding period.
(c) Notice of Disqualifying Disposition of ISO Ordinary Shares. If
----------------------------------------------------------
the Optionee sells or otherwise disposes of any of the Ordinary Shares
acquired pursuant to an ISO on or before the later of (i) two years
after the grant date, or (ii) one year after the exercise date, the
Optionee shall immediately notify the Company in writing of such
disposition. The Optionee agrees that he or she may be subject to
income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Ordinary Shares by
payment in cash or out of the current earnings paid to the Optionee.
9. Entire Agreement: Governing Law. The Plan is incorporated herein by
--------------------------------
reference. The Plan and this Option Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, and may not
be modified adversely to the Optionee's interest except by means of a
writing signed by the Company and Optionee. This Agreement is subject to
and conditional upon compliance with the Applicable Laws, in particular,
the laws of Ireland.
10. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND AGREES THAT
----------------------------------
THE VESTING OF ORDINARY SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS
EARNED ONLY BY CONTINUING AS AN EMPLOYEE, DIRECTOR OR CONSULTANT AT THE
WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS
OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND
AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE
VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED
PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE, DIRECTOR OR CONSULTANT FOR
THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN
ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
OPTIONEE'S RELATIONSHIP AS AN EMPLOYEE, DIRECTOR OR CONSULTANT AT ANY TIME,
WITH OR WITHOUT CAUSE.
By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by
the terms and conditions of the Plan and this Option Agreement. Optionee
has reviewed the Plan and this Option Agreement in their entirety, has had
an opportunity to obtain the advice of counsel prior to executing this
Option Agreement and fully understands all provisions of the Plan and
Option Agreement. Optionee hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Administrator upon any
questions relating to the Plan and Option Agreement. Optionee further
agrees to notify the Company upon any change in the residence address
indicated below.
OPTIONEE: KNOWLEDGE WELL LIMITED
_________________________ By: _________________________
__________________
Signature
_________________________ Title:
______________________
Print Name
_________________________
Residence Address
_________________________
_________________________
EXHIBIT A
---------
1998 SHARE OPTION PLAN
EXERCISE NOTICE
Knowledge Well Group Limited
Attention: Secretary
1. Exercise of Option. Effective as of today, _______________
------------------
19__, the undersigned ("Purchaser") hereby elects to purchase
_______________ ordinary shares (the "Shares") in the capital of Knowledge
Well Group Limited (the "Company") such purchase to be made under and
pursuant to the 1998 Share Option Plan (the "Plan") and the Share Option
Agreement dated _____________________ 19__ (the "Option Agreement"). The
purchase price for the Shares shall be US$________, as required by the
Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the full
-------------------
purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser has
----------------------------
received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. Rights as a Shareholder. Until the entry of the Purchaser (or, if
-----------------------
requested, the Optionee and his or her spouse or his or her nominee) in the
Register of Members of the Company occurs, no right to vote and receive
dividends or any other rights as a shareholder shall exist with respect to
the Option Shares, notwithstanding the exercise of the Option. A share
certificate for the number of Shares so acquired shall be issued to the
Purchaser (or his or her nominee) as soon as practicable after exercise of
the Option. No adjustment shall be made for a dividend or other right for
which the record date is prior to the date the share certificate is issued,
except as provided in Section 12 of the Plan.
5. Purchaser hereby elects to have the Shares issued in the name of (check
one):
_____ of
as
! ! Purchaser's nominee to hold the Shares on
-----
Purchaser's behalf and subject to Purchaser's directions. (If
selected, the share certificate shall be mailed at Purchaser's risk
to the address of the nominee specified above).
_____ Purchaser. (If selected, the share certificate
! ! shall be mailed at Purchaser's risk to the address specified
-----
below).
_____ Purchaser and his or her spouse (if selected, the
! ! share certificate shall be mailed at the Purchaser's risk to the
-----
address specified below).
6. Company's Right of First Refusal. Before any Shares held by Purchaser or
---------------------------------
any transferee (either being sometimes referred to herein as the "Holder")
may be sold or otherwise transferred (including transfer by gift or
operation of law), the Company or its assignee(s) shall have a right of
first refusal to purchase the Shares on the terms and conditions set forth
in this Section (the "Right of First Refusal").
(a) Notice of Proposed Transfer. The Holder of the Shares shall
----------------------------
deliver to the Company a written notice (the "Notice") stating:
(i) the Holder's bona fide intention to sell or otherwise
transfer such Shares;
(ii) the name of each proposed purchaser or other transferee
("Proposed Transferee");
(iii) the number of Shares to be transferred to each Proposed
Transferee; and
(iv) the bona fide cash price or other consideration for which
the Holder proposes to transfer the Shares (the "Offered
Price");
and the Holder shall offer the Shares at the Offered Price to the
Company or its assignee(s).
(b) Exercise of Right of First Refusal. At any time within thirty (30)
-----------------------------------
days after receipt of the Notice, the Company and/or its
assignee(s) may, by giving written notice to the Holder, elect to
purchase all, but not less than all, of the Shares proposed to be
transferred to any one or more of the Proposed Transferees, at the
purchase price determined in accordance with sub-section (c) below.
(c) Purchase Price. The purchase price ("Purchase Price") for the
---------------
Shares purchased by the Company or its assignee(s) under this
Section shall be the Offered Price. If the Offered Price includes
consideration other than cash, the cash equivalent value of the
non-cash consideration shall be determined by the Board of
Directors of the Company in good faith.
(d) Payment. Payment of the Purchase Price shall be made, at the
--------
option of the Company or its assignee(s), in cash (by check), by
cancellation
of all or a portion of any outstanding indebtedness of the Holder
to the Company (or, in the case of repurchase by an assignee, to
the assignee), or by any combination thereof within 30 days after
receipt of the Notice or in the manner and at the times set forth
in the Notice.
(e) Holder's Right to Transfer. If all of the Shares proposed in the
---------------------------
Notice to be transferred to a given Proposed Transferee are not
purchased by the Company and/or its assignee(s) as provided in this
Section, then the Holder may sell or otherwise transfer such Shares
to that Proposed Transferee at the Offered Price or at a higher
price, provided that such sale or other transfer is consummated
within 120 days after the date of the Notice, that any such sale or
other transfer is effected in accordance with any applicable
securities laws and that the Proposed Transferee agrees in writing
that the provisions of this Section shall continue to apply to the
Shares in the hands of such Proposed Transferee. If the Shares
described in the Notice are not transferred to the Proposed
Transferee within such period, a new Notice shall be given to the
Company, and the Company and/or its assignee(s) shall again be
offered the Right of First Refusal before any Shares held by the
Holder may be sold or otherwise transferred.
(f) Exception for Certain Family Transfers. Anything to the contrary
---------------------------------------
contained in this Section notwithstanding, the transfer of any or
all of the Shares during the Optionee's lifetime or on the
Optionee's death by will or intestacy to the Optionee's immediate
family or a trust for the benefit of the Optionee's immediate
family shall be exempt from the provisions of this Section.
"Immediate Family" as used herein shall mean spouse, lineal
descendant or antecedent, father, mother, brother or sister. In
such case, the transferee or other recipient shall receive and hold
the Shares so transferred subject to the provisions of this Section
and there shall be no further transfer of such Shares except in
accordance with the terms of this Section.
(g) Termination of Right of First Refusal. The Right of First Refusal
--------------------------------------
shall terminate as to any Shares upon the first sale of Ordinary
Shares of the Company to the general public pursuant to a
registration statement filed with and declared effective by the
Securities and Exchange Commission under the Securities Act of
1933, as amended.
7. Tax Consultation. Purchaser understands that Purchaser may suffer adverse
----------------
tax consequences as a result of Purchaser's purchase or disposition of the
Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company
for any tax advice.
8. Restrictive Legends and Stop-Transfer Orders.
---------------------------------------------
(a) Legends. Purchaser understands and agrees that the Company shall
--------
cause the legends set forth below or legends substantially
equivalent thereto, to be placed upon any certificate(s) evidencing
ownership of the Shares together with any other legends that may be
required by the Company or by state or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR,
IN THE OPINION OF COMPANY COUNSEL SATISFACTORY TO THE ISSUER
OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST
REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH
IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL
HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT
THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER
RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON
TRANSFEREES OF THESE SHARES.
(b) Stop-Transfer Notices. Purchaser 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 Agreement; or
(ii) to treat as owner of such Shares or to accord the right to
vote or pay dividends to any purchaser or other transferee
to whom such Shares shall have been so transferred.
9. Entire Agreement; Governing Law. The Plan and Option Agreement are
--------------------------------
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Purchaser with respect to
the subject matter hereof, and may not be modified adversely to the
Purchaser's interest except by means of a writing signed by the Company and
Purchaser. This Agreement is subject to and conditional upon compliance
with Applicable Laws, in particular, the laws of Ireland.
10. Successors and Assigns. The Company may assign any of its rights under
-----------------------
this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject
to the restrictions on transfer herein set forth, this Agreement shall be
binding upon the Purchaser and his or her heirs, executors, administrators,
successors and assigns.
11. Interpretation. Any dispute regarding the interpretation of this Agreement
---------------
shall be submitted by the Purchaser or by the Company forthwith to the
Administrator which shall review such dispute at its next regular meeting.
The resolution of such a dispute by the Administrator shall be final and
binding on all parties.
Submitted by: Accepted by:
PURCHASER: KNOWLEDGE WELL GROUP LIMITED
_________________________ By:
______________________
Signature
_________________________ Its: COMPANY SECRETARY
-------------------
Print Name
Address: Address:
------- -------
__________________________
__________________________
__________________________
EXHIBIT B
---------
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE:
COMPANY: KNOWLEDGE WELL GROUP LIMITED
SECURITY: Ordinary Shares
AMOUNT:
DATE:
In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and financial condition
and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. Optionee is
acquiring these Securities for investment for Optionee's own account only
and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
(b) Optionee acknowledges and understands that the Securities constitute
"restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this
connection, Optionee understands that, in the view of the Securities and
Exchange Commission, the statutory basis for such exemption may be
unavailable if Optionee's representation was predicated solely upon a
present intention to hold these Securities for the minimum capital gains
period specified under tax statutes, for a deferred sale, for or until an
increase, or decrease in the market price of the Securities, or for a
period of one year or any other fixed period in the future. Optionee
further understands that the Securities must be held indefinitely unless
they are subsequently registered under the Securities Act or an exemption
from such registration is available. Optionee further acknowledges and
understands that the Company is under no obligation to register the
Securities. Optionee understands that the certificate evidencing the
Securities will be imprinted with 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
legend required under applicable state securities laws.
(c) Optionee is familiar with the provisions of Rule 701 and Rule 144, each
promulgated under the Securities Act, which, in substance, permit limited
public resales of "restricted securities" acquired, directly or indirectly
from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of the grant of the Option to the
Optionee, the exercise will be exempt from registration under the
Securities Act. In the event the Company becomes subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
ninety (90) days thereafter (or such longer period as any market stand-off
agreement may require) the Securities exempt under Rule 701 may be resold,
subject to the satisfaction of certain of the conditions specified by Rule
144, including:
(1) the resale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker (as
said term is defined under the Securities Exchange Act of 1934); and
in the case of an affiliate,
(2) the availability of certain public information about the Company;
(3) the amount of Securities being sold during any three month period
not exceeding the limitations specified in Rule 144(e); and
(4) the timely filing of a Form 144, if applicable.
In any event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires
the resale to occur not less than one year after the later of the date the
Securities were sold by the Company or the date the Securities were sold by
an affiliate of the Company, within the meaning of Rule 144; and in the
case of acquisition of the Securities by an affiliate, or by a non-
affiliate who subsequently holds the Securities less than two years, the
satisfaction of the conditions set forth in sections (1), (2), (3) and (4)
of the paragraph immediately above.
(d) Optionee further understands that in the event all of the applicable
requirements of Rule 701 or 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rules
144 and 701 are not exclusive, the Staff of the Securities and Exchange
Commission has expressed its opinion that persons proposing to sell private
placement securities other than in a registered offering and otherwise than
pursuant to Rules 144 or 701 will have a substantial burden of proof in
establishing that an exemption from registration is available for such
offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk. Optionee
understands that no assurances can be given that any such other
registration exemption will be available in such event.
Signature of Optionee:
____________________________
Date: ______________ 19_____