Common use of Option Exchanges Clause in Contracts

Option Exchanges. Five minutes following the completion of the transactions contemplated by Section 1.2, (a) each option to purchase shares of USA Common Stock then outstanding shall be exchanged for an option to purchase a number shares of Company Common Stock equal to the number of shares of USA Common Stock set forth in the option agreement governing such option multiplied by the USA Percentage, at an adjusted exercise price equal to the exercise price set forth in such option agreement, divided by the USA Percentage, and the parties hereby determine that (i) the fair market value of the shares of Company Common Stock underlying such new option minus the aggregate exercise price under such new option does not exceed (ii) the fair market value of the shares of USA Common Stock underlying the options to purchase shares of USA Common Stock immediately before the exchange, minus the aggregate exercise price under such exchanged option to purchase USA Common Stock; and (b) each option to purchase LAI Class C Shares then outstanding shall be exchanged for an option to purchase a number shares of Company Common Stock equal to the number of LAI Class C Shares set forth in the option agreement governing such option multiplied by the LAI Percentage, at an adjusted exercise price equal to the exercise price set forth in such option agreement, divided by the LAI Percentage, and the parties hereby determine that (i) the fair market value of the shares of Company Common Stock underlying such new option minus the aggregate exercise price under such new option does not exceed (ii) the fair market value of the LAI Class C Shares underlying the options to purchase LAI Class C Shares immediately before the exchange, minus the aggregate exercise price under such exchanged option to purchase LAI Class C Shares. The following is an example of the foregoing option share amount and exercise price adjustments. This example is provided for illustration purposes only. Assume that a hypothetical holder holds an option to acquire 5,000 shares of USA Common Stock at an exercise price of $0.21 per share and an option to acquire 5,000 LAI Class C Shares at an exercise price of $1.18 per share and that the USA Percentage and LAI Percentage is 15% and 85%, respectively. Based on the foregoing, upon completion of the Reorganization, (a) the option to acquire 5,000 shares of USA Common Stock at an exercise price of $0.21 per share would become an option to acquire 750 shares of Company Common Stock (i.e., 5,000 x 0.15) at an adjusted exercise price of $1.40 (i.e., $0.21 / 0.15), and (b) the option to acquire 5,000 LAI Class C Shares at an exercise price of $1.18 per share would become an option to acquire 4,250 shares of Company Common Stock (i.e., 5,000 x 0.85) at an adjusted exercise price of $1.39 (i.e., $1.18 / 0.85, or $1.39). (c) The Company, LAI and USA will use all commercially reasonable efforts to obtain the written acknowledgement of all holders of options to purchase shares of USA Common Stock and all holders of options to purchase LAI Class C Shares, pursuant to which such holders acknowledge that at the Reorganization Effective Time, pursuant to this Agreement and the 2007 Equity Incentive Plan of the Company, such holders’ options to purchase shares of USA Common Stock and options to purchase LAI Class C Shares will be exchanged for options to purchase shares of Company Common Stock in the manner described in this Section 1.4, without any further act or formality on the part of such holders.