EXHIBIT 10.2.1
MISSION CRITICAL SOFTWARE, INC.
1997 STOCK OPTION PLAN
STOCK 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 STOCK OPTION GRANT
[Optionee's Name and Address]
The undersigned Optionee has been granted an Option to purchase Common
Stock 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 Share $________________________
Total Number of Shares Granted ________________________
Total Exercise Price $________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: ________________________
Vesting Schedule:
This Option shall be exercisable, in whole or in part, according to the
following vesting schedule:
25% of the Shares subject to the Option shall vest twelve months after the
Vesting Commencement Date, and 1/48 of the Shares subject to the Option shall
vest each month thereafter, subject to Optionee's continuing to be a Service
Provider on such dates.
TERMINATION PERIOD:
This Option shall be exercisable for three (3) months after Optionee ceases
to be a Service Provider. Upon Optionee's death or disability, this Option may
be exercised for such longer period as provided in the Plan. In no event may
Optionee exercise this Option after the Term/Expiration Date as provided above.
II. AGREEMENT
1. GRANT OF OPTION. The Plan Administrator of the Company hereby grants to
the Optionee named in the Notice of Grant (the "Optionee"), an option (the
"Option") to purchase the number of Shares set forth in the Notice of
Grant, at the exercise price per Share set forth in the Notice of Grant
(the "Exercise Price"), and subject to the terms and conditions of the
Plan, which is incorporated herein by reference. Subject to Section 13(c)
of the Plan, in the event of a conflict between the terms and conditions of
the Plan and this Option Agreement, the terms and conditions of the Plan
shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option as
defined in Section 422 of the Code. Nevertheless, to the extent that it exceeds
the $100,000 rule of Code Section 422(d), this Option shall be treated as a
Nonstatutory Stock Option ("NSO").
2. EXERCISE OF OPTION.
a. RIGHT TO EXERCISE. This Option shall be exercisable during its
term in accordance with the Vesting Schedule set out in the Notice
of Grant and with the applicable provisions of the Plan and this
Option Agreement.
b. METHOD OF EXERCISE. This Option shall be exercisable by delivery
of an exercise notice in the form attached as Exhibit A (the
"Exercise Notice") which shall state the election to exercise the
Option, the number of Shares with respect to which the Option is
being exercised, and such other representations and agreements as
may be required by 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 the aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of an Option unless
such issuance and such exercise complies with Applicable laws. Assuming such
compliance, for income tax purposes the Shares shall be considered transferred
to the Optionee on the date on which the Option is exercised with respect to
such Shares.
3. OPTIONEE'S REPRESENTATIONS. In the event the 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, and shall read the applicable rules of the
Commissioner of Corporations attached to such Investment Representation
Statement.
4. LOCK-UP PERIOD. 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, Optionee shall not sell
or otherwise transfer any Shares or other securities of the Company during
the 180-day period (or such other period as may be requested in writing by
the Managing Underwriter and agreed to in writing by the Company) (the
"Market Standoff Period") following the effective date of a registration
statement of the Company filed under the Securities Act. Such restriction
shall apply only to the first registration statement of the Company to
become effective under the 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 check;
b. consideration received by the Company under a formal cashless
exercise program adopted by the Company in connection with the Plan;
or
c. surrender of other Shares which, (i) in the case of 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 (ii) have a Fair Market Value on the date of surrender equal
to the aggregate Exercise Price of the Exercised Shares.
6. RESTRICTIONS ON EXERCISE. This Option may not be exercised until such
time as the Plan has been approved by the stockholders of the Company, or if
the issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any Applicable
Law.
7. 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
and may be exercised during the lifetime of Optionee only by Optionee. The
terms of the Plan and this Option
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Agreement shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
8. 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.
9. TAX CONSEQUENCES. Set forth below is a brief summary as of the date of
this Option of some of the federal tax consequences of exercise of this
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE
OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
a. EXERCISE OF ISO. If this Option qualifies as an ISO, there will
be no regular federal income tax liability upon the exercise of the
Option, although the excess, if any, of the Fair Market Value of the
Shares on the date of exercise over the Exercise Price will be
treated as an adjustment to the alternative minimum tax for federal
tax purposes and may subject the Optionee to the alternative minimum
tax in the year of exercise.
b. EXERCISE OF NONSTATUTORY STOCK OPTION. There may be a regular
federal income tax liability upon the exercise of a Nonstatutory
Stock Option. 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 Shares on the
date of exercise over the Exercise Price. If Optionee is an Employee
or a former Employee, the Company will be required to withhold from
Optionee's compensation or collect from 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 Shares if
such withholding amounts are not delivered at the time of exercise.
c. DISPOSITION OF SHARES. In the case of an NSO, if Shares are
held for at least one year, any gain realized on disposition of the
Shares will be treated as long-term capital gain for federal income
tax purposes. In the case of an ISO, if Shares transferred pursuant
to the Option are held for at least one year after exercise and of
at least two years after the Date of Grant, any gain realized on
disposition of the Shares will also be treated as long-term capital
gain for federal income tax purposes. If Shares purchased under an
ISO are disposed of within one year after exercise or two years
after the Date of Grant, any gain realized on such disposition will
be treated as compensation income (taxable at ordinary income rates)
to the
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extent of the difference between the Exercise Price and the lesser of (1)
the Fair Market Value of the Shares on the date of exercise, or (2) the
sale price of the Shares. Any additional gain will be taxed as capital
gain, short-term or long-term depending on the period that the ISO Shares
were held.
d. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the Option
granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before
the later of (1) the date two years after the Date of Grant, or (2) the
date one year after the date of exercise, the Optionee shall immediately
notify the Company in writing of such disposition. Optionee agrees that
Optionee may be subject to income tax withholding by the Company on the
compensation income recognized by the Optionee.
10. 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 governed by
the internal substantive laws but not the choice of law rules of Texas..
11. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER 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 A SERVICE PROVIDER 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 A SERVICE
PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that he
or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option and fully
understands all provisions of the Option. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option. Optionee
further agrees to notify the Company upon any change in the residence address
indicated below.
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MISSION CRITICAL SOFTWARE, INC.
_______________________________________
By
_______________________________________
Title
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OPTIONEE'S ACCEPTANCE AND ACKNOWLEDGMENT
Dated:________________________ ________________________________
Residential Address
______________________________ ________________________________
Optionee's Signature City, State, Zip Code
_____ I hereby acknowledge that I am not legally married as of the date of
this Agreement.
_____ I hereby acknowledge that I am legally married as of the date of this
Agreement and, if applicable, by executing this Agreement, my spouse
agrees to be bound by all the terms and conditions of this Agreement.
_____________________________
Spouse's Signature
SPOUSAL SIGNATURE IS REQUIRED FOR RESIDENTS OF COMMUNITY PROPERTY STATES:
ARIZONA, CALIFORNIA, IDAHO, LOUISIANA, NEVADA, NEW MEXICO, TEXAS, WASHINGTON AND
WISCONSIN.
THIS OPTION WILL BECOME EFFECTIVE UPON RECEIPT BY THE COMPANY OF ONE FULLY
EXECUTED COPY OF THIS AGREEMENT
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EXHIBIT A
1997 STOCK OPTION PLAN
EXERCISE NOTICE
Mission Critical Software, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
1. EXERCISE OF OPTION. Effective as of today, ___________, 19__, the
undersigned ("Optionee") hereby elects to exercise Optionee's option to
purchase _________ shares of the Common Stock (the "Shares") of Mission
Critical Software, Inc. (the "Company") under and pursuant to the 1997
Stock Option Plan (the "Plan") and the Stock Option Agreement dated
________, 19 (the "Option Agreement").
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the
full purchase price of the Shares, as set forth in the Option
Agreement.
3. REPRESENTATIONS OF OPTIONEE. Optionee acknowledges that Optionee
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 STOCKHOLDER. Until the issuance of the Shares (as
evidenced by the appropriate entry on the books of the Company or of a
duly authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a stockholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the
Option. The Shares shall be issued to the Optionee as soon as
practicable after the Option is exercised. No adjustment shall be made
for a dividend or other right for which the record date is prior to the
date of issuance except as provided in Section 11 of the Plan.
5. COMPANY'S RIGHT OF FIRST REFUSAL. Before any Shares held by
Optionee 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
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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 subsection (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.
▇. ▇▇▇▇▇▇'▇ 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 assignees 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
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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
Common Stock 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.
6. TAX CONSULTATION. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or
disposition of the Shares. Optionee represents that Optionee has
consulted with any tax consultants Optionee deems advisable in
connection with the purchase or disposition of the Shares and that
Optionee is not relying on the Company for any tax advice.
7. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
a. LEGENDS. Optionee 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
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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. Optionee 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.
8. 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 Optionee and his or her heirs,
executors, administrators, successors and assigns.
9. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee 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.
10. GOVERNING LAW; SEVERABILITY. This Agreement is governed by the
internal substantive laws but not the choice of law rules, of Texas.
11. ENTIRE AGREEMENT. The Plan and Option Agreement are incorporated
herein by reference. This Agreement, the Plan, the Option Agreement and
the Investment Representation Statement 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.
Submitted by: Accepted by:
OPTIONEE: MISSION CRITICAL SOFTWARE, INC.
________________________________ _________________________________
Signature By
________________________________ _________________________________
Print Name Its
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Address: Address:
________________________________ _________________________________
________________________________ _________________________________
_________________________________
Date Received
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EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE:
COMPANY: MISSION CRITICAL SOFTWARE, INC.
SECURITY: COMMON STOCK
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, a legend prohibiting their
transfer
without the consent of the Securities Commissioner of the State of
Texas and any other 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 resale of "restricted securities" acquired,
directly or indirectly from the issuer thereof, in a non-public
offering subject to the satisfaction of certain conditions. Rule 701
provides that if the issuer qualifies under Rule 701 at the time of
the grant of the Option to the 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 the event that the Company does not qualify under Rule 701 at the time
of grant of the Option, then the Securities may be resold in certain limited
circumstances subject to the provisions of Rule 144, which requires the resale
to occur not less than two years 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 three 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.
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e. Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the
transfer of the Securities without the consent of the Securities
Commissioner of the State of Texas.
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Signature of Optionee:
Date:__________________________, 19___
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