BY EVIDENCE OF COMPLIANCE WITH THE TERMS OF SUCH
AGREEMENTS.
(C)
ABILITY TO BEAR RISK.
THE GRANTEE
COVENANTS THAT THE GRANTEE WILL NOT EXERCISE ALL OR ANY OF THE OPTIONS UNLESS
(I) THE FINANCIAL SITUATION OF THE GRANTEE IS SUCH THAT THE GRANTEE CAN AFFORD
TO BEAR THE ECONOMIC RISK OF HOLDING THE EXERCISE SHARES FOR AN INDEFINITE
PERIOD AND (II) THE GRANTEE CAN AFFORD TO SUFFER THE COMPLETE LOSS OF THE
GRANTEE'S INVESTMENT IN THE EXERCISE SHARES.
(D)
RESTRICTION ON SALE UPON PUBLIC OFFERING.
THE GRANTEE AGREES THAT, IN THE EVENT THAT THE COMPANY FILES A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT WITH RESPECT TO AN UNDERWRITTEN PUBLIC
OFFERING OF ANY SHARES OF ITS CAPITAL STOCK, THE GRANTEE
9
WILL NOT EFFECT ANY PUBLIC SALE OR DISTRIBUTION OF ANY SHARES OF THE COMMON
STOCK (OTHER THAN AS PART OF SUCH PUBLIC OFFERING), INCLUDING BUT NOT LIMITED
TO, PURSUANT TO RULE 144 OR RULE 144A UNDER THE SECURITIES ACT, DURING THE 20
DAYS PRIOR TO AND THE 180 DAYS (OR SUCH LESSER NUMBER OF DAYS THAT THE MANAGING
UNDERWRITER MAY REQUIRE) AFTER THE EFFECTIVE DATE OF SUCH REGISTRATION
STATEMENT.
THE GRANTEE FURTHER UNDERSTANDS AND ACKNOWLEDGES THAT ANY SALE,
TRANSFER OR OTHER DISPOSITION OF THE EXERCISE SHARES BY HIM FOLLOWING A PUBLIC
OFFERING WILL BE SUBJECT TO COMPLIANCE WITH, AND MAY BE LIMITED UNDER, THE
FEDERAL SECURITIES LAWS AND/OR STATE "BLUE SKY" LAWS.
8.
CHANGE IN CONTROL.
UNLESS OTHERWISE
DETERMINED BY THE COMMITTEE, IN THE EVENT OF A CHANGE IN CONTROL, EACH
OUTSTANDING OPTION EXERCISABLE PURSUANT TO SECTION 2(B) SHALL BE CANCELED IN
EXCHANGE FOR A PAYMENT IN CASH OF AN AMOUNT EQUAL TO THE EXCESS, IF ANY, OF THE
CHANGE IN CONTROL PRICE OVER THE OPTION PRICE; PROVIDED THAT IF THE HOLDERS OF
COMMON STOCK RECEIVE PROPERTY OTHER THAN CASH AS A RESULT OF A CHANGE OF
CONTROL, THEN SUCH PAYMENT SHALL BE MADE IN SUCH OTHER PROPERTY IN THE SAME
PROPORTION AS THE HOLDERS OF COMMON STOCK RECEIVE LESS THE AGGREGATE OPTION
PRICE IN CONNECTION WITH SUCH CHANGE OF CONTROL.
9.
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.
THE COMPANY REPRESENTS AND WARRANTS TO THE GRANTEE THAT (A) THE
COMPANY HAS BEEN DULY INCORPORATED AND IS AN EXISTING CORPORATION IN GOOD
STANDING UNDER THE LAWS OF THE STATE OF ITS INCORPORATION, (B) THIS AGREEMENT
HAS BEEN DULY AUTHORIZED, EXECUTED AND DELIVERED BY THE COMPANY AND CONSTITUTES
A VALID AND LEGALLY BINDING OBLIGATION OF THE COMPANY ENFORCEABLE AGAINST THE
COMPANY IN ACCORDANCE WITH ITS TERMS, AND (C) THE EXERCISE SHARES, WHEN ISSUED,
DELIVERED AND PAID FOR, UPON EXERCISE OF THE OPTIONS IN ACCORDANCE WITH THE
TERMS HEREOF, THE JOINDER AGREEMENT AND THE STOCK SUBSCRIPTION AGREEMENT, WILL
BE DULY AUTHORIZED, VALIDLY ISSUED, FULLY PAID AND NONASSESSABLE, AND FREE AND
CLEAR OF ANY LIENS OR ENCUMBRANCES OTHER THAN THOSE CREATED PURSUANT TO THIS
AGREEMENT, THE SHAREHOLDERS AGREEMENT, THE STOCK SUBSCRIPTION AGREEMENT OR
OTHERWISE IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY.
10.
CAPITAL ADJUSTMENTS.
THE NUMBER AND PRICE
OF THE SHARES COVERED BY