Document:

EX-10.3 Lockup Agreement, dated August 29, 2008

Exhibit 10.3

LOCKUP AGREEMENT

clickNsettle.com, Inc.

4400 Biscayne Boulevard

Suite 950

Miami, FL 33137

Ladies and Gentlemen:

     The undersigned, a holder of equity interests of Cardo Medical, LLC (“Company”),
desires that the Company merge (the “Merger”) with and into a wholly-owned subsidiary of
clickNsettle.com, Inc. (“Parent”). For good and valuable consideration, the undersigned is
entering into this agreement (this “Lock-Up Letter Agreement”) and hereby irrevocably
agrees that following the closing of the Merger, and until the second anniversary of closing of the
Merger (the “Lock-Up Period End Date”), the undersigned will not, directly or indirectly:

     (1) offer for sale, sell, pledge or otherwise dispose of (or enter into any transaction or
device that is designed to, or could be expected to, result in the disposition by any person at any
time in the future of) any shares of Parent’s Common Stock, par value $.001, or any other
securities of Parent convertible into or exercisable or exchangeable for any shares of such Common
Stock which are owned as of the date of this Lock-Up Letter Agreement (collectively, the
“Shares”), including, without limitation, Shares that may be deemed to be beneficially
owned by the undersigned in accordance with the rules and regulations of the U.S. Securities and
Exchange Commission and Shares that may be issued upon exercise of any options or warrants, or
securities convertible into or exercisable or exchangeable for Shares;

     (2) enter into any swap or other derivatives transaction that transfers to another, in whole
or in part, any of the economic benefits or risks of ownership of Shares, whether any such
transaction is to be settled by delivery of Shares or other securities, in cash or otherwise;

     (3) make any demand for or exercise any right or cause to be filed a registration statement,
including any amendments thereto, with respect to the registration of any Shares or any other
securities of Parent; or

     (4) publicly disclose the intention to do any of the foregoing, for a period commencing on the
date of the closing of the Merger and ending on the Lock-Up Period End Date.

     The restrictions on the actions set forth in sections (1) through (4) above shall not apply
to: (a) transfers of Shares as a bona fide gift; (b) transfers of Shares to any trust,
partnership, limited liability company or other entity for the direct or indirect benefit of the
undersigned or the immediate family of the undersigned; (c) transfers of Shares to any beneficiary
of the undersigned pursuant to a will, trust instrument or other testamentary document or
applicable laws of descent; (d) transfers of Shares to the Company; or (e) transfers of Shares to
any entity directly or indirectly controlled by or under common control with the undersigned;
provided that, in the case of any transfer or distribution pursuant to clause (a), (b), (c), (d) or
(e) above, each donee, distributee or transferee shall sign and deliver to Parent, prior to such
transfer, a lock-up agreement substantially in the form of this Lock-Up Letter Agreement.

 

For purposes of this Lock-Up Letter Agreement, “immediate family” shall mean any relationship
by blood, marriage, domestic partnership or adoption, not more remote than first cousin.

     In addition, the restrictions on the actions set forth in sections (1) through (4) above shall
no loner apply to the Six Hundred Sixty-Seven Thousand Nine Hundred Forty-One (667,941) Shares
(the “Merger Shares”) issued to the undersigned in connection with the closing of the
Merger if the undersigned is terminated from his employment with the Company and/or the Parent
without Cause (as defined below) at any time prior to the Lock-Up Period End Date. If the
undersigned is terminated for Cause, or if the undersigned voluntarily terminates his employment or
resigns from his positions with the Company, the Merger Shares shall continue to be subject to the
restrictions set forth in sections (1) through (4) above. As used herein, the term “Cause”
means an act or omission that constitutes fraud, deceit, intentional misconduct, a knowing
violation of law, recklessness or gross negligence by the undersigned that materially and adversely
has affected or affects the business of the Company and/or the Parent, a material breach by the
undersigned of any of his obligations under any agreement with the Company and/or the Parent, or
material nonperformance of his duties to the Company and/or the Parent.

     In furtherance of the foregoing, Parent and its transfer agent on its behalf are hereby
authorized (i) to decline to make any transfer of securities if such transfer would constitute a
violation or breach of this Lock-Up Letter Agreement and (ii) to imprint on any certificate
representing Shares a legend describing the restrictions contained herein.

     It is understood that if the Merger Agreement entered into in connection with the Merger has
been terminated without the consummation of the Merger, this Lock-Up Letter Agreement shall be
cancelled and of no further force and effect.

     The undersigned understands that the Company will proceed with the Merger in reliance on this
Lock-Up Letter Agreement.

     The undersigned hereby represents and warrants that the undersigned has full power and
authority to enter into this Lock-Up Letter Agreement and that, upon request, the undersigned will
execute any additional documents necessary in connection with the enforcement hereof. Any
obligations of the undersigned shall be binding upon the heirs, personal representatives,
successors and assigns of the undersigned.

     For the avoidance of doubt, nothing herein shall be understood to prevent the undersigned from
taking any of the actions described in sections (1) through (4) above with respect to any shares of
Parent’s Common Stock or other securities of Parent acquired by the undersigned through open market
purchases consummated after the date of this Lock-Up Agreement.

     If the Parent agrees to enter into any agreement with any other holder (or effects a waiver
with the same effect) of Shares who agreed to enter into a lock-up letter agreement with
substantially the same terms as this Lock-Up Letter Agreement to permit such holder to sell Shares
prior to the Lock-Up Period End Date, which sale would otherwise be restricted by this Lock-Up
Letter Agreement, the Parent shall enter into a similar agreement with (or provide a similar waiver
to) the undersigned to provide for the release of a proportionate number of Shares.

[Signature page follows]

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Other than as set forth above, this Lock-Up Letter Agreement shall terminate upon the Lock-Up
Period End Date. This Lock-Up Agreement shall be construed in accordance with, and governed in all
respects by, the laws of the State of Delaware.

	 	 	 	 	 
	 	Very truly yours,

 	 
	 	By:  	/s/ Derrick Romine
 	 
	 	 	Name:  	Derrick Romine 	 
	 	 	Title:  	Chief Financial Officer and Secretary 	 
	 

Dated: August 29, 2008

3EX-10.5 Form of Cardo Medical Nonstatutory Option

Exhibit 10.5

THE SECURITIES REPRESENTED BY THE NONSTATUTORY OPTION AGREEMENT HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND
MAY BE OFFERED AND SOLD ONLY IF REGISTERED AND QUALIFIED PURSUANT TO THE RELEVANT PROVISIONS OF
FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT REGISTRATION AND QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT
REQUIRED.

NOTICE IS HEREBY GIVEN THAT THE SECURITIES REPRESENTED BY THE NONSTATUTORY OPTION AGREEMENT ARE
SUBJECT TO RESTRICTIONS ON TRANSFER WITHOUT THE PRIOR CONSENT OF THE COMPANY.

CARDO MEDICAL, LLC

NONSTATUTORY OPTION

COVER SHEET

     Cardo Medical, LLC, a California limited liability company (the “Company”), hereby grants an
option (the “Option”) to purchase the number of Units indicated below, as defined in the Company’s
Operating Agreement, as amended, to the Optionee named below. Capitalized terms used herein shall
have the meanings set forth herein and in the attached Agreement (including Schedule A
thereto).

Date of Grant:

Name of Optionee:

Number of Units Covered by Option (“Units”):

Exercise Price per Unit (“Exercise Price”):  $147,625.00, which is not less than the fair market value on the Date of Grant.

			
	Vesting Schedule:	 	Twenty percent (20%) upon the first anniversary of
the Date of Grant and an additional twenty percent
(20%) upon each anniversary of the Date of Grant
thereafter.

     By signing this cover sheet, you agree to all of the terms and conditions described in the
attached Agreement.

	 	 	 	 	 	 	 
	 

	 	OPTIONEE:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	COMPANY:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 
	 

	 	Name:
	 

	 	 
	 

	 	Its:	 	 	 	 

 

 

CARDO MEDICAL, LLC

NONSTATUTORY OPTION AGREEMENT

	 	 	 
	Entire Agreement

	 	This Agreement constitutes the
entire understanding between you and
the Company regarding the Option.
Any prior agreements, commitments or
negotiations concerning the Option
are superseded.
	 
	 	 
	Nonstatutory Option

	 	The Option is a nonstatutory option
and is not intended to be an
incentive stock option under Section
422 of the Internal Revenue Code of
1986, as amended (the “Code”), and
will be interpreted accordingly.
The Option represents the right to
purchase Units in accordance with
the terms and conditions of this
Agreement.
	 
	 	 
	Vesting

	 	Your right to exercise the Option
vests as shown on the cover sheet.
The number of Units which may be
purchased under the Option by you at
the Exercise Price shall be equal to
the difference between (a) the
number of Units covered by the
Option which have vested according
to the vesting schedule on the
preceding page minus (b) the number
of Units purchased pursuant to the
Option prior to such exercise. No
additional Units will vest after: (i) your service as an Employee of
the Company (“Service”) has
terminated for any reason, or (ii)
you cease to perform Services for or
on behalf of the Company; unless, in
either case, as otherwise provided
in any employment or consulting
agreement between you and the
Company or its affiliates.
	 
	 	 
	Term

	 	Subject to the termination
provisions set forth in this
Agreement, your Option, and all
rights to purchase the Units covered
by the Option, will expire on the
close of business on the tenth
(10th) anniversary of the Date of
Grant.
	 
	 	 
	Notice of Exercise

	 	When you wish to exercise the
Option, you must notify the Company
by delivering the properly completed
“Notice of Exercise” form (as
attached hereto in Schedule C), and
such other documents and instruments
as may be required by the Managers
of the Company (the “Managers”), at
the Company’s principal executive
offices. Your notice must specify
how many Units you wish to purchase.
Your Units will be registered in
your name or the names of you and
your spouse only. The notice will
be effective when it is received by
the Company.
	 
	 	 
	Form of Payment

	 	When you submit your notice of
exercise, you must include payment
of the Exercise Price for the Units
you are purchasing. Payment may be
made only in cash, by your personal
check, by cashier’s check or money
order, or by wire transfer of
immediately available funds.
	 
	 	 
	Withholding Taxes

	 	To the extent required by applicable
law, you will not be allowed to
exercise the Option unless you make
acceptable arrangements to pay any
withholding or other taxes that may
be due as a result of the Option
exercise or the sale of Units
acquired upon exercise of the
Option. In addition, the Company
will have the right at the time of
exercise of the Option to make
adequate provision for any federal,
state, local or foreign taxes which
it believes are or may be required
by law to be withheld with respect
to such exercise (“Tax Liability”),
to ensure the payment by you
(through withholding from any
compensation due to you, the Units
or otherwise as the Managers deem in
their sole and conclusive discretion
to be in the best interests of the
Company) of any such Tax Liability.

1

 

	 	 	 
	Restrictions onExercise and Resale

	 	The Option may not be exercised if
the issuance of Units on such
exercise would constitute a
violation of any applicable federal
or state securities laws or any
other law or regulation or any
requirements of any regulatory
bodies having jurisdiction over the
Company. The exercise of the Option
may be suspended without liability
to the Company whenever such
suspension is necessary to preclude
a violation of any requirement of
applicable law or regulatory bodies
having jurisdiction over the
Company. In addition, by signing
this Agreement, you agree not to
exercise the Option or sell any
Units acquired by exercise of the
Option at a time when Company or
underwriter trading policies
prohibit exercise or sale. Without
limiting the generality of the
foregoing, the Managers shall have
the right to designate one or more
periods of time, each of which shall
not exceed one hundred eighty (180)
days in length, during which the
Option shall not be exercisable
and/or the Units acquired by
exercise of the Option shall not be
transferable if the Managers
determine (in their sole discretion)
that such limitation on exercise or
transfer could in any way facilitate
a lessening of any restriction on
transfer pursuant to the Securities
Act of 1933, as amended (the
“Securities Act”), or any state
securities laws with respect to any
issuance of securities by the
Company, facilitate the registration
or qualification of any securities
by the Company under the Securities
Act or any state securities laws or
any offering pursuant thereto, or
facilitate the perfection of any
exemption from the registration or
qualification requirements of the
Securities Act or any applicable
state securities laws for the
issuance or transfer of any
securities. Such limitations on
exercise shall not alter the vesting
schedule set forth in this Agreement
other than to limit the periods
during which the Option shall be
exercisable.
	 
	 	 
	 

	 	If the sale of Units under the Plan
is not registered under the
Securities Act, but an exemption is
available which requires an
investment or other representation,
you shall represent and agree at the
time of exercise that the Units
being acquired upon exercising the
Option are being acquired for
investment, and not with a view to
the sale or distribution thereof,
and shall make such other
representations as are deemed
necessary or appropriate by the
Managers and the Company’s counsel.
The Company is under no obligation
to register or qualify the issuance
of Units upon the exercise of the
Option under the Securities Act or
any state securities laws or to
effect any such registration or
qualification covering resales of
Units issued upon the exercise of
the Option.
	 
	 	 
	Continual Service Requirement

	 	Unless otherwise provided by the
Managers or in any employment or
consulting agreement between you and
the Company, and except as otherwise
provided below in the Section
entitled “Effect of Termination of
Service,” an Option may not be
exercised unless, from the date of
grant to the date of exercise, you
remain continuously an Employee of
the Company. Unless otherwise
provided in any employment or
consulting agreement between you and
the Company, the Managers shall
determine, in their discretion in
the particular case, whether and to
what the extent the period of
continuous employment shall be
deemed to include any period in
which you are on leave of absence
with the consent of the Managers.
	 
	 	 
	Effect of Termination of Service

	 	Upon the termination of your Service
with the Company and its
Subsidiaries by reason of death or
Disability, (a) all Options then
held by you, to the extent
exercisable on the date of
termination of Service, shall remain
in full force and

2

 

	 	 	 
	 

	 	effect and may be
exercised pursuant to the provisions
thereof at any time until the
earlier of the end of the fixed term
thereof and the expiration of twelve
(12) months following termination of
your Service, and (b) all Options
then held by you, to the extent not
then presently exercisable, shall
terminate as of the date of such
termination of Service and shall not
be exercisable thereafter.
	 
	 	 
	 

	 	Upon the termination of your Service
with the Company and its
Subsidiaries for any reason other than (i) death, (ii) Disability or
(iii) Termination for Cause, then
(1) all Options then held by you, to
the extent exercisable on the date
of termination of Service, shall
remain in full force and effect and
may be exercised pursuant to the
provisions thereof at any time until
the earlier of the end of the fixed
term thereof and the expiration of
ninety (90) days following
termination of your Service (except
that this ninety (90)-day period
will be extended to twelve (12)
months from the date of termination
if you die during this ninety
(90)-day period), and (2) all
Options then held by you, to the
extent not then presently
exercisable, shall terminate as of
the date of such termination of
Service and shall not be exercisable
thereafter.
	 
	 	 
	 

	 	Notwithstanding anything else in
this Agreement to the contrary, if
your Service with the Company
terminates as a result of a
Termination for Cause, the Option
and all rights to purchase Units
thereunder, whether vested or unvested, shall terminate
concurrently with the first
discovery by the Company of any
reason for a Termination for Cause,
and the Option shall not be
exercisable thereafter. If your
Service with the Company is
suspended pending an investigation
of whether there shall be a
Termination for Cause, all of your
rights under the Option, including,
without limitation, the right to
exercise the Option, shall likewise
be suspended during the period of
investigation.
	 
	 	 
	Transfer of Option and Units

	 	No Option shall be transferable by
you other than by will or the laws
of intestate succession. No Option
or any interest therein shall be
subject to attachment, execution,
garnishment, sequestration, the laws
of bankruptcy or any other legal or
equitable process. The Option shall
be exercisable during your lifetime
only by you or by your guardian or
legal representative. 

None of the Units shall be
transferable without the prior
consent of the Managers, which may
be given or withheld at the sole
discretion of the Managers. Any
transfer in violation of these
provisions shall be null and void.
You agree to cause any permitted
transferee of all or any part of the
Units to agree to take and hold such
securities subject to these
provisions. 

Regardless of any marital property
settlement agreement, the Company is
not obligated to honor a notice of
exercise from your spouse or former
spouse, nor is the Company obligated
to recognize such individual’s
interest in the Option in any other
way. The terms of the Option shall
be binding on your executors,
administrators, heirs and
successors.
	 
	 	 
	Relationship with the Company

	 	This Agreement does not give you the
right to be retained to perform
Services for or on behalf of the
Company or employed by the Company
(or any Subsidiaries) in any
capacity. Except as may be provided
in any employment or consulting
agreement you may have with the
Company, the Company (or any
Subsidiary) reserves the right to
terminate your Service at any time
and for any reason. The Option
shall not be deemed to be salary or
other compensation to

3

 

	 	 	 
	 

	 	you for
purposes of any pension, thrift,
profit-sharing, stock purchase or
any other employee benefit plan now
maintained or hereafter adopted by
the Company (or any Subsidiary).
	 
	 	 
	Membership Rights

	 	You shall not have any rights as a
Member of the Company with respect
to any Units covered by an Option,
or any rights in or to Profits or
Losses (as such terms are defined in
the Operating Agreement of the
Company as amended to such date and
then in effect, the “Operating
Agreement”) or distributions of the
Company, or any right to vote or
otherwise participate as a Member of
the Company with respect thereto
until (a) you have duly exercised
the Option and paid in full the
Exercise Price therefor in
accordance with the provisions of
this Agreement, (b) you have
complied with all applicable
provisions of the Operating
Agreement pertaining to the issuance
of additional Membership Interests
(or fractions thereof) by the
Company, including, without
limitation, your delivery of a
written instrument, in form and
substance satisfactory to the
Managers, whereby you make certain
representations and warranties to
the Company and its Members and
agree to be bound by the provisions
of the Operating Agreement, and (c)
an entry evidencing your ownership
of the Membership Interests
represented by such Units (or
fractions thereof) subject to the
Option is made in the records of the
Company.
	 
	 	 
	 

	 	Units issued upon the exercise of an
Option, and your rights and
obligations with respect thereto,
shall be subject to all of the terms
and conditions of the Operating
Agreement, including, without
limitation, restrictions on transfer
and rights of first refusal, in each
case as set forth in the Operating
Agreement.
	 
	 	 
	 

	 	If you fail to comply with this
condition, any purported exercise of
the Option shall be void and of no
force or effect; and, in its
discretion, the Company may
terminate the Option upon written notice to you. By executing this
Agreement, you acknowledge that you
have been provided the opportunity
to review and receive a copy of the
Operating Agreement.
	 
	 	 
	Adjustments

	 	In the event of a stock split, a
stock dividend, a merger or a
similar change in the Company’s
securities, the number of Units
covered by the Option and the
Exercise Price may be adjusted
pursuant to Schedule B attached
hereto and incorporated herein by
this reference.
	 
	 	 
	Section 409A of the Code

	 	If any compensation payable
hereunder would be subject to the
requirements of Section 409A of the
Code, the provisions applicable to
such compensation, to the extent
consistent with the interpretive and
administrative discretion provided
hereunder, may be administered by
the Managers in a manner that would
limit or eliminate the Adverse Tax
Consequences under Section 409A.
For purposes of the preceding
sentence, “Adverse Tax Consequences
under Section 409A” shall mean the
accelerated inclusion, twenty
percent (20%) additional tax rate,
and associated interest charge that
would apply to any deferred
compensation included in taxable
income of an Optionee under Section
409A(a)(1)(B) of the Code.
	 
	 	 
	Legends

	 	Any certificates representing the
Units issued upon exercise of the
Option shall have endorsed thereon
the following legends (or such other
legends as may be deemed necessary
or appropriate by the Managers):

4

 

	 	 	 
	 

	 	THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED
OR QUALIFIED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE, AND
MAY BE OFFERED AND SOLD ONLY IF
REGISTERED AND QUALIFIED PURSUANT TO
THE RELEVANT PROVISIONS OF FEDERAL
AND STATE SECURITIES LAWS OR IF THE
COMPANY IS PROVIDED AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY
THAT REGISTRATION AND QUALIFICATION
UNDER FEDERAL AND STATE SECURITIES
LAWS IS NOT REQUIRED.
	 
	 	 
	 

	 	NOTICE IS HEREBY GIVEN THAT THE
SECURITIES REPRESENTED BY THIS
CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER WITHOUT THE
PRIOR CONSENT OF THE COMPANY.
	 
	 	 
	Applicable Law

	 	This Agreement will be interpreted
and enforced under the laws of the
State of California (without regard
to its choice of law provisions).
This Agreement may be modified only
by an agreement in writing signed by
you and the Company. Terms used
herein in any number or gender
include other numbers or genders as
the context may require. Captions
used herein are for convenience of
reference only and are not to be
considered a part of this Agreement
or to be used in determining the
intent or content hereof.
	 
	 	 
	Notices

	 	Any notice to be given hereunder may
be personally delivered or sent by
United States registered or
certified mail. Any notice to be
given to the Company shall be
addressed to the Company at its
principal executive offices, to the
attention of the Managers, and any
notice to be given to you shall be
addressed to you at your home
address appearing on the records of
the Company, or at such other
address as either you or the Company
hereafter may designate in writing
to the other. Any such notice shall
be deemed to have been duly given
when personally delivered or
seventy-two (72) hours after having
been deposited in the mails as
certified or registered matter.

     By signing the cover sheet of this Agreement, you agree to all of the terms and conditions
described above.

CONSENT OF SPOUSE

     The undersigned, being the spouse of the Optionee referred to in the foregoing Nonstatutory
Option Agreement (the “Agreement”), acknowledges that he or she has read the Agreement and knows
the contents thereof. The undersigned hereby approves of the provisions of the Agreement, and
agrees to be bound by the terms thereof. The undersigned further agrees to execute any further
documents or instruments necessary to effectuate the terms of the Agreement and this Consent.

Dated:                     , 2008

	 	 	 	 	 	 	 
	 

	 	Signature:	 	 	 	 
	 

	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Print Name:	 	 	 	 
	 

	 	 	 

	 	 

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SCHEDULE A

ADDITIONAL DEFINITIONS

     (a) “Affiliate” of a specified person means any person that directly, or indirectly through
one or more intermediaries, controls, is controlled by or is under common control with the person
specified and, in the case of a natural person, includes the spouse, ancestors and lineal
descendants of such person and the spouses of the ancestors and lineal descendants of such person.
The term “control” means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person. The term “person,” as used herein, means any
natural person, corporation, limited liability company, partnership, joint venture, association,
trust or other entity.

     (b) “Change in Control” of the Company means (i) a merger or consolidation of the Company, or
of any parent of the Company, with or into any other entity unless, immediately following such
transaction, the persons who were the members of the Company (or the members, shareholders or other
owners of the parent of the Company, as the case may be) immediately prior to such transaction,
together with their Affiliates, possess, directly or indirectly, at least fifty percent (50%) of
the voting power of the surviving entity in the merger or consolidation, (ii) a sale or disposition
of all or substantially all the assets of the Company to any person or entity other than an
Affiliate of the Company, (iii) any issuance or transfer (whether in one transaction or in a series
of related transactions) of more than fifty percent (50%) of the outstanding Membership Interests
of the Company, or of the outstanding shares, units or voting securities of any parent of the
Company, to any person or group of persons acting in concert, other than any such issuance or
transfer to an Affiliate of the Company, or (iv) the approval by the members of the Company of a
dissolution or liquidation of the Company.

     (c) “Disability” means any sickness or other physical or mental disability that materially
impairs the ability to perform Services for or on behalf of the Company, as determined by the
Managers.

     (d) “Employee” means any individual who is (i) a common law employee of the Company or of a
Subsidiary, or (ii) a consultant who performs bona fide services (other than services related to
the offer or sale of securities in a capital raising transaction or that, directly or indirectly,
promote or maintain a market for the Company’s securities) for the Company or a Subsidiary.
Service as a consultant shall be considered “employment” for all purposes of this Agreement.

     (e) “Subsidiary” means any corporation, partnership (whether general or limited), joint
venture, limited liability company or other entity in which the Company and/or one or more other
Subsidiaries own stock or other equity interests possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock and/or other equity interests of such entity.
A corporation or other entity that attains the status of a Subsidiary on a date after the adoption
of this Agreement shall be considered a Subsidiary commencing as of such date.

     (f) “Termination for Cause” means any termination of Service on account of (i) violation of
any federal or state law or regulation, (ii) fraud, dishonesty, disloyalty or breach of fiduciary
duty, or (iii) breach or violation of any term, requirement or condition of Service with the
Company or any Subsidiary. The Managers shall determine whether there has been a Termination for
Cause, and each Optionee agrees, by acceptance of the grant of an Option and the execution of this
Agreement, that the Managers’ determination is conclusive and binding on all persons for all
purposes.

 

 

SCHEDULE B

ADJUSTMENT OF UNITS

     1. General. The number and class of Units (or fractions thereof) subject to each
outstanding Option and the Exercise Price per Unit (or fraction thereof) shall be proportionately
adjusted in the event of (a) a split-up or consolidation of Units, (b) the payment of any dividend
or distribution by the Company in the form of Units (or fractions thereof), or (c) a
recapitalization (other than the conversion of convertible securities according to their terms and
provided that “recapitalization” shall not be deemed to include future issuances of Units or
Membership Interests, or of rights exercisable or exchangeable for or convertible into Units or
Membership Interests, in future capital offerings to prospective investors) or other like capital
adjustment, so that upon exercise of the Option, the Optionee shall receive the number and class of
securities (or fractions thereof) such Optionee would have received had such Optionee been the
holder of the number of Units (or fractions thereof) for which the Option is being exercised upon
the date of such change or increase or decrease in the number of issued Units.

     2. Reorganization. Upon (a) a reorganization, merger or consolidation of the Company
with one or more corporations or other entities as a result of which the Company is not the
surviving entity, or in which the Company survives as a majority-owned Subsidiary of another
corporation or entity, or upon a sale of all or substantially all of the assets of the Company to
another entity, or (b) a transaction in which the Company’s legal structure is converted into a
corporation, partnership or entity other than a limited liability company, or in which the
Company’s state of organization has changed to any state other than California (each a
“Transaction”), adequate adjustment or other provisions shall be made by the Company, or by the
other party to such Transaction, to each outstanding Option (including the number and class of
securities subject to the Option and the Exercise Price (but not the total price)) so that there
shall be substituted for the Units (or fractions thereof) provided for herein, the units, shares,
securities or assets which would have been issuable or payable in respect of or in exchange for the
Units (or fractions thereof) otherwise issuable under such Options, as if the Optionee had been the
owner of such Units (or fractions thereof) as of the effective date of the applicable Transaction.
Any Units (or fractions thereof), shares, securities or assets so substituted shall be subject to
similar successive adjustments. The foregoing notwithstanding, if a Transaction results in a
Change in Control, each outstanding Option shall be subject to the terms of the definitive
agreement(s) providing for the reorganization, merger or consolidation.

     3. Reservation of Rights. Except as specifically provided in this Schedule B, an
Optionee shall have no rights by reason of (a) any subdivision, consolidation or recapitalization
of the Company’s Units or Membership Interests, (b) the payment of any dividend (whether in
securities, cash or other property), (c) any other increase or decrease in the number of the
Company’s Membership Interests, or (d) any other issuance of securities by the Company. Except as
specifically provided in this Schedule B, any issuance by the Company of Units or Membership
Interests, or securities convertible into or exercisable for Units or Membership Interests, shall
not affect, and no adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Units subject to an Option. The grant of this Option shall not affect in any way
the right or power of the Company to make adjustments, reclassifications, reorganizations or
changes to its capital or business structure, to merge or consolidate, to dissolve or liquidate, to
sell or transfer all or any part of its business or assets or to enter into any other transaction
whatsoever.

     4. Determination of Adjustments. All adjustments pursuant to this Schedule B shall be
determined by the Managers, whose determination shall be conclusive and binding on all persons for
all purposes.

 

 

SCHEDULE C

NOTICE OF EXERCISE

Date:                    

     I hereby exercise my Option, dated August 27, 2008, as to ___Units of Cardo Medical, LLC
(the “Company”).

     Enclosed are the documents and payment specified in my Nonstatutory Option Agreement (the
“Option Agreement”). I understand that no Units shall be issued and delivered unless and until any
applicable registration requirements of the Securities Act of 1933, as amended, any listing
requirements of any securities exchange on which securities of the same class is then listed, and
any other requirements of law or any regulatory bodies having jurisdiction over such issuance and
delivery, shall have been fully complied with. I hereby represent and warrant to, and agree with,
the Company that:

     (a) The Units I am purchasing are being acquired for my account, for investment purposes only,
with no present intention of reselling or otherwise distributing them, except as permitted by
applicable federal and state securities laws, and no other person (except, if I am married, my
spouse) will own any interest therein.

     (b) I will not sell or dispose any of my Units in violation of the Option Agreement, the
Securities Act of 1933, as amended, or any other applicable federal or state securities laws, or in
violation of the Company’s Operating Agreement (the “Operating Agreement”) or any buy-sell
agreement or similar agreement to which I may be a party.

     (c) As a condition to the exercise of the Option, I agree to enter into (i) a written
agreement, in form and substance satisfactory to the Managers of the Company, setting forth my
agreement to be bound by the provisions of the Operating Agreement, and (ii) if applicable, the
current form of buy-sell agreement adopted by the Company.

     (d) I agree that the Company may, without liability, place legend conditions upon the Units
and issue “stop transfer” restrictions requiring compliance with applicable securities laws, the
terms of the Option and the terms of the Operating Agreement and any buy-sell or similar agreement
to which I may be a party.

     (e) I will report to the Company all sales of Units on the form prescribed from time to time
by the Company.

     The number of Units specified above are to be issued in the following registration (husband
and wife will be shown to be joint tenants unless I state that the Units will be held as community
property or as tenants in common):

	 	 	 	 	 	 	 
	 

(Print name)

	 	 	 	 

      (Signature)
	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

(Option-Print name of spouse

	 	 	 	 

 
 

	 	  
	if you wish joint registration)

	 	 	 	 
 

Address

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