7
WHAT WILL THE EXERCISE PRICE OF THE NEW OPTIONS BE?
The exercise price of the new options will equal the fair market value
of our common stock on the date prior to the date we grant the new options. Our
common stock is currently traded on the Nasdaq National Market and fair market
value will be determined based upon the last reported sale price of our common
stock on such date. Accordingly, we cannot predict the exercise price of the new
options. If on the date we grant the new options our common stock is not traded
on the Nasdaq National Market and is traded in the over-the-counter market, fair
market value will be the mean between the closing representative bid and asked
prices as of such date. Therefore, since we will not grant new options until at
least six months and one day after the date we cancel the options accepted for
exchange, it is possible that the new options may have a higher exercise price
than some or all of your current options. We recommend that you obtain current
market quotations for our common stock before deciding whether to tender your
options. (Section 7)
WHEN WILL THE NEW OPTIONS VEST?
Each new option issued in exchange for eligible options issued under a
Plan will be fully vested as to 75% of the shares subject thereto, and the
remaining 25% will have a one year quarterly vesting schedule beginning on the
date of issuance of the new option. Each new option issued in exchange for
Conversion Options will not be vested on the date of issuance and will have a
new one year quarterly vesting schedule beginning on the date of the issuance of
the new options. (Section 8)
WHEN WILL THE NEW OPTIONS EXPIRE?
The new options will expire ten years from the date of grant. (Section
8)
WILL I HAVE TO PAY U.S. FEDERAL INCOME TAXES IF I EXCHANGE MY OPTIONS IN THE
OFFER?
If you exchange your current eligible options for new options, we
believe you will not be required under current law to recognize income for U.S.
federal income tax purposes at the time of the exchange. Further, at the date of
grant of the new options, we believe you will not be required under current law
to recognize income for U.S. federal income tax purposes. We recommend that you
consult with your own tax advisor to determine the tax consequences of tendering
options pursuant to the offer. (Section 13)
WHAT HAPPENS TO ELIGIBLE OPTIONS THAT I CHOOSE NOT TO TENDER?
Nothing. Eligible options that you choose not to tender for exchange
remain outstanding and retain their current exercise price and current vesting
schedule. (Section 8)
However, if your eligible option is an incentive stock option and you
do not accept the offer, then, for U.S. federal income tax purposes only, your
option will be treated as if it was cancelled and granted as a new option on the
date of the offer. In such a case, your option will remain as an incentive stock
option, except to the extent the deemed re-grant causes more than