Exhibit 99.1
NESS TECHNOLOGIES, INC.
2007 STOCK OPTION PLAN
A PLAN UNDER SECTION 102 OF THE ISRAELI INCOME TAX ORDINANCE AND
THE UNITED STATES INTERNAL REVENUE CODE OF 1986
1. NAME AND PURPOSE OF THE PLAN.
1.1. This plan, as amended from time to time, shall be known as the Ness
Technologies, Inc. 2007 Stock Option Plan (the "2007 Plan" or the "Plan").
1.2. The Plan is intended as an incentive to retain in the employ of, and as
directors, consultants and advisors to Ness Technologies, Inc., a Delaware
corporation (the "Company"), and its subsidiaries (including any "employing
company" under Section 102(a) of the Ordinance (as hereinafter defined) and any
"subsidiary" within the meaning of Section 424(f) of the United States Internal
Revenue Code of 1986, as amended (the "Code"), collectively, the
"Subsidiaries"), persons of training, experience and ability, to attract new
employees, directors, consultants and advisors whose services are considered
valuable, to encourage the sense of proprietorship and to stimulate the active
interest of such persons in the development and financial success of the Company
and its Subsidiaries, by granting to such persons options (the "Options") to
purchase shares of the Company's common stock, $0.01 par value per share (the
"Stock", and the grant of Options to purchase shares of Stock, the "Award").
1.3. Options granted under this Plan to Israeli residents shall be granted
pursuant to the Israeli Income Tax Ordinance (New Version), 1961, as amended,
including the Law Amending the Income Tax Ordinance (Number 132), 2002 (the
"Ordinance") and any regulations, rules or orders or procedures promulgated
thereunder (the "Rules").
1.4. The Company intends that the Plan meet the requirements of Rule 16b-3
("Rule 16b-3") promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and that transactions of the type specified in
subparagraphs (c) to (f) inclusive of Rule 16b-3 by officers and directors of
the Company pursuant to the Plan will be exempt from the operation of Section
16(b) of the Exchange Act. Further, the Plan is intended to satisfy the
performance-based compensation exception to the limitation on the Company's tax
deductions imposed by Section 162(m) of the Code with respect to those Options
for which qualification for such exception is intended. In all cases, the terms,
provisions, conditions and limitations of the Plan shall be construed and
interpreted consistent with the Company's intent as stated in this Section 1.
2. ADMINISTRATION OF THE PLAN.
2.1. The Board of Directors of the Company (the "Board") shall appoint and
maintain as administrator of the Plan a Committee (the "Committee") consisting
of two or more directors who are "Non-Employee Directors" (as such term is
defined in Rule 16b-3 of the Exchange Act) and "Outside Directors" (as such term
is defined in Section 162(m) of the Code), which shall serve at the pleasure of
the Board. The Committee, subject to Sections 4 and 8 hereof, shall have full
power and authority to designate recipients of Options, to determine the terms
and conditions of respective Option agreements (which need not be identical)
(the "Option Agreements"), including the vesting schedule of the Options, which
may be performance based (the "Vesting Schedule") to interpret the provisions
and supervise the administration of the Plan, to accelerate the right to
exercise, in whole or in part, any previously granted Option, to grant new
options in exchange for existing Options and to determine whether an Award has
been earned (if performance requirements must be satisfied).
2.2. Subject to the provisions of the Plan, the Committee shall interpret
the Plan and all Options granted under the Plan, shall make such rules as it
deems necessary for the proper administration of the Plan, shall make all other
determinations necessary or advisable for the administration of the Plan and
shall correct any defects or supply any omission or reconcile any inconsistency
in the Plan or in any Options granted under the Plan in the manner and to the
extent that the Committee deems desirable to carry into effect the Plan or any
Options.
2.3. Subject to the Company's certificate of incorporation, as amended, and
bylaws, as amended, the act or determination of a majority of the members of the
Committee shall be the act or determination of the Committee and any decision
reduced to writing and signed by all of the members of the Committee shall be
fully effective as if such decision had been made by the Committee at a meeting
duly called and held. Subject to the provisions of the Plan, any action taken or
determination made by the Committee pursuant to this and the other Sections of
the Plan shall be conclusive on all parties.
2.4. The Committee may delegate to one or more executive officers of the
Company the authority to grant an Award under the Plan to persons eligible to
receive such Awards other than an officer or director of the Company or any
other person whose transactions in the Company's Stock are subject to Section 16
of the Exchange Act (an "Insider").
2.5. In the event that for any reason the Committee is unable to act or if
the Committee at the time of any grant, award or other acquisition under the
Plan of Options or Stock as hereinafter defined does not consist of two or more
Non-Employee Directors, or if there shall be no such Committee, then the Plan
shall be administered by the Board, and references herein to the Committee
(except in the proviso to this sentence) shall be deemed to be references to the
Board, and any such grant, award or other acquisition may be approved or
ratified in any other manner contemplated by subparagraph (d) of Rule 16b-3;
provided, however, that options granted to the Company's Chief Executive Officer
or to any of the Company's other four most highly compensated officers that are
intended to qualify as performance-based compensation under Section 162(m) of
the Code may only be granted by the Committee.
3. SCOPE OF THE PLAN.
3.1. Subject to the terms of Section 3.3 hereof, the total number of shares
of Stock reserved and available for grant and issuance pursuant to this Plan
will be 3,000,000. In addition, if shares of Stock are subject to an Award that
terminates without such shares of Stock being issued, then such shares of Stock
will again be available for grant and issuance under this Plan. Should any
Option expire or be canceled prior to its exercise in full or should the number
of shares of Stock to be delivered upon the exercise in full of an Option be
reduced for any reason, the shares of Stock theretofore subject to such Option
may be subject to future Options under the Plan, except where such reissuance is
inconsistent with the provisions of Section 162(m) of the Code.
3.2. The Company will at all times reserve and keep available the number of
shares of Stock necessary to satisfy the requirements of all Awards then
outstanding under this Plan. The shares of Stock subject to the Plan shall
consist of unissued shares, treasury shares or previously issued shares held by
any Subsidiary of the Company, and such amount of shares of Stock shall be and
is hereby reserved for such purpose. Any of such shares of Stock that may remain
unsold and that are not subject to outstanding Options at the termination of the
Plan shall cease to be reserved for the purposes of the Plan, but until
termination of the Plan the Company shall at all times reserve a sufficient
number of shares of Stock to meet the requirements of the Plan.
3.3. In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, or other change in corporate structure
affecting the Stock, the Committee shall make an appropriate and equitable
adjustment in the number and kind of shares reserved for issuance under the Plan
and in the number and option price of shares subject to outstanding Options
granted under the Plan, to the end that after such event each Optionee's
proportionate interest shall be maintained as immediately before the occurrence
of such event. The adjustments described above will be made only to the extent
consistent with continued qualification of the Option under Section 422 of the
Code (in the case of an Incentive Option) and Section 409A of the Code (in the
case of grantees potentially subject to Section 409A of the Code).
4. ELIGIBILITY.
4.1. The persons eligible for participation in the Plan as recipients of
Options (the "Optionees") shall include employees, officers and directors of,
and, subject to their meeting the eligibility requirements to participate in an
"employee benefit plan" as defined in Rule 405 promulgated under the Securities
Act (as defined below), consultants and advisors to, the Company or any
Subsidiary.
4.2. In selecting Optionees, and in determining the number of shares to be
covered by each Option granted to Optionees, the Committee may consider any
factors it deems relevant, including without limitation, the office or position
held by the Optionee or the Optionee's relationship to the Company, the
Optionee's degree of responsibility for and contribution to the growth and
success of the Company or any Subsidiary, the Optionee's length of service,
promotions and potential. An Optionee who has been granted an Option hereunder
may be granted an additional Option or Options, if the Committee shall so
determine.
5. OPTIONS GRANTED UNDER THE ORDINANCE.
5.1. Options granted under Section 102 of the Ordinance ("102 Options") may
be granted only to Israeli employees and Office Holders excluding any
"Controlling Holders" as such term is defined in the Ordinance. Options granted
under Section 3(i) of the Ordinance ("3(i) Options") may be granted only to
consultants and to any Israeli employees or Office Holders who are Controlling
Holders.
5.2. 102 Options shall be either (a) capital gains track options under
Section 102(b)(2), in which income resulting from the sale of Stock underlying
the Options is taxed as capital gain ("Capital Gains Options"), (b) ordinary
income track options under Section 102(b)(1), in which income resulting from the
sale of Stock underlying the Options is taxed as ordinary income ("Ordinary
Income Options" and, together with the Capital Gains Options, the "Approved 102
Options") or (c) options granted pursuant to Section 102(c) ("Unapproved 102
Options").
5.3. The Company's election of the type of Approved 102 Options as Capital
Gains Options or Ordinary Income Options granted to optionees (the "Election"),
shall be appropriately filed with the Israeli Tax Authorities (the "ITA") before
the date of grant of an Approved 102 Option. Such Election shall become
effective beginning the first grant of an Approved 102 Option under this Plan
and shall remain in effect until the end of the year following the year during
which the Company first granted Approved 102 Options. The Election shall
obligate the Company to grant only the type of Approved 102 Option it has
elected, and shall apply to all Optionees who were granted Approved 102 Options
during the period indicated herein, all in accordance with the provisions of
Section 102(g) of the Ordinance. For the avoidance of doubt, such Election shall
not prevent the Company from granting Unapproved 102 Options during such period.
5.4. Without derogating from anything to the contrary contained herein,
solely for the purpose of determining the tax liability pursuant to Section
102(b)(3) of the Ordinance, if at the date of grant of Approved 102 Options the
Company's shares are listed on any established stock exchange or a national
market system or if the Company's shares will be registered for trading within
ninety (90) days following such date of grant, the value of a share of Stock at
such date of grant shall be determined in accordance with the average value of
the Company's shares of Stock on the thirty (30) trading days immediately
preceding the date of grant or on the thirty (30) trading days immediately
following the date of registration for trading, as the case may be.
5.5. With respect to Unapproved 102 Option, if the Optionee ceases to be
employed by the Company or any Subsidiary, the Optionee shall extend to the
Company and/or its Subsidiary a security or guarantee for the payment of tax due
at the time of sale of shares of Stock, all in accordance with the provisions of
Section 102 and the Rules.
5.6. Trustee. All Approved 102 Options must be held by a person appointed by
the Company to serve as a trustee and approved by the ITA in accordance with the
provisions of Section 102(a) of the Ordinance (the "Trustee") in accordance with
the following:
5.6.1. Approved 102 Options which shall be granted under the Plan
and/or any shares of Stock allocated or issued upon exercise of
such Approved 102 Options and/or other shares of Stock received
subsequently following any realization of rights, including
without limitation, bonus shares, shall be allocated or issued to
the Trustee and held for the benefit of the Optionees for such
period of time as required by Section 102 or the Rules (the
"Holding Period"). In the case the requirements for Approved 102
Options are not met, then the Approved 102 Options may be treated
as Unapproved 102 Options, all in accordance with the provisions
of Section 102 and the Rules.
5.6.2. Notwithstanding anything to the contrary, the Trustee shall
not release any shares of Stock allocated or issued upon exercise
of Approved 102 Options prior to the full payment of the
Optionee's tax liabilities arising from Approved 102 Options which
were granted to him and/or any shares of Stock allocated or issued
upon exercise of such Options.
5.6.3. With respect to any Approved 102 Option, subject to the
provisions of Section 102 and the Rules, an Optionee shall not
sell or release from trust any shares of Stock received upon the
exercise of an Approved 102 Option and/or any shares of Stock
received subsequently following any realization of rights,
including without limitation, bonus shares, until the lapse of the
Holding Period required under Section 102 of the Ordinance.
Notwithstanding the above, if any such sale or release occurs
during the Holding Period, the sanctions under Section 102 of the
Ordinance and under the Rules shall apply to, and shall be borne
by, such Optionee.
5.6.4. Upon receipt of an Approved 102 Option, the Optionee will
sign an undertaking to release the Trustee from any liability in
respect of any action or decision duly taken and executed in good
faith in relation with the Plan or any Approved 102 Option or
shares of Stock granted to him thereunder.
5.7. The grant of Approved 102 Options shall be conditioned upon the
approval of this Plan by the Israeli Tax Authorities. In addition, the
provisions of the Plan and/or the Option Agreement shall be subject to the
provisions of the Ordinance and the Tax Assessing Officer's permit, and the said
provisions and permit shall be deemed an integral part of the Plan and of the
Option Agreement. Any provision of the Ordinance and/or the said permit which is
necessary in order to receive and/or to keep any tax benefit pursuant to the
Ordinance, which is not expressly specified in the Plan or the Option Agreement,
shall be considered binding upon the Company and the Optionees.
5.8. The Committee shall have the authority, without limitation, to
determine which method, the capital gain method or the work income method or any
other method available under Section 102 of the Ordinance, shall be adopted for
the purposes of the Plan and to appoint a Trustee, if the Committee deems it
advisable or necessary.
6. OPTIONS GRANTED UNDER THE CODE.
6.1. Options granted to employees of the Company or of one of its
Subsidiaries, who are not residents of the State of Israel, shall either
constitute incentive stock options within the meaning of Section 422 of the Code
("Incentive Options"), while certain other Options granted pursuant to the Plan
shall be nonqualified stock options ("Nonqualified Options").
6.2. Subject to meeting all applicable requirements, the Committee shall
have the authority, without limitation, to designate which Options granted under
the Plan shall be Incentive Options and which shall be Nonqualified Options.
6.3. The maximum number of shares of Stock that may be subject to Incentive
Options or Nonqualified Options granted under the Plan to any individual in any
calendar year shall not exceed 250,000 shares (subject to adjustment pursuant to
Section 3.3 hereof), and the method of counting such shares shall conform to any
requirements applicable to performance-based compensation under Section 162(m)
of the Code; provided, however, that new employees of the Company or of any
Subsidiary (including new employees who are also officers and directors of the
Company or any Subsidiary), will be eligible to receive Options to purchase up
to a maximum of 750,000 of the Company's Stock in the calendar year in which
they commence their employment.
6.4. The aggregate Fair Market Value (as hereinafter defined), determined as
of the date the Incentive Option is granted, of Stock for which Incentive
Options are exercisable for the first time by any Optionee during any calendar
year under the Plan (and/or any other stock option plans of the Company or any
Subsidiary) shall not exceed $100,000.
6.5. Optionee shall be required as a condition of the exercise to furnish to
the Company any payroll (employment) tax required to be withheld. In the case of
an Incentive Option, if the Optionee makes a disposition, within the meaning of
Section 424(c) of the Code and regulations promulgated thereunder, of any share
or shares of Stock issued to him upon exercise of an Incentive Option granted
under the Plan within the two-year period commencing on the day after the date
of the grant of such Incentive Option or within a one-year period commencing on
the day after the date of transfer of the share or shares to him pursuant to the
exercise of such Incentive Option, he shall, within 10 days after such
disposition, notify the Company thereof.
7. OTHER AWARDS. All other types of Awards not referenced in Sections 5
and 6 may be granted to any employee, officer, director or consultant of the
Company or any Parent or Subsidiary; provided that with respect to any
consultant, however, that such consultant is a natural person and the Award is
in full or partial compensation for bona fide services unconnected with any
offer and sale of securities in a capital-raising transaction.
8. TERMS AND CONDITIONS OF OPTIONS. Options granted under the Plan shall
be subject to the following conditions and shall contain such additional terms
and conditions, not inconsistent with the terms of the Plan, as the Committee
shall deem desirable:
8.1. OPTION PRICE. The exercise price of each share of Stock purchasable
under the Options shall be determined by the Committee at the time of grant,
subject to the conditions set forth in the immediately following sentence. The
exercise price of each share of Stock purchasable under an Incentive Option
shall not be less than 100% of the Fair Market Value (as hereinafter defined) of
such share of Stock on the trading day immediately preceding the date the
Incentive Option is granted; provided, however, that with respect to an Optionee
who, at the time such Incentive Option is granted, owns (within the meaning of
Section 424(d) of the Code) more than 10% of the total combined voting power of
all classes of stock of the Company or of any Subsidiary, the exercise price per
share of Stock shall be at least 110% of the Fair Market Value per share of
Stock on the trading day immediately preceding the date of grant. The exercise
price of each share of Stock purchasable under any Option other than an
Incentive Stock Option shall not be less than 100% of the Fair Market Value of
such share of Stock on the trading day immediately preceding the date the Option
is granted; provided, however, and notwithstanding any future amendment to the
minimum exercise price of a Nonqualified Option, that if an option granted to
the Company's Chief Executive Officer or to any of the Company's other four most
highly compensated officers is intended to qualify as performance-based
compensation under Section 162(m) of the Code, the exercise price of such Option
shall not be less than 100% of the Fair Market Value of such share of Stock on
the trading day immediately preceding the date the Option is granted. The
exercise price for each Option shall be subject to adjustment as provided in
Section 3.3 herein. Notwithstanding anything to the contrary contained herein,
in no event shall the exercise price of a share of Stock be less than the
minimum price permitted under the rules and policies of any national securities
exchange on which the shares of Stock are listed.
"Fair Market Value" means the closing price of publicly traded shares of
Stock on the principal securities exchange, including the Nasdaq Stock Market,
on which shares of Stock are listed (if the shares of Stock are so listed), or,
if not so listed, the mean between the closing bid and asked prices of publicly
traded shares of Stock in the over-the-counter market, or, if such bid and asked
prices shall not be available, as reported by any nationally recognized
quotation service selected by the Company, or as determined by the Committee in
a manner consistent with the provisions of the Code.
8.2. OPTION TERM. The term of each Option shall be fixed by the Committee,
but no Option shall be exercisable more than ten years after the date such
Option is granted and in the case of an Incentive Option granted to an Optionee
who, at the time such Incentive Option is granted, owns (within the meaning of
Section 424(d) of the Code) more than 10% of the total combined voting power of
all classes of stock of the Company or of any Subsidiary, no such Incentive
Option shall be exercisable more than five years after the date such Incentive
Option is granted.
8.3. EXERCISABILITY. Subject to Section 6.4 hereof, Options shall be
exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Committee at the time of grant.
8.4. METHOD OF EXERCISE. Options to the extent then exercisable may be
exercised in whole or in part at any time during the option period, by giving
written notice to the Company specifying the number of shares of Stock to be
purchased, accompanied by payment in full of the exercise price, in cash, or by
check or such other instrument as may be acceptable to the Committee. As
determined by the Committee, in its sole discretion, at or after grant, payment
in full or in part may be made at the election of the Optionee (i) in the form
of Stock owned by the Optionee (based on the Fair Market Value of the Stock on
the trading day before the Option is exercised) which is not the subject of any
pledge or security interest, (ii) in the form of shares of Stock withheld by the
Company from the shares of Stock otherwise to be received with such withheld
shares of Stock having a Fair Market Value on the date of exercise equal to the
exercise price of the Option, or (iii) by a combination of the foregoing,
provided that the combined value of all cash and cash equivalents and the Fair
Market Value of any shares surrendered to the Company is at least equal to such
exercise price and except with respect to (ii) above, such method of payment
will not cause a disqualifying disposition of all or a portion of the Stock
received upon exercise of an Incentive Option. An Optionee shall have the right
to dividends and other rights of a stockholder with respect to shares of Stock
purchased upon exercise of an Option at such time as the Optionee has (i) given
written notice of exercise and has paid in full for such shares and (ii) has
satisfied such conditions that may be imposed by the Company with respect to the
withholding of taxes.
8.5. NON-TRANSFERABILITY OF OPTIONS AND SHARES OF STOCK UNDERLYING OPTIONS.
8.5.1. Except as provided in Section 8.5.3 hereof, during the
lifetime of an Optionee, only the Optionee (or, in the event of
legal incapacity or incompetence, the Optionee's guardian or legal
representative) may exercise an Option. Except as provided in
Section 8.5.3 hereof, no Option shall be assignable or
transferable by the Optionee to whom it is granted, other than by
will or the laws of descent and distribution except pursuant to a
domestic relations order.
8.5.2. With respect to Approved 102 Options, as long as Options
and/or shares of Stock are held by the Trustee on behalf of the
Optionee, all rights of the Optionee over the Options and the
shares of Stock are personal, and cannot be transferred, assigned,
pledged or mortgaged, other than by will or pursuant to the laws
of descent and distribution.
8.5.3. An Optionee may transfer by gift all or part of an Option
that is not an Incentive Option to any "family member" (as that
term is defined under Rule 701(c)(3) of the Securities Act, as
amended or any successor provision of law); provided, that (x)
there shall be no consideration for any such transfer and (y)
subsequent transfers of transferred Options shall be prohibited
except those made in accordance with this Section 8.5.3 or by will
or the laws of descent and distribution or pursuant to a domestic
relations order and otherwise in compliance with applicable U.S.
federal and state and foreign securities laws. Following any
permitted transfer hereunder, any transferred Option shall
continue to be subject to the same terms and conditions as were
applicable immediately prior to such transfer, provided that for
purposes of this Section 8.5.3 the term "Optionee" shall be deemed
to refer to the transferee and the transferee shall agree to be
bound by the terms and conditions of the Options and this Plan.
The events of termination of the employment or other relationship
of Section 8.9 hereof shall continue to be applied with respect to
the original Optionee, following which the Option shall be
exercisable by the transferee only to the extent and for the
periods specified in Section 8.6, 8.7, 8.8, or 8.9 hereof.
8.6. TERMINATION BY REASON OF DEATH. Unless otherwise determined by the
Committee at grant, if any Optionee's employment with or service to the Company
or any Subsidiary terminates by reason of death, the Options granted to such
Employee may thereafter be exercised, to the extent then exercisable (or on such
accelerated basis as the Committee shall determine at or after grant), by the
legal representative of the estate or by the legatee of the Optionee under the
will of the Optionee, for a period of one year after the date of such death or
until the expiration of the stated term of such Option as provided under the
Plan, whichever period is shorter.
8.7. TERMINATION BY REASON OF DISABILITY. Unless otherwise determined by the
Committee at grant, if any Optionee's employment with or service to the Company
or any Subsidiary terminates by reason of total and permanent disability, any
Option held by such Optionee may thereafter be exercised, to the extent it was
exercisable at the time of termination due to Disability (or on such accelerated
basis as the Committee shall determine at or after grant), but may not be
exercised after 30 days after the date of such termination of employment or
service or the expiration of the stated term of such Option, whichever period is
shorter; provided, however, that, if the Optionee dies within such 30-day
period, any unexercised Option held by such Optionee shall thereafter be
exercisable to the extent to which it was exercisable at the time of death for a
period of one year after the date of such death or for the stated term of such
Option, whichever period is shorter.
8.8. TERMINATION BY REASON OF RETIREMENT. Unless otherwise determined by the
Committee at grant, if any Optionee's employment with or service to the Company
or any Subsidiary terminates by reason of Normal or Early Retirement (as such
terms are defined below), any Option held by such Optionee may thereafter be
exercised to the extent it was exercisable at the time of such Retirement (or on
such accelerated basis as the Committee shall determine at or after grant), but
may not be exercised after 90 days after the date of such termination of
employment or service or the expiration of the stated term of such Option,
whichever period is shorter; provided, however, that, if the Optionee dies
within such 90-day period, any unexercised Option held by such Optionee shall
thereafter be exercisable, to the extent to which it was exercisable at the time
of death, for a period of one year after the date of such death or for the
stated term of such Option, whichever period is shorter.
For purposes of this paragraph, "Normal Retirement" shall mean retirement
from active employment with the Company or any Subsidiary on or after the normal
retirement date specified in the applicable Company or Subsidiary pension plan
or if no such pension plan exists, age 65, and "Early Retirement" shall mean
retirement from active employment with the Company or any Subsidiary pursuant to
the early retirement provisions of the applicable Company or Subsidiary pension
plan or if no such pension plan exists, age 55.
8.9. OTHER TERMINATION. Unless otherwise determined by the Committee at
grant, if any Optionee's employment with or service to the Company or any
Subsidiary terminates for any reason other than death, Disability or Normal or
Early Retirement, the Option shall thereupon terminate, except that the portion
of any Option that was exercisable on the date of such termination of employment
or service may be exercised for the lesser of 90 days after the date of
termination or the balance of such Option's term if the Optionee's employment or
service with the Company or any Subsidiary is terminated by the Company or such
Subsidiary without cause (the determination as to whether termination was for
cause to be made by the Committee). The transfer of an Optionee from the employ
of or service to the Company to the employ of or service to a Subsidiary, or
vice versa, or from one Subsidiary to another, shall not be deemed to constitute
a termination of employment or service for purposes of the Plan.
8.10. OPTION AGREEMENT. Each Option granted pursuant to the Plan, shall be
evidenced by a written Option Agreement between the Company and the Optionee, in
such form as the Committee shall from time to time approve. Each Option
Agreement shall state, among other matters, the number of shares of Stock to
which the Option relates, the type of Option granted thereunder (whether a
Capital Gains Option, Ordinary Income Option, Unapproved 102 Option, 3(i)
Option, Incentive Option or Nonqualified Option), the Vesting Dates, the
exercise price per share, the expiration date and such other terms and
conditions as the Committee in its discretion may prescribe, provided that they
are consistent with this Plan.
9. CHANGE IN CONTROL.
9.1. Upon the occurrence of a "Change in Control" (as hereinafter defined),
the Committee may accelerate the vesting and exercisability of outstanding
Options, in whole or in part, as determined by the Committee in its sole
discretion. In its sole discretion, the Committee may also determine that, upon
the occurrence of a Change in Control, each outstanding Option shall terminate
within a specified number of days after notice to the Optionee thereunder, and
each such Optionee shall receive, with respect to each share of Company Stock
subject to such Option, an amount equal to the excess of the Fair Market Value
of such shares immediately prior to such Change in Control over the exercise
price per share of such Option; such amount shall be payable in cash, in one or
more kinds of property (including the property, if any, payable in the
transaction) or a combination thereof, as the Committee shall determine in its
sole discretion.
9.2. For purposes of the Plan, a Change in Control shall be deemed to have
occurred if:
9.2.1. a tender offer (or series of related offers) shall be made
and consummated for the ownership of 50% or more of the
outstanding voting securities of the Company, unless as a result
of such tender offer more than 50% of the outstanding voting
securities of the surviving or resulting corporation shall be
owned in the aggregate by the shareholders of the Company (as of
the time immediately prior to the commencement of such offer), any
employee benefit plan of the Company or its Subsidiaries, and
their affiliates;
9.2.2. the Company shall be merged or consolidated with another
corporation, unless as a result of such merger or consolidation
more than 50% of the outstanding voting securities of the
surviving or resulting corporation shall be owned in the aggregate
by the shareholders of the Company (as of the time immediately
prior to such transaction), any employee benefit plan of the
Company or its Subsidiaries, and their affiliates;
9.2.3. the Company shall sell substantially all of its assets to
another corporation that is not wholly owned by the Company,
unless as a result of such sale more than 50% of such assets shall
be owned in the aggregate by the shareholders of the Company (as
of the time immediately prior to such transaction), any employee
benefit plan of the Company or its Subsidiaries and their
affiliates; or
9.2.4. a Person (as defined below) shall acquire 50% or more of the
outstanding voting securities of the Company (whether directly,
indirectly, beneficially or of record), unless as a result of such
acquisition more than 50% of the outstanding voting securities of
the surviving or resulting corporation shall be owned in the
aggregate by the shareholders of the Company (as of the time
immediately prior to the first acquisition of such securities by
such Person), any employee benefit plan of the Company or its
Subsidiaries, and their affiliates.
9.3. For purposes of this Section 9, ownership of voting securities shall
take into account and shall include ownership as determined by applying the
provisions of Rule 13d-3(d)(I)(i) (as in effect on the date hereof) under the
Exchange Act. In addition, for such purposes, "Person" shall have the meaning
given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections
13(d) and 14(d) thereof; however, a Person shall not include (A) the Company or
any of its Subsidiaries; (B) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any of its Subsidiaries; (C) an
underwriter temporarily holding securities pursuant to an offering of such
securities; or (D) a corporation owned, directly or indirectly, by the
shareholders of the Company in substantially the same proportion as their
ownership of stock of the Company.
9.4. The Committee may determine, at its sole discretion, that the terms of
Options granted pursuant to the Plan shall provide for additional benefits to be
granted to the Optionee in the event of a Change in Control. Any such additional
benefits will not be subject to any tax benefits granted to Optionees in
connection with the Award and will be taxed pursuant to the provisions of the
Ordinance and the Code, as applicable.
10. EFFECTIVE DATE OF PLAN; TERM OF PLAN. The Plan shall be effective on
April 23, 2007; provided, however, that the Plan shall subsequently be approved
by majority vote of the Company's stockholders generally entitled to vote at a
meeting of stockholders not later than the April 22, 2008. No Option shall be
granted pursuant to the Plan on or after April 22, 2017, but Options theretofore
granted may extend beyond that date.
11. PURCHASE FOR INVESTMENT. Unless the Options and shares covered by the
Plan have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), or the Company has determined that such registration is
unnecessary, each person exercising an Option under the Plan may be required by
the Company to give a representation in writing that he is acquiring the shares
for his own account for investment and not with a view to, or for sale in
connection with, the distribution of any part thereof.
12. TAXES.
12.1. Any tax consequences arising from the grant or exercise of any Option,
from the payment for Stock covered thereby or from any other event or act (of
the Company and/or its Subsidiaries, the Trustee or the Optionee), hereunder,
shall be borne solely by the Optionee. The Company and/or its Subsidiaries
and/or the Trustee shall withhold taxes according to the requirements under the
applicable laws, rules, and regulations, including withholding taxes at source.
Furthermore, the Optionee shall agree to indemnify the Company and/or its
Subsidiaries and/or the Trustee and hold them harmless against and from any and
all liability for any such tax or interest or penalty thereon, including without
limitation, liabilities relating to the necessity to withhold, or to have
withheld, any such tax from any payment made to the Optionee.
12.2. The Company and/or, when applicable, the Trustee shall not be required
to release any Stock certificate to an Optionee until all required payments have
been fully made.
12.3. To the extent provided by the terms of an Option Agreement, the
Optionee may satisfy any tax withholding obligation relating to the exercise or
acquisition of tocks under an Option by any of the following means (in addition
to the Company's right to withhold from any compensation paid to the Optionee by
the Company) or by a combination of such means: (i) tendering a cash payment;
(ii) subject to the Committee's approval on the payment date, authorizing the
Company to withhold Shares from the Shares otherwise issuable to the Optionee as
a result of the exercise or acquisition of Shares under the Option in an amount
not to exceed the minimum amount of tax required to be withheld by law; or (iii)
subject to Committee approval on the payment date, delivering to the Company
owned and unencumbered Shares; provided that Shares acquired on exercise of
Options have been held for at least 6 months from the date of exercise.
12.4. The Company may make such provisions as it may deem appropriate,
consistent with applicable law, in connection with any Options granted under the
Plan with respect to the withholding of any taxes (including capital gains,
income or employment taxes) or any other tax matters.
13. PUBLIC OFFERING. As a condition of Participation in this Plan, each
Optionee shall be obligated to cooperate with the Company and the underwriters
in connection with any public offering of the Company's securities and any
transactions relating to a public offering, and shall execute and deliver any
agreements and documents, including without limitation, a lock-up agreement,
that may be requested by the Company or the underwriters. The Optionees'
obligations under this Section 13 shall apply to any Stock issued under the Plan
as well as to any and all other securities of the Company or its successor for
which Stock may be exchanged or into which Stock may be converted.
14. AMENDMENT AND TERMINATION.
14.1. The Board may amend, suspend, or terminate the Plan, except that no
amendment shall be made that would impair the rights of any Optionee under any
Option theretofore granted without the Optionee's consent, and except that no
amendment shall be made which, without the approval of the stockholders of the
Company would:
14.1.1. materially increase the number of shares that may be issued
under the Plan, except as is provided in Section 3.3;
14.1.2. materially increase the benefits accruing to the Optionees
under the Plan;
14.1.3. materially modify the requirements as to eligibility for
participation in the Plan;
14.1.4. decrease the exercise price of an Incentive Option to less
than 100% of the Fair Market Value per share of Stock on the date
of grant thereof or the exercise price of a Nonqualified Option to
less than 100% of the Fair Market Value per share of Stock on the
date of grant thereof; or
14.1.5. extend the term of any Option beyond that provided for in
Section 8.2.
14.2. The Committee may amend the terms of any Option theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any Optionee without the Optionee's consent. The Committee may also substitute
new Options for previously granted Options, including options granted under
other plans applicable to the participant and previously granted Options having
higher option prices, upon such terms as the Committee may deem appropriate.
The Committee may at any time or times amend the Plan or any outstanding
Award for any purpose which may at the time be permitted by law, or may at any
time terminate the Plan as to any further grants of Awards, provided that
(except to the extent expressly required or permitted by the Plan) no such
amendment will, without the approval of the stockholders of the Company,
effectuate a change for which stockholder approval is required in order for the
Plan to continue to qualify for the award of Incentive Options under Section 422
of the Code.
It is the intention of the Board that the Plan comply strictly with the
provisions of Section 409A of the Code, the Treasury Regulations and other
Internal Revenue Service guidance promulgated thereunder (the "Section 409A
Rules") and the Committee shall exercise its discretion in granting Awards
hereunder (and the terms of such Awards), accordingly. The Plan and any grant of
an Award hereunder may be amended from time to time (without, in the case of an
Award, the consent of the Participant) as may be necessary or appropriate to
comply with the Section 409A Rules.
15. RE-PRICING OF OPTIONS; REPLACEMENT OPTIONS. The Company shall not
re-price any Options or issue any replacement Options unless the Option
re-pricing or Option replacement shall have been approved by the holders of a
majority of the outstanding shares of the voting stock of the Company generally
entitled to vote at a meeting of stockholders.
16. GOVERNMENT REGULATIONS.
16.1. The Plan, and the grant and exercise of Options hereunder, and the
obligation of the Company to sell and deliver shares under such Options, shall
be subject to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies, national securities exchanges and interdealer
quotation systems as may be required.
17. GENERAL PROVISIONS.
17.1 CERTIFICATES. All certificates for shares of Stock delivered under the
Plan shall be subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other requirements
of the Securities and Exchange Commission, or other securities commission having
jurisdiction, any applicable Federal or state securities law, any stock exchange
or interdealer quotation system upon which the Stock is then listed or traded
and the Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions.
17.2 EMPLOYMENT MATTERS. The adoption of the Plan shall not confer upon any
Optionee of the Company or any Subsidiary any right to continued employment or,
in the case of an Optionee who is a director, continued service as a director,
with the Company or a Subsidiary, as the case may be, nor shall it interfere in
any way with the right of the Company or any Subsidiary to terminate the
employment of any of its employees, the service of any of its directors or the
retention of any of its consultants or advisors at any time.
17.3 LIMITATION OF LIABILITY. No member of the Board or the Committee, or
any officer or employee of the Company acting on behalf of the Board or the
Committee, shall be personally liable for any action, determination or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Committee and each and any officer or employee of
the Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation. Such indemnification shall be in addition to
any rights of indemnification such person may have as a director or otherwise
under the Company's incorporation documents, any agreement, any vote of
shareholders or disinterested directors, insurance policy or otherwise.
17.4 REGISTRATION OF STOCK. Notwithstanding any other provision in the
Plan, no Option may be exercised unless and until the Stock to be issued upon
the exercise thereof has been registered under the Securities Act and applicable
state securities laws, or are, in the opinion of counsel to the Company, exempt
from such registration in the United States. The Company shall not be under any
obligation to register under applicable federal or state securities laws any
Stock to be issued upon the exercise of an Option granted hereunder in order to
permit the exercise of an Option and the issuance and sale of the Stock subject
to such Option, although the Company may in its sole discretion register such
Stock at such time as the Company shall determine. If the Company chooses to
comply with such an exemption from registration, the Stock issued under the Plan
may, at the direction of the Committee, bear an appropriate restrictive legend
restricting the transfer or pledge of the Stock represented thereby, and the
Committee may also give appropriate stop transfer instructions with respect to
such Stock to the Company's transfer agent.
18. GOVERNING LAW; JURISDICTION. The Plan shall be governed by and
construed and enforced in accordance with the laws of the State of Israel
applicable to contracts made and to be performed therein, without giving effect
to the principles of conflict of laws, subject to the terms of Section 1.4
hereof. The competent courts of Tel-Aviv, Israel shall have sole jurisdiction in
any matters pertaining to the Plan.
NESS TECHNOLOGIES, INC.
April 23, 2007
