EXHIBIT 10.31
DATAWATCH CORPORATION
1996 INTERNATIONAL EMPLOYEE NON-QUALIFIED STOCK OPTION PLAN
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1. PURPOSE. This 1996 International Employee Non-Qualified Stock Option
Plan (the "Plan") is intended to provide incentives to employees and consultants
of Participating Subsidiaries (as defined in paragraph 3) of DATAWATCH
Corporation (the "Company") by providing them with opportunities to purchase
stock in the Company pursuant to options ("Non-Qualified Options" or "Options")
granted hereunder which do not qualify as "incentive stock options" ("ISOs")
under Section 422(b) of the United States Internal Revenue Code (the "Code").
2. ADMINISTRATION OF THE PLAN.
A. BOARD OR COMMITTEE ADMINISTRATION. The Plan shall be
administered by the Board of Directors of the Company (the "Board") or by
a committee appointed by the Board (the "Committee"). Hereinafter, all
references in this Plan to the "Committee" shall mean the Board if no
Committee has been appointed. Subject to ratification of the grant or
authorization of each Option by the Board (if so required by applicable
law), and subject to the terms of the Plan, the Committee shall have the
authority to (i) determine to whom, from among the class of individuals
and entities eligible under paragraph 3 to receive Options, Options may be
granted; (ii) determine the time or times at which Options shall be
granted; (iii) determine the option price of shares subject to each
Option, which price shall not be less than the minimum price specified in
paragraph 6; (iv) determine (subject to paragraph 7) the time or times
when each Option shall become exercisable and the duration of the exercise
period; (v) determine whether restrictions such as repurchase options are
to be imposed on shares subject to Options and the nature of such
restrictions, if any; and (vi) interpret the Plan and prescribe and
rescind rules and regulations relating to it. The Committee shall take
whatever actions it deems necessary, under Section 422 of the Code and the
regulations promulgated thereunder, to ensure that no Option issued
hereunder is treated as an ISO. The interpretation and construction by the
Committee of any provisions of the Plan or of any Option granted under it
shall be final unless otherwise determined by the Board. The Committee may
from time to time adopt such rules and regulations for carrying out the
Plan as it may deem advisable. No member of the Board or the Committee
shall be liable for any action or determination made in good faith with
respect to the Plan or any Option granted under it.
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B. COMMITTEE ACTIONS. The Committee may select one of its members
as its chairman, and shall hold meetings at such time and places as it may
determine. A majority of the Committee shall constitute a quorum and acts
by a majority of the members of the Committee, or acts reduced to or
approved in writing by a majority of the members of the Committee (if
consistent with applicable law), shall constitute the valid acts of the
Committee. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill
vacancies however caused, or remove all members of the Committee and
thereafter directly administer the Plan.
3. ELIGIBLE EMPLOYEES AND OTHERS. Non-Qualified Options may be granted
under the Plan to any employee or consultant of any Participating Subsidiary of
the Company. The Committee may take into consideration a recipient's individual
circumstances in determining whether to grant an Option. The granting of any
Option to any individual or entity shall neither entitle such grantee to, nor
disqualify such grantee from, participation in any other grant of Options. For
purposes of the Plan, the term "Participating Subsidiary" shall mean any present
or future subsidiary of the Company, as that term is defined in Section 424(f)
of the Code, incorporated outside of the United States.
4. STOCK. The stock subject to Options shall be authorized but unissued
shares of Common Stock of the Company, par value $.01 per share (the "Common
Stock"), or shares of Common Stock reacquired by the Company in any manner. The
aggregate number of shares which may be issued pursuant to the Plan is 200,000,
subject to adjustment as provided in paragraph 13. If any Option granted under
the Plan shall expire or terminate for any reason without having been exercised
in full or shall cease for any reason to be exercisable in whole or in part or
shall be repurchased by the Company, the shares of Common Stock subject to such
Option shall again be available for grants of Options under the Plan.
5. GRANTING OF OPTIONS. Options may be granted under the Plan at any time
on or after October 4, 1996 and prior to October 4, 2006. The date of grant of
an Option under the Plan will be the date specified by the Committee at the time
it grants the Option; provided, however, that such date shall not be prior to
the date on which the Committee acts to approve the grant.
6. MINIMUM OPTION PRICE.
The exercise price per share specified in the agreement relating to each
Non-Qualified Option granted under the Plan (the "Agreement"), may be less than
the fair market value of the Common Stock of the Company
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on the date of grant, but shall in no event be less than the minimum legal
consideration required therefor under the laws of the State of Delaware or the
laws of any jurisdiction in which the Company or its successors in interest may
be organized.
7. OPTION DURATION. Subject to earlier termination as provided in
paragraphs 9 and 10 or as specified in the Agreement relating to such Option,
each Option shall expire on the date specified by the Committee, but not more
than ten years from the date of grant.
8. EXERCISE OF OPTION. Subject to the provisions of paragraphs 9 through
12, each Option granted under the Plan shall be exercisable as follows:
A. VESTING. The Option shall either be fully exercisable on the
date of grant or shall become exercisable thereafter in such installments
as the Committee may specify.
B. FULL VESTING OF INSTALLMENTS. Once an installment becomes
exercisable it shall remain exercisable until expiration or termination of
the Option, unless otherwise specified by the Committee.
C. PARTIAL EXERCISE. Each Option or installment may be exercised
at any time or from time to time, in whole or in part, for up to the total
number of shares with respect to which it is then exercisable.
D. ACCELERATION OF VESTING. The Committee shall have the right to
accelerate the date that any installment of any Option becomes
exercisable.
9. TERMINATION OF BUSINESS RELATIONSHIP. Each Option may provide that it
shall terminate before its stated expiration date, upon terms specified by the
Committee, if the optionee ceases to be an employee or consultant of all
Participating Subsidiaries of the Company or of the Company (such relationship
hereinafter referred to as a "Business Relationship with the Company"). Nothing
in the Plan or any Option granted hereunder shall be deemed to give any optionee
the right to continue his or her Business Relationship with the Company for any
period of time.
10. DEATH; DISABILITY.
A. DEATH. Unless otherwise specified by the Committee, if an
optionee's Business Relationship with the Company terminates by reason of
death, his or her Option may be exercised, to the extent of the number of
shares with respect to which such optionee could
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have exercised it on the date of such optionee's death, by such optionee's
estate, personal representative or beneficiary who has acquired the Option
by will or by the laws of descent and distribution, at any time prior to
the earlier of the specified expiration date of the Option or 180 days
from the date of death.
B. DISABILITY. Unless otherwise specified by the Committee, if an
optionee's Business Relationship with the Company terminates by reason of
such optionee's disability, such optionee shall have the right to exercise
his or her Option, to the extent of the number of shares with respect to
which such optionee could otherwise have exercised it on the date his or
her Business Relationship with the Company terminated, at any time prior
to the earlier of the specified expiration date of the Option or 180 days
from the date of the termination of the optionee's Business Relationship
with the Company. For the purposes of the Plan, the term "disability"
shall mean "permanent and total disability" as defined in Section 22(e)(3)
of the Code or any successor statute.
11. ASSIGNABILITY. No Option shall be assignable or transferable by the
optionee except by will or by the laws of descent and distribution, and during
the lifetime of the optionee each Option shall be exercisable only by the
optionee.
12. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options. The Committee may specify that any Option
shall be subject to the restrictions set forth herein or, consistent with
paragraph 7, to such other or additional termination and cancellation provisions
as the Committee may determine. The Committee may from time to time confer
authority and responsibility on one or more of its own members and/or one or
more officers of the Company to execute and deliver such instruments. The proper
officers of the Company are authorized and directed to take any and all action
necessary or advisable from time to time to carry out the terms of such
instruments.
13. ADJUSTMENTS. Upon the occurrence of any of the following events, an
optionee's rights with respect to Options granted to such optionee hereunder
shall be adjusted as hereinafter provided, unless otherwise specifically
provided in the written agreement between the optionee and the Company relating
to such Option:
A. STOCK DIVIDENDS AND STOCK SPLITS. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller
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number of shares or if the Company shall issue any shares of Common Stock
as a stock dividend on its outstanding Common Stock, the number of shares
of Common Stock deliverable upon the exercise of Options shall be
appropriately increased or decreased proportionately, and appropriate
adjustments shall be made in the purchase price per share to reflect such
subdivision, combination or stock dividend.
B. CONSOLIDATIONS OR MERGERS. If the Company is to be consolidated
with or acquired by another entity in a merger or other reorganization in
which the holders of the outstanding voting stock of the Company
immediately preceding the consummation of such event, shall, immediately
following such event, hold, as a group, less than a majority of the voting
securities of the surviving or successor entity, or in the event of a sale
of all or substantially all of the Company's assets or otherwise (each, an
"Acquisition"), the Committee or the board of directors of any entity
assuming the obligations of the Company hereunder (the "Successor Board"),
shall, as to outstanding Options, either (i) make appropriate provision
for the continuation of such Options by substituting on an equitable basis
for the shares then subject to such Options either (a) the consideration
payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition, (b) shares of stock of the surviving or
successor corporation or (c) such other securities as the Successor Board
deems appropriate, the fair market value of which shall not materially
exceed the fair market value of the shares of Common Stock subject to such
Options immediately preceding the Acquisition; or (ii) upon written notice
to the optionees, provide that all Options must be exercised, to the
extent then exercisable or to be exercisable as a result of the
Acquisition, within a specified number of days of the date of such notice,
at the end of which period the Options shall terminate; or (iii) terminate
all Options in exchange for a cash payment equal to the excess of the fair
market value of the shares subject to such Options (to the extent then
exercisable or to be exercisable as a result of the Acquisition) over the
exercise price thereof.
C. RECAPITALIZATION OR REORGANIZATION. In the event of a
recapitalization or reorganization of the Company (other than a
transaction described in subparagraph B above) pursuant to which
securities of the Company or of another corporation are issued with
respect to the outstanding shares of Common Stock, an optionee upon
exercising an Option shall be entitled to receive for the purchase price
paid upon such exercise the securities such optionee would have received
if such optionee had exercised his or her Option prior to such
recapitalization or reorganization.
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D. DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, each Option will terminate
immediately prior to the consummation of such proposed action or at such
other time and subject to such other conditions as shall be determined by
the Committee.
E. ISSUANCES OF SECURITIES. Except as expressly provided herein,
no issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
price of shares subject to Options. No adjustments shall be made for
dividends paid in cash or in property other than securities of the
Company.
F. FRACTIONAL SHARES. No fractional shares shall be issued under
the Plan and the optionee shall receive from the Company cash in lieu of
such fractional shares.
G. ADJUSTMENTS. Upon the happening of any of the events described
in subparagraphs A, B or C above, the class and aggregate number of shares
set forth in paragraph 4 hereof that are subject to Options which
previously have been or subsequently may be granted under the Plan shall
also be appropriately adjusted to reflect the events described in such
subparagraphs. The Committee or the Successor Board shall determine the
specific adjustments to be made under this paragraph 13 and, subject to
paragraph 2, its determination shall be conclusive.
14. MEANS OF EXERCISING OPTIONS. An Option (or any part or installment
thereof) shall be exercised by giving written notice to the Company at its
principal office address, or to such transfer agent as the Company shall
designate. Such notice shall identify the Option being exercised and specify the
number of shares as to which such Option is being exercised, accompanied by full
payment of the purchase price therefor either (a) in United States dollars in
cash or by check, (b) at the discretion of the Committee, through delivery of
shares of Common Stock having a fair market value equal as of the date of the
exercise to the cash exercise price of the Option, (c) at the discretion of the
Committee, by delivery of the optionee's personal recourse note bearing interest
payable not less than annually at no less than 100% of the lowest applicable
Federal rate, as defined in Section 1274(d) of the Code, (d) at the discretion
of the Committee and consistent with applicable law, through the delivery of an
assignment to the Company of a sufficient amount of the proceeds from the sale
of the Common Stock acquired upon exercise of the Option and an authorization to
the broker or selling agent to pay that amount to the Company, which sale shall
be at the participant's direction at the time of exercise, or (e) at the
discretion of the Committee, by any combination of (a), (b), (c) and (d) above.
The holder of an Option
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shall not have the rights of a shareholder with respect to the shares covered by
such Option until the date of issuance of a stock certificate to such holder for
such shares. Except as expressly provided above in paragraph 13 with respect to
changes in capitalization and stock dividends, no adjustment shall be made for
dividends or similar rights for which the record date is before the date such
stock certificate is issued.
15. TERM AND AMENDMENT OF PLAN. This Plan was adopted by the Board on
October 4, 1996. The Plan shall expire at the end of the day on October 4, 2006
(except as to Options outstanding on that date). The Board may terminate or
amend the Plan in any respect at any time. In no event may action of the Board
alter or impair the rights of an optionee, without his or her consent, under any
Option previously granted to such optionee.
16. APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of shares pursuant to Options granted under the Plan shall be used for
general corporate purposes.
17. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the grant or exercise of
an Option, the vesting or transfer of an Option pursuant to an arm's-length
transaction, the vesting or transfer of restricted stock or securities acquired
upon the exercise of an Option hereunder, or the making of a distribution or
other payment with respect to such stock or securities, the Company or a
Participating Subsidiary may withhold taxes in respect of amounts that
constitute compensation includible in gross income. The Committee in its
discretion may condition (i) the grant or exercise of an Option, (ii) the
transfer of an Option or (iii) the vesting or transferability of restricted
stock or securities acquired by exercising a Option, on the optionee's making
satisfactory arrangement for such withholding. Such arrangement may include
payment by the optionee in cash or by check of the amount of the withholding
taxes or, at the discretion of the Committee, by the optionee's delivery of
previously held shares of Common Stock or the withholding from the shares of
Common Stock otherwise deliverable upon exercise of a Option shares having an
aggregate fair market value equal to the amount of such withholding taxes.
18. DETERMINATION OF FAIR MARKET VALUE OF COMMON STOCK. Whenever, under
the terms of any option agreement or in administering the Plan, it is necessary
or desirable to determine the fair market value of the Company's Common Stock,
the Committee shall make such determination in accordance with this Section.
"Fair Market Value" shall be determined as of the last business day for which
the prices or quotes discussed in this sentence are available prior to the date
such Option is granted and shall mean (i) the average (on that date) of the high
and low prices of the Common Stock on the principal national securities exchange
on which the Common Stock is traded, if the Common Stock is then traded on a
national securities exchange; or (ii) the last reported sale price (on that
date) of the Common Stock on the Nasdaq National Market, if the Common Stock is
not
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then traded on a national securities exchange; or (iii) the closing bid price
(or average of bid prices) last quoted (on that date) by an established
quotation service for over-the-counter securities, if the Common Stock is not
reported on the Nasdaq National Market. However, if the Common Stock is not
publicly traded at the time an Option is granted under the Plan, "fair market
value" shall be deemed to be the fair value of the Common Stock as determined by
the Committee after taking into consideration all factors which it deems
appropriate, including, without limitation, recent sale and offer prices of the
Common Stock in private transactions negotiated at arm's length.
19. GOVERNMENTAL REGULATION. The Company's obligation to sell and deliver
shares of the Common Stock under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.
Government regulations may impose reporting or other obligations on the
Company or a Participating Subsidiary with respect to the Plan. For example, the
Company or a Participating Subsidiary may be required to file tax information
returns with appropriate taxing authorities reporting the income received by
optionees in connection with the Plan.
20. GOVERNING LAW. The validity and construction of the Plan and the
instruments evidencing Options shall be governed by the laws of the Commonwealth
of Massachusetts, or the laws of any jurisdiction in which the Company or its
successors in interest may be organized.
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