EXHIBIT 4.2
ION NETWORKS, INC.
1998 STOCK OPTION PLAN
1998 U.K. Sub-Plan/U.K. Approved Rules
In pursuance of its powers under the Ion Networks, Inc. 1998 Stock Option Plan
(the "Plan"), the Board of Directors, or a duly appointed committee of the Board
of Directors (the "Committee") of Ion Networks, Inc. (the "Company") has adopted
these rules (the "UK Rules") for the purposes of operating the Plan with regard
to such options ("Options") which the UK Rules are expressed to extend at the
time when the Option is granted. Unless the context requires otherwise, all
expressions used in the UK Rules have the same meaning as the Plan. The Plan, as
supplemented by the UK Rules, is referred to hereinafter as the "Sub-Plan". For
the avoidance of doubt, the terms of the Plan (insofar as they have not been
disapplied by Rule p of the UK Rules) shall form part of the Sub-Plan.
(a) The shares over which Options may be granted under the
Sub-Plan form part of the ordinary share capital (as defined
in Section 832(1) Income and Corporation Taxes Act 1988)
("ICTA 1988") of the Company and must at all times, including
the time of grant and the time of exercise, comply with the
terms of the Plan and comply with the requirements of
paragraphs 10 to 14 Schedule 9 ICTA 1988.
(b) The companies participating in this Sub-Plan are the Company
and all companies controlled by the Company within the meaning
of Section 840 ICTA 1988 ("Subsidiaries").
(c) The shares of Common Stock to be acquired on exercise of the
Option in accordance with the terms of the Sub-Plan will be:
(i) fully paid up;
(ii) not redeemable;
(iii) not subject to any restrictions other than
restrictions which attach to all shares of the same
class. For the purpose of this clause, the term
"restrictions" includes restrictions which are deemed
to attach to the shares under any contract,
agreement, arrangement or condition as referred to in
paragraph 13 Schedule 9 ICTA 1988.
(d) An Option granted under this Sub-Plan shall not be exercisable
for more than ten years after the date of grant.
(e) To the extent any restrictions or contingencies have been
imposed by the Committee under the provisions contained in
Paragraph 3 of the Plan, these restrictions or contingencies
shall:
(i) be objective and set out in full at the time of grant
in the stock option contract referred to at Paragraph
11 of the Plan;
(ii) be such that rights to exercise such Option after the
fulfillment or attainment of any restrictions or
contingencies so specified shall not be dependent on
the further discretion of any person; and
(iii) not be capable of amendment, variation or waiver
unless an event occurs which causes the Committee
reasonably to consider that waived, varied or amended
restrictions or contingencies would be a fairer
measure of performance and would be no more difficult
to satisfy.
(f) No Option will be granted to an employee or director under
this Sub-Plan, or where an Option has previously been granted,
no Option shall be exercised by an optionholder if at that
time he has, or any time within the preceding 12 months has
had, a material interest for the purposes of Schedule 9 ICTA
1988 in either the Company being a close company (within the
meaning of Chapter I of Part XI of ICTA 1988) or in a company
being a close company which has control (within the meaning of
Section 840 ICTA 1988) of the Company or in a company being a
close company and a member of a consortium (as defined in
Section 187(7) ICTA 1988) which owns the Company. In
determining whether a company is a close company for this
purpose, Section 414(1)(a) ICTA 1988 (exclusion of companies
not resident in the United Kingdom) and Section 415 of ICTA
1988 (exclusion of certain companies with listed shares) shall
be disregarded.
(g) Notwithstanding any provision of the Plan, no Option will be
granted to an employee or director under this Sub-Plan in
relation to which the exercise price is manifestly less than
the fair market value (as defined in Section 187(2) ICTA 1988)
of the Company's Common Stock on the date of grant of the
Option. The exercise price shall be stated at the date of
grant of the Option and determined in accordance with
Paragraph 5 of the Plan, save that the exercise price of an
Option granted under the Sub-Plan shall be not less than one
hundred percent (100%) of the fair market value of the stock
on the date of grant, and shall be agreed in advance with the
Shares Valuation Division of the Inland Revenue or otherwise
determined with the agreement of the Shares Valuation
Division.
(h) Notwithstanding Paragraph 7 of the Plan, settlement of the
exercise price may not be in the form of previously acquired
shares of Common Stock and payment of the amount due on
exercise may not be made in installments.
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(i) Any alteration or amendment to this Sub-Plan shall not have
effect unless approved by the Board of Inland Revenue. The
Company undertakes to provide details thereof to the Board of
Inland Revenue without delay for this purpose.
(j) Notwithstanding Paragraph 11 of the Plan, any material
alteration of the standard form of stock option agreement
shall not have effect unless approved by the Board of Inland
Revenue.
(k) No adjustment pursuant to Paragraph 12 of the Plan shall be
made to any Option which has been granted under the Sub-Plan
unless such adjustment would be permitted under the Plan and
is a variation in the share capital of which the scheme shares
form part under paragraph 29 Schedule 9 ICTA 1988. Where so
permitted, no such adjustment shall take effect until the
approval of the Board of Inland Revenue shall have been
obtained thereto.
(l) For the avoidance of doubt it is stated that the Company is
the grantor as defined in paragraph 1(1) Schedule 9 ICTA 1988.
(m) Any Option granted to an employee or director under this
Sub-Plan shall be limited to take effect so that immediately
following such grant, the aggregate market value (determined
at the time prescribed by paragraph 28 Schedule 9 ICTA 1988
and calculated in accordance with the provisions of the said
Schedule 9) of shares of Common Stock which the optionholder
can acquire under this Sub-Plan and any other scheme or
schemes, not being a savings-related share option scheme,
approved under the said Schedule 9 and established by the
grantor or by any associated company (as defined in Section
416 ICTA 1988) of the grantor (and not exercised), shall not
exceed(pound)30,000 or such other sum as may be prescribed
from time to time by paragraph 28 Schedule 9 ICTA 1988,
provided always that this limit shall not exceed the
limitations set out in the Plan.
(n) An Option will only be granted under this Sub-Plan to an
employee (other than one who is a director) or a full-time
director of the Company or a subsidiary participating in this
Sub-Plan. For this purpose, a full-time director is one who is
employed by the Company required to work at least 25 hours a
week excluding meal-times in the business of the Company or
its Subsidiaries. For the avoidance of doubt an Option will
not be granted under this Sub-Plan to a consultant or director
who is not an employee of the Company or any of its
Subsidiaries, and all references in the Plan to Options
granted to consultants shall be disregarded.
(o) The Company shall, not later than 30 days after the actual
receipt of the written notice of exercise of an Option given
in accordance with the provisions of the Plan, together with
the payment of the aggregate exercise price in respect of the
shares of Common
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Stock to be issued or transferred pursuant to the exercise of
an Option, allot and issue credited as fully paid or transfer
to the Optionee and cause to be registered in his name the
number of shares of Common Stock specified in the written
notice.
(p) The following shall not form part of and shall therefore be
disregarded for the purposes of the Sub-Plan:
(i) in Paragraph 3 of the Plan, the words "the fair
market value of a share of Common Stock; whether and
under what conditions to restrict the sale or other
disposition of the shares of Common Stock acquired
upon the exercise of an Option and if so whether and
under what circumstances to waive such restriction;
whether to accelerate the date of exercise of any
option or installment; whether shares of Common Stock
may be issued upon the exercise of an option as
partly paid, and, if so, the dates when future
installments of the exercise price shall become due
and the amounts of such installment; and with the
consent of the optionee, to cancel or modify an
option, provided that the modified provision is
permitted to be included in an Option granted under
the terms of the Plan";
(ii) in the first paragraph of Paragraph 7, the
parenthetical that reads, "or the amount due on
exercise if the applicable Contract permits
installment payments" and the language from "(b)" to
the end of that paragraph; and
(iii) all references in the Plan to "Incentive Stock
Options" or "Non-Qualified Stock Options."
(q) This Sub-Plan shall not become effective in any manner until
and unless a closing occurs in connection with that certain
Share Purchase Agreement dated as of August 17, 1998, as
amended, by and among the Company, SolCom Systems Limited
("SolCom") and certain shareholders and shareholders'
representatives of SolCom.
ADOPTED ON BEHALF OF THE COMPANY:
By: /s/ Stephen B. Gray
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Stephen B. Gray
President and Chief Executive Officer
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