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EXHIBIT 4.5
NETECT LTD.
1998 INTERNATIONAL EMPLOYEE STOCK PLAN
1. PURPOSE. The purpose of the Netect Ltd. 1998 International Employee
Stock Plan (the "Plan") is to encourage key employees of all current and future
non-Israeli subsidiaries (herein collectively referred to as "Related
Corporations") of Netect Ltd., an Israeli corporation (the "Company") and other
non-Israeli individuals who render services to the Company or a Related
Corporation, by providing opportunities to participate in the ownership of the
Company and its future growth through (a) the grant of options which qualify as
"incentive stock options" ("ISOs") under Section 422(b) of the Internal Revenue
Code of 1986, as amended (the "Code"); (b) the grant of options which do not
qualify as ISOs ("Non-Qualified Options"); (c) awards of stock in the Company
("Awards"); and (d) opportunities to make direct purchases of stock in the
Company ("Purchases"). Both ISOs and Non-Qualified Options are referred to
hereafter individually as an "Option" and collectively as "Options." Options,
Awards and authorizations to make Purchases are referred to hereafter
collectively as "Stock Rights." As used herein, the terms "parent" and
"subsidiary" mean "parent corporation" and "subsidiary corporation,"
respectively, as those terms are defined in Section 424 of 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, subject to paragraph 2(D) (relating to
compliance with Section 162(m) of the Code), 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 Stock
Right by the Board (if so required by applicable state 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 employees eligible under paragraph 3 to receive
ISOs) ISOs shall be granted, and to whom (from among the
class of individuals and entities eligible under paragraph 3
to receive Non-Qualified Options and Awards and to make
Purchases) Non-Qualified Options, Awards and authorizations
to make Purchases may be granted; (ii) determine the time or
times at which Options or Awards shall be granted or
Purchases made; (iii) determine the purchase price of shares
subject to each Option or Purchase, which prices shall not be
less than the minimum price specified in paragraph 6; (iv)
determine whether each Option granted shall be an ISO or a
Non-Qualified Option; (v) determine (subject to paragraph 7)
the time or times when each Option shall become exercisable
and the duration of the exercise period; (vi) extend the
period during which outstanding Options may be exercised;
(vii) determine whether restrictions such as repurchase
options are to be imposed on shares subject to Options,
Awards and Purchases
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and the nature of such restrictions, if any; and (viii)
interpret the Plan and prescribe and rescind rules and
regulations relating to it. If the Committee determines to
issue a Non-Qualified Option, it shall take whatever actions
it deems necessary, under Section 422 of the Code and the
regulations promulgated thereunder, to ensure that such
Option is not treated as an ISO. The interpretation and
construction by the Committee of any provisions of the Plan
or of any Stock Right 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 Stock Right granted under it.
B. COMMITTEE ACTIONS. The Committee may select one
of its members as its chairman, and shall hold meetings at
such time and place as it may determine. A majority of the
Committee shall constitute a quorum and acts of a majority of
the members of the Committee at a meeting at which a quorum
is present, or acts reduced to or approved in writing by all
the members of the Committee (if consistent with applicable
state law), shall be 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.
C. GRANT OF STOCK RIGHTS TO BOARD MEMBERS.
1) Stock Rights may be granted to members of the Board.
All grants of Stock Rights to members of the Board shall in
all respects be made in accordance with the provisions of
this Plan applicable to other eligible persons. Members of
the Board who either (i) are eligible to receive grants of
Stock Rights pursuant to the Plan or (ii) have been granted
Stock Rights may vote on any matters affecting the
administration of the Plan or the grant of any Stock Rights
pursuant to the Plan, except that no such member shall act
upon the granting to himself or herself of Stock Rights, but
any such member may be counted in determining the existence
of a quorum at any meeting of the Board during which action
is taken with respect to the granting to such member of Stock
Rights.
2) No Options shall be awarded to directors or
shareholders or other interested parties, directly or
indirectly, other than: (i) an employee of the company or
subsidiary; (ii) members of Advisory Committee if
established, (iii) directors who do not hold equity or rights
convertible or exercisable into equity, except by a unanimous
vote of the Board of Directors
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D. PERFORMANCE-BASED COMPENSATION. The Board, in its
discretion, may take such action as may be necessary to
ensure that Stock Rights granted under the Plan qualify as
"qualified performance-based compensation" within the meaning
of Section 162(m) of the Code and applicable regulations
promulgated thereunder ("Performance-Based Compensation").
Such action may include, in the Board's discretion, some or
all of the following (i) if the Board determines that Stock
Rights granted under the Plan generally shall constitute
Performance-Based Compensation, the Plan shall be
administered, to the extent required for such Stock Rights to
constitute Performance-Based Compensation, by a Committee
consisting solely of two or more "outside directors" (as
defined in applicable regulations promulgated under Section
162(m) of the Code), (ii) if any Non-Qualified Options with
an exercise price less than the fair market value per
Ordinary Share are granted under the Plan and the Board
determines that such Options should constitute
Performance-Based Compensation, such options shall be made
exercisable only upon the attainment of a pre-established,
objective performance goal established by the Committee, and
such grant shall be submitted for, and shall be contingent
upon shareholder approval and (iii) Stock Rights granted
under the Plan may be subject to such other terms and
conditions as are necessary for compensation recognized in
connection with the exercise or disposition of such Stock
Right or the disposition of Ordinary Shares acquired pursuant
to such Stock Right, to constitute Performance-Based
Compensation.
3. ELIGIBLE EMPLOYEES AND OTHERS. ISOs may be granted only to
employees of the Company or any Related Corporation. Non-Qualified Options,
Awards and authorizations to make Purchases may be granted to any employee,
officer or director (whether or not also an employee) or consultant of the
Company or any Related Corporation. The Committee may take into consideration a
recipient's individual circumstances in determining whether to grant a Stock
Right. The granting of any Stock Right to any individual or entity shall
neither entitle that individual or entity to, nor disqualify such individual or
entity from, participation in any other grant of Stock Rights.
4. STOCK. The stock subject to Stock Rights shall be authorized but
unissued Ordinary Shares of the Company, NIS .01 par value per share (the
"Ordinary Shares"). The aggregate number of shares which may be issued pursuant
to the Plan is 770,000, 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, the unpurchased Ordinary Shares subject to
such Option shall again be available for grants of Stock Rights under the Plan.
No employee of the Company or any Related Corporation may be granted
Options to acquire, in the aggregate, more 364,000 Ordinary Shares under the
Plan during any fiscal year of the Company. 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, the
shares subject to such Option shall be included in the determination of the
aggregate number of Ordinary Shares deemed to have been granted to such
employee under the Plan.
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5. GRANTING OF STOCK RIGHTS. Stock Rights may be granted under the
Plan at any time on or after February 19, 1998 and prior to February 18, 2008.
The date of grant of a Stock Right under the Plan will be the date specified by
the Committee at the time it grants the Stock Right; 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; ISO LIMITATIONS.
A. PRICE FOR NON-QUALIFIED OPTIONS, AWARDS AND
PURCHASES. Subject to paragraph 2(D) (relating to compliance
with Section 162(m) of the Code), the exercise price per
share specified in the agreement relating to each
Non-Qualified Option granted, and the purchase price per
share of stock granted in any Award or authorized as a
Purchase, under the Plan may be less than the fair market
value of an Ordinary Share of the Company on the date of
grant; provided that, in no event shall such exercise price
or such purchase price be less than the minimum legal
consideration required therefor under the laws of any
jurisdiction in which the Company or its successors in
interest may be organized.
B. PRICE FOR ISOS. The exercise price per share
specified in the agreement relating to each ISO granted under
the Plan shall not be less than the fair market value per
Ordinary Share on the date of such grant. In the case of an
ISO to be granted to an employee owning stock possessing more
than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Related
Corporation, the price per share specified in the agreement
relating to such ISO shall not be less than one hundred ten
percent (110%) of the fair market value per Ordinary Share on
the date of grant. For purposes of determining stock
ownership under this paragraph, the rules of Section 424(d)
of the Code shall apply.
C. $100,000 ANNUAL LIMITATION ON ISO VESTING. Each
eligible employee may be granted Options treated as ISOs only
to the extent that, in the aggregate under this Plan and all
incentive stock option plans of the Company and any Related
Corporation, ISOs do not become exercisable for the first
time by such employee during any calendar year with respect
to stock having a fair market value (determined at the time
the ISOs were granted) in excess of $100,000. The Company
intends to designate any Options granted in excess of such
limitation as Non-Qualified Options, and the Company shall
issue separate certificates to the optionee with respect to
Options that are Non-Qualified Options and Options that are
ISOs.
D. DETERMINATION OF FAIR MARKET VALUE. If, at the
time an Option is granted under the Plan, the Company's
Ordinary Shares are publicly traded, "fair market value"
shall be determined as of the date of grant or, if the prices
or quotes discussed in this sentence are unavailable for such
date, the last business day for
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which such prices or quotes are available prior to the date
of grant and shall mean (i) the average (on that date) of the
high and low prices of an Ordinary Share on the principal
national securities exchange on which the Ordinary Shares are
traded, if the Ordinary Shares are then traded on a national
securities exchange; or (ii) the last reported sale price (on
that date) of an Ordinary Share on the Nasdaq National
Market, if the Ordinary Shares are not 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 Ordinary Shares are not reported on the
Nasdaq National Market. If the Ordinary Shares are not
publicly traded at the time an Option is granted under the
Plan, "fair market value" shall mean the fair value of an
Ordinary Share as determined by the Committee after taking
into consideration all factors which it deems appropriate,
including, without limitation, recent sale and offer prices
of an Ordinary Share in private transactions negotiated at
arm's length.
7. OPTION DURATION. Subject to earlier termination as provided in
paragraphs 9 and 10 or in the agreement relating to such Option, each Option
shall expire on the date specified by the Committee, but not more than (i) ten
years from the date of grant in the case of Options generally and (ii) five
years from the date of grant in the case of ISOs granted to an employee owning
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Related Corporation, as
determined under paragraph 6(B). Subject to earlier termination as provided in
paragraphs 9 and 10, the term of each ISO shall be the term set forth in the
original instrument granting such ISO, except with respect to any part of such
ISO that is converted into a Non-Qualified Option pursuant to paragraph 16.
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, provided, however, that each
installment (other than the final exercise for shares subject
to the Option) may be exercised only in lots of five (5)
shares.
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D. ACCELERATION OF VESTING. The Committee shall have
the right to accelerate the date that any installment of any
Option becomes exercisable. In the event of merger or
consolidation which results in a change in more than 50% of
the members of the Board (a "Change in Control"), any
unexercised Options granted under the plan to an Officer of
the Company (an employee whose title is vice president or
above), shall have vesting accelerated by 1 year upon the
effective date of the Change in Control. However, if any
Officer is terminated for any reason other than for cause
within six months of such Change in Control, any unvested
Options granted to such Officer shall immediately vest on the
date of termination. As used herein, "cause" shall mean
conduct involving one or more of the following: (i) the
substantial and continuing failure of the Employee, after
notice thereof, to render services to the Company or Related
Corporation in accordance with the terms or requirements of
his or her employment; (ii) disloyalty, gross negligence,
willful misconduct, dishonesty or breach of fiduciary duty to
the Company or Related Corporation; (iii) the commission of
an act of embezzlement or fraud; (iv) deliberate disregard of
the rules or policies of the Company or Related Corporation
which results in direct or indirect loss, damage or injury to
the Company or Related Corporation; (v) the unauthorized
disclosure of any trade secret or confidential information of
the Company or Related Corporation; or (vi) the commission of
an act which constitutes unfair competition with the Company
or Related Corporation or which induces any customer or
supplier to breach a contract with the Company or Related
Corporation. Notwithstanding the foregoing, the Committee
shall not, without the consent of an optionee, accelerate the
permitted exercise date of any installment of any Option
granted to any employee as an ISO (and not previously
converted into a Non-Qualified Option pursuant to paragraph
16) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as
described in paragraph 6(C).
9. TERMINATION OF EMPLOYMENT. Unless otherwise specified in the
agreement relating to such ISO, if an ISO optionee ceases to be employed by the
Company and all Related Corporations other than by reason of death or
disability as defined in paragraph 10, no further installments of his or her
ISOs shall become exercisable, and his or her ISOs shall terminate on the
earlier of (a) three months after the date of termination of his or her
employment, or (b) their specified expiration dates, except to the extent that
such ISOs (or unexercised installments thereof) have been converted into
Non-Qualified Options pursuant to paragraph 16. For purposes of this paragraph
9, employment shall be considered as continuing uninterrupted during any bona
fide leave of absence (such as those attributable to illness, military
obligations or governmental service) provided that the period of such leave
does not exceed 90 days or, if longer, any period during which such optionee's
right to reemployment is guaranteed by statute or by contract. A bona fide
leave of absence with the written approval of the Committee shall not be
considered an interruption of employment under this paragraph 9, provided that
such written approval contractually obligates the Company or any Related
Corporation to continue the employment of the optionee after the approved
period of absence. ISOs granted under the Plan shall not be affected by any
change of employment within or among the Company and Related
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Corporations, so long as the optionee continues to be an employee of the
Company or any Related Corporation. Nothing in the Plan shall be deemed to give
any grantee of any Stock Right the right to be retained in employment or other
service by the Company or any Related Corporation for any period of time.
10. DEATH; DISABILITY.
A. DEATH. If an ISO optionee ceases to be employed
by the Company and all Related Corporations by reason of his
or her death, any ISO owned by such optionee may be
exercised, to the extent otherwise exercisable on the date of
death, by the estate, personal representative or beneficiary
who has acquired the ISO by will or by the laws of descent
and distribution, until the earlier of (i) the specified
expiration date of the ISO or (ii) six months from the date
of the optionee's death.
B. DISABILITY. If an ISO optionee ceases to be
employed by the Company and all Related Corporations by
reason of his or her disability, such optionee shall have the
right to exercise any ISO held by him or her on the date of
termination of employment, for the number of shares for which
he or she could have exercised it on that date, until the
earlier of (i) the specified expiration date of the ISO or
(ii) six months from the date of the termination of the
optionee's employment. 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 Stock Right 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 shall be exercisable only by such optionee.
Except as set forth in the previous sentence, during the lifetime of a grantee
each Stock Right shall be exercisable only by such grantee.
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 Ordinary Shares issuable
upon exercise of Options. The Committee may specify that any Non-Qualified
Option shall be subject to the restrictions set forth herein with respect to
ISOs, or to such other 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.
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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 Ordinary
Shares shall be subdivided or combined into a greater of
smaller number of shares or if the Company shall issue any
Ordinary Shares as a stock dividend on its outstanding
Ordinary Shares, the number of Ordinary Shares 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 Ordinary Shares 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
Ordinary Shares 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
Ordinary Shares, an optionee upon exercising an Option shall
be entitled to receive for the
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purchase price paid upon such exercise the securities he or
she would have received if he or she had exercised such
Option prior to such recapitalization or reorganization.
D. MODIFICATION OF ISOS. Notwithstanding the
foregoing, any adjustments made pursuant to subparagraphs A,
B or C with respect to ISOs shall be made only after the
Committee, after consulting with counsel for the Company,
determines whether such adjustments would constitute a
"modification" of such ISOs (as that term is defined in
Section 424 of the Code) or would cause any adverse tax
consequences for the holders of such ISOs. If the Committee
determines that such adjustments made with respect to ISOs
would constitute a modification of such ISOs or would cause
adverse tax consequences to the holders, it may refrain from
making such adjustments.
E. 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.
F. 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.
G. 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.
H. 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 Stock Rights 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 cash or by check, (b)
at
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the discretion of the Committee, through delivery of Ordinary Shares 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
grantee'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 Ordinary
Shares 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. If the
Committee exercises its discretion to permit payment of the exercise price of
an ISO by means of the methods set forth in clauses (b), (c), (d) or (e) of the
preceding sentence, such discretion shall be exercised in writing at the time
of the grant of the ISO in question. The holder of an Option 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
February 19, 1998, subject, with respect to the validation of ISOs granted
under the Plan, to approval of the Plan by the stockholders of the Company at
the next Meeting of Stockholders or, in lieu thereof, by written consent. If
the approval of stockholders is not obtained prior to February 19, 1999, any
grants of ISOs under the Plan made prior to that date will be rescinded. The
Plan shall expire at the end of the day on February 18, 2008 (except as to
Options outstanding on that date). Subject to the provisions of paragraph 5
above, Options may be granted under the Plan prior to the date of stockholder
approval of the Plan. The Board may terminate or amend the Plan in any respect
at any time, except that, without the approval of the stockholders obtained
within 12 months before or after the Board adopts a resolution authorizing any
of the following actions: (a) the total number of shares that may be issued
under the Plan may not be increased (except by adjustment pursuant to paragraph
13); (b) the provisions of paragraph 3 regarding eligibility for grants of ISOs
may not be modified; (c) the provisions of paragraph 6(B) regarding the
exercise price at which shares may be offered pursuant to ISOs may not be
modified (except by adjustment pursuant to paragraph 13); and (d) the
expiration date of the Plan may not be extended. Except as otherwise provided
in this paragraph 15, in no event may any action of the Board or stockholders
alter or impair the rights of a grantee, without such grantee's consent, under
any Stock Right previously granted to such grantee.
16. MODIFICATIONS OF ISOS; CONVERSION OF ISOS INTO NON-QUALIFIED
OPTIONS. Subject to paragraph 13(D), without the prior written consent of the
holder of an ISO, the Committee shall not alter the terms of such ISO
(including the means of exercising such ISO) if such alteration would
constitute a modification (within the meaning of Section 424(h)(3) of the
Code). The Committee, at the written request or with the written consent of any
optionee, may in its discretion take such actions as may be necessary to
convert such optionee's ISOs (or any installments or portions of installments
thereof) that have not been exercised on the date of
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conversion into Non-Qualified Options at any time prior to the expiration of
such ISOs, regardless of whether the optionee is an employee of the Company or
a Related Corporation at the time of such conversion. Such actions may include,
but shall not be limited to, extending the exercise period or reducing the
exercise price of the appropriate installments of such ISOs. At the time of
such conversion, the Committee (with the consent of the optionee) may impose
such conditions on the exercise of the resulting Non-Qualified Options as the
Committee in its discretion may determine, provided that such conditions shall
not be inconsistent with this Plan. Nothing in the Plan shall be deemed to give
any optionee the right to have such optionee's ISOs converted into
Non-Qualified Options, and no such conversion shall occur until and unless the
Committee takes appropriate action. Upon the taking of such action, the Company
shall issue separate certificates to the optionee with respect to Options that
are Non-Qualified Options and Options that are ISOs.
17. APPLICATION OF FUNDS. The proceeds received by the Company from
the sale of shares pursuant to Options granted and Purchases authorized under
the Plan shall be used for general corporate purposes.
18. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. By accepting an
ISO granted under the Plan, each optionee agrees to notify the Company in
writing immediately after such optionee makes a Disqualifying Disposition (as
described in Sections 421, 422 and 424 of the Code and regulations thereunder)
of any stock acquired pursuant to the exercise of ISOs granted under the Plan.
A Disqualifying Disposition is generally any disposition occurring on or before
the later of (a) the date two years following the date the ISO was granted or
(b) the date one year following the date the ISO was exercised.
19. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a
Non-Qualified Option, the transfer of a Non-Qualified Stock Option pursuant to
an arm's-length transaction, the grant of an Award, the making of a Purchase of
Ordinary Shares for less than its fair market value, the making of a
Disqualifying Disposition (as defined in paragraph 18), the vesting or transfer
of restricted stock or securities acquired on the exercise of an Option
hereunder, or the making of a distribution or other payment with respect to
such stock or securities, the Company may withhold taxes in respect of amounts
that constitute compensation includible in gross income. The Committee in its
discretion may condition (i) the exercise of an Option, (ii) the transfer of a
Non-Qualified Stock Option, (iii) the grant of an Award, (iv) the making of a
Purchase of Ordinary Shares for less than its fair market value, or (v) the
vesting or transferability of restricted stock or securities acquired by
exercising an Option, on the grantee's making satisfactory arrangement for such
withholding. Such arrangement may include payment by the grantee in cash or by
check of the amount of the withholding taxes or, at the discretion of the
Committee, by the grantee's delivery of previously held Ordinary Shares or the
withholding from the Ordinary Shares otherwise deliverable upon exercise of any
Option having an aggregate fair market value equal to the amount of such
withholding taxes.
20. GOVERNMENTAL REGULATION. The Company's obligation to sell and
deliver the Ordinary Shares under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.
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Government regulations may impose reporting or other obligations on
the Company with respect to the Plan. For example, the Company may be required
to send tax information statements to employees and former employees that
exercise ISOs under the Plan, and the Company may be required to file tax
information returns reporting the income received by grantees of Options in
connection with the Plan.
21. GOVERNING LAW. With respect to each grantee of a Stock Right, the
validity and construction of the Plan and the instruments evidencing Options
shall be governed by the laws of the jurisdiction whose laws govern the terms
of employment of said grantee.
Amendments
1) 100 for 1 stock split 6/25/98
2) re granting of options to directors 7/19/98 shareholders meeting
3) increase in option pool 10/15/98