THE DIALOG CORPORATION PLC
1997 STOCK OPTION PLAN
APPROVED IN PRINCIPLE BY BOARD OF DIRECTORS OCTOBER 16, 1997
APPROVED BY SHAREHOLDERS NOVEMBER 10, 1997
ADOPTED BY BOARD OF DIRECTORS NOVEMBER 13, 1997
TERMINATION DATE: NOVEMBER 9, 2007
1. PURPOSES.
(a) GENERAL PURPOSE. The purpose of the Plan is to provide a means
by which selected Employees of the Company based in the United States and
Employees of the United States Affiliates of the Company may be given an
opportunity to acquire beneficial ownership of securities of the Company by
purchasing ADSs of the Company, evidenced by ADRs of the Company
("Shares").
(b) SPECIFIC PURPOSE. The Company, by means of the Plan, seeks to
retain the services of persons who are now Employees of the Company based
in the United States and Employees of United States Affiliates of the
Company, to secure and retain the services of new Employees and to provide
incentives for such persons to exert maximum efforts for the success of the
Company and its Affiliates.
(c) TYPE OF OPTION. The Company intends that the Options issued
under the Plan shall, in the discretion of the Board, be either Incentive
Stock Options or Nonstatutory Stock Options. All Options shall be
separately designated Incentive Stock Options or Nonstatutory Stock Options
at the time of grant, and in such form as issued pursuant to Section 6 of
the Plan, and a separate certificate or certificates will be issued for
Shares purchased on exercise of each type of Option.
2. DEFINITIONS.
(a) "ACT" means the United Kingdom Income and Corporation Taxes
Act of 1988 and any modification, consolidation, re-enactment or extension
of such Act.
(b) "ADMISSION" means the admission by the Council of the London
Stock Exchange Limited of all or any of the ordinary share capital of the
Company to the Official List of the London Stock Exchange Limited first
becoming effective.
(c) "ADR" means an American Depositary Receipt, the evidentiary
document for an underlying holding of one or more ADS.
(d) "ADS" means an American Depositary Share of the Company
reserving four (4) Ordinary Shares. The ADSs are evidenced by ADRs and are
approved for quotation on the Nasdaq National Market under the symbol
"DIALY." Option Holders who exercise their Options under the Plan will
become holders of ADRs, with all the rights of ADR holders. For purposes of
the Code and the current double taxation convention between the United
States and the United Kingdom, beneficial owners of ADSs who are U.S.
persons will be treated as the beneficial owners of the underlying Ordinary
Shares represented by the ADSs evidenced by the ADRs.
(e) "AFFILIATE" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined
in Sections 424(e) and (f) respectively, of the Code.
(f) "ANY OTHER EXECUTIVE OPTION SCHEME" means any employee share
option scheme (other than any savings related share option scheme approved
by the United Kingdom Board of the Inland Revenue) adopted by the Company
or any of its Subsidiaries in general meeting which provides for the
granting of options to employees.
(g) "BOARD" means the Board of Directors of the Company.
(h) "CODE" means the United States Internal Revenue Code of 1986,
as amended.
(i) "COMMITTEE" means a Committee appointed by the Board in
accordance with subsection 3(c) of the Plan.
(j) "COMPANIES ACT" means the United Kingdom Companies Act of 1985
and any modifications, consolidation, re-enactment or extension of such
Act.
(k) "COMPANY" means the company registered in England with
registered number 1890236 and currently known as The Dialog Corporation
plc.
(l) "CONTINUOUS SERVICE" means the absence of any interruption or
termination of service to the Company or an Affiliate in the capacity of an
Employee. The Board or the Chief Executive Officer of the Company may
determine, in that party's sole discretion, whether Continuous Service
shall be considered interrupted in the case of: (i) any leave of absence
approved by the Board or the Chief Executive Officer of the Company,
including sick leave, military leave or any other personal leave; or (ii)
transfers between the Company, Affiliates or their successors.
(m) "CONTROL" has the same meaning as in Section 840 of the Act.
(n) "COVERED EMPLOYEE" means the Chief Executive Officer and the
four (4) other highest compensated officers of the Company for whom total
compensation is required to be reported to Shareholders of the Company
under the Exchange Act, as determined for purposes of Section 162(m) of the
Code.
(o) "DATE OF GRANT" means the date of the Board resolution
granting the Option.
(p) "DIRECTOR" means a member of the Board.
(q) "EARNINGS" means at the Board's discretion, either:
(i) the cash earnings including bonuses of the office(s) or
employments(s) by virtue of which an Employee is eligible to participate in
the Plan during the period of twelve (12) months ending on the relevant
Date of Grant or the last accounting period of the Company, if greater; or
(ii) the aggregate annual rate of cash earnings of an
Employee from all such office(s) and employment(s) on the Date of Grant of
an Option plus any cash bonus paid to him or her during the period of
twelve (12) months ending on that Date of Grant.
(r) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company who is based in the United States or employed by
any United States Affiliate of the Company and who, in the case of an
Officer or a Director, is required to devote substantially the whole of his
or her time and attention to the affairs of the employer corporation and
normally to work not less than twenty-five (25) hours per week (excluding
meal breaks).
(s) "EXCHANGE ACT" means the United States Securities Exchange Act
of 1934, as amended.
(t) "FAIR MARKET VALUE" means the value of a security, as
determined in good faith by the Board. If the security is listed on any
established stock exchange or traded on the Nasdaq National Market or the
Nasdaq SmallCap Market, the Fair Market Value of the security shall be
(rounded up where necessary to the nearest whole penny or cent) the closing
sales price for such security (or the closing bid, if no sales were
reported) as quoted on such exchange or market (or the exchange or market
with the greatest volume of trading in the relevant security of the
Company) on the trading day prior to the Date of Grant, as reported in The
Wall Street Journal or such other source as the Board deems reliable.
(u) "INCENTIVE STOCK OPTION" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code
and the regulations promulgated thereunder.
(v) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not
a current Employee or Officer of the Company or its parent or subsidiary,
does not receive compensation (directly or indirectly) from the Company or
its parent or subsidiary for services rendered as a consultant or in any
capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K
promulgated pursuant to the Securities Act ("Regulation S-K")), does not
possess an interest in any other transaction as to which disclosure would
be required under Item 404(a) of Regulation S-K, and is not engaged in a
business relationship as to which disclosure would be required under Item
404(b) of Regulation S-K; or (ii) is otherwise considered a "non-employee
director" for purposes of Rule 16b-3.
(w) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.
(x) "OFFICER" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(y) "OPTION" means a stock option granted pursuant to the Plan.
(z) "OPTION AGREEMENT" means a written agreement between the
Company and an Option Holder evidencing the terms and conditions of an
individual Option grant. Each Option Agreement shall be subject to the
terms and conditions of the Plan.
(aa) "OPTION HOLDER" means a person to whom an Option is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.
(bb) "ORDINARY SHARE" means a fully paid ordinary share of one
pence (1p) in the capital of the Company. The Company's Shares currently
are traded on the London Stock Exchange Limited in London, England.
(cc) "OUTSIDE DIRECTOR" means a Director who either (i) is not a
current employee of the Company or an "affiliated corporation" (within the
meaning of the Treasury regulations promulgated under Section 162(m) of the
Code), is not a former employee of the Company or an "affiliated
corporation" receiving compensation for prior services (other than benefits
under a tax qualified pension plan), was not an officer of the Company or
an "affiliated corporation" at any time, and is not currently receiving
direct or indirect remuneration from the Company or an "affiliated
corporation" for services in any capacity other than as a Director, or (ii)
is otherwise considered an "outside director" for purposes of Section
162(m) of the Code.
(dd) "PLAN" means this 1997 Stock Option Plan.
(ee) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3 as in effect with respect to the Company at the
time discretion is being exercised regarding the Plan.
(ff) "SECURITIES ACT" means the United States Securities Act of
1933, as amended.
(gg) "SUBSIDIARY" means a company which is both under the Control
of the Company and which is a subsidiary of the Company within the meaning
of Section 736 of the Companies Act.
3. ADMINISTRATION.
(a) GENERAL. The Plan shall be administered by the Board unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c) of the Plan.
(b) POWERS. Provided that none of the rights of an Option Holder
are altered adversely, the Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons
eligible under the Plan shall be granted Options; when and how each Option
shall be granted; whether an Option will be an Incentive Stock Option or a
Nonstatutory Stock Option; the provisions of each Option granted (which
need not be identical), including the time or times such Option may be
exercised in whole or in part; and the number of Shares for which an Option
shall be granted to each such person.
(2) To construe and interpret the Plan and Options
granted under it, and to establish, amend and revoke rules and regulations
for its administration. The Board, in the exercise of this power, may
correct any defect, omission or inconsistency in the Plan or in any Option
Agreement, in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.
(3) To amend the Plan or an Option as provided in Section
11 of the Plan.
(c) COMMITTEE. The Board may delegate administration of the Plan
to a Committee of the Board composed of two (2) or more members, all of the
members of which Committee may be, in the discretion of the Board,
Non-Employee Directors and/or Outside Directors. If administration is
delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
including the power to delegate to a subcommittee of two (2) or more
Outside Directors any of the administrative powers the Committee is
authorized to exercise (and references in this Plan to the Board shall
thereafter be to the Committee or such a subcommittee), subject, however,
to such resolutions, not inconsistent with the provisions of the Plan, as
may be adopted from time to time by the Board. The Board may abolish the
Committee at any time and revest in the Board the administration of the
Plan. Notwithstanding anything in this Section 3 of the Plan to the
contrary, the Board or the Committee may delegate to a committee of one or
more members of the Board the authority to grant Options to eligible
persons who (1) are not then subject to Section 16 of the Exchange Act
and/or (2) are either (i) not then Covered Employees and are not expected
to be Covered Employees at the time of recognition of income resulting from
such Option, or (ii) not persons with respect to whom the Company wishes to
comply with Section 162(m) of the Code.
4. SHARES SUBJECT TO THE PLAN.
(a) RESERVE. Subject to the provisions of Section 11 of the Plan
relating to adjustments upon changes in securities, the Shares that may be
sold pursuant to Incentive Stock Options shall not exceed in the aggregate
two million two hundred and forty eight thousand and fifty-seven
(2,248,057) Shares, representing eight million nine hundred and ninety two
thousand two hundred and twenty nine (8,992,229) Ordinary Shares. If any
Option shall for any reason expire or otherwise terminate, in whole or in
part, without having been exercised in full, the Shares not purchased under
such Option shall revert to and again become available for issuance under
the Plan.
(b) SOURCE. The Shares subject to the Plan may be unissued Shares
or Shares which have been bought on the open market at prevailing market
prices or otherwise.
(c) NONSTATUTORY STOCK OPTION GRANT LIMITS.
(1) No Nonstatutory Stock Options shall be granted on any
Date of Grant or any proposed Date of Grant if, as a result:
(i) the aggregate number of Ordinary Shares
represented by the number of Shares issued or issuable pursuant to grants
made under this Plan plus the aggregate number of Ordinary Shares issued or
issuable pursuant to grants made under the Company's 1994 Savings Related
Share Option Scheme, the Company's 1994 Unapproved Executive Share Option
Scheme and the Company's 1994 Executive Share Option Scheme and pursuant to
grants or appropriations made during the ten (10) years preceding such Date
of Grant under all other share schemes (including non-approved,
savings-related and profit sharing schemes) established after Admission by
the Company would exceed ten percent (10%) of the issued share capital of
the Company on that Date of Grant; or
(ii) the aggregate number of Ordinary Shares
represented by the number of Shares issued or issuable pursuant to grants
made under this Plan plus the aggregate number of Ordinary Shares issued or
issuable pursuant to grants made under the Company's 1994 Unapproved
Executive Share Option Scheme and the Company's 1994 Executive Share Option
Scheme and pursuant to grants made during the ten (10) years preceding such
Date of Grant under all other share option schemes (whether or not approved
by the Board of Inland Revenue but not being a savings-related share option
scheme) established after Admission by the Company would exceed seven and
one-half percent (7.5%) of the issued share capital or the Company on that
Date of Grant; or
(iii) the aggregate number of Ordinary Shares issued
or issuable pursuant to grants made under the schemes mentioned in
subsection 4(c)(1)(ii) above in the preceding three (3) years would exceed
six percent (6%) of the issued share capital of the Company on that Date of
Grant.
(2) For the avoidance of doubt, Shares and Ordinary
Shares which shall have been the subject of Options or rights granted under
any other share scheme or plan which have lapsed shall not be taken into
account for the purposes of this subsection 4(c).
5. ELIGIBILITY.
(A) EMPLOYEES. Only an Employee may be granted an Option under
the Plan.
(b) SECTION 162(M) LIMIT. Subject to the provisions of Section 11
relating to adjustments upon changes in stock, no person shall be eligible
to be granted in any calendar year Options covering more than sixty two
thousand five hundred (62,500) Shares, representing two hundred and fifty
thousand (250,000) Ordinary Shares.
(c) 10% OWNERS. No person shall be eligible for the grant of an
Incentive Stock Option if, on the Date of Grant, such person owns (or is
deemed to own pursuant to Section 424(d) of the Code) securities possessing
more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or of any of its Affiliates unless the
exercise price of such Incentive Stock Option is at least one hundred ten
percent (110%) of the Fair Market Value of a Share on the Date of Grant and
the Incentive Stock Option is not exercisable after the expiration of five
(5) years from the Date of Grant.
(d) GENERAL LIMITATION ON INDIVIDUAL GRANTS. On any Date of Grant
the aggregate Fair Market Value for Shares which may be issued on the
exercise of any Option then granted shall not, when aggregated with the
Fair Market Value for any Shares which remain to be issued on the exercise
of Options granted to the Option Holder in question or which could have
been acquired but for the surrender or lapse of any such Option during the
period of ten (10) years immediately preceding such Date of Grant under (i)
the Plan or (ii) Any Other Executive Share Scheme exceed either eight (8)
times the Option Holder's Earnings.
(e) $100,000 LIMITATION FOR INCENTIVE STOCK OPTIONS. To the extent
that the aggregate Fair Market Value (determined at the time of grant) of
Shares with respect to which Incentive Stock Options are exercisable for
the first time by any Option Holder during any calendar year under all
plans of the Company and its Affiliates exceeds one hundred thousand
dollars ($100,000), the Options or portions thereof which exceed such limit
(according to the order in which they were granted) shall be treated as
Nonstatutory Stock Options.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise)
the substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of
ten (10) years from the date it was granted.
(b) PRICE. The exercise price of each Option shall be not less
than one hundred percent (100%) of the Fair Market Value of a Share subject
to the Option on the date the Option is granted. Notwithstanding the
foregoing, an Option may be granted with an exercise price lower than that
set forth in the preceding sentence if such Option is granted pursuant to
an assumption or substitution for another option in a manner satisfying the
provisions of Section 424(a) of the Code.
(c) CONSIDERATION. The purchase price of Shares acquired pursuant
to an Option, to the extent permitted by applicable statutes and
regulations, may consist entirely of (i) cash or check or (ii) such other
consideration and method of payment for the issuance of Shares to the
extent permitted under applicable law.
(d) TRANSFERABILITY. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the
Incentive Stock Option is granted only by such person. A Nonstatutory Stock
Option but not an Incentive Stock Option, may be transferred to the extent
provided in the Option Agreement; provided that if the Option Agreement
does not expressly permit the transfer of a Nonstatutory Stock Option, the
Nonstatutory Stock Option shall not be transferable except by will, by the
laws of descent and distribution or pursuant to a domestic relations order
satisfying the requirements of Rule 16 of the Exchange Act and shall be
exercisable during the lifetime of the person to whom the Option is granted
only by such person or any transferee pursuant to a domestic relations
order. Notwithstanding the foregoing, the person to whom the Option is
granted may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of
the death of the Option Holder, shall thereafter be entitled to exercise
the Option.
(e) VESTING. The total number of Shares subject to an Option may,
but need not, be allotted in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time
during each of such installment periods, the Option may become exercisable
("vest") with respect to some or all of the Shares allotted to that period,
and may be exercised with respect to some or all of the Shares allotted to
such period and/or any prior period as to which the Option became vested
but was not fully exercised. The Option may be subject to such other terms
and conditions on the time or times when it may be exercised (which may be
based on performance or other criteria) as the Board may deem appropriate.
The provisions of this subsection 6(e) of the Plan are subject to any
Option provisions governing the minimum number of Shares as to which an
Option may be exercised.
(f) SECURITIES LAW COMPLIANCE. The Company may require any Option
Holder, or any person to whom an Option is transferred under subsection
6(d) of the Plan, as a condition of exercising any such Option, (1) to give
written assurances satisfactory to the Company as to the Option Holder's
knowledge and experience in financial and business matters and/or to employ
a purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters, and that
he or she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Option; and (2) to
give written assurances satisfactory to the Company stating that such
person is acquiring the Shares subject to the Option for such person's own
account and not with any present intention of selling or otherwise
distributing the Shares. The foregoing requirements, and any assurances
given pursuant to such requirements, shall be inoperative if (i) the
issuance of the Shares upon the exercise of the Option has been registered
under a then currently effective registration statement under the
Securities Act, or (ii) as to any particular requirement, a determination
is made by counsel for the Company that such requirement need not be met in
the circumstances under the then applicable securities laws. The Company
may require the Option Holder to provide such other representations,
written assurances or information which the Company shall determine is
necessary, desirable or appropriate to comply with applicable securities
and other laws as a condition of granting an Option to such Option Holder
or permitting the Option Holder to exercise such Option. The Company may,
upon advice of counsel to the Company, place legends on Share certificates
issued under the Plan as such counsel deems necessary or appropriate in
order to comply with applicable securities laws, including, but not limited
to, legends restricting the transfer of the Shares.
(g) TERMINATION OF CONTINUOUS SERVICE OF OPTION HOLDER. In the
event an Option Holder's Continuous Service terminates (other than upon the
Option Holder's death or disability), the Option Holder may exercise his or
her Option (to the extent that the Option Holder was entitled to exercise
it at the date of termination) but only within such period of time ending
on the earlier of (i) the date three (3) months after the termination of
the Option Holder's Continuous Service (or such longer or shorter period
specified in the Option Agreement, which shall not be less than thirty (30)
days unless such termination is for cause), or (ii) the expiration of the
term of the Option as set forth in the Option Agreement. If, after
termination, the Option Holder does not exercise his or her Option within
the time specified in the Option Agreement, the Option shall terminate, and
the Shares covered by such Option shall revert to and again become
available for issuance under the Plan.
An Option Holder's Option Agreement may also provide that, if the
exercise of the Option following the termination of the Option Holder's
Continuous Service (other than upon the Option Holder's death or
disability) would be prohibited at any time solely because the issuance of
Shares would violate the registration requirements under the Securities
Act, then the Option shall terminate on the earlier of (i) the expiration
of the term of the Option as described in subsection 6(a) or (ii) the
expiration of a period of three (3) months after the termination of the
Option Holder's Continuous Service during which the exercise of the Option
would not be in violation of such registration requirements (if such
provisions would result in an extension of the time during which the Option
may be exercised beyond the period described in the first paragraph of this
subsection 6(f)).
(h) DISABILITY OF OPTION HOLDER. In the event an Option Holder's
Continuous Service terminates as a result of the Option Holder's
disability, the Option Holder may exercise his or her Option (to the extent
that the Option Holder was entitled to exercise it at the date of
termination), but only within such period of time ending on the earlier of
(i) the date twelve (12) months following such termination (or such longer
or shorter period specified in the Option Agreement, which in no event
shall be less than six (6) months), or (ii) the expiration of the term of
the Option as set forth in the Option Agreement. If, at the date of
termination, the Option Holder is not entitled to exercise his or her
entire Option, the Shares covered by the unexercisable portion of the
Option shall revert to and again become available for issuance under the
Plan. If, after termination, the Option Holder does not exercise his or her
Option within the time specified herein, the Option shall terminate, and
the Shares covered by such Option shall revert to and again become
available for issuance under the Plan.
(i) DEATH OF OPTION HOLDER. In the event of the death of an Option
Holder during, or within a period specified in the Option after the
termination of, the Option Holder's Continuous Service, the Option may be
exercised (to the extent the Option Holder was entitled to exercise the
Option at the date of death) by the Option Holder's estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the option upon the Option Holder's death
pursuant to subsection 6(d), but only within the period ending on the
earlier of (i) the date eighteen (18) months following the date of death
(or such longer or shorter period specified in the Option Agreement, which
in no event shall be less than six (6) months), or (ii) the expiration of
the term of such Option as set forth in the Option Agreement. If, at the
time of death, the Option Holder was not entitled to exercise his or her
entire Option, the Shares covered by the unexercisable portion of the
Option shall revert to and again become available for issuance under the
Plan. If, after death, the Option is not exercised within the time
specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to and again become available for issuance under
the Plan.
(j) WITHHOLDING. To the extent provided by the terms of an Option
Agreement and permissible under applicable law, the Option Holder may
satisfy any foreign, federal, state or local tax withholding obligation
relating to the exercise of such Option by any of the following means or by
a combination of such means: (i) tendering a cash payment or (ii)
authorizing the Company to withhold Shares from the Shares otherwise
issuable to the Option Holder as a result of the exercise of the Option.
7. CANCELLATION AND RE-GRANT OF OPTIONS.
(a) GENERAL. The Board shall have the authority to effect, at any
time and from time to time, (i) the repricing of any outstanding Options
under the Plan and/or (ii) with the consent of any adversely affected
holders of Options, the cancellation of any outstanding Options under the
Plan and the grant in substitution therefor of new Options under the Plan
covering the same or different numbers of Shares but having an exercise
price per Share not less than one hundred percent (100%) of the Fair Market
Value for an Option or, in the case of an Incentive Stock Option held by a
10% stockholder (as described in subsection 5(b)), not less than one
hundred ten percent (110%) of the Fair Market Value per Share on the new
grant date. Notwithstanding the foregoing, the Board may grant an Option
with an exercise price lower than that set forth above if such Option is
granted as part of a transaction to which Section 424(a) of the Code
applies.
(b) SECTION 162(M) REQUIREMENTS. Shares subject to an Option
canceled under this Section 7 shall continue to be counted against the
maximum award of Options permitted to be granted pursuant to subsection
5(c) of the Plan. The repricing of an Option under this Section 7,
resulting in a reduction of the exercise price, shall be deemed to be a
cancellation of the original Option and the grant of a substitute Option;
in the event of such repricing, both the original and the substituted
Options shall be counted against the maximum awards of Options permitted to
be granted pursuant to subsection 5(c) of the Plan. The provisions of this
subsection 7(b) shall be applicable only to the extent required by Section
162(m) of the Code.
8. COVENANTS OF THE COMPANY.
(a) MAINTENANCE OF SHARE CAPITAL. The Company shall maintain
sufficient unissued share capital to satisfy all rights to subscribe for
ADSs from time to time subsisting under options granted pursuant to the
Plan.
(b) SECURITIES LAWS. The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to issue and sell Shares upon exercise of the
Options; provided, however, that this undertaking shall not require the
Company to register under the Securities Act either the Plan, any Option,
any Shares issued or issuable pursuant to any such Option. If, after
reasonable efforts, the Company is unable to obtain from any such
regulatory commission or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of Shares under the Plan,
the Company shall be relieved from any liability for failure to issue and
sell Shares upon exercise of such Options unless and until such authority
is obtained.
9. USE OF PROCEEDS FROM SHARES.
Proceeds from the sale of Shares pursuant to Options shall
constitute general funds of the Company.
10. MISCELLANEOUS.
(a) ACCELERATION. The Board shall have the power to accelerate the
time at which an Option may first be exercised or the time during which an
Option or any part thereof will vest pursuant to subsection 6(e) of the
Plan, notwithstanding the provisions in the Option stating the time at
which it may first be exercised or the time during which it will vest.
(b) OPTION HOLDER. Neither an Option Holder nor any person to whom
an Option is transferred under subsection 6(d) of the Plan shall be deemed
to be the holder of, or to have any of the rights of a holder with respect
to, any Shares unless and until such person has satisfied all requirements
for exercise of the Option pursuant to its terms.
(c) SERVICE RIGHTS. Nothing in the Plan or any instrument executed
or Option granted pursuant thereto shall confer upon any person any right
to continue in the service of the Company or any Affiliate or shall affect
the right of the Company or any Affiliate to terminate the service of any
Option Holder.
11. ADJUSTMENTS UPON CHANGES IN SHARES.
(A) CORPORATE TRANSACTIONS. If any change is made in the Shares
subject to the Plan, or subject to any Option, without the receipt of
consideration by the Company (through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend, dividend
in property other than cash, stock split, liquidating dividend, combination
of shares, exchange of shares, change in corporate structure or other
transaction not involving the receipt of consideration by the Company), the
Plan will be appropriately adjusted in the class(es) and maximum number of
Shares subject to the Plan pursuant to subsection 4(a) and the maximum
number of Shares subject to award to any person during any calendar year
pursuant to subsection 5(c), and the outstanding Options will be
appropriately adjusted in the class(es) and number of Shares and price per
Share of Shares subject to such outstanding Options. Such adjustments shall
be made by the Board, the determination of which shall be final, binding
and conclusive. (The conversion of any convertible securities of the
Company shall not be treated as a "transaction not involving the receipt of
consideration by the Company".)
(b) CHANGE IN CONTROL. In the event of: (1) a dissolution,
liquidation, or sale of all or substantially all of the assets of the
Company; (2) a merger or consolidation in which the Company is not the
surviving corporation; (3) a reverse merger in which the Company is the
surviving corporation but the Ordinary Shares outstanding immediately
preceding the merger are converted by virtue of the merger into other
property, whether in the form of securities, cash or otherwise; or (4) the
acquisition by any person, entity or group within the meaning of Section
13(d) or 14(d) of the Exchange Act, or any comparable successor provisions
(excluding any employee benefit plan, or related trust, sponsored or
maintained by the Company or any Affiliate of the Company) of the
beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act, or comparable successor rule) of securities of the
Company representing at least fifty percent (50%) of the combined voting
power entitled to vote in the election of directors, then: (i) any
surviving or acquiring corporation shall assume Options outstanding under
the Plan or shall substitute similar options (including an option to
acquire the same consideration paid to Shareholders in the transaction
described in this subsection 11(b)) for those outstanding under the Plan,
or (ii) in the event any surviving or acquiring corporation refuses to
assume such Options or to substitute similar options for those outstanding
under the Plan, the vesting of such Options and the time during which such
Options may be exercised shall be accelerated prior to such event and,
other than an event specified in item (4) above, the Options terminated if
not exercised after such acceleration and at or prior to such event.
12. AMENDMENT OF THE PLAN AND OPTIONS.
(a) AMENDMENT OF PLAN; MANDATORY SHAREHOLDER APPROVAL. The Board
at any time, and from time to time, may amend the Plan. However, except as
provided in Section 11 of the Plan relating to adjustments upon changes in
securities and except as to minor amendments to benefit the administration
of the Option Plan, to take account of a change in legislation or to obtain
or maintain favorable tax, exchange control or regulatory treatment for
Option Holders or the Company or any Subsidiary, no amendment shall be
effective unless approved by the Shareholders of the Company to the extent
Shareholder approval is necessary for the Plan to satisfy the requirements
of Section 422 of the Code, Rule 16b-3 under the Exchange Act and any
London Stock Exchange Limited, Nasdaq or other securities exchange listing
requirements. Currently under United States law Shareholder approval within
twelve (12) months before or after the adoption of the amendment is
required where the amendment will increase the number of Shares reserved
for Options under the Plan. In addition, Shareholder approval is required
by the regulations of the London Stock Exchange Limited for any amendment
to the advantage of Option Holders in respect to the following: eligibility
to participate in the Plan; limits on the number of Shares which may be
issued pursuant to the Plan; the maximum entitlement of individual
participants under the Plan; the adjustments of awards under the Plan on a
variation of share capital; and the restrictions on vesting and release of
Options.
(b) DISCRETIONARY SHAREHOLDER APPROVAL. The Board may in its sole
discretion submit any other amendment to the Plan for Shareholder approval,
including, but not limited to, amendments to the Plan intended to satisfy
the requirements of Section 162(m) of the Code and the regulations
promulgated thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid
to certain executive officers.
(c) EXPRESS AMENDMENTS CONTEMPLATED. It is expressly contemplated
that the Board may amend the Plan in any respect the Board deems necessary
or advisable to provide Option Holders with the maximum benefits provided,
or to be provided, under the provisions of the Code and the regulations
promulgated thereunder relating to Incentive Stock Options and/or to bring
the Plan and/or Incentive Stock Options granted under it into compliance
therewith.
(d) NO IMPAIRMENT BY PLAN AMENDMENT. Rights and obligations under
any Option granted before amendment of the Plan shall not be impaired by
any amendment of the Plan unless (i) the Company requests the consent of
the person to whom the Option was granted and (ii) such person consents in
writing.
(e) NO IMPAIRMENT BY OPTION AMENDMENT. The Board at any time, and
from time to time, may amend the terms of any one or more Options;
provided, however, that the rights and obligations under any Option shall
not be impaired by any such amendment unless (i) the Company requests the
consent of the person to whom the Option was granted and (ii) such person
consents in writing.
13. TERMINATION OR SUSPENSION OF THE PLAN.
(a) GENERAL. The Board may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate ten (10) years
from the date the Plan is adopted by the Board or approved by the
Shareholders of the Company, whichever is earlier. No Options may be
granted under the Plan while the Plan is suspended or after it is
terminated.
(b) NO IMPAIRMENT BY TERMINATION OR SUSPENSION. Rights and
obligations under any Option granted while the Plan is in effect shall not
be impaired by suspension or termination of the Plan, except with the
written consent of the person to whom the Option was granted.
14. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no
Options granted under the Plan shall be exercised unless and until the Plan
has been approved by the Shareholders of the Company, which approval shall
be within twelve (12) months before or after the date the Plan is adopted
by the Board.