Exhibit 4.7
DELTATHREE, INC.
2004 STOCK INCENTIVE PLAN
This plan, as amended from time to time, shall be known as the deltathree, Inc.
2004 Stock Incentive Plan (the "Plan"). This Plan replaces the previous 1999
Stock Incentive Plan (the "1999 Plan").
1. Purpose
The purpose of the Plan is to foster and promote the long-term financial
success of the Company and its Subsidiaries and materially increase
shareholder value by:
(a) motivating superior performance by means of performance-related
incentives;
(b) encouraging and providing for the acquisition of an ownership
interest in the Company by Eligible Employees; and
(c) enabling the Company to attract and retain the services of
outstanding management team and other qualified and dedicated
employees upon whose judgment, interest and special effort the
successful conduct of its operations is largely dependent.
2. Definitions
For purposes of interpreting the Plan and related documents (including
the Option Agreement and its appendices), the following definitions shall
apply:
(a) "Administrator" - means the Board or the Compensation Committee as
shall be administering the Plan, in accordance with Section 3
hereof.
(b) "Affiliate" - means a corporation which is a Parent or Subsidiary
of the Company, direct or indirect.
(c) "Applicable Laws" - means the requirements relating to the
administration of employee stocl option plans under the law of the
United States of America, any stock exchange or quotation system
on which the shares shall be listed or quoted and the applicable
laws of any country or jurisdiction where Options are granted
under the Plan.
(d) "Award" - shall mean any grant or award under the Plan, as
evidenced in a written document delivered to a Participant as
provided in Section 13(b).
(e) "Board" - means the Board of Directors of the Company.
(f) "Cause"- shall mean (i) the willful failure by the Participant to
perform substantially the Participant's duties (other than due to
physical or mental illness) after reasonable notice to the
Participant of such failure, (ii) the Participant's engaging in
serious misconduct that is injurious to the Company or any
Subsidiary, (iii) the Participant's having been convicted of, or
entered a plea of nolo contendere to, a crime that constitutes a
felony, or (iv) the breach by the Participant of any written
covenant or agreement not to compete, in each case with respect to
the Company or any Subsidiary, regarding confidentiality of
information of the Company or any Subsidiary or nonsolicitation or
hiring of employees of the Company or any Subsidiary.
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(g) "Code" - means the United States Internal Revenue Code of 1986, as
amended from time to time, and the regulations thereunder.
(h) "Committee" - shall mean the Compensation Committee of the Board,
or such other Board committee as may be designated by the Board to
administer the Plan.
(i) "Company" - shall mean Deltathree, Inc., a Delaware corporation,
and any successor thereto.
(j) "Common Stock" - shall mean the Class A common shares, par value
$0.001 per share, of the Company, as may be adjusted persuant to
section 4(c) of the Plan.
(k) "Deferred Annual Amount" shall mean, with respect to any year, the
amount of compensation that a Participant elects to defer in
exchange for an award of Elective Units as determined pursuant to
Section 9 hereof.
(l) "Consultant" - means any person who is engaged by the Company to
render consulting or advisory services to any of the Company
entities.
(m) "Disability" - " shall mean long-term disability as defined under
the terms of the Company's applicable long-term disability plans
or policies.
(n) "Date of Grant"- shall have the meaning set forth in Section 14
below.
(o) "Director" - means a member of the Board.
(p) "Disinterested Director" - shall mean a director of the Company
who is both a "Non-Employee Director" within the meaning of Rule
16b-3 under the Exchange Act and an "outside director" within the
meaning of Section 162(m) of the Code.
(q) "Dividend Equivalent" shall mean a right granted to a Participant
to receive cash or Common Stock equal in value to dividends paid
with respect to Common Stock.
(r) "Early Retirement" - shall mean retirement at or after the
earliest age at which the Participant may retire and receive an
immediate, but actuarially reduced, retirement benefit under any
defined benefit pension plan maintained by the Company or any of
its Subsidiaries in which such Participant participates, or, in
the absence of any such applicable plan, as determined by the
Committee.
(s) "Effective Date" shall mean the date on which the Plan is approved
by the shareholders of the Company.
(t) "Elective Units" - shall mean a contractual right to receive a
share of Common Stock at the time and subject to the conditions
set forth in Section 9 hereof, in respect of a Participant's
Deferred Annual Amount.
(u) "Eligible Employee" - shall mean each Executive Officer and each
other employee or consultant of the Company or its Subsidiaries,
but shall not include Directors who are not employees of any such
entity.
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(v) "Employment" shall mean, for purposes of Sections 5(g), 7(b) and
8(b), continuous and regular salaried employment with the Company
or a Subsidiary, which shall include (unless the Committee shall
otherwise determine) any period of vacation, any approved leave of
absence or any salary continuation or severance pay period and, at
the discretion of the Committee, may include service with any
former Subsidiary of the Company
(w) "Exchange Act" - means the Securities Exchange Act of 1934, as now
in effect or as hereafter amended.
(x) "Exercise Price" - means the price for each Share of stock subject
to an Option.
(y) "Executive Officer" - shall mean those persons who are officers of
the Company within the meaning of Rule16a-1(f) of the Exchange
Act.
(z) "Fair Market Value" of a Share of Common Stock means:
(1) If the Common Stock is listed on a national securities
exchange or traded in the over-the-counter market and sales
prices are regularly reported for the Common Stock, the
closing or last price of the Common Stock on the Composite
Tape or other comparable reporting system for the trading day
immediately preceding the applicable date;
(2) If the Common Stock is not traded on a national securities
exchange but is traded on the over-the-counter market, if
sales prices are not regularly reported for the Common Stock
for the trading day referred to in clause (1), and if bid and
asked prices for the Common Stock are regularly reported, the
mean between the bid and the asked price for the Common Stock
at the close of trading in the over-the-counter market for the
trading day on which Common Stock was traded immediately
preceding the applicable date; and
(3) If the Common Stock is neither listed on a national
securities exchange nor traded in the over-the-counter market,
such value as the Administrator, in good faith, shall
determine.
(aa) "Incentive Stock" - shall mean any Award of Common Stock granted
under Section 8 which becomes vested and nonforfeitable upon the
attainment, in whole or in part, of performance objectives
determined by the Committee.
(bb) "Incentive Stock Option" - or "ISO" - shall mean an Option which
is intended to meet the requirements of Section 422 of the Code.
(cc) "Incentive Unit" - shall mean any Award of a contractual right
granted under Section 8 to receive Common Stock (or, at the
discretion of the Committee, cash based on the Fair Market Value
of the Common Stock) which becomes vested and nonforfeitable upon
the attainment, in whole or in part, of performance objectives
determined by the Committee
(dd) "Nonstatutory Stock Option" - or "NSO" - shall mean an Option
which is not intended to be an Incentive Stock Option.
(ee) "Normal Retirement" - shall mean retirement at or after the
earliest age at which the Participant may retire and receive a
retirement benefit without an actuarial reduction for early
commencement of benefits under any defined benefit pension plan
maintained by the Company or any of its Subsidiaries in which such
Participant participates, or, in the absence of any such
applicable plan, as determined by the Committee
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(ff) "102 Award" - means an Award that the Board intends to be a "102
Award" which shall only be granted to employees of the Company who
are not Ten Percent Shareholders, and shall be subject to and
shall be construed consistently with the requirements of Section
102 of the Tax Ordinance. The Company shall have no liability to
an Eligible Person, or to any other party, if an Option (or any
part thereof) which is intended to be a 102 Option is not a 102
Option.
Approved 102 Awards may either be classified as Capital Gain
Awards ("CGA") or Ordinary Income Awards ("OIA").
Approved 102 Awards elected and designated by the Company to
qualify under the capital gain tax treatment in accordance with
the provisions of Section 102(b)(2) of the Tax Ordinance shall be
referred to herein as CGA.
Approved 102 Awards elected and designated by the Company to
qualify under the ordinary income tax treatment in accordance with
the provisions of Section 102(b)(1) of the Tax Ordinance shall be
referred to herein as OIA.
The Company's election of the type of Approved 102 Awards as CGA
or OIA granted to Employees (the "Election"), shall be
appropriately filed with the Israeli Tax Authorities before the
Date of Grant of any Approved 102 Option.
Such Election shall become effective beginning the first Date of
Grant of an Approved 102 Award under the Plan and shall remain in
effect until at least the end of the year following the year
during which the Company first granted Approved 102 Awards. The
Election shall obligate the Company to grant only the type of
Approved 102 Award it has elected, and shall apply to all Approved
102 Awards granted during the period indicated herein, all in
accordance with the provisions of Section 102(g) of the Tax
Ordinance. For the avoidance of doubt, such Election shall not
prevent the Company from granting Unapproved 102 Awards
simultaneously.
All Approved 102 Awards must be held in trust by a Trustee, as
described in Section 11.
For the avoidance of doubt, the designation of Unapproved 102
Awards and Approved 102 Awards shall be subject to the terms and
conditions set forth in Section 102 of the Tax Ordinance and the
regulations promulgated thereunder
With regards to Approved 102 Awards, the provisions of the Plan
and/or the Option Agreement shall be subject to the provisions of
Section 102 and the Tax Assessing Officer's permit, and the said
provisions and permit shall be deemed an integral part of the Plan
and of the Option Agreement. Any provision of Section 102 and/or
the said permit which is necessary in order to receive and/or to
keep any tax benefit pursuant to Section 102, which is not
expressly specified in the Plan or the Option Agreement, shall be
considered binding upon the Company and the Participants.
(gg) "3(i) Options" - means Options that do not contain such terms as
will qualify under Section 102 of the Tax Ordinance.
(hh) "Option" - " shall mean the right to purchase the number of shares
of Common Stock specified by the Committee, at a price and for the
term fixed by the Committee in accordance with the Plan and
subject to any other limitations and restrictions as this Plan and
the Committee shall impose.
(ii) "Option Agreement" - means a written or electronic agreement
between the Company and an Participant evidencing the terms and
conditions of an individual Option grant. The Option Agreement
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shall state, inter alia, the number of Shares covered thereby, the
dates when it may be exercised (subject to Section 5), the
Exercise Price per Share subject to the Option and such other
terms as the Administrator in its discretion may prescribe. The
Option Agreement is subject to the terms and conditions of the
Plan.
(jj) "Participant" - shall mean an Eligible Employee who is selected by
the Committee to receive an Award under the Plan.
(kk) "Parent" - means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company if, at the
time of granting an Option, each of the corporations (other than
the Company), owns stock possessing fifty percent (50%) or more of
total combined voting power of all classes of stock in one of the
other corporations in such chain.
(ll) "Reload Option" - shall have the meaning ascribed thereto in
Section 5(h).
(mm) "Retirement" - shall mean Participant's retirement pursuant to
applicable law or in accordance with the terms of any
tax-qualified retirement plan maintained by the Company or any of
its Parents or Subsidiaries in which the Participant participates
within the meaning of Section 22(e)(3) of the Code.
(nn) "Restricted Period" - shall mean the period during which a grant
of Incentive Stock, Restricted Stock, Incentive Units or
Restricted Units is subject to forfeiture.
(oo) "Restricted Stock" - shall mean any Award of Common Stock granted
under Section 7 which becomes vested and nonforfeitable, in whole
or in part, upon the completion of such period of service as shall
be determined by the Committee.
(pp) "Restricted Unit" - shall mean any Award of a contractual right
granted under Section 7 to receive Common Stock (or, at the
discretion of the Committee, cash based on the Fair Market Value
of the Common Stock) which becomes vested and nonforfeitable, in
whole or in part, upon the completion of such period of service as
shall be determined by the Committe
(qq) "Service Provider" - means an Employee, advisor or Consultant of
the Company, provided, however, that a consultant or advisor must
be an individual who is providing or will be providing bona fide
services to the Company, with such services (1) not being in
connection with the offer or sale of securities in a
capital-raising transaction, and (2) not directly or indirectly
promoting or maintaining a market for securities of the Company.
(rr) "Share" - shall mean a share of Common Stock.
(ss) "Stock Appreciation Right" - shall mean a contractual right
granted under Section 6 to receive cash, Common Stock or a
combination thereof.
(tt) "Subsidiary" - shall mean any corporation of which the Company
possesses directly or indirectly fifty percent (50%) or more of
the total combined voting power of all classes of stock of such
corporation and any other business organization, regardless of
form, in which the Company possesses directly or indirectly fifty
percent (50%) or more of the total combined equity interests in
such organization.
(uu) "Supplemental Units" - shall mean an award made pursuant to
Section 9 with respect to a number of shares of Common Stock in
excess of the number of shares of Common Stock corresponding to
the Participant's Elective Units.
(vv) "Tax Ordinance" - means the Israeli Income Tax Ordinance [New
Version]-1961 and the rules and regulations promulgated thereunder
as now in effect or as hereafter amended.
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(ww) "Ten Percent Shareholder" - means a person who owns shares
possessing more than ten percent (10%) of the total combined
voting power of all classes of shares of the Company or of any of
its Affiliates immediately before such Option is granted.
(xx) "Trustee" - means any individual appointed by the Company to serve
as a trustee and approved by the aplicable law.
3. Administration of the Plan
The Plan shall be administered by the Committee which shall consist of at
least two Directors of the Company chosen by the Board each of whom is a
Disinterested Director. The Committee shall have the responsibility of
construing and interpreting the Plan and of establishing and amending
such rules and regulations as it deems necessary or desirable for the
proper administration of the Plan. Any decision or action taken or to be
taken by the Committee, arising out of or in connection with the
construction, administration, interpretation and effect of the Plan and
of its rules and regulations, shall, to the maximum extent permitted by
applicable law, be within its absolute discretion (except as otherwise
specifically provided herein) and shall be conclusive and binding upon
all Participants and any person claiming under or through any
Participant. No member of the Board or the Committee shall be liable for
any action taken or determination made in good faith with respect to the
Plan or any Award granted hereunder.
4. Maximum Amount of Shares Available for Awards
(a) Maximum Number of Shares. The aggregate number of Shares that may
be issued under this Plan shall not exceed (a) 759,732 Shares
(which represents 4,000,000 Shares reserved under the 1999 Plan
less the amount of Shares represented by Awards previously granted
under the 1999 Plan and previously exercised and/or outstanding as
of September 28, 2004), plus (b) such additional Shares as are
represented by Awards previously granted under the 1999 Plan which
are cancelled or expire after the date of stockholder approval of
this Plan without delivery of shares of stock by the Company,
except as provided in this Section. Shares subject to any Award
granted hereunder, or under the 1999 Plan, which expire or are
terminated or canceled prior to exercise will be available for
future grants under the Plan. Without limiting the generality of
the foregoing, whenever shares are received by the Company in
connection with the exercise of or payment for any Award granted
under the Plan only the net number of shares actually issued shall
be counted against the foregoing limit.
(b) Shares Available for Issuance. Shares of Common Stock may be made
available from the authorized but unissued shares of the Company
or from Shares held in the Company's treasury and not reserved for
some other purpose. In addition, if any Award (including awards
made under the 1999 Plan) in respect of Shares is canceled or
forfeited for any reason without delivery of shares of Common
Stock, the shares subject to such Award shall thereafter again be
available for award pursuant to the Plan.
(c) Adjustments Upon Certain Events. In the event of any Share
dividend or Share split, re-capitalization (including, without
limitation, the payment of an extraordinary dividend), merger,
consolidation, combination, spin-off, distribution of assets to
shareholders, exchange of shares, or other similar corporate
change, the aggregate number of Shares available for Options under
Section 4(a) or subject to outstanding Options and the respective
prices applicable to outstanding Options shall be appropriately
adjusted.
(d) No Adjustment If Value Received. Except as hereinbefore expressly
provided, the issuance by the Company of shares of stock of any
class or securities convertible into shares of stock of any class,
for cash, property, labor or services, upon direct sale, upon the
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exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or other securities, and in any case whether
or not for fair value, shall not affect, and no adjustment by
reason thereof shall be made with respect to the number of Shares
subject to Options to be awarded to an Eligible Employee pursuant
to Section 5.
(e) Neither this Plan nor any Agreement nor any offer of Shares or
Options to an Participant shall impose any obligation on the
Company to continue to employ or engage the services of any
Participant, and nothing in the Plan or in any Option granted
pursuant thereto shall give any Participant any right to continue
in the employment or service of the Company or restrict the right
of the Company to terminate such employment or services at any
time.
(f) The grant of an Option to a Participant hereunder, shall neither
entitle such Participant to participate, nor disqualify him from
participating, in any other grant of Options pursuant to this Plan
or any other share incentive or share option plan of the Company
or any of its Affiliates.
5. Stock Options
(a) Grant. Subject to the provisions of the Plan, the Committee shall
have the authority to grant Options to Eligible Employees and to
determine (i) the number of shares to be covered by each Option,
(ii) the exercise price therefor and (iii) the conditions and
limitations applicable to the exercise of the Option.
Notwithstanding the foregoing, in no event shall the Committee
grant any Participant Options in any single calendar year with
respect to more than 500,000 shares of Common Stock authorized for
issuance under the Plan, as such number may be adjusted pursuant
to Section 4(c). The Committee shall have the authority to grant
102 Options, 3(i) Options, Incentive Stock Options or Nonstatutory
Stock Options. In the case of Incentive Stock Options, the terms
and conditions of such grants shall be subject to and comply with
Section 422 of the Code and the regulations thereunder.
(b) All Service Providers of the Company shall be eligible to receive
Options under the Plan; provided, however, that Options qualifying
as ISOs shall be granted only to employees of the Company and
options qualified under section 102 of the ordinance - capital
gain track - shall be granted only to employees of the Company who
are not Ten Percent shareholders of the Company.
(c) Each Option granted pursuant to the Plan, shall be evidenced by an
Option Agreement, in such form as the Committee shall from time to
time approve. Each Option Agreement shall state, among other
matters, the number of Shares underlying the Option, the Exercise
Price and the type of Option granted there under (whether a 102
Option, a 3(i) Option, an ISO or a NSO or any other applicable
agreement).
(d) Option Price. The Committee shall establish the exercise price at
the time each Option is granted. Notwithstanding the foregoing,
(i) the exercise price at the time an Option is granted shall not
be less than the Fair Market Value of the Common Stock at the date
of grant and (ii) in the case of an Incentive Stock Option issued
to a Participant who owns stock in the Company possessing more
than 10% of the total combined voting power of all classes of
stock of the Company, the exercise price at the time such
Incentive Stock Option is granted to such individual shall equal
at least 110% of the Fair Market Value of the Common Stock at the
date of grant.
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(e) Option Term. If not previously exercised each Option shall expire
upon the tenth (10th) anniversary of the date of the grant thereof
or, upon the earlier termination of the Participant's Employment
(or, if applicable, on the day following the last day on which
such Option is exercisable under Section 5(g) below), provided
that (i) the Committee may establish a shorter term for an Option
at the time of the grant of such Option and (ii) in the case of an
Incentive Stock Option issued to a Participant who owns stock in
the Company possessing more than 10% of the total combined voting
power of all classes of stock of the Company, such Incentive Stock
Option shall expire on the fifth (5th) anniversary of the date of
grant.
(f) Exercise. Each Option shall be exercised at such times and subject
to such terms and conditions as the Committee may specify in the
applicable Award or thereafter; provided, however, that if the
Committee does not establish a different exercise schedule at or
after the date of grant of an Option, such Option shall become
exercisable on a cumulative basis in three equal annual
installments commencing on the first anniversary of the date the
Option is granted. The Committee may impose such conditions with
respect to the exercise of Options as it shall deem appropriate,
including without limitation, any conditions relating to the
application of federal or state securities laws. No Shares shall
be delivered pursuant to any exercise of an Option unless
arrangements satisfactory to the Committee have been made to
assure full payment of the option price therefor and of applicable
taxes as provided in Section 13(a) below. Without limiting the
generality of the foregoing, payment of the option price may be
made in cash or its equivalent or, if and to the extent permitted
by the Committee, by exchanging shares of Common Stock owned by
the Participant for at least six (6) months (or such longer period
as is required by applicable accounting standards to avoid a
charge to earnings) and that are not the subject of any pledge or
other security interest, or by a combination of the foregoing,
provided that the combined value of all cash and cash equivalents
and the Fair Market Value of any such Common Stock so tendered to
the Company, valued as of the date of such tender, is at least
equal to such option price
(g) Termination of Employment. Unless the Committee shall otherwise
determine at or after grant, in the event of termination of
Participant's employment with the Company other than for Cause,
Disability or Death, or if applicable, the termination of services
given by the Participant to the Group other than for Cause,
Disability or Death, all Options granted to that Participant,
which are vested and exercisable at the time of such termination,
may, unless earlier terminated in accordance with the provisions
of the Plan or the Option Agreement, be exercised within three (3)
months after the date of such termination. If, on the date of
termination, the Shares subject to the Option have not vested in
their entirety, any Shares covered by the unvested portion of the
Option shall expire and be of no further force and effect and
revert to the Plan. If the vested portion of the Option is not so
exercised within the time specified herein, such vested portion of
the Option shall expire and be of no further force and effect, and
the Shares covered by such Option shall revert to the Plan.
In the event of termination of Participant's employment with the
Company, or if applicable, the termination of services given by
the Participant to the Company by reason of death or total and
permanent Disability (within the meaning of Section 22(e)(3) of
the Code), or Retirement, the outstanding Options, which were
vested on the date of termination, may be exercised by the
Participant, the Participant's legal guardian, the Participant's
estate or a person who acquires the right to exercise the Option
by bequest or inheritance, as the case may be, within twelve (12)
months after termination (but in no event later than the
expiration of the term of such Option as set forth in the Option
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Agreement). If, on the date of termination, there are Options
which are not entirely vested, the Shares covered by the unvested
portion of the Options shall revert to the Plan. If the Option is
not so exercised within the time specified herein, the Option
shall terminate, and the Shares covered by such Option shall
revert to the Plan.
If a Participant's Employment is terminated for Cause (or, if
after the Participant's termination of Employment, the Committee
determines that the Participant's Employment could have been
terminated for Cause had the Participant still been employed or
has otherwise engaged in conduct that is detrimental to the
interests of the Company, as determined by the Committee in its
sole discretion), all Options held by the Participant shall
immediately terminate, regardless of whether then exercisable.
In the event of a Participant's termination of Employment for any
reason not described in the preceding sentences, the Participant
(or, in the event of the Participant's death or Disability during
the period during which an Option is exercisable under this
sentence, the Participant's beneficiary or legal representative)
may exercise any Option which was exercisable at the time of such
termination for 90 days (or such greater or lesser period as the
Committee shall specify at or after the grant of such Option)
following the date of such termination, but in no event after the
date the Option otherwise expires.
(h) Reload Options. The Committee may provide that a Participant (or,
if applicable, his permitted transferee) who delivers shares of
Common Stock that have been owned by such Participant (or
permitted transferee) for any minimum period of time specified by
the Committee to exercise an Option (when the fair market value of
Common Stock exceeds the exercise price of such Option) will
automatically be granted new Options ("Reload Options") for a
number of shares of Common Stock equal to the number of shares so
delivered. Unless the Committee determines otherwise, such Reload
Options will be subject to the same terms and conditions
(including the same expiration date) as the related Option except
(i) that the exercise price shall initially be equal to the Fair
Market Value of a share of Common Stock on the date such Reload
Option is granted and (ii) such Reload Option shall not be
exercisable prior to the six month anniversary of the date of
grant and, thereafter, shall be exercisable in full.
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6. Stock Appreciation Rights
(a) Grant of SARs. The Committee shall have the authority to grant
Stock Appreciation Rights in tandem with an Option, in addition to
an Option, or freestanding and unrelated to an Option.
Notwithstanding the foregoing, in no event shall the Committee
grant any Participant SARs with respect to more than 600,000
shares of Common Stock authorized for issuance under the Plan, as
such number may be adjusted pursuant to Section 4(c).
(b) Exercise of SARs. A Stock Appreciation Right shall entitle the
Participant to receive from the Company an amount equal to the
excess of the Fair Market Value of a share of Common Stock on the
date of exercise of the Stock Appreciation Right over the base
price thereof. The Committee shall determine the time or times at
which or the event or events (including, without limitation, a
change of control) upon which a Stock Appreciation Right may be
exercised in whole or in part, the method of exercise and whether
such Stock Appreciation Right shall be settled in cash, shares of
Common Stock or a combination of cash and shares of Common Stock;
provided, however, that unless otherwise specified by the
Committee at or after grant, a Stock Appreciation Right granted in
tandem with an Option shall be exercisable only at the same time
or times as the related Option is exercisable.
7. Restricted Stock and Restricted Units
(a) Grant of Restricted Stock or Restricted Units. The Committee may
grant Awards of Restricted Stock or Restricted Units to
Participants at such times and in such amounts, and subject to
such other terms and conditions not inconsistent with the Plan, as
it shall determine. Each grant of Restricted Stock or Restricted
Units shall be evidenced by an Award Agreement. Unless the
Committee provides otherwise at or after the date of grant, stock
certificates evidencing any shares of Restricted Stock so granted
shall be held in the custody of the Secretary of the Company until
the Restricted Period lapses, and, as a condition to the grant of
any Award of shares of Restricted Stock, the Participant shall
have delivered to the Secretary of the Company a certificate,
endorsed in blank, relating to the shares of Common Stock covered
by such Award.
(b) Termination of Employment. Unless the Committee otherwise
determines at or after grant, the rights of a Participant with
respect to an award of Restricted Stock or Restricted Units
outstanding at the time of the Participant's termination of
Employment shall be determined under this Section 7(b). In the
event that a Participant's Employment terminates due to the
Participant's (i) death, (ii) Disability, (iii) Early Retirement
with the consent of the Committee or (iv) Normal Retirement, any
award of Restricted Stock or Restricted Units shall become vested
and nonforfeitable as to that number of shares which is equal to
the number of shares of Common Stock subject to such Award times a
fraction, the numerator of which is the number of days actually
worked during the Restricted Period (or, in the case of an Award
which has previously vested in part (an "Installment Award"), the
number of days worked since the last vesting date) and the
denominator of which is the total number of days during the
Restricted Period (or, in the case of an Installment Award, the
number of days between the last vesting date and the end of the
Restricted Period). Unless the Committee otherwise determines, any
portion of any Restricted Stock or Restricted Unit Award that has
not become nonforfeitable at the date of a Participant's
termination of Employment shall be forfeited as of such date.
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(c) Delivery of Shares. Upon the expiration or termination of the
Restricted Period and the satisfaction (as determined by the
Committee) of any other conditions determined by the Committee,
the restrictions applicable to the Restricted Stock or Restricted
Units shall lapse and a stock certificate for the number of shares
of Common Stock with respect to which the restrictions have lapsed
shall be delivered, free of all such restrictions, except any that
may be imposed by law, to the Participant or the Participant's
beneficiary or estate, as the case may be. No payment will be
required to be made by the Participant upon the delivery of such
shares of Common Stock and/or cash, except as otherwise provided
in Section 13(a) of the Plan. At or after the date of grant, the
Committee may accelerate the vesting of any award of Restricted
Stock or Restricted Units or waive any conditions to the vesting
of any such award.
(d) Restricted Period; Restrictions on Transferability during
Restricted Period. Unless otherwise determined by the Committee at
or after the date of grant, the Restricted Period applicable to
any award of Restricted Stock or Restricted Units shall lapse, and
the shares related to such award shall become freely transferable,
on the third anniversary of the date of grant. Restricted Stock or
Restricted Units may not be sold, assigned, pledged or otherwise
encumbered, except as herein provided, during the Restricted
Period. Any certificates issued in respect of Restricted Stock
shall be registered in the name of the Participant and deposited
by such Participant, together with a stock power endorsed in
blank, with the Company. At the expiration of the Restricted
Period with respect to any award of Restricted Stock, unless
otherwise forfeited, the Company shall deliver such certificates
to the Participant or to the Participant's legal representative.
Payment for Restricted Stock Units shall be made by the Company in
shares of Common Stock, cash or in any combination thereof, as
determined by the Committee.
(e) Rights as a Stockholder; Dividend Equivalents. Unless otherwise
determined by the Committee at or after the date of grant,
Participants granted shares of Restricted Stock shall be entitled
to receive, either currently or at a future date, as specified by
the Committee, all dividends and other distributions paid with
respect to those shares, provided that if any such dividends or
distributions are paid in shares of Common Stock or other property
(other than cash), such shares and other property shall be subject
to the same forfeiture restrictions and restrictions on
transferability as apply to the shares of Restricted Stock with
respect to which they were paid. The Committee will determine
whether and to what extent to credit Dividend Equivalents to the
account of, or to pay dividends currently to, each recipient of
Restricted Units. To the extent provided by the Committee at or
after the date of grant, any Dividend Equivalents credited to a
Participant's account shall be deemed to have been invested in
shares of Common Stock on the record date established for the
related dividend and, accordingly, a number of additional
Restricted Units shall be credited to such Participant's account
equal to the greatest whole number which may be obtained by
dividing (x) the value of such Dividend Equivalent on the record
date by (y) the Fair Market Value of a share of Common Stock on
such date.
11
8. Incentive Awards
(a) Incentive Stock and Incentive Units. Subject to the provisions of
the Plan, the Committee shall have the authority to grant
Incentive Stock or Incentive Units to any Eligible Employee and to
determine (i) the number of shares of Incentive Stock and the
number of Incentive Units to be granted to each Participant and
(ii) the other terms and conditions of such Awards; provided that,
to the extent necessary to comply with applicable law, Incentive
Stock shall only be awarded to an Eligible Employee who has been
employed for such minimum period of time as shall be determined by
the Committee. The Restricted Period related to Incentive Stock or
Incentive Units shall lapse upon the determination by the
Committee that the performance objectives established by the
Committee have been attained, in whole or in part. Such
performance objectives may be related to the performance of (i)
the Company, (ii) a Subsidiary, (iii) a division or unit of the
Company or any Subsidiary, (v) the Participant or (vi) any
combination of the foregoing, over a measurement period or periods
established by the Committee. Unless the Committee otherwise
determines at the time of grant of Incentive Stock or Incentive
Units, the perfor mance objectives with respect to such Award
shall be related to at least one of the following criteria, which
may be determined solely by reference to the performance of the
Company or a Subsidiary or a division or unit of the Company or a
Subsidiary or based on comparative performance relative to other
companies: (i) consolidated earnings before income taxes,
depreciation and amortization; (ii) revenues; (iii) earnings per
share; (iv) net income; (v) gross profit margin; (vi) maximum
capital expenditures; (vii) return on equity; and/or (viii) return
on total capital. Except to the extent otherwise expressly
provided herein, the Committee may, at any time and from time to
time, change the performance objectives applicable with respect to
any Incentive Stock or Incentive Units to reflect such factors,
including, without limitation, changes in a Participant's duties
or responsibilities or changes in business objectives (e.g., from
corporate to Subsidiary or business unit performance or vice
versa), as the Committee shall deem necessary or appropriate. In
making any such adjustment, the Committee shall adjust the number
of Incentive Stock or Incentive Units or take other appropriate
actions to prevent any enlargement or diminution of the
Participant's rights related to service rendered and performance
attained prior to the effective date of such adjustment.
(b) Termination of Employment. Unless the Committee otherwise
determines at or after grant, the rights of a Participant with
respect to an award of Incentive Stock or Incentive Units
outstanding at the time of the Participant's termination of
Employment shall be determined under this Section 8(b). In the
event that a Participant's Employment terminates due to the
Participant's (i) death, (ii) Disability, (iii) Early Retirement
with the consent of the Committee or (iv) Normal Retirement, any
award of Incentive Stock or Incentive Units shall become vested
and nonforfeitable at the end of the measurement period as to that
number of shares which is equal to that percentage, if any, of
such award that would have been earned based on the attainment or
partial attainment of such performance objectives times a
fraction, the numerator of which is the number of days employed
during the Restricted Period (or, in the case of an Award which
has previously vested in part (an "Installment Award"), the number
of days employed since the last vesting date) and the denominator
of which is the total number of days during the Restricted Period
(or, in the case of an Installment Award, the number of days
between the last vesting date and the end of the Restricted
Period); provided that, any portion of any Incentive Stock or
Incentive Unit award that does not become vested as of the times
set forth in this sentence shall be forfeited at such times. In
all other cases, any portion of any award of Incentive Stock or
Incentive Units that has not become nonforfeitable at the date of
a Participant's termination of Employment shall be forfeited as of
such date.
12
(c) Awards Nontransferable. Incentive Stock or Incentive Units may not
be sold, assigned, pledged or otherwise encumbered, except as
herein provided, during the Restricted Period. Any certificates
issued in respect of Incentive Stock shall be registered in the
name of the Participant and deposited by such Participant,
together with a stock power endorsed in blank, with the Company.
At the expiration of the Restricted Period with respect to any
award of Incentive Stock, unless otherwise forfeited, the Company
shall deliver such certificates to the Participant or to the
Participant's legal representative. Payment for Incentive Stock
Units shall be made by the Company in shares of Common Stock, cash
or in any combination thereof, as determined by the Committee.
(d) Rights as a Stockholder; Dividend Equivalents. Unless otherwise
determined by the Committee at or after the date of grant,
Participants granted shares of Incentive Stock shall be entitled
to receive, either currently or at a future date, as specified by
the Committee, all dividends and other distributions paid with
respect to those shares, provided that if any such dividends or
distributions are paid in shares of Common Stock or other property
(other than cash), such shares and other property shall be subject
to the same forfeiture restrictions and restrictions on
transferability as apply to the shares of Incentive Stock with
respect to which they were paid. The Committee will determine
whether and to what extent to credit Dividend Equivalents to the
account of, or to pay dividends currently to, each recipient of
Incentive Units during the period of deferral. To the extent
provided by the Committee at or after the date of grant, any
Dividend Equivalents credited to a Participant's account shall be
deemed to have been invested in shares of Common Stock on the
record date established for the related dividend and, accordingly,
a number of additional Incentive Units shall be credited to such
Participant's account equal to the greatest whole number which may
be obtained by dividing (x) the value of such Dividend Equivalent
on the record date by (y) the Fair Market Value of a share of
Common Stock on such date.
(e) Interpretation. Notwithstanding anything else contained in this
Section 8 to the contrary, if any award of Incentive Stock or
Incentive Units is intended, at the time of grant, to be other
performance-based compensation within the meaning of Section
162(m)(4)(C) of the Code, to the extent required to so qualify any
Award hereunder, the Committee shall not be entitled to exercise
any discretion otherwise authorized under this Section 8 with
respect to such award if the ability to exercise such discretion
(as opposed to the exercise of such discretion) would cause such
award to fail to qualify as other performance-based compensation.
9. Elective and Supplemental Units
(a) Elective Units; Supplemental Units. On such date or dates as shall
be established by the Committee and subject to such terms and
conditions as the Committee shall determine, a Participant may be
permitted to elect to defer receipt of all or a portion of his
annual compensation and/or annual incentive bonus ("Deferred
Annual Amount") payable by the Company or a Subsidiary and receive
in lieu thereof a number of Elective Units equal to the greatest
whole number which may be obtained by dividing (x) the amount of
the Deferred Annual Amount by (y) the Fair Market Value of a share
of Common Stock on the date of grant. No shares of Common Stock
will be issued upon the issuance of Elective Units; the Company
will establish a separate account for the Participant and will
record in such account the number of Elective Units issued to the
Participant. To the extent the Committee so determines, a
Participant who elects to receive Elective Units shall also
receive that number of Supplemental Units equal to the greatest
whole number which may be obtained by dividing (x) such percentage
of the Deferred Annual Amount as is determined by the Committee at
the date of grant by (y) the Fair Market Value of a share of
Common Stock on the date of grant.
13
(b) Rights as a Stockholder; Dividend Equivalents. A Participant shall
not have any right in respect of Elective Units issued pursuant to
the Plan to vote on any matter submitted to the Company's
stockholders until such time as the shares of Common Stock
attributable to such Elective Units have been issued to such
Participant or his beneficiary. The Committee will determine
whether and to what extent to credit Dividend Equivalents to the
account of, or to pay dividends currently to, each recipient of
Elective Units. Dividend Equivalents credited to a Participant's
account shall be deemed to have been invested in shares of Common
Stock on the record date established for the related dividend and,
accordingly, a number of Elective Units shall be credited to such
Participant's account equal to the greatest whole number which may
be obtained by dividing (x) the value of such Dividend Equivalent
on the record date by (y) the Fair Market Value of a share of
Common Stock on such date.
(c) Vesting of Elective Units and Supplemental Units. The Elective
Units credited to a Participant, together with any Dividend
Equivalents credited in respect of such Elective Units, shall be
fully vested at all times. Unless the Committee provides otherwise
at or after the date of grant, the Supplemental Units credited to
a Participant, together with any Dividend Equivalents credited in
respect of Supplemental Units, shall become vested in full on the
third anniversary of the date the corresponding Deferred Annual
Amount would have been paid absent the Participant's election to
defer provided the Participant remains in the continuous employ of
the Company or a Subsidiary through such date. Notwithstanding the
foregoing, the Committee may accelerate the vesting of any
Supplemental Units at or after the date of grant.
(d) Settlement of Elective Units and Supplemental Units. Unless the
Committee determines otherwise at or after the date of grant, a
Participant shall receive one share of Common Stock for each
Elective Unit (and related Dividend Equivalents) as of the date of
such Participant's termination of employment (or such later date
as may be elected by the Participant in accordance with the rules
and procedures of the Committee). Unless the Committee determines
otherwise at or after the date of grant, a Participant shall
receive one share of Common Stock for each Supplemental Unit (and
related Dividend Equivalents) that shall have become vested on or
prior to the date of such Participant's termination of employment
with the Company and the Subsidiaries, other than any such
termination for Cause, on the date of such termination of
employment (or on such earlier date as the Committee shall permit
or such later date as may be elected by the Participant in
accordance with the rules and procedures of the Committee). In the
event of the termination of a Participant's employment with the
Company and the Subsidiaries for Cause, the Participant shall
immediately forfeit all rights with respect to any Supplemental
Units (and related Dividend Equivalents) credited to his account.
The Committee may provide in the Award Agreement applicable to
Elective Units that, in lieu of issuing shares of Common Stock in
settlement of the vested Supplemental Units (and related Dividend
Equivalents), the Committee may direct the Company to pay to the
Participant the cash value thereof.
14
10. Designation of Awards Pursuant to Section 102 of the Tax Ordinance
(a) The Committee may designate Awards granted to Employees pursuant
to Section 102 of the Tax Ordinance as Unapproved 102 Awards or as
Approved 102 Awards.
(b) The grant of an Approved 102 Award under the Plan shall be
conditioned upon the approval of the Plan by the Israeli Tax
Authorities.
(c) Approved 102 Awards may either be classified as Capital Gain
Awards or Ordinary Income Awards.
(d) Each Award Agreement shall state, inter alia, the type of Award
granted thereunder (whether a CGA, OIA, Unapproved 102 Award or a
3(i) Award), the vesting provisions and the Exercise Price.
(e) No Approved 102 Awards may be granted under this Plan to any
eligible Employee, unless and until, the Company's election of the
type of Approved 102 Awards as CGA or OIA granted to Employees
(the "Election"), shall be appropriately filed with the Israeli
Tax Authorities at least thirty (30) days before the first Date of
Grant of an Approved 102 Option under this Plan. Such Election
shall become effective beginning the first Date of Grant of an
Approved 102 Option under the Plan and shall remain in effect
until at least the end of the year following the year during which
the Company first granted Approved 102 Awards. The Election shall
obligate the Company to grant only the type of Approved 102 Option
it has elected, and shall apply to all Approved 102 Awards granted
during the period indicated herein, all in accordance with the
provisions of Section 102(g) of the Tax Ordinance, as now in
effect or as hereafter ammended. For the avoidance of doubt, such
Election shall not prevent, subject to the Board's sole
discretion, the Company from simultaneously (i) granting
Unapproved 102 Awards; or (ii) 3(i) Options.
(f) All Approved 102 Awards must be held in trust by a Trustee, as
described in Section 11 below.
(g) For the avoidance of doubt, the designation of Unapproved 102
Awards and Approved 102 Awards shall be subject to the terms and
conditions set forth in Section 102 of the Tax Ordinance and
regulations, rules, orders or procedures promulgated thereunder as
now in effect or as hereafter amended.
(h) With regards to Approved 102 Awards, the provisions of the Plan
and the Option Agreement shall be subject to the provisions of
Section 102 and the Tax Assessing Officer's permit, and the said
provisions and permit shall be deemed an integral part of the Plan
and of the Option Agreement. Any provision of Section 102 and/or
the said permit which is necessary in order to receive and/or to
keep any tax benefit pursuant to Section 102, which is not
expressly specified in the Plan or the Option Agreement, shall be
considered binding upon the Company and the Participants.
15
11. Trustee
(a) The Committee may choose to deposit the Awards granted pursuant to
the Plan with a trustee (the "Trustee"). In such event, the
Trustee shall hold such Awards, and any Shares issued upon the
exercise of any of such Awards, in trust pursuant to the Company's
instructions from time to time. The Trustee shall be entitled to
make such provisions and take such steps as it may deem necessary
or appropriate for the withholding of all taxes required by law to
be withheld with respect to the exercise of the Awards or their
sale to a third party. The Company shall deliver the Trustee all
the necessary information required by him. The Trustee shall be
exempt from any liability with respect to any action or decision
duly taken in its/his capacity as Trustee.
(b) Anything herein to the contrary notwithstanding, Approved 102
Awards granted under the Plan and/or all Shares allocated or
issued upon exercise of such Approved 102 Awards and/or all other
shares received subsequently following any realization of rights
in connection with such Approved 102 Awards or Shares and all
rights attached to shares described above or Approved 102 Awards,
shall be allocated or issued to the Trustee and held for the
benefit of the Participant for such period of time as required by
Section 102 or any regulations, rules, orders or procedures
promulgated there under as now in effect or as hereafter amended
(the "Restricted Period Per Section 102"). All of the rights
attached to Shares issued upon exercise of Approved 102 Awards,
including without limitation dividend in shares, shall be subject
to the same tax treatment as the treatment to which such Awards
are subject to. In case the requirements pursuant to Section 102
for an Approved 102 Awards are not met, then the Approved 102
Awards may be regarded as Unapproved 102 Awards, all in accordance
with the provisions of Section 102 and regulations, rules, orders
or procedures promulgated there under as now in effect or as
hereafter amended.
(c) Notwithstanding anything to the contrary, the Trustee shall not
make any transaction or take any action with respect to Approved
102 Awards or Shares issued upon exercise thereof, will not
transfer, assign, release, pledge, mortgage voluntarily, or grant
in connection therewith any proxy or assignment deed, whether
immediately effective or effective at a future date, other than by
will or by operation of law, until after the full payment of the
Participant's tax liabilities arising from the grant of such
Awards or their exercise or release or transfer by the Trustee or
after guarantying the payment of said taxes. If such Options or
Shares have been transferred by will or by operation of law, the
provisions of Section 102 will apply with respect to the heirs or
the transferees of the Participant or Stockholder, as the case may
be.
(d) Upon receipt of an Approved 102 Award, the Participant will sign
an undertaking to release the Trustee from any liability in
respect of any action or decision duly taken and bona fide
executed in relation with the Plan, or any Approved 102 Award or
Share held, released or transferred by the Trustee, in accordance
with the terms of Section 102.
(e) Subject to the provisions of Section 102 and any regulations,
rules, orders or procedures promulgated there under as now in
effect or as hereafter amended, during the Restricted Period Per
Section 102 a Participant may not release the Approved 102 Awards
or Shares issued upon exercise thereof from trust or sell such
Awards or Shares while they are held by the Trustee. At any time
thereafter each Participant may require (but shall not be
Participant, any Approved 102 Awards or Shares issued pursuant to
the exercise of such Approved 102 Awards, provided that (1) such
transfer is in compliance with all applicable securities laws, and
(2) all applicable tax due pursuant to such a sale or transfer has
been paid in accordance with Section 102 and the Trustee has
received an acknowledgment from the Israeli Tax Authorities that
the Participant has paid any applicable tax due pursuant to the
Tax Ordinance. Notwithstanding the above, if any such sale or
release occurs during the Restricted Period Per Section 102, the
sanctions under Section 102 of the Tax Ordinance and under any
rules or regulation or orders or procedures promulgated there
under as now in effect or as hereafter amended, shall apply to and
shall be borne by such Participant.
16
12. Stock in Lieu of Cash
The Committee may grant Awards or shares of Common Stock in lieu of all
or a portion of an award otherwise payable in cash to an Executive
Officer pursuant to any bonus or incentive compensation plan of the
Company (subject to any applicable limitations in such bonus or incentive
compensation plan). If shares are issued in lieu of cash, the number of
shares of Common Stock to be issued shall be the greatest number of whole
shares which has an aggregate Fair Market Value on the date the cash
would otherwise have been payable pursuant to the terms of such other
plan equal to or less than the amount of such cash.
13. General Provisions
(a) Withholding. The Company shall have the right to deduct from all
amounts paid to a Participant in cash (whether under this Plan or
otherwise) any taxes required by law to be withheld in respect of
Awards under this Plan. In the case of any Award satisfied in the
form of Common Stock, no shares shall be issued unless and until
arrangements satisfactory to the Committee shall have been made to
satisfy any withholding tax obligations applicable with respect to
such Award. Without limiting the generality of the foregoing and
subject to such terms and conditions as the Committee may impose,
the Company shall have the right to retain, or the Committee may,
subject to such terms and conditions as it may establish from time
to time, permit Participants to elect to tender, Common Stock
(including Common Stock issuable in respect of an Award) to
satisfy, in whole or in part, the amount required to be withheld.
(b) Awards. Each Award hereunder shall be evidenced by a written or
electronic agreement. The agreement shall be delivered to the
Participant and shall incorporate the terms of the Plan by
reference and specify the terms and conditions thereof and any
rules applicable thereto (each, an "Award Agreement").
(c) Non-transferability. No Award shall be transferable by a
Participant otherwise than by will or under the applicable laws of
descent and distribution, unless such transfer shall be (i)
permitted by the Committee (on such terms as it shall establish)
or (ii) if the Option agreement pursuant to which an Award is made
so provides, to (A) the spouse, children or grandchildren of such
Participant (collectively, "Family Members"), (B) a trust or
trusts for the exclusive benefit of such Family Members, or (C) a
partnership or limited liability company in which such Family
Members and trusts for the exclusive benefit of such Family
Members are the only partners or members, as the case may be. In
addition, no Award shall be assigned, negotiated, pledged or
hypothecated in any way (whether by operation of law or otherwise)
and no Award shall be subject to execution, attachment or similar
process. Upon any attempt to transfer, assign, negotiate, pledge
or hypothecate any Award, or in the event of any levy upon any
Award by reason of any attachment or similar process, in either
case contrary to the provisions hereof, such Award shall
immediately become null and void.
17
(d) Legend. To the extent any stock certificate is issued to a
Participant in respect of shares of Restricted Stock or Incentive
Stock awarded under the Plan prior to the expiration of the
applicable Restricted Period, such certificate shall be registered
in the name of the Participant and shall bear the following (or
similar) legend:
"The shares of stock represented by this certificate are subject
to the terms and conditions contained in the deltathree, Inc. 2004
Stock Incentive Plan and the Award Agreement, dated as of _____,
between the Company and the Participant, and may not be sold,
pledged, transferred, assigned, hypothecated or otherwise
encumbered in any manner (except as provided in Section 13(c) of
the Plan or in such Award Agreement) until ____________________ ."
Upon the lapse of the Restricted Period with respect to any such
shares of Restricted Stock or Incentive Stock, the Company shall
issue or have issued new share certificates without the legend
described herein in exchange for those previously issued.
(e) No Right to Employment. No person shall have any claim or right to
be granted an Award, and the grant of an Award shall not be
construed as giving a Participant the right to be retained in the
employ of the Company or any Subsidiary. Further, the Company and
each Subsidiary expressly reserves the right at any time to
dismiss a Participant free from any liability, or any claim under
the Plan, except as provided herein or in any agreement entered
into with respect to an Award.
(f) No Rights to Awards, No Shareholder Rights. No Participant or
Eligible Employee shall have any claim to be granted any Award
under the Plan, and there is no obligation of uniformity of
treatment of Participants and Eligible Employ ees. Subject to the
provisions of the Plan and the applicable Award, no person shall
have any rights as a shareholder with respect to any shares of
Common Stock to be issued under the Plan prior to the issuance
thereof.
(g) Effective Date and Termination of the Plan. The Plan shall become
effective on the Effective Date. No Awards may be granted under
the Plan after the expiration of ten years from the date this Plan
is adopted. The Plan will terminate on September 23, 2014, the
date which is ten years from the earlier of the date of its
adoption by the Board of Directors and the date of its approval by
the shareholders. The Plan may be terminated at an earlier date by
vote of the shareholders or the Board of Directors of the Company;
provided, however, that any such earlier termination shall not
affect any Option Agreements or Award Agreements executed prior to
the effective date of such termination.
(h) Amendment of Plan. The Board or the Committee may amend, suspend
or terminate the Plan or any portion thereof at any time, provided
that no amendment shall be made without shareholder approval if
such amendment would:
(1) increase the number of shares of Common Stock subject to
the Plan, except pursuant to Section 4(c);
(2) determine the price at which Options may be granted; or
(3) remove the administration of the Plan from the Committee.
Without the written consent of an affected Participant, no
termination, suspension or modification of the Plan shall
adversely affect any right of such Participant under the terms of
an Award granted before the date of such termination, suspension
or modification.
(i) Application of Proceeds. The proceeds received by the Company from
the sale of its shares under the Plan will be used for general
corporate purposes.
18
(j) Compliance with Legal and Exchange Requirements. The Plan, the
granting and exercising of Awards thereunder, and the other
obligations of the Company under the Plan, shall be subject to all
applicable federal and state laws, rules, and regulations, and to
such approvals by any regulatory or governmental agency as may be
required. The Company, in its discretion, may postpone the
granting and exercising of Awards, the issuance or delivery of
Common Stock under any Award or any other action permitted under
the Plan to permit the Company, with reasonable diligence, to
complete such stock exchange or similar listing or registration or
qualification of such Common Stock or other required action under
any federal or state law, rule, or regulation and may require any
Participant to make such representations and furnish such
information as it may consider appropriate in connection with the
issuance or delivery of Common Stock in compliance with applicable
laws, rules, and regulations. The Company shall not be obligated
by virtue of any provision of the Plan to recognize the exercise
of any Award or to otherwise sell or issue Common Stock in
violation of any such laws, rules, or regulations; and any
postponement of the exercise or settlement of any Award under this
provision shall not extend the term of such Awards, and neither
the Company nor its directors or officers shall have any
obligation or liability to the Participant with respect to any
Award (or Stock issuable thereunder) that shall lapse because of
such postponement.
(k) Gender and Number. Except when otherwise indicated by the context,
words in the masculine gender used in the Plan shall include the
feminine gender, the singular shall include the plural, and the
plural shall include the singular.
(l) Governing Law.
(i) The Plan and all instruments issued there under or in
connection therewith the Delaware Company, shall be governed by,
construed, enforced and interpreted in accordance with, the laws
of the State of New York.
(ii) The Plan and all instruments issued there under or in
connection therewith the Company affiliates and/or subsidiaries,
shall be governed by, and interpreted in accordance with, the
applicable laws with in the county of incorporation of the
Company's affiliate and/or subsidiary.
14. Date of Grant
Subject to Applicable Laws, the Date of Grant of an Award shall, for all
purposes, be the date on which the Committee makes the determination
granting such Award.
15. Tax Consequences
Any tax consequences arising from the grant or exercise of any Award or
from the disposition of Shares or from any other event or act (whether of
the Participant or of the Company or of its Trustee) hereunder, shall be
borne solely by the Participant. The Company and/or the Trustee shall
withhold taxes according to the requirements under the Applicable Laws,
rules, and regulations, including withholding taxes at source.
Furthermore, such Participant shall agree to indemnify the Company that
employs the Participant and/or the Trustee, and/or the Company's
shareholders and/or directors and/or officers if applicable, and hold
them harmless against and from any and all liability for any such tax or
interest or penalty thereon, including without limitation, liabilities
relating to the necessity to withhold, or to have withheld, any such tax
from any payment made to the Participant. Except as otherwise required by
law, the Company shall not be obligated to honor the exercise of any
Option by or on behalf of an Participant until all tax consequences (if
any) arising from the exercise of such Options are resolved in a manner
reasonably acceptable to the Company.
19
16. Non-Exclusivity of the Plan
The adoption of the Plan by the Board shall not be construed as amending,
modifying or rescinding any previously approved incentive arrangements or
as creating any limitations on the power of the Board to adopt such other
incentive arrangements as it may deem desirable, including, without
limitation, the granting of Options otherwise then under the Plan, and
such arrangements may be either applicable generally or only in specific
cases.
For the avoidance of doubt, prior grant of options to Participants of the
Company under their employment agreements, and not in the framework of
any previous option plan, shall not be deemed an approved incentive
arrangement for the purpose of this Section.
17. Inability to Obtain Authority
The inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel
to be necessary to the lawful issuance of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue
or sell such Shares as to which such requisite authority shall not have
been obtained.
18. Multiple Agreements
The terms of each Option may differ from other Options granted to each
Participant under the Plan at the same time. The Administrator may also
grant more than one Option to a given Participant during the term of the
Plan, either in addition to, or in substitution for, one or more Options
previously granted to that Participant.
19. Disputes
Any dispute or disagreement which may arise under or as a result of or
pursuant to this Plan or the Options Agreements shall be determined by
the Board in its sole discretion and any interpretation made by the Board
of the terms of the Plan or the Option Agreements shall be final, binding
and conclusive.
Adopted by the Board on September 23, 2004.
20