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Nice Ltd. — Regulatory Filings 2010
Jul 15, 2010
6950_rns_2010-07-15_07554c79-d10b-49a6-a9f0-9dff2c8671e7.pdf
Regulatory Filings
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As filed with the Securities and Exchange Commission on July 14, 2010
Registration No. 333-______________ __________________________________________________________________________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 __________________
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ________________
NICE SYSTEMS LTD.
(Exact Name of Registrant as Specified in Its Charter) ISRAEL N/A (State or Other Jurisdiction of Incorporation) (I.R.S. Employer Identification Number) 8 Hapnina Street P.O. Box 690 43107 Ra’anana Israel
(Address of Principal Executive Offices) (Zip Code) e-Glue Software Technologies, Inc. 2004 Stock Option Plan (Full Title of the Plan) NICE Systems Inc. 301 Route 17 North 10th Floor Rutherford, New Jersey 07070 (Name and Address of Agent For Service) (201) 964-2600 (Telephone Number, Including Area Code, of Agent for Service) Copies to: Adam M. Klein, Adv. Goldfarb, Levy, Eran, Meiri, Tzafrir & Co. 2 Weizmann Street Tel Aviv 64239 Israel +972-3-608-9999
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company o
CALCULATION OF REGISTRATION FEE
| Title of SecuritiesTo Be Registered | Amount ToBe Registered (2) | ProposedMaximumOffering Price PerShare | ProposedMaximumAggregateOfferingPrice | Amount ofRegistration Fee |
|---|---|---|---|---|
| Ordinary Shares, par value NIS 1.00 per share (1) | 76,035(3) | $ 0.26(4) | $ 19,769 | $ 1.41 |
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(1) American Depositary Shares (“ADSs”), evidenced by American Depositary Receipts (“ADRs”), issuable upon deposit of Ordinary Shares, par value NIS 1.00 per share, of NICE Systems Ltd. are registered on a separate registration statement. Each ADS represents one Ordinary Share.
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(2) Pursuant to Rule 416(a) under the Securities Act of 1933, as amended (the “Securities Act”), this Registration Statement also covers such indeterminate number of Ordinary Shares as may be offered or issued to prevent dilution resulting from stock splits, stock dividends, or similar transactions pursuant to the terms of the e-Glue Software Technologies, Inc. 2004 Stock Option Plan.
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(3) Represents Ordinary Shares subject to issuance upon the exercise of stock options outstanding and restricted share units issued in lieu of restricted share units issued under the e-Glue Software Technologies, Inc. 2004 Stock Option Plan and that will be assumed by the Registrant pursuant to an Agreement and Plan of Merger dated as of June 9, 2010.
(4) Computed in accordance with Rule 457(h) promulgated under the Securities Act. Such computation is based on the exercise price of $0.26 per share.
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EXPLANATORY NOTE
This Registration Statement on Form S-8 is filed by NICE Systems Ltd. (the “Registrant”) and relates to 76,035 ordinary shares, par value NIS 1.00 per share (the “Ordinary Shares”), issued or issuable to participants in the e-Glue Software Technologies, Inc. 2004 Stock Option Plan (the “Plan”). Pursuant to an Agreement and Plan of Merger dated as of June 9, 2010, by and among the Registrant and a wholly owned subsidiary of the Registrant, and e-Glue Software Technologies, Inc. (the “Merger Agreement”), the options and restricted share units originally granted under the Plan to officers and employees of e-Glue Software Technologies, Inc. and its subsidiaries will be assumed by the Registrant and converted into options to purchase Ordinary Shares of the Registrant or restricted share units of the Registrant, respectively, upon the closing of the Merger Agreement.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The Securities and Exchange Commission (the “Commission”) allows us to “incorporate by reference” information into this prospectus. This means that we can disclose important information to you by referring you to another document filed by us with the Commission. Any information referenced this way is considered part of this prospectus, and any information that we file after the date of this prospectus with the Commission will automatically update and supersede this information. We incorporate by reference into this prospectus the following documents:
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(i) The Registrant's Report on Form 20-F for the fiscal year ended December 31, 2009, filed with the Commission on March 31, 2010;
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(ii) The Registrant's Current Report on Form 6-K submitted to the Commission on January 11, 2010;
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(iii) The GAAP financial information contained in Exhibit 99.1 of the Registrant's Current Report on Form 6-K submitted to the Commission on February 17, 2010;
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(iv) The GAAP financial information contained in Exhibit 99.1 of the Registrant's Current Report on Form 6-K submitted to the Commission on May 11, 2010;
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(v) The first sentence in the first paragraph of the press release attached as Exhibit 99.1 of the Registrant's Current Report on Form 6-K submitted to the Commission on June 10, 2010;
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(vi) The first sentence in the first paragraph of the press release attached as Exhibit 99.1 of the Registrant's Current Report on Form 6-K submitted to the Commission on June 22, 2010;
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(vii) The Registrant’s Current Report on Form 6-K submitted to the Commission on June 29, 2010; and
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(viii) The descriptions of our ADSs, ADRs and our Ordinary Shares contained in the Company’s Registration Statement on Form F-3 filed with the Commission on September 18, 2007 and including any subsequent amendment or report filed for the purpose of updating such description.
In addition, any future filings made by us with the Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), after the date of this prospectus and prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, and any future reports on Form 6-K submitted by us to the Commission during such period (or portions thereof) that are identified in such forms as being incorporated into this Registration Statement, shall be considered to be incorporated in this Registration Statement by reference, shall be considered a part of this Registration Statement from the date of filing or submission of such documents and shall update and supersede the information in this Registration Statement.
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ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Exemption of Office Holders
Under the Companies Law, an Israeli company may not exempt an office holder from liability for breach of his duty of loyalty, but may exempt in advance an office holder from liability to the company, in whole or in part, for a breach of his duty of care (except in connection with distributions), provided the articles of association of the company allow it to do so. Our articles of association do not allow us to do so.
Office Holder Insurance
Our articles of association provide that, subject to the provisions of the Companies Law, we may enter into a contract for the insurance of the liability of any of our office holders with respect to:
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a breach of his duty of care to us or to another person,
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a breach of his duty of loyalty to us, provided that the office holder acted in good faith and had reasonable grounds to assume that his act would not prejudice our interests, or
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a financial liability imposed upon him in favor of another person concerning an act performed by him in his capacity as an office holder.
Indemnification of Office Holders
Our articles of association provide that we may indemnify an office holder against:
- a financial liability imposed on or incurred by an office holder in favor of another person by any judgment, including a settlement or an arbitrator’s award approved by a court concerning an act performed in his capacity as an office holder. Such indemnification may be approved (i) after the liability has been incurred or (ii) in advance, provided that the undertaking is limited to types of events which our board of directors deems to be foreseeable in light of our actual operations at the time of the undertaking and limited to an amount or criterion determined by our board of directors to be reasonable under the circumstances, and further provided that such events and amounts or criterion are set forth in the undertaking to indemnify, and provided that the total amount of indemnification for all persons we have agreed to indemnify in such circumstances does not exceed, in the aggregate twenty-five percent (25%) of our shareholders’ equity at the time of the actual indemnification;
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reasonable litigation expenses, including attorney’s fees, expended by the office holder as a result of an investigation or proceeding instituted against him by a competent authority, provided that such investigation or proceeding concluded without the filing of an indictment against him and either (A) concluded without the imposition of any financial liability in lieu of criminal proceedings or (B) concluded with the imposition of a financial liability in lieu of criminal proceedings but relates to a criminal offense that does not require proof of criminal intent; and
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reasonable litigation expenses, including attorneys’ fees, expended by the office holder or charged to him by a court, in proceedings instituted against him by or on our behalf or by another person, or in a criminal charge from which he was acquitted, or a criminal charge in which he was convicted for a criminal offense that does not require proof of intent, in each case relating to an act performed in his capacity as an office holder.
We have undertaken to indemnify our directors and officers pursuant to applicable law. We have obtained directors and officers liability insurance for the benefit of our directors and officers.
Limitations on Exemption, Insurance and Indemnification
The Companies Law provides that a company may not exempt or indemnify an office holder, or enter into an insurance contract, which would provide coverage for any monetary liability incurred as a result of any of the following:
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a breach by the office holder of his duty of loyalty unless, with respect to insurance coverage or indemnification, the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;
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a breach by the office holder of his duty of care if the breach was done intentionally or recklessly;
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any act or omission done with the intent to derive an illegal personal benefit; or
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any fine levied against the office holder.
Required Approvals
In addition, under the Companies Law, any exemption of, indemnification of, or procurement of insurance coverage for, our office holders must be approved by our audit committee and our board of directors and, if the beneficiary is a director, by our shareholders. We have obtained such approvals for the procurement of liability insurance covering our officers and directors and for the grant of indemnification letters to our officers and directors.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
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ITEM 8. EXHIBITS
The following exhibits are filed with or incorporated by reference into this Registration Statement (numbering corresponds to Exhibit Table in Item 601 of Regulation S-K):
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4.1 Amended and Restated Memorandum of Association of NICE Systems Ltd. (an English translation), as amended through December 21, 2006 (previously filed as Exhibit 1.1 to, and incorporated by reference from, NICE’s Annual Report on Form 20-F filed with the Commission on June 13, 2007).
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4.2 Amended and Restated Articles of Association of NICE Systems Ltd., as amended through June 29, 2010.
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4.3 Form of Share Certificate (previously filed as Exhibit 4.1 to, and incorporated by reference from, NICE’s Amendment No. 1 to Registration Statement on Form F-1 (Registration No. 333-99640) filed with the Commission on December 29, 1995).
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4.4 e-Glue Software Technologies, Inc. 2004 Stock Option Plan, as amended.
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5 Opinion of Goldfarb, Levy, Eran, Meiri, Tzafrir & Co.
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23.1 Consent of Kost, Forer, Gabbay & Kasierer, a member of Ernst & Young Global.
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23.2 Consent of Goldfarb, Levy, Eran, Meiri, Tzafrir & Co. (included in Exhibit 5).
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24 Power of Attorney (included in signature page of this Registration Statement).
ITEM 9. UNDERTAKINGS
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(a) The undersigned Registrant hereby undertakes:
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(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:
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(i) To include any prospectus required by Section 10(a)(3) of the Securities Act;
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(ii) To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective Registration Statement; and
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(iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement;
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ided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the registration information is on Form S-8 and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the Registration Statement.
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(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act), that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8, and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Ra’anana, State of Israel, on the 12[th] day of July, 2010.
NICE SYSTEMS LTD.
By: /s/ Zeev Bregman /s/Dafna Gruber Zeev Bregman Dafna Gruber President and CEO Corporate VP and CFO
POWER OF ATTORNEY
Know all men by these present, that each individual whose signature appears below constitutes and appoints Zeev Bregman, Dafna Gruber, and each of them, his or her true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him or her and in his or her place and stead, in any and all capacities, to sign any all amendments (including post-effective amendments) to this Registration Statement and to file the same will all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby rectifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following person in the capacities and on the dates identified:
| Signature | Title | Date |
|---|---|---|
| /s/ Ron Gutler | Chairman of the Board of Directors | July 12, 2010 |
| Ron Gutler | ||
| /s/ Joseph Atsmon | Vice-Chairman of the Board of Directors | July 12, 2010 |
| Joseph Atsmon | ||
| /s/ Zeev Bregman | President and Chief Executive Officer | July 12, 2010 |
| Zeev Bregman | (Principal Executive Officer) | |
| /s/ Dafna Gruber | Chief Financial Officer | July 12, 2010 |
| Dafna Gruber | (Principal Financial Officer) | |
| /s/ Rimon Ben-Shaoul | Director | July 12, 2010 |
| Rimon Ben-Shaoul | ||
| /s/ Yoseph Dauber | Director | July 12, 2010 |
| Yoseph Dauber | ||
| /s/ Dan Falk | Director | July 12, 2010 |
| Dan Falk | ||
| /s/ John Hughes | Director | July 12, 2010 |
| John Hughes | ||
| /s/ Yocheved Dvir | Director | July 12, 2010 |
| Yocheved Dvir | ||
| /s/ David Kostman | Director | July 12, 2010 |
| David Kostman |
Authorized Representative in the United States: NICE SYSTEMS INC.
July 12, 2010
By: /s/ David Ottensoser Name: David Ottensoser Title: Corporate Secretary
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INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
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4.1 Amended and Restated Memorandum of Association of NICE Systems Ltd. (an English translation), as amended through December 21, 2006 (previously filed as Exhibit 1.1 to, and incorporated by reference from, NICE’s Annual Report on Form 20-F filed with the Commission on June 13, 2007).
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4.2 Amended and Restated Articles of Association of NICE Systems Ltd., as amended through June 29, 2010.
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4.3 Form of Share Certificate (previously filed as Exhibit 4.1 to, and incorporated by reference from, NICE’s Amendment No. 1 to Registration Statement on Form F-1 (Registration No. 333-99640) filed with the Commission on December 29, 1995).
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4.4 e-Glue Software Technologies, Inc. 2004 Stock Option Plan, as amended.
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5 Opinion of Goldfarb, Levy, Eran, Meiri, Tzafrir & Co.
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23.1 Consent of Kost, Forer, Gabbay & Kasierer, a member of Ernst & Young Global.
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23.2 Consent of Goldfarb, Levy, Eran, Meiri, Tzafrir & Co. (included in Exhibit 5).
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24 Power of Attorney (included in signature page of this Registration Statement).
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THE COMPANIES LAW, 5759-1999
A COMPANY LIMITED BY SHARES
1. DEFINITIONS; INTERPRETATION
(a) "Companies Law" - the Israeli Companies Law, 5759-1999 as the same
shall be amended from time to time, or any other law which shall replace that
Law, together with any amendments and regulations thereto.
(b) "Companies Ordinance" - those sections of the Israeli Companies
Ordinance [New Version] 5743-1983 that shall remain in force after the date of
the coming into force of the Companies Law, as the same shall be amended from
time to time.
(c) Unless the subject or the context otherwise requires: words and
expressions defined in the Companies Law and in the Companies Ordinance, as the
case may be, shall have the same meanings herein; words and expressions
importing the singular shall include the plural and vice versa; words and
expressions importing the masculine gender shall include the feminine gender;
and words and expressions importing persons shall include bodies corporate.
(d) The captions in these Articles are for convenience only and shall not
be deemed a part hereof or affect the construction of any provision hereof.
2. OBJECT AND PURPOSE OF THE COMPANY
The object and the purpose of the Company are as set forth in Section 2 of
the Memorandum of Association of the Company.
3. LIMITATION OF LIABILITY
The liability of the shareholders of the Company is limited as set forth in
Section 3 of the Memorandum of Association of the Company.
<PAGE>
4. SHARE CAPITAL
The share capital of the Company is one hundred and twenty five million New
Israeli Shekels (NIS 125,000,000) divided into one hundred and twenty five
million (125,000,000) Ordinary Shares of nominal value of NIS 1.00 each
("Ordinary Shares").
5. INCREASE OF SHARE CAPITAL
(a) The Company may, from time to time, by resolution of the shareholders,
whether or not all the shares then authorized have been issued, resolve to
increase its share capital by the creation of new shares. Any such increase
shall be in such amount and shall be divided into shares of such nominal
amounts, and such shares shall confer such rights and preferences, and shall be
subject to such restrictions, as such resolution shall provide.
(b) Except to the extent otherwise provided in such resolution, such new
shares shall be subject to all the provisions applicable to the shares of the
original share capital.
6. THE RIGHTS OF ORDINARY SHARES
The Ordinary Shares confer upon the holders thereof all rights accruing to
a shareholder of the Company, as provided in these Articles, including, inter
alia, the right to receive notices of (in the manner proscribed in Articles 20
and 50 of these Articles), and to attend, shareholder meetings of the
shareholders; for each share held - the right to one vote at all shareholders'
meetings for all purposes, and to share equally, on a per share basis, in such
dividends as may be declared by the Board of Directors in accordance with the
terms of these Articles and the Companies Law; and upon liquidation or
dissolution, the right to participate in the distribution of any surplus assets
of the Company legally available for distribution to shareholders after payment
of all debts and other liabilities of the Company, in accordance with the terms
of these Articles and the law. All Ordinary Shares rank PARI PASSU in all
respects with each other.
7. SPECIAL RIGHTS; MODIFICATIONS OF RIGHTS
(a) Subject to the provisions of any law, the Company may, from time to
time, by resolution of the shareholders, provide for shares with such preferred
or deferred rights or rights of redemption or other special rights and/or such
restrictions, whether in regard to dividends, voting, repayment of share capital
or otherwise, as may be stipulated in such resolution.
(b) (i)If at any time the share capital is divided into different classes
of shares, the rights attached to any class, unless otherwise provided by these
Articles, may be modified or abrogated by the Company, by a shareholder
resolution, subject to the consent of the holders of a majority of the voting
power of such class by written consent or at a separate General Meeting of the
holders of the shares of such class.
(ii) The provisions of these Articles relating to General Meetings
shall, mutatis mutandis, apply to any separate General Meeting of the
holders of the shares of a particular class.
<PAGE>
(iii) Unless otherwise provided by these Articles, the enlargement of
an existing class of shares, or the issuance of additional shares thereof,
shall not be deemed, for purposes of this Article 7(b), to modify or
abrogate the rights attached to the previously issued shares of such class
or of any other class.
8. CONSOLIDATION, SUBDIVISION, CANCELLATION AND REDUCTION OF SHARE CAPITAL
(a) The Company may (subject, however, to the provisions of Article 7(b)
hereof and to applicable law), from time to time, by resolution of the Company's
shareholders:
(i) consolidate and divide all or any of its issued or unissued share
capital into shares of larger nominal value than its existing shares,
(ii) subdivide its shares (issued or unissued) or any of them, into
shares of smaller nominal value than is fixed by these Articles (subject to
the provisions of the Companies Law), and the shareholders resolution
whereby any share is subdivided may determine that, as among the holders of
the shares resulting from such subdivision, one or more of the shares may,
as compared with the others, have any such preferred or deferred rights or
rights of redemption or other special rights, or be subject to any such
restrictions, as the Company has power to attach to unissued or new shares.
(iii) cancel any shares which, at the date of the adoption of such
resolution, have not been taken or agreed to be taken by any person, and
diminish the amount of its share capital by the amount of the shares so
cancelled, or
(iv) reduce its share capital in any manner, and with and subject to
any incident authorized, and consent required, by law.
(b) With respect to any consolidation of issued shares into shares of
larger nominal value, and with respect to any other action which may result in
fractional shares, the Board of Directors may settle any difficulty which may
arise with regard thereto, as it deems fit, including, INTER ALIA, resort to one
or more of the following actions:
(i) determine, as to the holder of shares so consolidated, which
issued shares shall be consolidated into each share of larger nominal
value;
(ii) allot, in contemplation of or subsequent to such consolidation or
other action, such shares or fractional shares sufficient to preclude or
remove fractional share holdings;
(iii) redeem, in the case of redeemable preference shares, and subject
to applicable law, such shares or fractional shares sufficient to preclude
or remove fractional share holdings;
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<PAGE>
(iv) cause the transfer of fractional shares by certain shareholders
of the Company to other shareholders thereof so as to most expediently
preclude or remove any fractional shareholdings, and cause the transferees
to pay the transferors the fair value of fractional shares so transferred,
and the Board of Directors is hereby authorized to act as agent for the
transferors and transferees with power of substitution for purposes of
implementing the provisions of this sub-Article 8(b)(iv).
(c) The notice of a General Meeting with respect to the adoption of a
resolution under Article 8(a) above, shall specify the actions to be adopted by
the Board of Directors under Article 8(b) above.
9. ISSUANCE OF SHARE CERTIFICATES; REPLACEMENT OF LOST CERTIFICATES
(a) Share certificates of issued shares shall, if issued, be issued under
the seal or the rubber stamp of the Company or the Company printed name, and
shall bear the signatures of two Directors, or of one Director and of the
Secretary of the Company, or of any other person or persons authorized thereto
by the Board of Directors.
(b) Each shareholder, registered in the Register of Shareholders (as
defined in the Companies law), shall be entitled to one numbered certificate for
all the shares of any class registered in his name, or if the Board of Directors
so approves, to several certificates, each for one or more of such shares, in
the form as shall be determined by the Board of Directors and according to the
law.
(c) A share certificate registered in the names of two or more persons
shall be delivered to the person first named in the Register of Shareholders in
respect of such co-ownership.
(d) If a share certificate is defaced, lost or destroyed, it may be
replaced, provided that the original certificate is presented to and destroyed
by the Board of Directors or it is proved to the satisfaction of the Board of
Directors that the certificate has been lost or destroyed, and upon payment of
such fee, and upon the furnishing of such evidence of ownership and such
indemnity or security, as the Board of Directors may think fit.
10. ALLOTMENT OF SHARES
The unissued shares shall be under the control of the Board of Directors,
who shall have the power to allot shares or otherwise dispose of them to such
persons, on such terms and conditions (including INTER ALIA terms relating to
calls as set forth in Article 11(f) hereof), and either at par or at a premium,
and at such times, as the Board of Directors may think fit, and the power to
grant to any person the option to acquire from the Company any shares, either at
par or at a premium, during such time and for such consideration as the Board of
Directors may think fit.
<PAGE>
11. CALLS ON SHARES; FORFEITURE AND SURRENDER
(a) The Board of Directors may, from time to time, make such calls as it
may think fit upon a shareholder in respect of any sum unpaid in respect of
shares held by such shareholder which is not, by the terms of allotment thereof
or otherwise, payable at a fixed time, and each shareholder shall pay the amount
of every call so made upon him (and of each installment thereof if the same is
payable in installments), to the person(s) and at the time(s) and place(s)
designated by the Board of Directors, as any such time(s) may be thereafter
extended and/or such person(s) or place(s) changed. Unless otherwise stipulated
in the resolution of the Board of Directors (and in the notice hereafter
referred to), each payment in response to a call shall be deemed to constitute a
pro rata payment on account of all shares in respect of which such call was
made.
(b) Notice of any call shall be given in writing to the shareholder(s) in
question not less than fourteen (14) days prior to the time of payment,
specifying the time and place of payment, and designating the person to whom
such payment shall be made, provided, however, that before the time for any such
payment, the Board of Directors may, by notice in writing to such
shareholder(s), revoke such call in whole or in part, extend such time, or alter
such person and/or place. In the event of a call payable in installments, only
one notice thereof need be given.
(c) If, by the terms of allotment of any share or otherwise, any amount is
made payable at any fixed time, every such amount shall be payable at such time
as if it were a call duly made by the Board of Directors and of which due notice
had been given, and all the provisions herein contained with respect to such
calls shall apply to each such amount.
(d) The joint holders of a share shall be jointly and severally liable to
pay all calls in respect thereof and all interest payable thereon.
(e) Any amount unpaid in respect of a call shall bear interest from the
date on which it is payable until actual payment thereof, at such rate (not
exceeding the then prevailing debitory rate charged by leading commercial banks
in Israel), and at such time(s) as the Board of Directors may prescribe.
(f) Upon the allotment of shares, the Board of Directors may provide for
differences among the allottees of such shares as to the amount of calls and/or
the times of payment thereof.
(g) If any shareholder fails to pay any amount payable in respect of a
call, or interest thereon as provided for herein, on or before the day fixed for
payment of the same, the Company, by resolution of the Board of Directors, may
at any time thereafter, so long as the said amount or interest remains unpaid,
forfeit all or any of the shares in respect of which said call had been made.
Any expense incurred by the Company in attempting to collect any such amount or
interest, including, INTER ALIA, attorneys' fees and costs of suit, shall be
added to, and shall, for all purposes (including the accrual of interest
thereon), constitute a part of the amount payable to the Company in respect of
such call.
(h) Upon the adoption of a resolution of forfeiture, the Board of Directors
shall cause notice thereof to be given to such shareholder, which notice shall
state that, in the event of the failure to pay the entire amount so payable
within a period stipulated in the notice (which period shall not be less than
fourteen (14) days and which may be extended by the Board of Directors), such
shares shall be ipso facto forfeited, provided, however, that, prior to the
expiration of such period, the Board of Directors may nullify such resolution of
forfeiture, but no such nullification shall stop the Board of Directors from
adopting a further resolution of forfeiture in respect of the non-payment of the
same amount.
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<PAGE>
(i) Whenever shares are forfeited as herein provided, all dividends
theretofore declared in respect thereof and not actually paid shall be deemed to
have been forfeited at the same time.
(j) The Company, by resolution of the Board of Directors, may accept the
voluntary surrender of any share.
(k) Any share forfeited or surrendered as provided herein shall become the
property of the Company, and the same, subject to the provisions of these
Articles, may be sold, re-allotted or otherwise disposed of as the Board of
Directors thinks fit.
transaction whatsoever.
prior to such transfer.
(o) The Board of Directors may cause the Company to sell any shares subject
to such lien when any such debt, liability or engagement has matured, in such
manner as the Board of Directors may think fit, but no such sale shall be made
unless such debt, liability or engagement has not been satisfied within fourteen
(14) days after written notice of the intention to sell shall have been served
on such shareholder, his executors or administrators.
(p) The net proceeds of any such sale, after payment of the costs thereof,
shall be applied in or toward satisfaction of the debts, liabilities or
engagements of such shareholder (whether or not the same have matured), or any
specific part of the same (as the Company may determine), and the residue (if
any) shall be paid to the shareholder, his executors, administrators or assigns.
<PAGE>
12. EFFECTIVENESS AND REGISTRATION
No transfer of shares shall be registered in the Register of Shareholders
unless a proper instrument of transfer (in form and substance satisfactory to
the Secretary of the Company) has been submitted to the Company, together with
such other evidence of title as the Board of Directors may reasonably require.
Until the transferee has been registered in the Register of Shareholders in
respect of the shares so transferred, the Company may continue to regard the
transferor as the owner thereof.
13. DECEDENTS' SHARES
(a) In case of a share registered in the names of two or more holders
established by law, the Company may recognize the survivor(s) as the sole
owner(s) thereof unless and until the provisions of Article 13(b) have been
effectively invoked.
(b) Any person becoming entitled to a share in consequence of the death of
any person, upon producing evidence of the grant of probate or letters of
administration or declaration of succession (or such other evidence as the Board
of Directors may reasonably deem sufficient that he sustains the character in
respect of which he proposes to act under this Article or of his title), shall
be registered as a shareholder in respect of such share, or may, subject to the
regulations as to transfer herein contained, transfer such share.
14. RECEIVERS AND LIQUIDATORS
(a) The Company may recognize the receiver, liquidator or similar official
of any corporate shareholder in winding-up or dissolution, or the receiver,
trustee or similar official in bankruptcy or in connection with the
reorganization of any shareholder, as being entitled to the shares registered in
the name of such shareholder.
(b) The receiver, liquidator or similar official of a corporate shareholder
in winding-up or dissolution, or the receiver, trustee or similar official in
bankruptcy or in connection with the reorganization of any shareholder, upon
producing such evidence as the Board of Directors may deem sufficient that he
sustains the character in respect of which he proposes to act under this Article
or of his title, shall with the consent of the Board of Directors (which the
Board of Directors may grant or refuse in its absolute discretion), be
registered as a shareholder in respect of such shares in the Register of
Shareholders, or may, subject to the regulations as to transfer herein
contained, transfer such shares.
<PAGE>
RECORD DATE WITH RESPECT TO OWNERSHIP OF SHARES
15. RECORD DATE FOR GENERAL MEETINGS
The shareholders entitled to receive notice of, to participate in and to
vote thereon at a General Meeting, or to express consent to or dissent from any
corporate action in writing, shall be the shareholders on the date set in the
resolution of the Board of Directors to convene the General Meeting, provided
that, such date shall not be earlier than forty (40) days prior to the date of
the General Meeting and not later than four (4) days prior to the date of such
General Meeting, or different periods as shall be permitted by law. A
determination of shareholders of record with respect to a General Meeting shall
apply to any adjournment of such meeting.
16. RECORD DATE FOR DISTRIBUTION OF DIVIDENDS
The shareholders entitled to receive dividends shall be the shareholders on
the date upon which it was resolved to distribute the dividend or at such later
date as shall be provided in the resolution in question.
17. GENERAL MEETINGS
(a) An Annual General Meeting shall be held once in every calendar year at
such time (within a period of not more than fifteen (15) months after the last
preceding Annual General Meeting) and at such place either within or without the
State of Israel as may be determined by the Board of Directors.
(b) All General Meetings other than Annual General Meetings shall be called
"SPECIAL GENERAL MEETINGS." The Board of Directors may, whenever it thinks fit,
convene a Special General Meeting at such time and place, within or without the
State of Israel, as may be determined by the Board of Directors. Special General
Meetings may also be convened upon requisition in accordance with the Companies
Law.
18. SHAREHOLDER PROPOSALS
(a) A shareholder (including two or more shareholders that are acting in
concert, a "PROPOSING SHAREHOLDER") holding one percent or more of the
outstanding voting rights in the Company may request, subject to Section 66(b)
of the Companies Law, that the Board of Directors include a proposal on the
agenda of a General Meeting to be held in the future, provided that the
Proposing Shareholder gives timely notice of such request in writing (a
"PROPOSAL REQUEST") to the Secretary of the Company and the Proposal Request
complies with all the requirements of this Article 18, these Articles and
applicable law and stock exchange rules. To be considered timely, a Proposal
Request must be delivered, either in person or by certified mail, postage
prepaid, and received at the principal executive office of the Company, no less
than sixty (60) days prior to the date of the Company's proxy statement in
connection with such General Meeting.
<PAGE>
(b) The Proposal Request shall set forth (i) the name, business address,
telephone number and fax number or email address of the Proposing Shareholder
(or each member of the group constituting the Proposing Shareholder, as the case
may be) and, if an entity, the name(s) of the person(s) that controls or manages
such entity, (ii) the number of Ordinary Shares held by the Proposing
Shareholder, directly or indirectly, and, if any of such Ordinary Shares are
held indirectly, an explanation of how they are held and by whom, and, if such
Proposing Shareholder is not the holder of record of any such Ordinary Shares, a
written statement from the holder of record or authorized bank, broker,
depository or other nominee, as the case may be, indicating the number of
Ordinary Shares the Proposing Shareholder is entitled to vote as of a date that
no more than ten (10) days prior to the date of delivery of the Proposal
Request, (iii) any agreements, arrangements, understandings or relationships
between the Proposing Shareholder and any other person with respect to any
securities of the Company or the subject matter of the Proposal Request, (iv)
the Proposing Shareholder's purpose in making the Proposal Request, (v) the
complete text in the English language of the resolution that the Proposing
Shareholder proposes to be voted upon at the General Meeting and, if the
Proposing Shareholder wishes to have a statement in support of the Proposing
Shareholder's proposal included in the Company's proxy statement, a copy of such
statement, which shall be in the English language and shall not exceed 500
words, (vi) a statement of whether the Proposing Shareholder has a personal
interest in the proposal and, if so, a description in reasonable detail of such
personal interest, and (vii) if the proposal of the Proposing Shareholder is to
nominate a candidate for election to the Board of Directors, (A) a declaration
signed by the nominee and the other information required under Section 224B of
the Companies Law, (B) to the extent not otherwise provided in the Request
Proposal, the information in respect of the nominee as would be provided in
response to the disclosure requirements of Item 6A (directors and senior
management), Item 6E (share ownership) and Item 7B (related party transactions)
of Form 20-F of the U.S. Securities and Exchange Commission, (C) a
representation of whether the nominee meets the objective criteria for an
independent director of the Company under the listing rules of the NASDAQ Stock
Market (or such other stock exchange on which the Ordinary Shares are then
listed) and if not, then an explanation of why not, and (D) a statement signed
by the nominee that he consents to be named in the Company's notices and proxy
materials relating to the General Meeting and, if elected, to serve on the Board
of Directors. In addition, the Proposing Shareholder shall promptly provide any
other information reasonably requested by the Company. The Company shall be
entitled to publish information provided by a Proposing Shareholder pursuant to
Article 18, and the Proposing Shareholder shall be responsible for the accuracy
thereof. The parenthetical regulation headings contained in this Article 18(b)
are for convenience only and shall not be deemed a part hereof or used to limit
the scope of disclosure required by this Article 18(b). References in this
Article 18(b) to particular laws, regulations or rules shall be deemed to apply
to such amended or successor laws, regulations or rules as shall be in effect
from time to time.
(c) A Proposing Shareholder holding five percent or more of the outstanding
voting rights in the Company (or five percent or more of the outstanding share
capital and one percent or more of the voting rights in the Company) may
request, subject to Section 63(b)(2) of the Companies Law, that the Board of
Directors convene a Special General Meeting, provided that the request complies
with all the applicable requirements of a "Proposal Request" set forth in
Article 18(b), these Articles and applicable law and stock exchange rules.
<PAGE>
19. POWERS OF THE GENERAL MEETING
Subject to the provisions of the Companies Law and of these Articles, the
resolutions in respect to the following matters shall be adopted by the General
Meeting:
(a) Amendments to the Articles, as set forth in Section 20 of the Companies
Law.
(b) Exercise of the authorities of the Board of Directors in accordance
with the provisions of Section 52(a) of the Companies Law.
(c) Appointment of the outside auditor(s) of the Company, the determination
of its/their terms of engagement with the Company and termination of its/their
engagement with the Company, all in accordance with the provisions of Sections
154-167 of the Companies Law.
(d) Appointment of independent ("external") Directors in accordance with
the provisions of Section 239 of the Companies Law ("External Directors").
(e) Approval of actions and transactions that require the approval of the
General Meeting pursuant to Sections 255 and 268-275 of the Companies Law.
(f) An increase and a decrease of the authorized share capital of the
Company, pursuant to Sections 286 and 287 of the Companies Law.
(g) A merger, as set forth in Section 320(a) of the Companies Law.
20. NOTICE OF GENERAL MEETINGS
(a) Not less than twenty-one (21) days' prior notice shall be given of
every General Meeting (the "Notice"). The Notice shall be published in two (2)
newspapers in Israel and as shall be required by law or rules and regulations of
the stock exchanges on which the Company's shares are listed. The Notice shall
specify the place, date and hour of the General Meeting, its agenda, a summary
of proposed resolutions and the procedure for voting in such General Meeting by
proxy statement and any other matter as shall be required by law. Notices shall
not be sent to each of the shareholders registered in the Company's Register of
Shareholders.
(b) The validity of any resolutions carried at a General Meeting shall not
be affected if the Company, by oversight, has not sent a notice of the convening
of the meeting, or has sent an incomplete or incorrect notice regarding the
convening of the meeting or its agenda, or has not served a notice as aforesaid
or has delayed in sending or delivering the said notice.
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<PAGE>
PROCEEDINGS AT GENERAL MEETINGS
21. QUORUM
constitute a quorum at General Meetings.
(b) If within half an hour from the time appointed for the meeting a quorum
is not present, if convened upon requisition under sections 63, 64 or 65 of the
Companies Law, the meeting shall be dissolved, but in any other case it shall
stand adjourned to the same day in the next week, at the same time and place, or
to such day and at such time and place as specified in the Notice of such
meeting or as the Chairman may determine with the consent of the holders of a
majority of the voting power represented at the meeting in person or by proxy or
by written ballot, as shall be permitted, and voting on the question of
adjournment. At such adjourned meeting, any two (2) shareholders (not in default
as aforesaid) present in person or by proxy or by written ballot, as shall be
permitted, shall constitute a quorum.
(c) No business shall be transacted at a General Meeting, or at any
adjournment thereof, unless the requisite quorum is present when the meeting
proceeds to business.
22. CHAIRMAN
Any member of the Board of Directors shall preside as Chairman at any
General Meeting of the Company. If there is no such member, or if at any meeting
such member is not present within fifteen (15) minutes after the time fixed for
holding the meeting or is unwilling to act as Chairman, the shareholders present
shall choose someone of their member to be Chairman. The office of Chairman
shall not, by itself, entitle the holder thereof to vote at any General Meeting
nor shall it entitle such holder to a second or casting vote (without
derogating, however, from the rights of such Chairman to vote as a shareholder
or proxy of a shareholder if, in fact, he is also a shareholder or such proxy).
23. ADOPTION OF RESOLUTIONS AT GENERAL MEETINGS
(a) Unless otherwise specifically provided in these Articles or under any
applicable law, all resolutions submitted to the shareholders shall be deemed
adopted if approved by the holders of a simple majority of the voting power
represented at the meeting in person or by proxy or by written ballot, as shall
be permitted, and voting thereon.
(b) Every question submitted to a General Meeting shall be decided by a
count of votes.
(c) A declaration by the Chairman of the meeting that a resolution has been
carried unanimously, or carried by a particular majority, or lost, and an entry
to that effect in the minute book of the Company, shall be prima facie evidence
of the fact without proof of the number or proportion of the votes recorded in
favor of or against such resolution.
24. POWER TO ADJOURN
(a) The Chairman of a General Meeting, in which the required quorum is
present, may resolve to adjourn the meeting ,for no more than thirty(30)days, to
such time and place as shall be determined but no business shall be transacted
at any adjourned meeting except business which might lawfully have been
transacted at the meeting as originally called.
<PAGE>
(b) It shall not be necessary to give any notice of an adjournment under
Article 24(a), unless the meeting is adjourned for more than twenty-one (21)
days in which event notice thereof shall be given in the manner required for the
meeting as originally called.
25. VOTING POWER
Subject to any provision hereof conferring special rights as to voting, or
restricting the right to vote, every shareholder shall have one vote for each
share held by him of record, on every resolution.
26. VOTING RIGHTS
(a) The shareholders entitled to vote at a General Meeting shall be the
shareholders listed in the Company's Register of Shareholders on the record
date, as specified in Article 15.
(b) A company or other corporate body being a shareholder of the Company
may, by resolution of its directors or any other managing body thereof,
authorize any person to be its representative at any meeting of the Company. Any
person so authorized shall be entitled to exercise on behalf of such shareholder
all the power which the latter could have exercised if it were an individual
shareholder. Upon the request of the Chairman of the meeting, written evidence
of such authorization (in form acceptable to the Chairman) shall be delivered to
him.
(c) Any shareholder entitled to vote may vote either personally or by proxy
(who need not be a shareholder of the Company), or, if the shareholder is a
company or other corporate body, by a representative authorized pursuant to
Article 26(b) or by a written ballot, as permitted by law and according to these
Articles.
(d) If two or more persons are registered as joint holders of any share,
the vote of the senior who tenders a vote, in person or by proxy or by written
ballot, as shall be permitted, shall be accepted to the exclusion of the vote(s)
of the other joint holder(s); and for this purpose seniority shall be determined
by the order in which the names stand in the Register of Shareholders.
(e) No shareholders shall be entitled to vote at any General Meeting (or be
counted as a part of the quorum thereat), unless all calls and other sums then
payable by him in respect of his shares in the Company have been paid.
(f) The Board of Directors may determine, in its discretion, the matters
that may be voted upon a written ballot to the Company (without attendance in
person or by proxy or by written ballot, as shall be permitted, at a General
Meeting, in addition to the matters listed in Section 87(c ) of the Companies
law.
PROXIES
27. INSTRUMENT OF APPOINTMENT
(a) The instrument appointing a proxy shall be in writing and shall be in
any usual or common form or in such other form as may be approved by the Board
of Directors. It shall be duly signed by the appointor or, if such appointor is
a company or other corporate body, under its common seal or stamp or the hand of
its duly authorized agent(s) or attorney(s).
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<PAGE>
(b) The instrument appointing a proxy (and the power of attorney or other
authority, if any, under which such instrument has been signed) shall be
delivered to the Company (at its Registered Office, or at its principal place of
business or at the offices of its transfer agent or at such other place as the
Board of Directors may specify) not less than forty-eight (48) hours (or such
shorter period as may be determined by the Board of Directors) before the time
fixed for the meeting at which the person named in the instrument proposes to
vote.
A vote cast pursuant to an instrument appointing a proxy shall be valid
notwithstanding the previous death of the appointing shareholder (or of his
attorney-in-fact, if any, who signed such instrument), or the revocation of the
appointment or the transfer of the share in respect of which the vote is cast,
provided no written notification of such death, revocation or transfer shall
have been received by the Company or by the Chairman of the meeting before such
vote is cast, and provided, further, that the appointing shareholder, if present
in person at said meeting, may revoke the appointment by means of a writing,
oral notification to the Chairman, or otherwise.
BOARD OF DIRECTORS
29. POWERS OF BOARD OF DIRECTORS
(a) The Board of Directors shall have all powers vested in it according to
the Companies Law and these Articles, shall have any and all authorities not
vested in any other organ of the Company according to the Companies Law and
these Articles, shall be authorized to determine the policy of the Company,
shall supervise the performance and actions of the General Manager, and, without
derogating form the above, shall have all the following powers:
(i) determine the Company's plans of action, the principles of their
financing and the order of priority among them;
(ii) examine the financial status of the Company, and set the frame of
credit that the Company shall be entitle to acquire;
(iii) determine the organizational structure of the Company and its
compensation policies;
(iv) may resolve to issue series of debentures;
(v) shall be responsible for the preparation and approval of the
financial statements of the Company, as set forth in Section 171 of the
(vi) report to the Annual General Meeting of the status of the
Company's affairs and of their financial outcomes, as set forth in Section
173 of the Companies Law.
(vii) appoint the General Manager and may terminate such appointment,
in accordance with Section 250 of the Companies Law;
<PAGE>
(viii) resolve in the matters on actions and transactions that require
its approval according to Sections 255 and 268-275 of the Companies Law and
of the provisions of these Articles;
(ix) issue shares and convertible securities up to the total amount of
the authorized share capital of the Company, in accordance with Section 288
of the Companies Law;
(x) decide on a "distribution" as set forth in Sections 307-308 of the
Companies Law;
(xi) express its opinion on a special tender offer, as set forth in
Section 329 of the Companies Law.
(b) The powers of the Board of Directors described in Articles
29(a)(i)-29(a)(xi) above shall not be delegated to the General Manager(s) of the
Company.
30. EXERCISE OF POWERS OF DIRECTORS
(a) A meeting of the Board of Directors at which a quorum is present shall
be competent to exercise all the authorities, powers and discretion vested in or
exercisable by the Board of Directors.
(b) A resolution proposed at any meeting of the Board of Directors shall be
deemed adopted if approved by a simple majority of the Directors then in office
who are lawfully entitled to participate in the meeting and vote thereon and
present when such resolution is put to a vote and voting thereon.
(c) A resolution may be adopted by the Board of Directors without convening
a meeting if all Directors then in office and lawfully entitled to vote thereon
(as conclusively determined by the Chairman of the Audit Committee, and in the
absence of such determination - by the Chairman of the Board of Directors) have
given their consent (in any manner whatsoever) not to convene a meeting. Such a
resolution shall be adopted if approved by a simple majority of the Directors
entitled to vote thereon (as determined as aforesaid). The Chairman of the Board
shall sign any resolutions so adopted, including the decision to adopt said
resolutions without a meeting.
31. DELEGATION OF POWERS
The Board of Directors may, subject to the provisions of the Companies Law,
delegate its powers to committees, each consisting of two or more persons (all
of whose members must be Directors), and it may from time to time revoke such
delegation or alter the composition of any such committee. Any such Committee
authorized to exercise the powers of the Board of Directors shall include at
least one (1) External Director. Any Committee so formed (in these Articles
referred to as a "Committee of the Board of Directors"), shall, in the exercise
of the powers so delegated, conform to any regulations imposed on it by the
Board of Directors. The meetings and proceedings of any such Committee of the
Board of Directors shall, mutatis mutandis, be governed by the provisions herein
contained for regulating the meetings of the Board of Directors, so far as not
superseded by any regulations adopted by the Board of Directors under this
Article. Unless otherwise expressly provided by the Board of Directors in
delegating powers to a Committee of the Board of Directors, such Committee shall
not be empowered to further delegate such powers.
<PAGE>
32. NUMBER OF DIRECTORS
Until otherwise determined by resolution of the Company's shareholders, the
Board of Directors shall consist of not less than three (3) nor more than
thirteen (13) Directors, including at least two (2) External Directors.
33. ELECTION AND REMOVAL OF DIRECTORS
Directors shall be elected at the Annual General Meeting by the vote of the
holders of a simple majority of the voting power represented at such meeting in
person or by proxy or by written ballot, as shall be permitted, and voting on
the election of directors. The Directors so elected shall hold office until the
next Annual General Meeting. The holders of a simple majority of the voting
power represented at a General Meeting and voting thereon shall be entitled to
remove any Director(s) from office, to elect directors in place of the
Director(s) so removed or to fill any vacancy, however created, on the Board of
Directors. Notwithstanding anything to the contrary herein, the term of a
Director may commence as of a date later than the date of the shareholder
resolution electing said Director, if so specified in said shareholder
resolution.
34. CONTINUING DIRECTORS IN THE EVENT OF VACANCIES
(a) Any vacancy in the Board of Directors, however occurring, including a
vacancy resulting from an enlargement of the Board, may be filled by a vote of a
majority of the Directors then in office, even if less than quorum. A Director
elected to fill a vacancy shall be elected to hold office until the next annual
General Meeting.
(b) If the position of one or more Directors is vacated, the continuing
Directors shall be entitled to act in every matter so long as their number is
not less than the statutory minimum number required at the time. If, at any
time, their number decreases below said statutory minimum number, they will not
be entitled to act except in an emergency, and they may fill vacant positions on
the Board of Directors pursuant to Article 34(a) herein or call a General
Meeting of the Company for the purpose of electing Directors to fill any
vacancies.
35. VACATION OF OFFICE
(a) The office of a Director shall be vacated, ipso facto, upon the
occurrence of any of the following: (i) such Director's death, (ii) such
Director is convicted of a crime as described in Section 232 of the Companies
Law, (iii) such Director is removed by a court or law in accordance with Section
233 or 247 of the Companies Law, (iv) such Director becomes legally incompetent,
(v) if such Director is an individual, such Director is declared bankrupt, (vi)
if such Director is a corporate entity, upon its winding-up, liquidation,
whether voluntary or involuntary or (vii) upon a resolution of the Company's
shareholders pursuant to Article 33(a) above.
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<PAGE>
(b) The office of a Director shall be vacated by his written resignation.
Such resignation shall become effective on the date fixed therein, or upon the
delivery thereof to the Company, whichever is later.
36. REMUNERATION OF DIRECTORS
Each Director shall be paid remuneration by the Company for his services as
Director as such remuneration shall have been approved pursuant to the
provisions of the Companies Law.
37. NO ALTERNATE DIRECTORS
A Director may not appoint an alternate for himself.
38. MEETINGS
(a) The Board of Directors may meet and adjourn its meetings according to
the Company's needs but at least once in every three (3) months, and otherwise
regulate such meetings and proceedings as the Directors think fit. Meetings of
the Board of Directors may be held telephonically or by any other means of
communication provided that each Director participating in such meeting can hear
and be heard by all other Directors participating in such meeting.
(b) Any Director may at any time convene a meeting of the Board of
Directors, but not less than seven (7) days' notice (oral or written) shall be
given of any meeting so convened. The failure to give notice to a Director in
the manner required hereby may be waived by such Director. Upon the unanimous
approval of the Directors, a meeting of the Board of Directors can be convened
without any prior notice. The notice of a meeting shall include the agenda of
the meeting.
39. QUORUM
A quorum at a meeting of the Board of Directors shall be constituted by the
presence, in person or by any other means of communication by which the
Directors may hear each other simultaneously, of a majority of the Directors
then in office who are lawfully entitled to participate in the meeting and vote
thereon (as conclusively determined by the Chairman of the Board of Directors).
No business shall be transacted at a meeting of the Board of Directors unless
the requisite quorum is present as aforesaid when the meeting proceeds to
business.
40. CHAIRMAN OF THE BOARD OF DIRECTORS
The Board of Directors shall from time to time elect one of its members to
be the Chairman of the Board of Directors, and it may from time to time remove
such Chairman from office and appoint another in its place. The Chairman of the
Board of Directors shall preside at every meeting of the Board of Directors, but
if there is no such Chairman, or if at any meeting he is not present within
fifteen (15) minutes of the time fixed for the meeting, or if he is unwilling to
take the chair, the Directors present shall choose one of their number to be the
chairman of such meeting.
<PAGE>
The General Manager of the Company shall not serve as the Chairman of the
Board of Directors, and the Chairman of the Board of Directors shall not be
granted authorities of the General Manager, unless such appointment, or grant,
as the case may be, is approved by the shareholders in a General Meeting in
accordance with Section 121(c) of the Companies Law. The office of Chairman
shall not entitle the holder to a second or casting vote.
41. VALIDITY OF ACTS DESPITE DEFECTS
Subject to the provisions of the Companies Law, all acts done bona fide at
any meeting of the Board of Directors, or of a Committee of the Board of
Directors, or by any person(s) acting as Director(s), shall, notwithstanding
that it may afterwards be discovered that there was some defect in the
appointment of the participants in such meetings or any of them or any person(s)
acting as aforesaid, or that they or any of them were disqualified, be as valid
as if there were no such defect or disqualification.
42. GENERAL MANAGER
(a) The Board of Directors shall appoint from time to time one or more
persons as General Manager(s) of the Company.
(b) The General Manager shall be responsible for the day-to-day management
of the affairs of the Company within the framework of the policies determined by
the Board of Directors from time to time and subject to the discretion of the
Board of Directors.
(c) The General Manager shall have full managerial and operational
authority to carry out all the activities which the Company may carry on by law
and under these Articles and which have not been vested by law or by these
Articles in any other organ of the Company. The General Manager shall be subject
to the supervision of the Board of Directors.
(d) The General Manager may, subject to the provisions of the Companies
Law, from time to time, appoint a Secretary to the Company, as well as officers,
agents, employees and independent contractors, as the General Manager may think
fit, and may terminate the service of any such person. The General Manager may,
subject to the provisions of the Companies Law, determine the powers and duties,
as well as the salaries and emoluments, of all such persons.
43. MINUTES
(a) Minutes of each General Meeting and of each meeting of the Board of
Directors shall be recorded and duly entered in books provided for that purpose.
The minutes of each meeting of the Board of Directors shall, in all events, set
forth the names of the persons present at the meeting and all resolutions
adopted thereat.
<PAGE>
(b) Any minutes as aforesaid, if purporting to be signed by the chairman of
the meeting or by the chairman of the next succeeding meeting, shall constitute
prima facie evidence of the matters recorded therein.
44. DECLARATION OF DIVIDENDS
Subject to the Companies Law, the Board of Directors may from time to time
declare, and cause the Company to pay dividends out of the profits of the
Company. Subject to the Companies Law, the Board of Directors shall determine
the time for payment of such dividends and the record date for determining the
shareholders entitled thereto.
45. AMOUNT PAYABLE BY WAY OF DIVIDENDS
(a) Subject to the rights of the holders of shares with special rights as
to dividends, if any, any dividend paid by the Company shall be allocated among
the shareholders entitled thereto in proportion to the nominal value of their
respective holdings of the shares in respect of which such dividend is being
paid.
(b) Shares which are fully paid up or which are credited as fully or partly
paid within any period which in respect thereof dividends are paid shall entitle
the holders thereof to a dividend in proportion to the amount paid up or
credited as paid up in respect of the nominal value of such shares and to the
date of payment thereof (pro rata temporis).
46. INTEREST
No dividend shall carry interest as against the Company.
47. UNCLAIMED DIVIDENDS
All unclaimed dividends payable in respect of a share may be invested or
otherwise made use of by the Board of Directors for the benefit of the Company
until claimed. The payment by the Directors of any unclaimed dividend into a
separate account shall not constitute the Company a trustee in respect thereof,
and any dividend unclaimed after a period of seven (7) years from the date of
declaration of such dividend unclaimed after a like period from the date the
same were payable, shall be forfeited and shall revert to the Company, PROVIDED,
HOWEVER, that the Board of Directors may, at its discretion, cause the Company
to pay any such dividend, or any part thereof, to a person who would have been
entitled thereto had the same not reverted to the Company.
<PAGE>
48. AUDITORS
The outside auditor(s) of the Company shall be appointed by resolution of
the Company's shareholders at the General Meeting and shall serve until
its/their re-election, removal or replacement by subsequent resolution, provided
that each term of service shall not extend beyond the third Annual Meeting after
the Annual Meeting at which such auditor was appointed. The authorities, rights
and duties of the outside auditor(s) of the Company, shall be regulated by
applicable law. The Board of Directors shall have the power and authority to fix
the remuneration of the auditor(s).
49. RIGHTS OF SIGNATURE
The Board of Directors shall be entitled to authorize any person or persons
(who need not be Directors) to act and sign on behalf of the Company, and the
acts and signature of such person(s) on behalf of the Company shall bind the
Company insofar as such person(s) acted and signed within the scope of his or
their authority.
50. NOTICES
Without derogating from the provisions of Article 20:
(a) In the event the Company elects to send any written notice or other
document to any of its shareholders such notice may be served either personally
or by sending it by prepaid registered mail (airmail if sent to a place outside
Israel) addressed to such shareholder at his address as described in the
Register of Shareholders or such other address as he may have designated in
writing for the receipt of notices and other documents. In the event a
shareholder elects to send the Company any written notice or other document such
notice may be served by tendering the same in person to the Secretary or the
General Manager of the Company at the principal office of the Company or by
sending it by prepaid registered mail (airmail if posted outside Israel) to the
Company at its Registered Address. Any such notice or other document shall be
deemed to have been served forty-eight (48) hours after it has been posted
(seven (7) business days if sent internationally), or when actually received by
the addressee if sooner than two days or seven days, as the case may be, after
it has been posted, or when actually tendered in person, to such shareholder (or
to the Secretary or the General Manager), provided, however, that notice may be
sent by cablegram, telex, telecopier (facsimile) or other electronic means (to
an address provided to the Company by any shareholder) and confirmed by
registered mail as aforesaid, and such notice shall be deemed to have been given
twenty-four (24) hours after such cablegram, telex, telecopy or other electronic
communication has been sent (provided, that electronic confirmation of the
successful sending of such notice was received) or when actually received by
such shareholder (or by the Company), whichever is earlier. If a notice is, in
fact, received by the addressee, it shall be deemed to have been duly served,
when received, notwithstanding that it was defectively addressed or failed, in
some respect, to comply with the provisions of this Article 50(a).
<PAGE>
(b) All notices to be given to the shareholders shall, with respect to any
share to which persons are jointly entitled, be given to whichever of such
persons is named first in the Register of Shareholders, and any notice so given
shall be sufficient notice to the holders of such share.
(c) Any shareholder whose address is not described in the Register of
Shareholders, and who shall not have designated in writing an address for the
receipt of notices, shall not be entitled to receive any notice from the
Company.
INSURANCE AND INDEMNITY
51. INDEMNITY AND INSURANCE
(a) Indemnification
(i) Subject to the provisions of the Companies Law, including the
receipt of all approvals as required therein or under any applicable law,
the Company may indemnify an Office Holder with respect to the following
liabilities and expenses, provided that such liabilities or expenses were
incurred by such Office Holder in such Office Holder's capacity as an
Office Holder of the Company:
(1) a monetary liability imposed on or incurred by an Office
Holder pursuant to a judgment in favor of another person, including a
judgment imposed on such Office Holder in a settlement or in an
arbitration decision that was approved by a court of law;
(2) reasonable litigation expenses, including attorney's fees,
expended by the Office Holder as a result of an investigation or
proceeding instituted against him by a competent authority, provided
that such investigation or proceeding concluded without the filing of
an indictment against him and either (A) concluded without the
imposition of any financial liability in lieu of criminal proceedings
or (B) concluded with the imposition of a financial liability in lieu
of criminal proceedings but relates to a criminal offense that does
not require proof of criminal intent; and
(3) reasonable legal expenses, including attorney's fees, which
the Office Holder incurred or with which the Office Holder was charged
by a court of law, in a proceeding brought against the Office Holder,
by the Company, on its behalf or by another person, or in a criminal
prosecution in which the Office Holder was acquitted, or in a criminal
prosecution in which the Office Holder was convicted of an offense
that does not require proof of criminal intent.
(ii) The foregoing indemnification may be procured by the Company (a)
retroactively and (b) as a commitment in advance to indemnify an Office
Holder, provided that, in respect of Article 51(a)(i)(1), such commitment
shall be limited to (i) such events that in the opinion of the Board of
Directors are foreseeable in light of the Company's actual operations at
the time the undertaking to indemnify is provided, and (ii) to the amounts
or criterion that the Board of Directors deems reasonable under the
circumstances, and further provided that such events and amounts or
criterion are set forth in the undertaking to indemnify, and which shall in
no event exceed, in the aggregate, twenty five percent (25%) of the
Company's shareholder's equity at the time of the indemnification .
- 20 -
<PAGE>
(b) Insurance
(i) Subject to the provisions of the Companies Law, including the
receipt of all approvals as required therein or under any applicable law,
the Company may enter into an agreement to insure an Office Holder for any
responsibility or liability that may be imposed on such Office Holder in
connection with an act performed by such Office Holder in such Office
Holder's capacity as an Office Holder of the Company, with respect to each
of the following:
(1) violation of the duty of care of the Office Holder towards
the Company or towards another person;
(2) breach of the duty of loyalty towards the Company, provided
that the Office Holder acted in good faith and with reasonable grounds
to assume that the such action would not prejudice the benefit of the
(3) a financial obligation imposed on the Office Holder for the
(ii) Articles 51(a) and 51(b)(i) shall not apply under any of the
following circumstances:
(1) a breach of an Office Holder's duty of loyalty, except as
specified in Article 51(b)(i)(2);
(2) a reckless or intentional violation of an Office Holder's
(3) an action intended to reap a personal gain illegally; and
(4) a fine or ransom levied on an Office Holder.
(iii) The Company may procure insurance for or indemnify any person
who is not an Office Holder, including without limitation, any employee,
agent, consultant or contractor, provided, however, that any such insurance
or indemnification is in accordance with the provisions of these Articles
and the Companies Law.
<PAGE>
52. MERGER
A merger (as defined in the Companies Law) of the Company shall require the
approval of the holders of a majority of seventy five percent (75%) of the
voting power represented at the General Meeting in person or by proxy or by
written ballot, as shall be permitted, and voting thereon in accordance with the
provisions of the Companies Law.
53. WINDING UP
If the Company be wound up, then, subject to applicable law, after
satisfaction of the Company's liabilities to creditors, the Company's
liquidation proceeds shall be distributed to the shareholders of the Company in
proportion to the nominal value of their respective holdings of the shares in
respect of which such distribution is being made. A voluntary winding up of the
Company shall require the approval of the holders of a majority of at least
seventy five percent (75%) of the voting power represented at a General Meeting
in person or by proxy or by written ballot, as shall be permitted, and voting
thereon.
54. Any amendment of these Articles shall require the approval of the
holders of a simple majority of the voting power represented at the General
Meeting in person or by proxy or by written ballot, as shall be permitted, and
voting thereon.
e-Glue SOFTWARE TECHNOLOGIES, INC.
2004 STOCK OPTION PLAN
1. PURPOSE
The purpose of this e-Glue Software Technologies, Inc. 2004 Stock Option
Plan (the "PLAN") is to encourage employees, directors and other individuals
(whether or not employees) who render services to e-Glue Software Technologies,
Inc. (the "COMPANY") and its Subsidiaries as hereinafter defined), to continue
their association with the Company and its Subsidiaries by providing
opportunities for them to participate in the ownership of the Company and in its
future growth through the granting of options to acquire the Company's stock
("OPTIONS") and stock to be transferred subject to restrictions ("RESTRICTED
STOCK"). The term "SUBSIDIARY" as used in the Plan means a corporation or other
business entity of which the Company owns, directly or indirectly through an
unbroken chain of ownership, fifty percent (50%) or more of the total combined
voting power of all classes of stock, in the case of a corporation, or fifty
percent (50%) or more of the total combined interests by value, in the case of
any other type of business entity.
2. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by the Board of Directors of the Company
(the "BOARD"). The Board shall from time to time determine to whom Options or
Restricted Stock shall be granted under the Plan, whether Options granted are
intended to be incentive stock options ("ISOS") or nonqualified stock options
("NSOS"), the terms of the Options and the number of shares of Common Stock (as
hereinafter defined) that may be granted under Options, and the terms and number
of shares of Restricted Stock.
(b) If the circumstances described in Section 2(d) are applicable, the
Board shall delegate to the Compensation Committee of the Board (the
"COMPENSATION COMMITTEE") the authority of the Board to make determinations and
to take actions described in this Section 2 and elsewhere in the Plan. The Board
may otherwise delegate to the Compensation Committee the authority to make such
determinations and to take such actions as the Board shall determine in its
discretion. The Compensation Committee shall report to the Board any such
determinations made and actions taken pursuant to such delegated authority.
Should the Board delegate such authority to the Compensation Committee, any
reference in this Plan to the "Board" shall refer also to the Compensation
Committee.
(c) The Board shall have the authority to adopt, amend and rescind such
rules and regulations as, in its opinion, may be advisable in the administration
of the Plan. All questions of interpretation and application of such rules and
regulations of the Plan and of Options or Restricted Stock granted hereunder
shall be subject to the determination of the Board, which shall be final and
binding. The Plan shall be administered in such a manner as to permit those
Options granted hereunder and specially designated under Section 5 hereof as an
ISO to qualify as incentive stock options as described in Section 422 of the
Internal Revenue Code of 1986, as amended (the "CODE").
<PAGE>
(d) If at any time Section 16 of the Securities Exchange Act of 1934, as
amended from time to time (the "EXCHANGE ACT"), is applicable to the Company,
each member of the Compensation Committee shall be a "non-employee director" or
the equivalent within the meaning of Rule 16b-3 under the Exchange Act and,
during any period that Section 162(m) of the Code is applicable to the Company,
an "outside director" within the meaning of Section 162 of the Code and the
regulations thereunder. With respect to persons subject to Section 16 of the
Exchange Act ("INSIDERS"), transactions under the Plan are intended to comply
with all applicable conditions of Rule 16b-3 or its successor under the Exchange
Act. To the extent any provision of the Plan or action by the Board or
Compensation Committee fails to so comply, it shall be deemed to be modified so
as to be in compliance with such Rule or, if such modification is not possible,
it shall be deemed to be null and void, to the extent permitted by law and
deemed advisable by the Board or Compensation Committee.
3. STOCK SUBJECT TO THE PLAN
The total number of shares of capital stock of the Company that may be
subject to Options and Restricted Stock grants under the Plan shall be 1,354,394
shares of the Company's Common Stock, $.001 par value per share (the "COMMON
STOCK"), from either authorized but unissued shares or treasury shares. The
number of shares stated in this Section 3 shall be subject to adjustment in
accordance with the provisions of Section 9. Shares of Restricted Stock that
fail to vest and shares of Common Stock subject to an Option that is not fully
exercised prior to its expiration or other termination shall again become
available for grant under the terms of the Plan.
4. ELIGIBILITY
The individuals who shall be eligible to receive Option grants and
Restricted Stock grants under the Plan shall be employees, directors and other
individuals who render services to the management, operation or development of
the Company or a Subsidiary and who have contributed or may be expected to
contribute to the success of the Company or a Subsidiary. In determining the
suitability of an individual to be granted an option, as well as in determining
the number of options to be granted to any individual, the Board shall take into
account the position and responsibilities of the individual being considered,
the nature and value to the Company or its subsidiaries of his or her service
and accomplishments, his or her present and potential contribution to the
success of the Company or its subsidiaries, and such other factors as the Board
may deem relevant. ISOs shall not be granted to any individual who is not an
employee of the Company or a Subsidiary that is a corporation for federal tax
purposes. The term "Optionee," as used in the Plan, refers to any individual to
whom an Option has been granted.
5. TERMS AND CONDITIONS OF OPTIONS
Every Option shall be evidenced by a written Stock Option Agreement in such
form as the Board shall approve from time to time, specifying the number of
shares of Common Stock that may be purchased pursuant to the Option, the time or
times at which the Option shall become exercisable in whole or in part, whether
the Option is intended to be an ISO or an NSO and such other terms and
conditions as the Board shall approve, and containing or incorporating by
reference the following terms and conditions.
<PAGE>
(a) DURATION. Each Option shall expire ten years from its date of grant,
PROVIDED, HOWEVER, that no ISO granted to an employee who owns (directly or
under the attribution rules of Section 424(d) of the Code) stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Subsidiary shall expire later than five (5) years
from its date of grant.
(b) VESTING SCHEDULE. Options granted under the Plan will be subject to a
four (4) year vesting period, as follows: twenty five percent (25%) of the
Options granted to any Optionee shall vest and become exercisable one (1) year
from they day they were granted to such Optionee, with the balance of
seventy-five percent (75%) of the Options, vesting in equal installments, on a
quarterly basis over the following three (3) years thereafter, unless otherwise
specified by the Board or the Compensation Committee.
(c) EXERCISE PRICE. The exercise price of each Option shall be any lawful
consideration, as specified by the Board in its discretion; PROVIDED, HOWEVER,
that the price shall be at least 100 percent of the Fair Market Value (as
hereinafter defined) of the shares on the date on which the Board awards the
Option, which shall be considered the date of grant of the Option for purposes
of fixing the price; and PROVIDED, FURTHER, that the price with respect to
options granted to an Optionee who at the time of grant owns (directly or under
the attribution rules of Section 424(d) of the Code) stock representing more
than ten percent (10%) of the voting power of all classes of stock of the
Company or of any Subsidiary shall be at least 110 percent of the Fair Market
Value of the shares on the date of grant of such options. Notwithstanding the
above, the Board may resolve to grant Options to non US employees at an exercise
price less than the Fair Market Value of the shares on the date of grant of such
options. For purposes of the Plan, except as may be otherwise explicitly
provided in the Plan or in any Stock Option Agreement, the "Fair Market Value"
of a share of Common Stock at any particular date shall be determined according
to the following rules: (i) if the Common Stock is not at the time listed or
admitted to trading on a stock exchange or the Nasdaq Stock Market, the Fair
Market Value shall be the closing price of the Common Stock on the date in
question in the over-the-counter market, as such price is reported in a
publication of general circulation selected by the Board and regularly reporting
the price of the Common Stock in such market, including any market that is
outside of the United States; PROVIDED, HOWEVER, that if the price of the Common
Stock is not so reported, the Fair Market Value shall be determined in good
faith by the Board, which may take into consideration (1) the price paid for the
Common Stock in the most recent trade of a substantial number of shares known to
the Board to have occurred at arm's length between willing and knowledgeable
investors, (2) an appraisal by an independent party or (3) any other method of
valuation undertaken in good faith by the Board, or some or all of the above as
the Board shall in its discretion elect; or (ii) if the Common Stock is at the
time listed or admitted to trading on any stock exchange, including any market
that is outside of the United States, or the Nasdaq Stock Market, then the Fair
Market Value shall be the mean between the lowest and highest reported sale
prices (or the highest reported bid price and the lowest reported asked price)
of the Common Stock on the date in question on the principal exchange or the
Nasdaq Stock Market, as the case may be, on which the Common Stock is then
listed or admitted to trading. If no reported sale of Common Stock takes place
on the date in question on the principal exchange or the Nasdaq Stock Market, as
the case may be, then the most recent previous reported closing sale price of
the Common Stock (or, in the Board's discretion, the reported closing asked
price) of the Common Stock on such date on the principal exchange or the Nasdaq
Stock Market, as the case may be, shall be determinative of Fair Market Value.
- 3 -
<PAGE>
(d) METHOD OF EXERCISE.
(i) To the extent that it has become exercisable under the terms of
the Stock Option Agreement, an Option may be exercised from time to time by
notice acceptable to the Chief Financial Officer of the Company, or his
delegate, stating the number of shares with respect to which the Option is
being exercised and accompanied by payment of the exercise price in cash or
check payable to the Company, or, if the Stock Option Agreement so
provides, other payment or deemed payment described in this Section 5(d),
or by means of a "cashless exercise" as described in Section 5(d)(ii). Such
notice shall be delivered in person to the Chief Financial Officer of the
Company, or his delegate, or shall be sent by registered mail, return
receipt requested, to the Chief Executive Officer of the Company, or his
delegate, in which case delivery shall be deemed made on the date such
notice is deposited in the mail.
(ii) If permitted under applicable securities laws, an Option may be
exercised by means of a "cashless exercise" procedure in which a broker
reasonably acceptable to the Company (a) transmits the exercise price to
the Company in cash or acceptable cash equivalents, either (i) against the
Optionee's notice of exercise and the Company's confirmation that it will
deliver to the broker stock certificates issued in the name of the broker
for at least that number of shares having a fair market value equal to the
exercise price, or (ii) as the proceeds of a margin loan to the Optionee;
or (b) agrees to pay the exercise price to the Company in cash or
acceptable cash equivalents upon the broker's receipt from the Company of
stock certificates issued in the name of the broker for at least that
number of shares having a fair market value equal to the exercise price.
The Optionee's notice of exercise of an Option pursuant to a "cashless
exercise" procedure must include the name and address of the broker
involved, a clear description of the procedure, and such other information
or undertaking by the broker as the Company shall reasonably require.
(iii) Within ten days after the time specified in an Optionee's notice
of exercise, the Company shall, without issue or transfer tax to the
Optionee, deliver to him at the main office of the Company, or such other
place as shall be mutually acceptable, a stock certificate for the shares
as to which his Option is exercised. If the Optionee fails to pay for or to
accept delivery of all or any part of the number of shares specified in his
notice upon tender of delivery thereof, his right to exercise the Option
with respect to those shares shall be terminated, unless the Company
otherwise agrees.
(e) EXERCISABILITY. An Option may be exercised so long as it is outstanding
from time to time in whole or in part, to the extent it is vested, and subject
to the terms and conditions that the Board in its discretion may provide in the
Stock Option Agreement, PROVIDED, HOWEVER, that any partial exercise must be for
a minimum of ten (10) shares of Common Stock. Such terms and conditions shall
include provisions for exercise within twelve (12) months after his or her death
or disability (within the meaning of Section 22(e)(3)) of the Code, PROVIDED
that no Option shall be exercisable after the expiration of the period described
in paragraph (a) above. Except as the Board in its discretion may otherwise
provide in the Stock Option Agreement, an Option shall cease to be exercisable
upon the expiration of three (3) months following the termination of the
Optionee's employment with, or his other provision of services to, the Company
or a Subsidiary, subject to paragraph (a) above and Section 9 hereof.
<PAGE>
(f) NOTICE OF ISO STOCK DISPOSITION. The Optionee must notify the Company
promptly in the event that he sells, transfers, exchanges or otherwise disposes
of any shares of Common Stock issued upon exercise of an ISO before the later of
(i) the second anniversary of the date of grant of the ISO and (ii) the first
anniversary of the date the shares were issued upon his exercise of the ISO.
(g) NO RIGHTS AS STOCKHOLDER. An Optionee shall have no rights as a
stockholder with respect to any shares covered by an Option until the date of
issuance of a stock certificate to him for the shares. No adjustment shall be
made for dividends or other rights for which the record date is earlier than the
date the stock certificate is issued, other than as required or permitted
pursuant to Section 8.
(h) TRANSFERABILITY OF OPTIONS. Options shall not be transferable by the
Optionee otherwise than by will or under the laws of descent and distribution,
and shall be exercisable during his or her lifetime only by the Optionee, except
that the Board may specify in a Stock Option Agreement that pertains to an NSO
that the Optionee may transfer such NSO to a member of the Immediate Family of
the Optionee, to a trust solely for the benefit of the Optionee and the
Optionee's Immediate Family, or to a partnership or limited liability company
whose only partners or members are the Optionee and members of the Optionee's
Immediate Family. "Immediate Family" shall mean, with respect to any Optionee,
such Optionee's child, stepchild, spouse, son-in-law or daughter-in-law, and
shall include adoptive relationships.
6. RESTRICTED STOCK
(a) The Board may grant or award shares of Restricted Stock in respect of
such number of shares of Common Stock, and subject to such terms or conditions,
as the Board shall determine and specify in a Restricted Stock Agreement, and
may provide in a Stock Option Agreement for an Option to be exercisable for
Restricted Stock.
(b) A holder of Restricted Stock shall have all of the rights of a
stockholder of the Company, including the right to vote the shares and the right
to receive any cash dividends, unless the Board shall otherwise determine.
Certificates representing Restricted Stock shall be imprinted with a legend to
the effect that the shares represented may not be sold, exchanged, transferred,
pledged, hypothecated or otherwise disposed of except in accordance with the
terms of the Restricted Stock Agreement and, if the Board so determines, the
holder may be required to deposit the certificates with the President,
Treasurer, Secretary or other officer of the Company or with an escrow agent
designated by the Board, together with a stock power or other instrument of
transfer appropriately endorsed in blank.
7. METHOD OF GRANTING OPTIONS AND RESTRICTED STOCK
The grant of Options and Restricted Stock shall be made by action of the
Board at a meeting at which a quorum of its members is present, or by unanimous
written consent of all its members, PROVIDED, HOWEVER, that if an individual to
whom a grant has been made fails to execute and deliver to the Board a Stock
Option Agreement or Restricted Stock Agreement within thirty (30) days after it
is submitted to him, the Option or Restricted Stock under the agreement shall be
voidable by the Company at its election, without further notice to the grantee.
<PAGE>
8. REQUIREMENTS OF LAW
The Company shall not be required to transfer Restricted Stock or to sell
or issue any shares upon the exercise of any Option if the issuance of such
shares will result in a violation by the Optionee or the Company of any
provisions of any law, statute or regulation of any governmental authority.
Specifically, in connection with the Securities Act of 1933, as amended from
time to time (the "SECURITIES ACT"), upon the transfer of Restricted Stock or
the exercise of any Option, the Company shall not be required to issue shares
unless the Board has received evidence satisfactory to it to the effect that the
holder of the Restricted Stock or the Option will not transfer such shares
except pursuant to a registration statement in effect under the Securities Act
or unless an opinion of counsel satisfactory to the Company has been received by
the Company to the effect that registration is not required. Any determination
in this connection by the Board shall be conclusive. The Company shall not be
obligated to take any other affirmative action in order to cause the transfer of
Restricted Stock or the exercise of an Option to comply with any law or
regulations of any governmental authority, including, without limitation, the
Securities Act or applicable state securities laws.
9. CHANGES IN CAPITAL STRUCTURE
(a) In the event that the outstanding shares of Common Stock are hereafter
exchanged for a different number or kind of shares or other securities of the
Company, by reason of a reorganization, recapitalization, exchange of shares,
stock split, combination of shares or dividend payable in shares or other
securities, a corresponding adjustment shall be made by the Board in the number
and kind of shares or other securities covered by outstanding Options and for
which Options may be granted under the Plan. Any such adjustment in outstanding
Options shall be made without change in the total price applicable to the
unexercised portion of the Option, but the price per share specified in each
Stock Option Agreement shall be correspondingly adjusted, PROVIDED, HOWEVER,
that no adjustment shall be made with respect to an ISO that would constitute a
modification as defined in Section 424 of the Code without the consent of the
holder. Any such adjustment made by the Board shall be conclusive and binding
upon all affected persons, including the Company and all Optionees.
(b) If, while unexercised Options remain outstanding under the Plan, the
Company merges or consolidates with a wholly-owned Subsidiary for the purpose of
reincorporating itself under the laws of another jurisdiction, the Optionees
will be entitled to acquire shares of common stock of the reincorporated Company
upon the same terms and conditions as were in effect immediately prior to such
reincorporation (unless such reincorporation involves a change in the number of
shares or the capitalization of the Company, in which case proportional
adjustments shall be made as provided above) and the Plan, unless otherwise
rescinded by the Board, will remain the Plan of the reincorporated Company.
<PAGE>
(c) Except as otherwise provided in the preceding paragraph, if the Company
is merged or consolidated with another corporation, whether or not the Company
is the surviving entity, or if the Company is liquidated or sells or otherwise
disposes of all or substantially all of its assets to another entity while
unexercised Options remain outstanding under the Plan, or if other circumstances
occur in which the Board in its sole and absolute discretion deems it
appropriate for the provisions of this paragraph to apply (in each case, an
"APPLICABLE EVENT"), then: (i) in the discretion of the Board, each holder of an
outstanding Option shall be entitled, upon exercise of the Option, to receive in
lieu of shares of Common Stock, such stock or other securities or property as he
or she would have received had he exercised the Option immediately prior to the
Applicable Event; or (ii) the Board may, in its discretion, waive, generally or
in one or more specific cases, any limitations imposed on exercise (including
without limitation a change in any existing vesting schedule) so that some or
all Options shall be exercisable from and after a date prior to the effective
date of such Applicable Event, as specified by the Board in its discretion, or
(iii) the Board may, in its discretion, convert some or all Options into Options
to purchase the stock or other securities of the surviving corporation pursuant
to such Applicable Event; or (iv) the Board may, in its discretion, convert the
outstanding and unexercised options to purchase stock or other securities of any
corporation into Options to purchase Common Stock, whether pursuant to the Plan
or not, pursuant to an Applicable Event; or (v) the Board may, in its
discretion, cancel all outstanding and unexercised Options as of the effective
date of any such Applicable Event; PROVIDED, HOWEVER, that notice of any
cancellation pursuant to clause (v) shall be given to each holder of an Option
not less than thirty (30) days preceding the effective date of such Applicable
Event; and PROVIDED, FURTHER, that the Board may, in its discretion, waive,
generally or in one or more specific instances, any limitations imposed on
exercise (including a change in any existing vesting schedule) with respect to
any Option so that such Option shall be exercisable in full or in part during
such thirty (30) day period, as the Board may, in its discretion, determine.
(d) Except as expressly provided to the contrary in this Section 9, the
issuance by the Company of shares of stock of any class for cash or property or
for services, either upon direct sale or upon the exercise of rights or
warrants, or upon conversion of shares or obligations of the Company convertible
into such shares or other securities, shall not affect the number, class or
price of shares of Common Stock then subject to outstanding Options.
10. FORFEITURE FOR DISHONESTY OR TERMINATION FOR CAUSE
Notwithstanding any provision of the Plan to the contrary, if the Board
determines, after full consideration of the facts, that:
(a) the Optionee or holder of Restricted Stock has been engaged in fraud,
embezzlement or theft in the course of his or her employment by or involvement
with the Company or a Subsidiary, has made unauthorized disclosure of trade
secrets or other proprietary information of the Company or a Subsidiary or of a
third party who has entrusted such information to the Company or a Subsidiary,
or has been convicted of a felony or any crime that reflects negatively upon the
Company; or
- 7 -
<PAGE>
(b) the Optionee or holder of Restricted Stock has violated the terms of
any employment, noncompetition, nonsolicitation, confidentiality, nondisclosure
or other agreement with the Company to which he is a party; or
(c) the employment or involvement with the Company or a Subsidiary of the
Optionee or holder of Restricted Stock was terminated for "cause," as defined in
any agreement with the Optionee or holder of Restricted Stock governing his or
her relationship with the Company, or if there is no such agreement, as
determined by the Board, which may determine that "cause" includes among other
matters the willful failure or refusal of the Optionee or holder of Restricted
Stock to perform and carry out his or her assigned duties and responsibilities
diligently and in a manner satisfactory to the Board;
then the Optionee's right to exercise an Option shall terminate as of the date
of such act (in the case of (a) or (b)) or such termination (in the case of
(c)), the Optionee shall forfeit all unexercised Options and the Company shall
have the right to repurchase all or any part of the shares of Common Stock
acquired by the Optionee upon any previous exercise of any Option or any
previous acquisition by the holder of Restricted Stock, whether then vested or
unvested, at a price equal to the lower of (x) the amount paid to the Company
upon such exercise or acquisition, or (y) the Fair Market Value of such shares
at the time of repurchase. If an Optionee whose behavior the Company asserts
falls within the provisions of the clauses above has exercised or attempts to
exercise an Option prior to consideration of the application of this Section 10
or prior to a decision of the Board, the Company shall not be required to
recognize such exercise until the Board has made its decision and, in the event
any exercise shall have taken place, it shall be of no force and effect (and
shall be void AB INITIO) if the Board makes an adverse determination; PROVIDED,
HOWEVER, that if the Board finds in favor of the Optionee then the Optionee will
be deemed to have exercised the Option retroactively as of the date he or she
originally gave notice of his or her attempt to exercise or actual exercise, as
the case may be. The decision of the Board as to the cause of an Optionee's or
holder of Restricted Stock's discharge and the damage done to the Company shall
be final, binding and conclusive. No decision of the Board, however, shall
affect in any manner the finality of the discharge of such Optionee or holder of
Restricted Stock by the Company. For purposes of this Section 10, reference to
the Company shall include any Subsidiary.
11. CERTAIN AGREEMENTS
Without limiting the foregoing, the Board may provide in an Optionee's
Stock Option Agreement (or in a grantee's Restricted Stock Agreement) that
any exercise of such Option (or any grant of Restricted Stock) is
conditioned on the Optionee's (or grantee's) execution of one or more
letter agreements or other documents concerning investment intent, transfer
restrictions, and such other matters as the Board may deem appropriate.
12. MISCELLANEOUS
(a) NO GUARANTEE OF EMPLOYMENT OR OTHER SERVICE RELATIONSHIP. Neither the
Plan nor any Stock Option Agreement or Restricted Stock Agreement shall give an
employee the right to continue in the employment of the Company or a Subsidiary
or give the Company or a Subsidiary the right to require an employee to continue
in employment. Neither the Plan nor any Stock Option Agreement or Restricted
Stock Agreement shall give a director or other service provider the right to
continue to perform services for the Company or a Subsidiary or give the Company
or a Subsidiary the right to require the director or service provider to
continue to perform services.
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<PAGE>
(b) TAX WITHHOLDING. To the extent required by law, the Company shall
withhold or cause to be withheld income and other taxes with respect to any
income recognized by an Optionee by reason of the exercise or vesting of an
Option or Restricted Stock, and as a condition to the receipt of any Option or
Restricted Stock the Optionee shall agree that if the amount payable to him by
the Company and any Subsidiary in the ordinary course is insufficient to pay
such taxes, then he shall upon the request of the Company pay to the Company an
amount sufficient to satisfy its tax withholding obligations.
Without limiting the foregoing, the Board may in its discretion permit any
Optionee's withholding obligation to be paid in whole or in part in the form of
shares of Common Stock by withholding from the shares to be issued or by
accepting delivery from the Optionee of shares already owned by him. The Fair
Market Value of the shares for such purposes shall be determined as set forth in
Section 5(b). An Optionee may not make any such payment in the form of shares of
Common Stock acquired upon the exercise of an ISO until the shares have been
held by him for at least two years after the date the ISO was granted and at
least one year after the date the ISO was exercised. If payment of withholding
taxes is made in whole or in part in shares of Common Stock, the Optionee shall
deliver to the Company stock certificates registered in his name representing
shares of Common Stock legally and beneficially owned by him, fully vested and
free of all liens, claims and encumbrances of every kind, duly endorsed or
accompanied by stock powers duly endorsed by the record holder of the shares
represented by such stock certificates. If the Optionee is subject to Section
16(a) of the Exchange Act, his ability to pay his withholding obligation in the
form of shares of Common Stock shall be subject to such additional restrictions
as may be necessary to avoid any transaction that might give rise to liability
under Section 16(b) of the Exchange Act.
ALL TAX CONSEQUENCES UNDER ANY APPLICABLE LAW WHICH MAY ARISE FROM THE
GRANT OF ANY OPTIONS OR RESTRICTED STOCK , OR IN THE CASE OF AN OPTION, FROM ITS
EXERCISE, FROM THE SALE OR DISPOSITION OF THE SHARES OR RESTRICTED STOCK OR FROM
ANY OTHER ACT OF THE OPTIONEE IN CONNECTION WITH THE FOREGOING SHALL BE BORNE
SOLELY BY THE OPTIONEE, AND THE OPTIONEE SHALL INDEMNIFY THE COMPANY AND SHALL
HOLD IT HARMLESS AGAINST AND FROM ANY LIABILITY FOR ANY SUCH TAX OR PENALTY,
INTEREST OR INDEXATION THEREON OR THEREUPON
Each Optionee shall notify the Company in writing within ten (10) days
after the date such Optionee first obtains knowledge of any tax bureau inquiry,
audit, assertion, determination, investigation, or question relating in any
manner to the value of Stock or Options granted or received hereunder, and each
Optionee agrees to any settlement, closing or other similar agreement in
connection with the foregoing. Upon request, an Optionee shall provide to the
Company any information or document relating to any event described in the
preceding sentence which the Company (in its sole discretion) requires in order
to calculate and substantiate any change in the Company's tax liability as a
result of such event.
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<PAGE>
(c) USE OF PROCEEDS. The proceeds from the sale of shares pursuant to
Options shall constitute general funds of the Company.
(d) CONSTRUCTION. All masculine pronouns used in the Plan shall include
both sexes; the singular shall include the plural and the plural the singular
unless the context otherwise requires. The titles of the sections of the Plan
are included for convenience only and shall not be construed as modifying or
affecting their provisions.
(e) GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
principles of conflict of laws.
13. EFFECTIVE DATE, DURATION, AMENDMENT AND TERMINATION OF PLAN
The Plan shall be effective as of November __, 2004, subject to
ratification by (a) the holders of a majority of the outstanding shares of
capital stock present, or represented, and entitled to vote thereon (voting as a
single class) at a duly held meeting of the stockholders of the Company or (b)
by the written consent of the holders of a majority (or such greater percentage
as may be prescribed under the Company's charter, by-laws and applicable state
law) of the capital stock of the Company entitled to vote thereon (voting as a
single class), in either case within twelve months after such date. Options or
Restricted Stock that are conditioned upon the ratification of the Plan by the
stockholders may be granted prior to ratification. The Board may grant Options
or Restricted Stock under the Plan from time to time until the close of business
on November __, 2014. The Board may at any time amend the Plan; PROVIDED,
HOWEVER, that without approval of the Company's stockholders there shall be no:
(a) change in the number of shares of Common Stock that may be issued under the
Plan, except by operation of the provisions of Section 9, either to any one
Optionee or in the aggregate; (b) change in the class of persons eligible to
receive Options or Restricted Stock; or (c) other change in the Plan that
requires stockholder approval under applicable law. No amendment shall adversely
affect outstanding Options or Restricted Stock without the consent of the
Optionee or holder of Restricted Stock. The Plan may be terminated at any time
by action of the Board, but any such termination will not terminate any Option
or Restricted Stock then outstanding without the consent of the Optionee or the
holder of such Restricted Stock.
14. RULES PARTICULAR TO SPECIFIC COUNTRIES
(a) NOTWITHSTANDING anything herein to the contrary, the terms and
conditions of the Plan may be amended with respect to particular types of
Optionees as determined by the Board (for example - Israeli employees) by an
addendum to the Plan (the "APPENDIX").
(b) THE Company may adopt one or more Appendixes. Each Appendix shall be
approved by the Board and as required or advisable under applicable law.
(c) THE terms of an Appendix shall govern only with respect to the types of
Optionees specified in such Appendix.
(d) In the case that the terms and conditions set forth in an Appendix
conflict with any provisions of the Plan, the provisions of the Appendix shall
govern with respect to Optionees that are subject to such Appendix, provided,
however, that such Appendix shall not be construed to grant the Optionees rights
not consistent with the terms of the Plan, unless specifically provided in such
Appendix.
<PAGE>
[Form of Stock Option Agreement]
ALL OF THE TERMS OF THIS AGREEMENT AND THE INFORMATION HEREIN ARE CONFIDENTIAL.
This Stock Option Agreement (this "AGREEMENT") is made as of this day of by
and between e-Glue Software Technologies, Inc., a Delaware corporation (the
"COMPANY"), and (the "OPTIONEE").
WITNESSETH THAT:
WHEREAS, the Company instituted the "e-Glue Software Technologies, Inc.
2004 Stock Option Plan" (the "PLAN"); and
WHEREAS, the Board of Directors of the Company (the "BOARD") has granted to
the Optionee a stock option upon the terms and subject to the conditions of this
Agreement and of the Plan (which is hereby incorporated herein); and
WHEREAS, the Board has designated this stock option [an incentive / a
non-qualified] stock option in accordance with the Plan.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, the Company and the Optionee agree as follows:
1. GRANT. Subject to the terms and conditions hereinafter set forth and the
terms and conditions of the Plan, the Company (which term shall include, unless
the context otherwise clearly requires, all Subsidiaries of the Company) hereby
grants to the Optionee the following option (the "OPTION") to purchase from the
Company the number of shares specified in SCHEDULE 1 attached hereto of the
Common Stock, $.001 par value per share (the "COMMON STOCK"), of the Company.
2. EXERCISE PRICE AND FURTHER CONDITIONS. This Option may be exercised at the
exercise price per share of Common Stock set forth in SCHEDULE 1 attached
hereto, subject to the Vesting Schedule set forth in Section 3 herein and the
adjustment as provided herein and in the Plan. Pursuant to Section 11 of the
Plan, the exercise of this Option may also be conditioned on the Optionee's
execution of certain letter agreements or other documents, including, without
limitation, those expressly referred to herein.
3. VESTING SCHEDULE. Options granted under this Agreement will be exercisable
subject to a four (4) year vesting period, as follows: twenty five percent (25%)
of the Options granted to the Optionee shall vest and become exercisable one (1)
year from they day they were granted to the Optionee, with the balance of
seventy five percent (75%) of the Options, vesting and becoming exercisable in
equal installments, on a quarterly basis over the following three (3) years
thereafter, unless otherwise approved by the Board as set forth in SCHEDULE 1 to
this Agreement.
<PAGE>
4. TERM AND EXERCISABILITY OF OPTION. This Option shall expire on the expiration
date specified in SCHEDULE 1 attached hereto and shall be exercisable prior to
that date in accordance with and subject to the conditions set forth in the Plan
and those conditions, if any, set forth in SCHEDULE 1 attached hereto or in
Section 2 hereof. If before this Option has been exercised in full, the Optionee
ceases to be an employee of or provide services for the Company or a Subsidiary,
for any reason other than a termination for a reason specified in Section 10 of
the Plan, the Optionee may exercise this Option to the extent that he or she
might have exercised it on the date of termination of his or her employment, but
only during the period ending on the earlier of (a) the date on which the Option
expires in accordance with SCHEDULE 1 attached hereto or (b) three (3) months
after the date of termination of the Optionee's employment with the Company or a
Subsidiary, or of his provision of services to the Company or a Subsidiary.
However, if the Optionee dies before the date of expiration of this Option and
while in the employ of or during the course of providing services, for the
Company or a Subsidiary or during the three (3) month period described in the
preceding sentence, or in the event of the retirement of the Optionee for
reasons of disability (within the meaning of Section 22(e)(3) of the Code) the
Option shall remain exercisable until the earlier of its date of expiration in
accordance with SCHEDULE 1 attached hereto or one year from the date of such
death or retirement. If the Optionee dies before this Option has been exercised
in full, the executor, administrator or personal representative of the estate of
the Optionee may exercise this Option as set forth in the preceding sentence.
5. METHOD OF EXERCISE. To the extent that the right to purchase shares of Common
Stock is exercisable hereunder, this Option may be exercised from time to time
(i) by notice acceptable to the Company substantially in the form attached
hereto as EXHIBIT A stating the number of shares with respect to which this
Option is being exercised and accompanied by payment in full of the exercise
price for the number of shares to be delivered by cash or check or (ii) by means
of a "cashless exercise" procedure set forth in Section 5(d)(ii) of the Plan.
Any exercise of less than all the options that are vested at the time of
exercise must be for a minimum of ten (10) shares. As soon as practicable after
its receipt of such notice, the Company shall, without transfer or issue tax to
the Optionee (or other person entitled to exercise this Option), deliver to the
Optionee (or other person entitled to exercise this Option), at the principal
executive offices of the Company or such other place as shall be mutually
acceptable, a stock certificate or certificates for such shares out of
theretofore authorized but unissued shares or reacquired shares of its Common
Stock as the Company may elect; PROVIDED, HOWEVER, that the time of such
delivery may be postponed by the Company for such period as may be required for
it with reasonable diligence to comply with any applicable requirements of law.
6. NONASSIGNABILITY OF OPTION RIGHTS. This Option shall not be assignable or
transferable by the Optionee except by will or by the laws of descent and
distribution and during the life of the Optionee, this Option shall be
exercisable only by him or her.
7. FORFEITURE FOR DISHONESTY OR TERMINATION FOR CAUSE. Notwithstanding any
provision of this Agreement to the contrary, if the Board determines, after full
consideration of the facts, that:
(a) the Optionee has been engaged in fraud, embezzlement or theft in the
course of his or her employment by or involvement with the Company or a
Subsidiary, has made unauthorized disclosure of trade secrets or other
proprietary information of the Company or a Subsidiary or of a third party who
has entrusted such information to the Company or a Subsidiary, or has been
convicted of a felony or any crime that reflects negatively upon the Company; or
<PAGE>
(b) the Optionee has violated the terms of any employment, noncompetition,
nonsolicitation, confidentiality, nondisclosure or other agreement with the
Company to which he is a party; or
(c) the employment or involvement with the Company or a Subsidiary of the
Optionee was terminated for "cause," as defined in any agreement with the
Optionee governing his or her relationship with the Company, or if there is no
such agreement, as determined by the Board, which may determine that "cause"
includes among other matters the willful failure or refusal of the Optionee to
perform and carry out his or her assigned duties and responsibilities diligently
and in a manner satisfactory to the Board;
then the Optionee's right to exercise this Option shall terminate as of the date
of such act (in the case of (a) or (b)) or such termination (in the case of
(c)), the Optionee shall forfeit the unexercised portion of this Option and the
Company shall have the right to repurchase all or any part of the shares of
Common Stock acquired by the Optionee upon any previous exercise of this Option,
at a price equal to the lower of (x) the amount paid to the Company upon such
exercise, or (y) the Fair Market Value of such shares at the time of repurchase.
If the Company asserts that the Optionee's behavior falls within the provisions
of the clauses above and the Optionee has exercised or attempts to exercise this
Option prior to consideration of the application of this Section 7 or prior to a
decision of the Board, the Company shall not be required to recognize such
exercise until the Board has made its decision and, in the event any exercise
shall have taken place, it shall be of no force and effect (and shall be void AB
INITIO) if the Board makes an adverse determination; PROVIDED, HOWEVER, that if
the Board finds in favor of the Optionee then the Optionee will be deemed to
have exercised this Option retroactively as of the date he or she originally
gave notice of his or her attempt to exercise or actual exercise, as the case
may be. The decision of the Board as to the cause of the Optionee's discharge
and the damage done to the Company shall be final, binding and conclusive. No
decision of the Board, however, shall affect in any manner the finality of the
discharge of the Optionee by the Company. For purposes of this Section 7,
reference to the Company shall include any Subsidiary.
8. RIGHT OF FIRST REFUSAL; Drag Along; Right of Repurchase.
(a) If at any time the Optionee (which term for purposes of this Section 8
shall mean the Optionee and his executors, administrators and any other person
to whom the Option may be transferred by will or the laws of descent and
distribution) desires to sell, assign or otherwise transfer (including by gift)
any of the shares of Common Stock acquired pursuant to the exercise of this
Option, the Optionee shall first offer such shares to the Company by giving
written notice of the Optionee's desire so to sell, assign or transfer such
shares. The notice shall state the number of shares offered, the name of the
person or persons to whom it is proposed to sell, assign or transfer such shares
and the price (if any) at which such shares are intended to be sold, assigned or
transferred. Such notice shall constitute an offer to the Company for the
Company to purchase the number of shares set forth in the notice at a price per
share equal to the price stated therein or, in the case of a proposed transfer
without consideration, at the exercise price per share of this Option. The
Company may accept the offer as to all or a part of such shares by notifying the
Optionee in writing within 15 days after receipt of such notice of its
acceptance of the offer. If the Company accepts the offer in whole or in part,
the Company shall have 30 days thereafter within which to purchase the offered
shares that it has elected to purchase at a price per share as aforesaid. If
within the applicable time periods the Optionee does not receive notice of the
Company's intention to purchase the offered shares, or if payment in full of the
purchase price is not tendered by the Company, the offer shall be deemed to have
been rejected as to any shares not so purchased and the Optionee may transfer
title to such Shares as shall not have been so purchased within 90 days from the
date of the Optionee's written notice to the Company of the Optionee's intention
to sell, but such transfer shall be made only to the proposed transferee and at
the proposed price as stated in such notice and after compliance with any other
provisions of this Option and any other agreements that are applicable to the
transfer of such Shares. Shares that are so transferred to such transferee shall
continue to be subject to the rights of the Company set forth in this Section 8,
as well as all applicable provisions of the Stock Restriction Agreement.
- 3 -
<PAGE>
(b) No sale, assignment, pledge or transfer of any of the shares covered by
this Option shall be effective unless all of the applicable provisions of this
Section 8 have been duly complied with, and the Company may inscribe on the face
of any certificate representing any of such shares a legend referring to the
provisions of this Section 8. If any transfer of shares is made or attempted in
violation of this Section 8, or if shares are not offered to the Company as
required this Section 8, the Company shall have the right to purchase such
shares from the Optionee or his transferee at any time before or after the
transfer. In addition to any other legal or equitable remedies which it may
have, the Company may enforce its rights by actions for specific performance (to
the extent permitted by law) and may refuse to recognize any transferee as a
stockholder for any purpose, until all applicable provisions hereof have been
complied with.
(c) Drag-Along. As a condition to the receipt of any Stock pursuant to the
grant of Options, Optionee hereby irrevocably agrees that his/her Stock shall be
subject to any and all drag-along and/or squeeze-out obligations relating to the
compulsory transfer of his/her Stock in accordance with the provisions of the
Company's Certificate of Incorporation, as may be amended from time to time, and
if no such drag-along and/or squeeze-out obligations are provided for in said
charter documents, then as such drag-along and/or squeeze-out obligations shall
be provided in the latest agreement in effect among the Company's shareholders
to which the Company is party which agreement is deemed to be incorporated
herein by reference and the Optionee shall be deemed to be a holder of Stock
that is party to such agreement. The stockholder of the Company and the Company
are entitled to rely on this irrevocable agreement.
(d) Right of Repurchase. To the extent provided in the Company's
Certificate of Incorporation, as may be amended from time to time, and subject
to applicable law, the Company shall have the right to repurchase all or any
part of the Stock purchased upon the exercise of this Option, provided however
that such repurchase shall not occur during the six (6) month period following
the date of the exercise of the Option, in consideration for the fair market
value of the Stock. The fair market value of such Stock shall be determined by
the Board in good faith.
<PAGE>
9. CONFIDENTIALITY. The Optionee hereby agrees that the entire contents of this
Agreement are confidential at all times, and that the Option's exercisability is
conditioned on his or her compliance with this covenant; PROVIDED, HOWEVER, that
the Optionee may disclose the contents of this Agreement to his or her spouse
and to his or her legal and financial advisors.
10. IRREVOCABLE PROXY UNTIL IPO OR MERGER/SALE. Notwithstanding anything herein
or in the Plan to the contrary, and as a material precondition to the Company's
issuance of Options and Restricted Stock under the Plan, the Optionee shall
execute an irrevocable proxy in the form attached hereto as EXHIBIT B,
appointing as the Optionee's proxy, any person designated by the Board or the
Committee with power of delegation. So long as any such Stock are held by a
Trustee such Shares shall be voted by the person designated by the Board or the
Committee, in the same proportion as the result of the total shareholder vote in
the matter brought to vote. It is hereby clarified the Trustee shall have no
voting rights. Notwithstanding the foregoing, any irrevocable proxy granted
pursuant hereto shall be of no force or effect upon the earlier of (i) the
consummation of the Company's Initial Public Offering or (ii) the consummation
of a Merger/Sale, as such terms are defined in the Plan. The proxy is to vote
pro-rata to the voting of the other shareholders.
11. COMPLIANCE WITH SECURITIES ACT. (a) The Company shall not be obligated to
sell or issue any shares of Common Stock or other securities pursuant to the
exercise of this Option unless the shares of Common Stock or other securities
with respect to which this Option is being exercised are at that time
effectively registered or exempt from registration under the Securities Act and
applicable state securities laws. In the event shares or other securities shall
be issued that shall not be so registered, the Optionee hereby represents,
warrants and agrees that he or she will receive such shares or other securities
for investment and not with a view to their resale or distribution, and will
execute an appropriate investment letter satisfactory to the Company and its
counsel.
(b) NO REGISTRATION RIGHTS - The Company may, but shall not be obligated to,
register or qualify the sale of Shares under the Securities Act or any other
applicable law. The Company shall not be obligated to take any affirmative
action in order to cause the sale of Shares under this Agreement to comply with
any law.
(c) SECURITIES LAW RESTRICTIONS. Regardless of whether the offering and sale of
Shares under the Plan have been registered under the Securities Acts or have
been registered or qualified under the securities laws of any state, the Company
at its discretion may impose restrictions upon the sale, pledge or other
transfer of such Shares (including the placement of appropriate legends on share
certificates or the imposition of stop-transfer instructions) if, in the
judgment of the Company, such restrictions are necessary or desirable in order
to achieve compliance with the Securities Act, the securities laws of any state
or any other law.
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<PAGE>
12. MARKET STAND-OFF. In connection with any underwritten public offering by the
Company of its equity securities pursuant to an effective registration statement
filed under the Securities Act, including the Company's initial public offering,
the Optionee shall not directly or indirectly sell, make any short sale of,
loan, hypothecate, pledge, offer, grant or sell any Option or other contract for
the purchase of, purchase any Option or other contract for the sale of, or
otherwise dispose of or transfer, or agree to engage in any of the foregoing
transactions with respect to, any Shares acquired under this Agreement without
the prior written consent of the Company or its underwriters. Such restriction
(the "Market Stand-Off") shall be in effect for such period of time following
the date of the final prospectus for the offering as may be requested by the
Company or such underwriters. In no event, however, shall such period exceed 180
days. In the event of the declaration of a stock dividend, a spin-off, a stock
split, an adjustment in conversion ratio, a recapitalization or a similar
transaction affecting the Company's outstanding securities without receipt of
consideration, any new, substituted or additional securities which are by reason
of such transaction distributed with respect to any Stock subject to the Market
Stand-Off, or into which such Stock thereby become convertible, shall
immediately be subject to the Market Stand-Off. In order to enforce the Market
Stand-Off, the Company may impose stop-transfer instructions with respect to the
Shares acquired under this Agreement until the end of the applicable stand-off
period. The Company's underwriters shall be beneficiaries of the agreement set
forth in this Section 12. This Section 12 shall not apply to Stock registered in
the public offering under the Securities Act.
13. LEGENDS. All certificates evidencing Restricted Stock purchased under this
Agreement shall bear the following legends:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR APPLICABLE STATE SECURITIES
LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933
AND APPLICABLE STATE SECURITIES LAWS, OR THE AVAILABILITY OF AN EXEMPTION
FROM THE REGISTRATION PROVISIONS OF THE SECURITIES ACT OF 1933 AND
APPLICABLE STATE SECURITIES LAWS".
" THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFER AND MAY NOT BE SOLD, EXCHANGED, TRANSFERRED, OR OTHERWISE DISPOSED
OF EXCEPT IN ACCORDANCE WITH AND SUBJECT TO ALL THE TERMS AND CONDITIONS OF
THIS STOCK OPTION AGREEMENT AMONG THE CORPORATION AND OPTIONEE. ANY
TRANSFEREE RECEIVES THIS CERTIFICATE SUBJECT TO THE WAIVER OF SUCH
RESTRICTIONS."
REMOVAL OF LEGENDS. If, in the opinion of the Company and its counsel, any
legend placed on a share certificate representing Shares sold under this
Agreement is no longer required, the holder of such certificate shall be
entitled to exchange such certificate for a certificate representing the same
number of Shares but without such legend.
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<PAGE>
15. WITHHOLDING TAXES. The Optionee hereby agrees, as a condition to any
exercise of this Option, to provide to the Company an amount sufficient to
satisfy its obligation to withhold certain federal, state and local taxes
arising by reason of such exercise (the "WITHHOLDING AMOUNT"), if any, by (a)
authorizing the Company and/or a Subsidiary to withhold the Withholding Amount
from his cash compensation or (b) remitting the Withholding Amount to the
Company in cash; PROVIDED, HOWEVER, that to the extent that the Withholding
Amount is not provided by one or a combination of such methods, the Company in
its sole and absolute discretion may refuse to issue such shares of Common Stock
or may withhold from the shares of Common Stock delivered upon exercise of this
Option that number of shares having a Fair Market Value, on the date of
exercise, sufficient to eliminate any deficiency in the Withholding Amount.
18. EFFECT UPON EMPLOYMENT. Nothing in this Option or the Plan shall be
construed to impose any obligation upon the Company or any Subsidiary to employ
or retain in its employ, or continue its involvement with, the Optionee.
19. TIME FOR ACCEPTANCE. Unless the Optionee shall evidence his acceptance of
this Option by executing this Agreement and returning it to the Company within
thirty (30) days after its delivery to him, the Option and this Agreement shall,
in the discretion of the Company, be null and void.
<PAGE>
20. GENERAL PROVISIONS.
instance.
successors and assigns.
(c) CONSTRUCTION. This Agreement is to be construed in accordance with the
terms of the Plan. In case of any conflict between the Plan and this Agreement,
the Plan shall control. The titles of the sections of this Agreement are
included for convenience only and shall not be construed as modifying or
affecting their provisions. The masculine gender shall include both sexes; the
singular shall include the plural and the plural the singular unless the context
otherwise requires. Capitalized terms not defined herein shall have the meanings
given to them in the Plan.
(d) GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the applicable laws of the State of Delaware (other
than the law governing conflict of law questions) except to the extent the laws
of any other jurisdiction are mandatorily applicable.
(e) NOTICES. Any notice in connection with this Agreement shall be deemed
to have been properly delivered if it is in writing and is delivered by hand or
facsimile or sent by registered mail to the party addressed as follows, unless
another address has been substituted by notice so given:
To the Optionee: To his or her address as listed on the books of the Company
To the Company: e-Glue Software Technologies, Inc.
D.N. Hefer 37845, Israel
Attention: Mr. Moshe Avlagon, CFO
Fax: 972-4-6231786
with a copy to: Z.A.G. / S&W LLP
1290 Avenue of the Americas, 29th Floor
New York, NY 10404, USA
Attention: Yair Estline, Esq.
[Remainder of page intentionally left blank.]
<PAGE>
IN WITNESS WHEREOF, Optionee has executed this Agreement and the Company
has caused this Agreement to be executed by its officer thereunto duly
authorized, all as of the date first set forth above.
By:___________________________
Title:
<PAGE>
Schedule 1 to Stock Option Agreement
1. Name of Optionee:
2. Date of grant of Option:
3. Number of shares of Common Stock:
4. Type of Option: [Incentive/Nonqualified]
5. Exercise Price (per share): $
6. Term: Subject to Section 3 of the Stock Option Agreement, this Option expires at 5:00 p.m. Eastern Time on [date].
7. Exercisability: Provided that on the dates set forth below the Optionee is still employed by or providing services to the Company, the Option will become exercisable as follows and as provided in Section 3 of the Stock Option Agreement:
DATE NUMBER OF SHARES CUMULATIVE NUMBER
<PAGE>
e-Glue Software Technologies, Inc.
[COMPLETE]
Re: Exercise of Option under the e-Glue Software Technologies, Inc. 2004
Stock Option Plan
Gentlemen:
I hereby elect to exercise the stock option granted to me pursuant and
subject to the terms and conditions of the Stock Option Agreement between the
Company and me dated as of _______, 200__ (the "OPTION AGREEMENT") by and to the
extent of purchasing _____ shares of Common Stock, $.001 par value per share, of
______ e-Glue Software Technologies, Inc. (the "COMPANY") for the exercise price
of $_____ per share.
Enclosed please find payment, in cash or in such other property as is
permitted under the g-Glue Software Technologies, Inc. 2004 Stock Option Plan
(the "PLAN"), of the purchase price for said shares. IF I AM MAKING PAYMENT OF
ANY PART OF THE PURCHASE PRICE BY DELIVERY OF SHARES OF COMMON STOCK OF THE
COMPANY, I HEREBY CONFIRM THAT I HAVE INVESTIGATED AND CONSIDERED THE POSSIBLE
INCOME TAX CONSEQUENCES OF MAKING PAYMENTS IN THAT FORM. I agree to provide the
Company an amount sufficient to satisfy the obligation of the Company to
withhold certain taxes, as provided in Section 14 of the Option Agreement.
Also enclosed are executed letters concerning my investment intent
representations.
I specifically confirm to the Company that the shares shall be held subject
to all of the terms and conditions of the Option Agreement.
_________________________________
Date (Signed by the Employee or other
party duly exercising option)
<PAGE>
[Date]
e-Glue Software Technologies, Inc.
[COMPLETE]
Gentlemen:
In connection with my acquisition of [Number] shares of the Common Stock,
$.001 par value per share (the "SHARES"), of e-Glue Software Technologies, Inc.
(the "COMPANY"), from [from the Company at a price of [Amount] per share/from
[Name of Seller] for a purchase price of [Amount] per share]/upon the exercise
of a stock option at an exercise price of [Amount] per share], I hereby
represent to the Company that I am acquiring the Shares to be purchased for my
own account for investment and not with a view to, or for resale in connection
with, any distribution thereof or the grant of any participation therein, and
that I have no present intention of distributing or reselling any thereof, or
granting any participation therein. My acquisition of the Shares will be a
representation by me to the Company that I am then acquiring the Shares for my
own account for investment with no intention of making any distribution thereof.
I represent that I understand that there is no trading market for shares of the
Company Common Stock, there is no assurance that such market will ever develop,
and that any routine resales of the Shares made in reliance upon Rule 144 under
the Securities Act of 1933 (the "ACT"), if Rule 144 becomes available with
respect to shares of the Company's Common Stock, can be made only in limited
amounts in accordance with the terms and conditions of that Rule, and as long as
Rule 144 is not available with respect to the Shares, absent registration,
compliance with Regulation A under the Act or some other exemption will be
required for any resale. The Company is under no obligation to me to register
the Shares under the Act, to comply with any exemption under the Act or to
furnish me with any information necessary to enable me to sell shares of the
Company's Common Stock under Rule 144.
transaction without the consent of any other person.
<PAGE>
The undersigned holder, being an employee of e-Glue Software Technologies, Inc.
(the "COMPANY"), a Delaware corporation, or a subsidiary thereof, who holds (or
will hold, after exercising options to purchase the Company's Common Stock)
Common Stock of the Company (the "SHARES"), hereby appoints the Company's
Secretary (or another person, in the Company's discretion) (the "PROXY HOLDER")
as my proxy to vote for me and on my behalf at shareholders meetings of the
Company with respect to the Shares. The Proxy Holder is hereby appointed as my
true and lawful proxy and attorney-in-fact, with full power of substitution and
revocation, to attend meetings of the shareholders of the Company to be held at
any time, or any continuation or adjournment thereof, to vote or take action by
written consent with respect to the Shares, on all matters as the Proxy Holder
shall determine in its discretion, including, without limitation, shareholders
meetings, shareholders actions by written consent and waivers. In addition, the
undersigned hereby appoints the Proxy Holder as my true and lawful proxy and
attorney-in-fact, with full power of substitution, to receive all notices to
which I am entitled to by virtue of contract or the Company's By Laws or
Certificate of Incorporation. Furthermore, the undersigned hereby appoints the
Proxy Holder as my exclusive true and lawful proxy and attorney-in-fact, with
full power of substitution, to request from the Company and to receive all
information or documentation which I am entitled to by virtue of contract, the
Company's By Laws or Certificate of Incorporation or applicable law, as the
Proxy Holder shall deem fit in its discretion.
This Proxy is irrevocable, for an indefinite time, or until another date as
determined by the Company's Compensation Committee or Board. Notwithstanding the
foregoing, this Proxy shall terminate automatically upon the consummation of an
initial public offering of the Company's Common Stock. The undersigned further
agrees that this proxy is coupled with an interest.
In the case that the Shares shall be held for my benefit by a trustee (the
"TRUSTEE"), then this Proxy shall act as irrevocable instructions in writing to
the Trustee, so the Trustee shall perform all of the above with respect to the
Shares.
This Irrevocable Proxy shall be governed by and construed in accordance with the
laws of the State of Israel, without regard to its conflict of laws principles.
This Irrevocable Proxy is effective as of ______, 200_.
______________________________________________
SIGNATURE
Name: __________________________________
Date:
<PAGE>
E-GLUE SOFTWARE TECHNOLOGIES, INC. 2004 STOCK OPTION PLAN
APPENDIX A - ISRAEL
1. PURPOSE OF THE APPENDIX
-
1.1. This Appendix (the "APPENDIX") is made as part of the Plan (as defined herein. All terms not otherwise defined herein shall have the meaning ascribed to them in the Plan.) and pursuant to the provisions of Section 102 of the Israeli Income Tax Ordinance as amended under Amendment number 132 and thereafter (both as defined herein). -
1.2. This Appendix governs grants of Options to Israeli employees, either by a Trustee, or without a Trustee or to Israeli consultants and service providers.
2. DEFINITIONS
As used herein, the following definitions shall apply:
-
2.1. "CAPITAL GAIN METHOD" means the capital gain method under Section 102. -
2.2. "ELIGIBLE PARTICIPANT" means any employee as such term is defined in Section 102. Without derogating from the foregoing Eligible Participant shall include any employee or Office Holder (as such term is defined in the Israeli Companies Law, 5759 - 1999) of the Company or any Subsidiary except for such persons that are deemed to beBA'AL SHLITA' ("Controlling Person") under Section 32 to the Income Tax Ordinance.` -
2.3. "INCOME TAX AUTHORITIES" means the Israeli income tax authorities that are authorized to give approvals in relation to this Appendix and grant of Options to Eligible Participants. -
2.4. "INCOME TAX ORDINANCE" - the Israeli Income Tax Ordinance (New Version) 1961, as amended from time to time. -
2.5. "LABOR INCOME METHOD" means the labor income method under Section 102. -
2.6. "OPTIONEE" means any Eligible Participant or Service Provider who is granted Options. -
2.7. "PLAN" means the e-Glue Software Technologies, Inc. 2004 Stock Option Plan this Appendix is attached to. -
2.8. "REALIZATION EVENT" means, with respect to each Option granted to a certain Optionee, the earlier to occur of: (I) the transfer of Securities from the Trustee to such Optionee; or (II) the sale of Shares by the Trustee; or (III) one day before such Optionee is no longer an Israeli resident (as provided for in Section 100A of the Income Tax Ordinance).
<PAGE>
-
2.9. "RELEASE TERM" means, in the case of the Capital Gain Method, a period ending twenty four (24) months after the end of the year in which certain Options were granted to the Trustee for the benefit of a certain Optionee. In the case of the Labor Income MethodRelease Term' shall mean a period ending twelve (12) months after the end of the year in which certain Options were granted to the Trustee for the benefit of the Optionee.` -
2.10. "SECTION 102" means Section 102 to the Income Tax Ordinance as amended under Amendment number 132 to the Income Tax Ordinance and as further amended from time to time, and / or as superseded and any rules regulations or instructions promulgated or enacted under such Section 102. -
2.11. "SECURITIES" shall mean Options or Restricted Stock. -
2.12. "SERVICE PROVIDER" means a person or entity who is engaged by the Company or any Subsidiary to render services (e.g, consulting services, advisory services, development services, marketing and sale services or any other services, including suppliers) to the Company or to such Subsidiary, but not including capital raising services. -
2.13. "TAX METHOD" means either the Capital Gains Method or the Labor Income Method. -
2.14. "TRUST" means a trust, maintained under the Trust Agreement enteredinto between the Company and the Trustee for administration of grant
-
2.15. "TRUST AGREEMENT" means the agreement between the Company and the Trustee as may be in effect from time to time specifying the duties and authority of the Trustee. -
2.16. "TRUST ASSETS" means all Securities and other assets held in Trust for the benefit of the Optionees pursuant to this Appendix and the Trust Agreement -
2.17. "TRUSTEE" means ____________________ (and any successor Trustee) who-
was, or shall be appointed by the Board of Directors of the Company -
and approved by the Income Tax Authorities to hold the Trust Assets.
-
3. ADMINISTRATION
The Board shall have the authority in its discretion, subject to and not
inconsistent with the express provisions of the Plan, this Appendix, and of
any applicable laws, to administer the Plan and to exercise all the powers
and authorities either specifically granted to it under the Plan as
necessary or advisable in the administration of the Plan, including,
without limitation, the authority to: (i) to grant Options; (ii) to
determine the kind of consideration payable (if any) with respect to
Options; (iii) to determine the period during which Options may be
exercised, and whether in whole or in installments; (iv) to determine the
persons to whom, and the time or times at which Options shall be granted;
(v) to determine the number of shares to be covered by each Option; (vi) to
interpret the Plan; (vii) to prescribe, amend and rescind rules and
regulations relating to the Plan; (viii) to determine the terms and
provisions of the agreements (which need not be identical) entered into in
connection with Options granted under the Plan; (ix) to cancel or suspend
Options, as necessary; (x) to designate the type of Options to be granted
to a Optionee; and (xi) to make all other determinations deemed necessary
or advisable for the administration of the Plan. 4.
<PAGE>
4. PROVISIONS OF THE APPENDIX SHALL GOVERN
The provisions of this Appendix shall supersede and govern in the case of
any inconsistency or conflict arising between the provisions of the
Appendix and the provisions of the Plan, provided, however, that this
Appendix shall not be construed to grant any Optionee rights not consistent
with the terms of the Plan, unless specifically provided herein. 6.
5. SELECTION OF TAX METHOD - CAPITAL GAINS METHOD
The Company chooses the Capital Gain Method (`MASLUL REVACH HON'). This
choice may be changed in the future, by a Board resolution, provided,
however, that the change is permissible under the provisions of Section
102.
6. HOLDING OF SECURITIES BY THE TRUSTEE
-
6.1. All Securities shall be issued to the Trustee to be held in the Trust for the benefit of the relevant Optionees. All certificates representing Securities issued to the Trustee under this Appendix shall be deposited with the Trustee, and shall be held by the Trustee until such time that such Options or Shares are released from the Trust as herein provided. -
6.2. After the Release Term is over, a Optionee shall be entitled to instruct the Trustee to transfer the Shares held for such Optionee's benefit to such Optionee, provided, however, that the Trustee confirms that all applicable tax as set forth in Section 102 was actually paid and the Trustee holds a confirmation to that effect from Income Tax Authorities. -
6.3. In the case that the Company distributes dividends, than the amount of dividends with respect of Shares held in Trust shall be paid to the Optionees that are the beneficial holders of such Shares, subject to deduction at source of the applicable tax. 7.
<PAGE>
7. PROVISIONS GOVERNING THIS APPENDIX AND PLAN
Notwithstanding anything to the contrary in the Plan or elsewhere in this
Appendix:
-
7.1. The Plan shall have one, sole, Trustee. -
7.2. The Appendix shall be subject to one Tax Method, unless the provisions of Section 102 allow otherwise. -
7.3. The Optionees shall not be entitled to cause a Realization Event to occur unless the Release Term is fulfilled. -
7.4. All rights or benefits that are received subsequent to the grant or exercise the Options or the Shares underlying such Options (including and not limited to bonus shares) shall be deposited with the Trustee until the end of the Release Term, and all such rights and benefits shall be subject to the Tax Method selected
8. EFFECTIVENESS OF THE APPENDIX.
This Appendix shall become effective, and Options may be granted hereunder,
only after receipt of the approvals required under Section 102 from the
Income Tax Authorities. 8.
9. ADDITIONAL LIMITATIONS
-
9.1. The Company shall not issue Options to an Optionee unless such Optionee has confirmed in writing that he or she are aware of the provisions of Section 102 and the applicable Tax Method, and such Optionee has agreed in writing to the terms of the Trust Agreement, and that he/she shall not cause a Realization Event to occur before the Release Term is over. The form for the above confirmation shall be determined by the Committee, and shall be attached to this Appendix as EXHIBIT A. -
9.2. The Trustee shall not release any shares held by it in accordance with the terms of this Appendix, until the earlier to occur of: (i) an initial public offering of the Company's Common Stock; (ii) another event, as shall be determined by the Committee, regarding all, or any part of the Optionees; (iii) in the event that a certain Optionee wishes to sell the shares held for his or her benefit by the Trustee, according to a bona fide transaction. -
9.3. Each grant of Options is conditioned upon the Optionee agreeing irrevocably to discharge the Trustee, the Company and any other office holder, employee or agent thereof from any liability with respect of any action or decision duly taken and BONA FIDE executed in relation to the Plan, or relating to any Grant of Securities. -
9.4. The Trustee shall use the voting rights vested in any such shares issued upon the exercise of any Options granted under the Plan, in accordance with EXHIBIT B.
<PAGE>
10. GRANT OF OPTIONS NOT BY A TRUSTEE
Notwithstanding the above, the Company shall be entitled to allocate
Options not according to the Tax Methods, but by direct grant to Optionees,
provided, however, that the requirements of Section 102 are met. In the
case of a grant of Options to Service Providers or their employees, Section
102 shall not apply and such Optionees shall be required to execute option
agreements in the form approved by the Board or the Compensation Committee.
10.
11. INTEGRATION OF SECTION 102
-
11.1. The provisions of the Plan and/or of the Option Agreement shall besubject to the provisions of Section 102, and the said provisions shall be deemed an integral part of the Plan and of the Option
-
11.2. For the avoidance of doubt, it is hereby clarified that any provisions of Section 102 which are 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 parties to the Plan and/or the Option Agreement.
12. GOVERNING LAW AND JURISDICTION
This Appendix shall be governed by and construed and enforced in accordance
with the Israeli laws applicable to contracts made and to be performed
therein, without giving effect to the principles of conflict of laws. The
competent courts of Tel-Aviv, Israel, shall have sole jurisdiction in any
matters pertaining to this Appendix.
13. TAX CONSEQUENCES
Any tax consequences arising from the grant or exercise of any Option, from
the payment for stock covered thereby or from any other event or act (of
the Company, and/or its Subsidiaries, and the Trustee or the Optionee),
hereunder, shall be borne solely by the Optionee. The Company and/or its
Subsidiaries, and the Trustee shall withhold taxes according to the
requirements of the applicable laws, rules, and regulations, including
withholding taxes at source. Furthermore, the Optionee shall agree to
indemnify the Company and/or its Subsidiaries and/or the Trustee 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 Optionee, unless the said liability is a
result of default of the Company. The Committee and/or the Trustee shall
not be required to release any stock certificate to a Optionee until all
required payments have been fully made.
<PAGE>
This letter agreement (the "AGREEMENT") is made as of _______ __, 2004, by and
among e-Glue Software Technologies, Inc. (the "COMPANY"), a private company
organized under the laws of the state of Delaware with its main place of
business at _________________________, Israel, and _________, an [Israeli
citizen], I.D number _______ (the "OPTIONEE").
WHEREAS The Company has adopted a Stock Option Plan (together with applicable
Appendixes, the "PLAN"), a copy of which was reviewed by the Optionee;
and
WHEREAS The Company has resolved to grant to the Optionee Options, subject to
the terms and conditions herein; and
NOW, THEREFORE, it is agreed as follows:
1. All terms not defined herein shall have the meaning ascribed to them in the
Plan.
2. The Company has resolved to grant certain options (the "OPTION GRANT") to
purchase the Company's Ordinary Shares to the Optionee.
3. The terms of the Option Grant are as follows:
3.1. Number of Options: _______ (____________________).
3.2. Vesting Schedule - as defined in the Plan / ___________________.
[Choose the relevant alternative]
3.3. Vesting Commencement Date: _____ __, 200_.
3.4. Exercise Price per options: _______.
4. The grant of the Option Grant is conditioned upon, and shall not become
effective unless and until the Optionee agreeing to the terms of this Agreement.
5. Contact details and personal details of the Optionee as supplied by it:
5.1. Full name: _________.
5.2. Identification / registration number: _____________. [Only for Israeli
citizens or entities]
5.4. Telephone (home): _________.
5.5. Cellular Phone: ____________.
5.6. Facsimile: __________.
5.7. E-mail: ____________.
<PAGE>
6. The grant is made in accordance with the terms of the Plan.
7. Prior to signing this Agreement Optionee had the reasonable opportunity to
review the Plan and consult with his / her advisors (such advisors shall not
include the Company or anyone on the Company's behalf) as Optionee deemed fit.
8. Optionee hereby confirms that he or she received reasonable opportunity to
review the Plan and understand its terms, and that Optionee agrees to the terms
and provisions of the Plan.
9. The Optionee acknowledges and agrees that the Company may be merged, or
acquired or sold to a third party, and in such case, by signing this Agreement,
the Optionee grants the Board, or anyone on behalf of the Board, the right to
sign on behalf of such Optionee any document or agreement reasonably necessary,
in the Board's discretion, in order to consummate such acquisition, merger or
sale.
10. Optionee hereby confirms that he or she is aware of the provisions of
Section 102 (the updated Section 102 is attached hereto as EXHIBIT A) and the
applicable Tax Method.
11. Optionee shall not exercise shares (as such term is defined in Section 102)
before the Release Term.
12. Optionee agrees to the terms in the Trust Agreement (attached hereto as
EXHIBIT B). 14.
Sincerely yours,
______________________________________ ______________________________________
e-Glue Software Technologies, Inc. ____________________ [OPTIONEE]
By: ______________________________ Name: ______________________________
Title: ______________________________
<PAGE>
The undersigned holder, being an employee of e-Glue Software Technologies, Inc.
(the "COMPANY"), a Delaware corporation, or a subsidiary thereof, who holds (or
will hold, after exercising options to purchase the Company's Common Stock)
Common Stock of the Company (the "SHARES"), hereby appoints the Company's
Secretary (or another person, in the Company's discretion) (the "PROXY HOLDER")
as my proxy to vote for me and on my behalf at shareholders meetings of the
Company with respect to the Shares. The Proxy Holder is hereby appointed as my
true and lawful proxy and attorney-in-fact, with full power of substitution and
revocation, to attend meetings of the shareholders of the Company to be held at
any time, or any continuation or adjournment thereof, to vote or take action by
written consent with respect to the Shares, on all matters as the Proxy Holder
shall determine in its discretion, including, without limitation, shareholders
meetings, shareholders actions by written consent and waivers. In addition, the
undersigned hereby appoints the Proxy Holder as my true and lawful proxy and
attorney-in-fact, with full power of substitution, to receive all notices to
which I am entitled to by virtue of contract or the Company's By Laws or
Certificate of Incorporation. Furthermore, the undersigned hereby appoints the
Proxy Holder as my exclusive true and lawful proxy and attorney-in-fact, with
full power of substitution, to request from the Company and to receive all
information or documentation which I am entitled to by virtue of contract, the
Company's By Laws or Certificate of Incorporation or applicable law, as the
Proxy Holder shall deem fit in its discretion.
This Proxy is irrevocable, for an indefinite time, or until another date as
determined by the Company's Compensation Committee or Board. Notwithstanding the
foregoing, this Proxy shall terminate automatically upon the consummation of an
initial public offering of the Company's Common Stock. The undersigned further
agrees that this proxy is coupled with an interest.
In the case that the Shares shall be held for my benefit by a trustee (the
"TRUSTEE"), then this Proxy shall act as irrevocable instructions in writing to
the Trustee, so the Trustee shall perform all of the above with respect to the
Shares.
This Irrevocable Proxy shall be governed by and construed in accordance with the
laws of the State of Israel, without regard to its conflict of laws principles.
This Irrevocable Proxy is effective as of ______, 200_.
________________________________________________
SIGNATURE
Name:___________________________________________
Date:
ACKNOWLEDGED AND AGREED TO:
Proxy Holder:
___________________________
<PAGE>
This amendment to e-Glue Software Technologies, Inc. 2004 Stock Option Plan is
made as of June 9th, 2010 (the "AMENDMENT").
1. Capitalized terms used herein and not defined herein shall have the meaning ascribed to them pursuant to the Plan.
2. Section 1 of the Plan shall be replaced in its entirety with the following:
The purpose of this Plan is to encourage employees, directors and other
individuals (whether or not employees) who render services to the Company
and its Subsidiaries, to continue their association with the Company and
its Subsidiaries by providing opportunities for them to participate in the
ownership of the Company and in its future growth through the granting of
Options and/or Restricted Stock.
3. Section 3 of the Plan shall be replaced in its entirety with the following:
The total number of shares of capital stock of the Company that may be
subject to Options and Restricted Stock grants under the Plan shall be
32,321,750 Option Shares of the Company from either authorized but unissued
shares or treasury shares. The number of shares stated in this Section 3
shall be subject to adjustment in accordance with the provisions of Section
9. Shares of Restricted Stock that fail to vest and Options that are not
fully exercised prior to its expiration or other termination shall again
become available for grant under the terms of the Plan.
4. A new Section 5A will be added to the Plan as follows:
"5A. EXERCISABILITY INTO PREFERRED AA STOCK. Without derogating from
anything contained herein, the Board may resolve with respect to certain
holders of options to acquire the Company's Common Stock (the "COMMON
OPTION"), that such Common Options may be exercised into shares of
Preferred AA Stock and/or a combination of shares of Preferred AA Stock and
Options and/or Restricted Stock underlying shares of Series D Preferred
Stock, so long as such Common Options are outstanding, from time to time,
in whole or in part, to the extent such are vested, and subject to the
terms and conditions that the Board in its discretion may provide,
PROVIDED, HOWEVER, that any partial exercise must be for a minimum of ten
(10) shares of Preferred AA Stock. No Common Option shall be exercisable
after the expiration of the period described in Section 5(a) above. Except
as the Board in its discretion may otherwise provide in the Stock Option
Agreement, a Common Option shall cease to be exercisable upon the
expiration of three (3) months following the termination of the Optionee's
employment with, or his other provision of services to, the Company or a
Subsidiary, subject to Section 5 (a) above and Section 9 below."
<PAGE>
5. Section 6(b) of the Plan shall be shall be amended and replaced with the following (changes from the version of the Plan are underlined):
(b) A holder of Restricted (Stock) SHARES shall have all of the rights of a stockholder of the Company, including the right to vote the shares and the right to receive any cash dividends, unless the Board shall otherwise determine. Certificates representing Restricted (Stock) SHARES shall be imprinted with a legend to the effect that the shares represented may not be sold, exchanged, transferred, pledged, hypothecated or otherwise disposed of except in accordance with the terms of the Restricted (Stock) SHARES Agreement and, if the Board so determines, the holder may be required to deposit the certificates with the President, Treasurer, Secretary or other officer of the Company or with an escrow agent designated by the Board, together with a stock power or other instrument of transfer appropriately endorsed in blank."
6. New Sections 6(c), 6(d), 6(e) and 6(f) shall be added to the Plan as follows:
-
"(c) The Board may grant or award Restricted Share Units in respect of such number of Option Shares, and subject to such terms or conditions, as the Board shall determine and specify in a Restricted Share Units Agreement, and may provide in a Stock Option Agreement for an Option to be exercisable for Restricted Share Units. Such Restricted Share Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Share Units Agreements entered into under the Plan need not be identical. Restricted Share Units may be granted in consideration of a reduction in the recipient's other compensation. -
(d) No voting or dividend rights as a shareholder shall exist prior to the actual issuance of shares in the name of the recipient of Restricted Share Units. Notwithstanding anything else in this Plan (as may be amended from time to time) to the contrary, unless otherwise specified by the Board, each Restricted Share Unit shall be for a term of 10 years. Each Restricted Share Units Agreement shall specify its term and any conditions on the time or times for settlement, and provide for expiration prior to the end of its term in the event of termination of employment or service providing to the Company, and may provide for earlier settlement in the event of the recipient's death, disability or other events. -
(e) Restricted Share Units may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Share Units agreement. -
(f) Settlement of vested Restricted Share Units shall be made in the form of shares. Distribution to a recipient of Restricted Share Units of an amount (or amounts) from settlement of vested Restricted Share Units can be deferred to a date after settlement as determined by the Board. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until the grant of Restricted Share Units is settled, the number of such Restricted Share Units shall be subject to adjustment pursuant hereto."
7. A new Section 15 will be added to the Plan as follows:
"15. DEFINITIONS
<PAGE>
Except for definitions of capitalized terms set forth in Plan, the
capitalized terms set forth below shall have the meaning ascribed next to
-
(a) "COMMON STOCK" shall mean common stock, $.001 par value per share of the Company. -
(b) "COMPANY" shall mean e-Glue Software Technologies, Inc. -
(c) "OPTION" shall mean an option to purchase Option Shares and/orRestricted Stock (as the case may be) subject to the provisions of
-
(d) "OPTION SHARE" shall mean shares of Common Stock and/or Preferred AA Stock and/or Preferred D Stock, respectively. -
(e) "PLAN" shall mean e-Glue Software Technologies, Inc. 2004 Stock Option -
(f) "PREFERRED AA STOCK" shall mean Series AA Preferred Stock, $.001 par value per share of the Company. -
(g) "PREFERRED D STOCK" shall mean Series D Preferred Stock, $.001 par value per share of the Company. -
(h) "RESTRICTED SHARES" shall mean restricted shares of any series or class of Option Share of the Company. -
(i) "RESTRICTED SHARE UNITS" shall mean restricted share units of any series or class of Option Share of the Company. -
(j) "RESTRICTED STOCK" shall mean Restricted Shares and/or Restricted Share Units. -
(k) "SUBSIDIARY" shall mean a corporation or other business entity of which the Company owns, directly or indirectly through an unbroken chain of ownership, fifty percent (50%) or more of the total combined voting power of all classes of stock, in the case of a corporation, or fifty percent (50%) or more of the total combined interests by value, in the case of any other type of business entity."
8. Except for Sections 3 and 5(i) of the Plan, the term "Common Stock" throughout the Plan, shall be replaced with the term "Option Shares".
9. This Amendment is made in accordance with the provisions of Section 13 of the Plan.
10. Except as set forth herein, the Plan shall remain in full force and effect in accordance with its terms and conditions.
11. This Amendment may be executed in any number of counterparts, each of which shall be deemed an original and enforceable against the parties actually executing such counterpart, and all of which together shall constitute one and the same instrument.
NICE Systems Ltd.
8 Hapnina Street
P.O. Box 690
43107 Ra'anana
Israel
Ladies and Gentlemen:
We refer to the Registration Statement on Form S-8 (the "Registration
Statement") to be filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Act"), on behalf of NICE Systems Ltd.
(the "Company"), relating to 76,035 of the Company's Ordinary Shares, NIS 1.00
nominal value per share (the "Shares"), issuable under the e-Glue Software
Technologies, Inc. 2004 Stock Option Plan (the "Plan"), which will be assumed
pursuant to an Agreement and Plan of Merger dated as of June 9, 2010, by and
among the Registrant and a wholly owned subsidiary of the Registrant, and e-Glue
Software Technologies, Inc. (the "Agreement"), upon the closing of the
transactions contemplated by the Agreement.
We are members of the Israel Bar and we express no opinion as to any matter
relating to the laws of any jurisdiction other than the laws of Israel.
In connection with this opinion, we have examined such corporate records,
other documents, and such questions of Israeli law as we have considered
necessary or appropriate. In such examination, we have assumed the genuineness
of all signatures, the authenticity of all documents submitted to us as
originals, the conformity to original documents of documents submitted to us as
certified or photostatic copies, the authenticity of the originals of such
copies and the due constitution of the Board of Directors of the Company.
Based on the foregoing and subject to the qualifications stated herein, we
advise you that in our opinion, the Shares have been duly and validly
authorized, and when, and if, issued pursuant to the terms of the Plan were, or
will be, validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as part of the Registration
Statement. This consent is not to be construed as an admission that we are a
person whose consent is required to be filed with the Registration Statement
under the provisions of the Act.
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the Registration Statement (Form
S-8) of NICE Systems Ltd. for the registration of 76,035 of its ordinary shares
under the e-Glue Software Technologies, Inc. 2004 Stock Option Plan (the "Plan")
of our report dated March 31, 2010, with respect to the consolidated financial
statements of NICE Systems Ltd. for the year ended December 31, 2009, and the
effectiveness of internal control over financial reporting of NICE-Systems Ltd.,
which is included in its Annual Report (Form 20-F), filed with the Securities
and Exchange Commission.
Tel-Aviv, Israel
July 12, 2010
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