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Exhibit 10.2
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RTS LTD.
1997 STOCK OPTION AND INCENTIVE PLAN
1. NAME
This plan, as amended from time to time, shall be known as the RTS Ltd.
1997 Stock Option And Incentive Plan.
2. PURPOSE OF 1997 PLAN
The purpose of the RTS Ltd. 1997 Stock Option and Incentive Plan (the "1997
Plan") is to afford an incentive to officers, directors, employees and
consultants of RTS Ltd. (the "Company"), or any subsidiary of the Company
which now exists or hereafter is organized or acquired by the Company, to
acquire a proprietary interest in the Company, to continue as employees,
directors and consultants, to increase their efforts on behalf of the
Company and to promote the success of the Company's business. It is further
intended that among other options granted some of the options granted by the
Committee pursuant to the 1997 Plan shall constitute "incentive stock
options" ("Incentive Stock Options" or "ISO") within the meaning of Section
422 of the U.S. Internal Revenue Code of 1986, as amended (the "Code"), some
of the options granted by the Committee pursuant to the 1997 Plan shall
constitute "nonqualified stock options" ("Nonqualified Stock Option's") and
some of the options granted by the Committee shall be 102 Stock Options
("102 Stock Options") pursuant to the provisions of Section 102 of the
Israeli Income Tax Ordinance (New Version) 1961 and any regulations, rules,
orders or procedures promulgated thereunder (together: the "Options"). The
Committee may also grant restricted shares ("Restricted Stock") under the
1997 Plan (Restricted Stock together with the Options shall be referred to
as: "Options/Shares").
3. ADMINISTRATION OF 1997 PLAN
The Board of Directors (the "Board") or a Stock Option Committee
(the "Committee") appointed and maintained by the Board shall have the power
to administer the 1997 Plan. The Committee shall consist of at least three
members who shall serve at the pleasure of the Board, and any member of such
Committee shall be eligible to receive Options/Shares under the 1997 Plan
while serving on the Committee, unless otherwise specified herein. The Board
or the Committee shall have full power and authority: (i) to designate
participants; (ii) to designate Options/Shares or any portion thereof as
incentive Stock Options, as Nonqualified Stock Options, as Restricted Stock,
as 102 Stock Options, or otherwise; (iii) to determine the terms and
provisions of respective Option/Shares agreements (which need not be
identical) including, but not limited to, the number of Options/Shares in
the Company to be granted, provisions concerning the time or times
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when and the extent to which the Options may be exercised and the nature and
duration of restrictions as to transferability or restrictions constituting
substantial risk of forfeiture; (iv) to accelerate the right of an optionee
to exercise, in whole or in part, any previously granted Option; (v) to
interpret the provisions and supervise the administration of the 1997 Plan;
and (vi) to determine any other matter which is necessary or desirable for,
or incidental to administration of the 1997 Plan.
The Board or the Committee shall have the authority to grant in its
discretion to the holder of an outstanding Option, in exchange for the
surrender and cancellation of such Option, a new Option having a purchase
price lower than provided in the Option so surrendered and canceled and
containing such other terms and conditions as the Board or the Committee may
prescribe in accordance with the provisions of the 1997 Plan.
All decisions and selections made by the Board or the Committee pursuant to
the provisions of the 1997 Plan shall be made by a majority of its members
except that no member of the Board or Committee shall vote on, or be counted
for quorum purposes, with respect to any proposed action of the Board or
Committee relating to any Option to be granted to that member. Any decision
reduced to writing and signed by a majority of the members who are
authorized to make such decision shall be fully effective as if it had been
made by a majority at a meeting duly held.
Each member of the Board or the Committee shall be indemnified and held
harmless by the Company against any cost or expense (including counsel fees)
reasonably incurred by him, or liability (including any sum paid in
settlement of a claim with the approval of the Company) arising out of any
act or omission to act in connection with the 1997 Plan unless arising out
of such member's own fraud or bad faith, to the extent permitted by
applicable law. Such indemnification shall be in addition to any rights of
indemnification the member may have as directors or otherwise under the
articles of association of the Company, any agreement, any vote of
stockholders or disinterested directors, or otherwise.
4. DESIGNATION OF PARTICIPANTS
The persons eligible for participation in the 1997 Plan as recipients of
Options/Shares shall include any employees or former employees of the
Company or of any subsidiary of the Company. Except for Incentive Stock
Options Directors of the Company or of any subsidiary of the Company who are
not employees of the Company or its subsidiaries, and additionally
consultants or contractors of the Company or its subsidiaries, shall also be
eligible for participation in the 1997 Plan as recipients of Options.
A person who has been granted an Option/Share hereunder may be granted
additional Options/Shares, if the Board or the Committee shall so determine.
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5. TRUSTEE
The 102 Stock Options which shall be granted to employees of the Company
(or if required by law) shall be issued to a trustee nominated by the Board
or the Committee (in accordance with the provisions of Section 102)
(the "Trustee") and held for the benefit of the optionees for a period of
not less than two years (24 months) from the date of grant. The Trustee may
also hold in trust any shares issued upon exercise of such 102 Stock Options
pursuant to the provisions of Section 102.
The Trustee shall not use the voting rights vested in any such shares held
by the Trustee and shall not exercise said right in any way whatsoever,
except in cases when, at his discretion and after consulting with the
Committee, the Trustee believes that the said rights should be exercised for
the protection of the optionees as a minority among the Company
shareholders.
6. SHARES RESERVED FOR 1997 PLAN
Subject to adjustment as provided in Paragraph 8 hereof, a total of 500,000
Ordinary Shares, NIS 0.1 par value per share, of the Company ("Shares")
shall be subject to the 1997 Plan. The Shares subject to the 1997 Plan
hereby are, reserved for sale for such purpose. Any of such Shares which may
remain unsold and which are not subject to outstanding options at the
termination of the 1997 Plan shall cease to be reserved for the purpose of
the 1997 Plan, but until termination of the 1997 Plan the Company shall at
all times reserve a sufficient number of shares to meet the requirements of
the 1997 Plan. Should any Option for any reason expire or be canceled prior
to its exercise or relinquishment in full, the shares therefore subject to
such Option may again be subjected to an Option under the 1997 Plan.
7. OPTION/SHARES PRICE
(a) Except for Incentive Stock Options the purchase price of each Share
subject to an Option or of each Restricted Stock or any portion thereof
shall be determined by the Committee in its sole and absolute
discretion in accordance with applicable law, subject to guidelines as
shall be suggested by the Board from time to time (but not less than
the par value).
(b) The Option price shall be payable upon the exercise of the Option in
cash, by check, or other form satisfactory to the Board or the
Committee.
(c) The proceeds received by the Company from the sale of Options/Shares
subject to an Option/Share granted under the 1997 Plan will be added to
the general funds of the Company and used for its corporate purposes.
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8. ADJUSTMENTS
Upon the occurrence of any of the following described events, a grantee's
rights to purchase Options/Shares under the 1997 Plan shall be adjusted as
hereinafter provided:
(a) If the Company is separated, reorganized, merged, consolidated or
amalgamated with or into another corporation while unexercised/unvested
Options/Shares remain outstanding under the 1997 Plan, there shall be
substituted for the shares subject to the unexercised/unvested portions
of such outstanding Options/Shares an appropriate number of shares of
each class of shares or other securities of the separated, reorganized,
merged, consolidated or amalgamated corporation which were distributed
to the shareholders of the Company in respect of such shares, and
appropriate adjustments shall be made in the purchase price per share
to reflect such action.
(b) If the Company is liquidated or dissolved while unexercised/unvested
Options/Shares remain outstanding under the 1997 Plan, then all such
outstanding Options/Shares may be exercised/vested in full by the
optionees/grantees as of the effective date of any such liquidation or
dissolution of the Company without regard to the installment exercise
provisions of Paragraph 9(b), by the optionees/grantees giving notice
in writing to the Company of their intention to so exercise.
(c) If the outstanding shares of the Company shall at anytime be changed or
exchanged by declaration of a stock dividend, stock split, combination
or exchange of shares, recapitalization, extraordinary dividend payable
in stock of a corporation other than the Company, or any other like
event by or of the Company, and as often as the same shall occur, then
the number, class and kind of Shares subject to this 1997 Plan or
subject to any Options theretofore granted, and the option prices,
shall be appropriately and equitably adjusted so as to maintain the
proportionate number of Shares without changing the aggregate option
price; provided, however, that no adjustment shall be made by reason of
the distribution of subscription rights on outstanding stock. Upon the
happening of any of the foregoing, the class and aggregate number of
shares issuable pursuant to the 1997 Plan (as set forth in paragraph 6
hereof), in respect of which Options/Shares have not yet been
exercised/vested, shall be appropriately adjusted.
(d) Anything herein to the contrary notwithstanding, if prior to the
completion of the initial public offering of shares of the Company, all
or substantially all of the shares of the Company are to be sold, or
upon a -merger or reorganization or the like, the shares of the
Company, or any class thereof, are to be exchanged for securities of
another company, then in such event, each optionee shall be obliged to
sell or exchange, as the case may be, the shares he purchased under the
1997 Plan in accordance with the instructions then issued by the Board.
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9. TERM AND EXERCISE OF OPTIONS/SHARES
(a) Options shall be exercised by the optionee by giving written notice to
the Company, which exercise shall be effective upon receipt of such
notice by the Secretary of the Company at its principal office. The
notice shall specify the number of Shares with respect to which the
Option is being exercised.
(b) Each Option granted under this 1997 Plan shall be exercisable on the
date and for the number of shares as shall be provided in the option
agreement evidencing the Option and setting forth the terms thereof.
However, (i) no Option shall be exercisable after the expiration of
seven (7) years from the date of grant and (ii) no Incentive Stock
Options may be granted to a person who at the time of the grant owns
more than 10% of the voting stock of value of the Company.
(c) Options/Shares granted under the 1997 Plan shall not be transferable by
optionees/grantees other than by will or the laws of descent and
distribution, and during an optionee's lifetime shall be exercisable
only by that optionee.
(d) Options granted to employees or directors may not be exercised after
the termination of employment and/or service as a director unless
(i) prior to the date of such termination, the Board or the Committee
shall authorize, in the relevant option agreement or otherwise, an
extension of the term of all or part of the option beyond the date of
such termination for a period not to exceed the period during which the
Option by its terms would otherwise have been exercisable,
(ii) termination is without Cause (as determined by the Committee) or
employee resigns, in which event any Options still in force and
unexpired may be exercised within a period of 30 days from the date of
such termination, but only with respect to the number of shares
purchasable at the time of such termination, (iii) termination is the
result of death or disability, in which event any Options still in
force and unexpired may be exercised within a period of six (6) months
from the date of termination, but only with respect to the number of
shares purchasable at the time of such termination, or (iv) termination
of employment is the result of retirement under any deferred
compensation agreement or retirement plan of the Company or of any
subsidiary of the Company or after age 60, while Options granted
hereunder are still in force and unexpired, in which case the Board or
Committee shall have the discretion to permit any unnatured
installments of the Options to be accelerated as for the later of the
date of retirement or a date one year following the date of grant, and
the Options shall thereupon be exercisable in fall without regard to
the installment exercise provisions of Paragraph 9(b).
(e) The holders of Options/Shares shall not be or have any of the rights or
privileges of shareholders of the Company in respect of any shares
unless and until, following exercise/vesting date but subject always to
the provisions of Section 5 above, certificates representing such
shares shall have been issued by the Company and delivered to such
holders.
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(f) Any form of option agreement authorized by the 1997 Plan may contain
such other provisions as the Board or the Committee may, from time to
time, deem advisable. Without limiting the foregoing, the Board or the
Committee may, with the consent of the optionee/grantee, from time to
time cancel all or any portion of any Option then subject to exercise,
and the Company's obligation in respect of such Option may be
discharged by (i) payment to the optionee of an amount in cash equal to
the excess, if any, of the Fair Market Value of the shares at the date
of such cancellation subject to the portion of the Option so canceled
over the aggregate purchase price of such shares, (ii) the issuance or
transfer to the optionee of Shares of the Company with a Fair Market
Value at the date of such transfer equal to any such excess, or
(iii) a combination of cash and shares with a combined value equal to
any such excess, all as determined by the Board or the Committee in its
sole discretion.
(g) Shares of Restricted Stock may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of, except by will or the
laws of descent and distribution, for such period as the Committee
shall determine from the date on which the award is granted (the
"Restricted Period"). The Committee may also impose such other
restrictions and conditions on the shares as it deems appropriate
including the satisfaction of performance criteria. Certificates for
shares of stock issued pursuant to Restricted Stock awards shall bear
an appropriate legend referring to such restrictions, and any attempt
to dispose of any such shares of stock in contravention of such
restrictions shall be null and void and without effect. During the
Restricted Period, such certificates shall be held in escrow by an
escrow agent appointed by the Committee. In determining the Restricted
Period of an award, the Committee may provide that the foregoing
restrictions shall lapse with respect to specified percentages of the
awarded shares on successive anniversaries of the date of such award.
Subject to such exceptions as may be determined by the Committee, if
the Grantee's continuous employment with, or performance of, service
for, the Company or any Parent or Subsidiary shall cease for any reason
prior to the expiration of the Restricted Period of an award, any
shares remaining subject to restrictions shall thereupon be forfeited
by the grantee and transferred to a Subsidiary at no cost to the
Company or such Parent or Subsidiary or shall be converted into a
deferred stock.
10. INCENTIVE STOCK OPTIONS
(a) In case of ISO granted to employees, the aggregate Fair Market Value of
Shares (determined as of the date of the grant of the ISO's) with
respect to which ISO's are exercisable for the first time by any
optionee during any calendar year shall not exceed the limitation
provided under Section 422(d) of the Code.
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(b) The options issued as ISO's must be granted within 7 years of the date
that the Plan is adopted or the date that the Plan is approved by the
stockholders, whichever is earlier.
(c) Any option issued as an ISO must by its terms be exercisable only
within 10 years of the date that it is granted.
(d) The option price for any ISO must not be less than the fair market
value of the stock at the time that the option is granted. This
requirement shall be deemed satisfied if there has been a good faith
attempt to value the stock accurately for this purpose.
(e) The ISO by its terms must be non-transferable other than at death and
must be exercisable during the employee's lifetime only by the
employee.
11. PURCHASE OF INVESTMENT
Unless Shares covered by the 1997 Plan have been listed for trade on any
stock exchange (of any jurisdiction), or the Company has determined that
such registration is unnecessary, each person exercising an Option under the
1997 Plan may be required by the Company to give a representation in writing
that he is acquiring such shares for his own account for investment and not
with a view to, or for sale in connection with, the distribution of any part
thereof.
12. TERM DATE OF 1997 PLAN
The 1997 Plan shall be effective as of January 1, 1997 and shall terminate
on December 31, 2006. All Options not exercised as of December 31, 2006
shall expire.
13. AMENDMENTS OR TERMINATION
The Board may, at any time and from time to time, amend, alter, or
discontinue the 1997 Plan, except that no amendment or alteration shall be
made which would impair the rights of the holder of any Options/Shares
theretofore granted without his consent.
14. GOVERNMENT REGULATIONS
The 1997 Plan, and the granting and exercise of Options/Shares hereunder,
and the obligation of the Company to sell and deliver shares under such
Options/Shares, shall be subject to all applicable laws, rules, and
regulations, whether of the State of Israel or of the United States or any
other State having jurisdiction over the Company and the optionee including
the registration of the shares under the United States Securities Act of
1933, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
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15. CONTINUANCE OF EMPLOYMENT
Neither the 1997 Plan nor the option agreement with the optionee shall
impose any obligation on the Company or a subsidiary thereof, to continue
any optionee/grantee in its employ, and nothing in the 1997 Plan or in any
Option/Share granted pursuant thereto shall confer upon any optionee any
right to continue in the employ of the Company or a subsidiary thereof or
restrict the right of the Company or a subsidiary thereof to terminate such
employment at any time.
16. GOVERNING LAW
This 1997 Plan shall be governed by and construed and enforced in accordance
with the laws of the State of Israel applicable to contracts made and to be
performed therein, without giving effect to the principles of conflict of
laws.
17. TAX CONSEQUENCES
Any tax consequences arising from the grant or exercise of any
Options/Shares, from the payment for shares covered thereby or from any
other event or act (of the Company or the optionee) hereunder (including
without limitation any tax consequences if for any reason, or by any
authority, legal or other, according to any law or regulation, local or
foreign, the options or shares of any type or kind granted under this 1997
Plan or any portion thereof, would not constitute or not qualify for any
type or kind of tax consequences), shall be borne solely by the optionee.
Furthermore, the optionee shall agree to indemnify the Company and 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/grantee.
18. NON-EXCLUSIVITY OF THE 1997 PLAN
The adoption of the 1997 Plan by the Board shall not be construed as
amending, modifying or rescinding any previously approved incentive
arrangement or as creating any limitations on the power of the Board to
adopt such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than under the
1997 Plan, and such arrangements may be either applicable generally or only
in specific cases.
19. MULTIPLE AGREEMENTS
The terms of each Option/Share may differ from other Options/Shares granted
under the 1997 Plan at the same time, or at any other time. The Committee
may also grant more than one Option/Share to a given optionee/grantee during
the term of the 1997 Plan, either in addition to, or in substitution for,
one or more Options/Shares previously granted to that optionee/grantee.
