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EXHIBIT 99.2
SEAGULL SEMICONDUCTOR LTD.
SECTION 102 STOCK OPTION/STOCK PURCHASE PLAN
STOCK OPTION AGREEMENT
Made as of the __ day of ______, 1999,
BETWEEN
Seagull Semiconductor Ltd., an Israeli company with offices at 0 Xxxxxx xx.,
Xxxxxxxx, Xxxxxx.
AND
_________________ an individual resident of Israel whose address is
_____________________________________________________________ (the "Optionee");
WITNESSETH
WHEREAS, the Company desires, by affording the Optionee an opportunity to
purchase shares of its Ordinary Shares ("Ordinary Shares"), par value MS 0.01
per share (the "Shares"), as hereinafter provided, to carry out the purpose of
the Company's Section 102 Stock Option/Stock Purchase Plan (the "Plan");
NOW THEREFORE, in consideration of the premises and of the mutual covenants and
agreements hereinafter contained, the parties hereto mutually covenant and agree
as follows:
1. GRANT OF OPTION
The Company has granted to the Optionee as of __________, 1999, (the "Date of
the Grant") the option (the "Option") to purchase all or any part of an
aggregate of _______ Ordinary Shares (such number being subject to adjustment as
provided in Paragraph 8) on the terms and conditions hereinafter set forth. Such
Option shall be in the name of Xxxx Xxxxxxxxxxxx, as Trustee/Escrow Agent.
(One) The Optionee hereby waives NIS 1 as a portion of his salary payment in
consideration for the Option.
2. PURCHASE PRICE
The purchase price of the Shares issuable upon exercise of the Option ("the
Option Price") shall be __________ per share. Payment shall be made in cash or
by certified check in the manner prescribed in paragraph 9 hereof.
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3. TERM OF OPTION
The term of the Option shall be for a period of ten (10) years from the date
hereof subject to earlier termination as provided in paragraph 7. This term may
be modified by the Stock Option Committee, in its sole discretion, if
circumstances so dictate.
The Optionee's rights to purchase the Shares shall be exercisable over a period
of four years from ______ 199 __ ("Commencement Date") in the following manner:
the option to purchase 25% of the Shares shall be exercisable upon the
expiration of the first year from the date hereof the option to purchase
additional 6.25% of the Shares shall be exercisable upon the expiration of each
quarter, commencing one year from the date hereof until four years from the date
hereof.
Except as provided in paragraph 7, the Option may not be exercised unless, at
the time the Option is exercised and at all times from the Commencement Date,
the Optionee shall then be and shall have been, an employee of the Company.
4. APPLICATION OF SECTION 102 OF THE INCOME TAX ORDINANCE
(a) The provisions governing the deferral of tax for options granted or
shares issued to employees as embodied in Section 102 of the Israel Income Tax
Ordinance (New Version) (the "Ordinance") and its regulations, Income Tax Rules
(Tax Benefits in Stock Issuance to Workers) 5349-1989 (the "Rules") shall be
applied to the Option. The Optionee shall comply with the Ordinance and Rules
and with the Escrow Agreement entered into between the Company and the Escrow
Agent.
(b) No employee participating in this Plan shall claim an exemption from
Israeli tax pursuant to part E of the Ordinance or section 97(a) of the Income
Tax Ordinance (New Version) in connection with a transfer by such employee of an
Option or Purchased Shares prior to the end of the "Holding Period" as defined
in Rule 1(i) of the Rules.
Any and all tax liabilities (as may apply from time to time ) in connection with
the grant and/or exercise of the Options and the sale of the shares issued upon
the exercise of the Options, will be born by the optionee (or who ever holds the
options on his behalf pursuant to this agreement), and the optionee will be
solely liable for all such taxes.
(c) Each participating employee shall be obligated to immediately notify
the Company and the Escrow Agent of his request, if any, to the Income Tax
Authority pursuant to Rule 6(b) of the Rules in the event the Purchased Shares
or the Shares underlying the Options are registered on any stock exchange and
may elect to have the
Authority recognize his cost basis commensurate with the share price from the
first 3 days of trading. Nothing herein shall obligate the Company to register
its shares or any portion of its shares on a stock exchange.
(d) The Option, and/or the Shares, as the case may be, shall be held by an
Escrow Agent approved by representatives of the tax authority for at least two
years from the date of the grant of the Option. After the two year holding
period and subject to any further period agreed to under agreement with each
employee, the Escrow Agent may release the Options or Shares to the
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employee only after (i) the receipt by the Escrow Agent of an acknowledgment
from the Income Tax Authority that the employee has paid any applicable tax due
pursuant to the Ordinance and the Rules, or (ii) the Escrow Agent withholds any
applicable tax due pursuant to the Ordinance and Rules.
(e) In the event a share dividend (bonus shares) is declared on Shares
acquired pursuant to an Option or Purchased Shares, such dividend shares shall
be subject to the provisions of Section 2 and 7 and the holding period for such
dividend shares shall be measured from the commencement of the holding period
for the Option or Purchased Shares from which the dividend was declared.
(f) With respect to all Shares (in contrary to unexercised Options) issued
upon the exercise of Options purchased by the Optionee and held by the Trustee,
the Optionee shall be entitled to receive dividends in accordance with the
quantity of such Shares, and subject to any applicable taxation on distribution
of dividends. During the period in which the Shares issued to the Trustee on
behalf of a Optionee are held by the Trustee, the cash dividends paid with
respect thereto shall be paid directly to the Optionee.
(g) The exemption under Section 102 of the Ordinance shall be forfeited
and the employee shall be required to pay any applicable tax promptly at such
time as: (i) the employee's employment is terminated during the two year holding
period (other than because of death or some other reason acceptable to the
Income Tax Authority); (ii) the Company or the employee fails to comply with one
or more other conditions for the exemption as required by the Ordinance, Rules
or Income Tax Authority; or (iii) the Income Tax Authority withdraws or cancels
the exemption for the Plan or the particular employee.
5. RESTRICTIONS ON DISPOSITION
Shares acquired by Optionee pursuant to the exercise of the Option prior to the
expiration of the applicable two year Holding Period under Section 102 of the
Ordinance are subject to restrictions on disposition as provided in the Plan,
and such shares shall not be sold, transferred, or otherwise disposed of and
shall not be pledged or otherwise hypothecated until such restrictions lapse at
the expiration of the two-year Holding Period, at which time the shares shall
become free shares. Shares acquired by the Optionee pursuant to the exercise of
the Option after the expiration of the Section 102 two-year Holding Period shall
be free shares at the time of exercise, fully vested in the Optionee and not
subject to restrictions on disposition.
6. NONTRANSFERABILITY
The Option shall not be transferable otherwise than by will or the laws of
descent and distribution to the extent provided in paragraph 7 and the Option
may be exercised, during the lifetime of the Optionee, only by him. More
particularly (but without limiting the generality of the foregoing), the Option
may not be assigned, transferred (except as provided above), pledged or
hypothecated in any way, shall not be assignable by operation of law, and shall
not be subject to execution, attachment or similar process. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of the Option
contrary to the provisions hereof and of the Plan, and the levy of any
execution, attachment, or similar process upon the Option, shall be null
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and void and without effect; provided, however, that if the Optionee shall die
while in the employ of the Company his estate, personal representative, or
beneficiary shall have the right to exercise the Option to the extent provided
in Paragraph 7.
7. TERMINATION OF OPTION
(a) Subject to paragraph 4(f) hereof and Section 102 of the Ordinance:
(i) if the Optionee ceases to be employed by the Company as a result
of his disability or his retirement with the consent of the Company, then any
Options that are exercisable by him at the time he ceases to be employed by the
Company, and only to the extent such Options are exercisable as of such time,
may be exercised by him.
(ii) if the Optionee ceases to be employed by the Company as a result
of his dismissal without cause, then any Options that are exercisable by him at
the time he ceases to be employed by the Company, and only to the extent such
Options are exercisable as of such time, may be exercised by him within sixty
(60) days after the date he ceases to be employed by the Company;
(iii) If the holder of an Option ceases to be employed by the Company
as a result of his retirement without the Company's consent, then any Options
that are exercisable by him at the time he ceases to be employed by the Company,
and only to the extent such Options are exercisable as of such time, may be
exercised by him within thirty (30) days after the date he ceases to be employed
by the Company;
(iv) If the holder of an Option ceases to be employed by the Company
as a result of his dismissal for cause, any Options that are exercisable by him
at the time he ceases to be employed by the Company shall be reacquired by the
Escrow Agent as trustee on behalf of the Company and shall be reissued under the
Plan according to the terms specified in sub-section 6(f) hereof. In such case
the Company shall not be obligated to give the Employee prior written or oral
notice regarding the reacquiring of the exercisable Options.
(v) if the Optionee shall die while in the employ of the Company, his
estate, personal representative or beneficiary shall have the right to exercise
the entire Option granted to the option holder pursuant to the Plan at any time,
in respect of the total number of shares as to which he would have been entitled
to exercise an Option at the date of his death.
(b) Notwithstanding the foregoing, the Optionee understands and agrees
that any termination of employment prior to the expiration of the 2 year Holding
Period required under Section 102 of the Ordinance and Rules may subject the
Optionee to forfeiture of the tax benefits available under Section 102 of the
Ordinance.
(c) In the event of the institution of any legal proceedings directed to
the validity of the Plan or the Option, the Company may, in its sole discretion,
and without incurring any liability therefore to the Optionee, terminate the
Option.
(d) Directors of the Company or the Committee responsible may change the
above provisions as it deems fit.
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(e) In accordance with section 102 of the Income Tax Ordinance and
pursuant to this paragraph 8, shares held in trust by the escrow agent during
the legal holding period (from the date of the grant of the option) that have
not become free shares during the established period, shall be held in trust for
the benefit of the Company and shall be disposed of according to the plan, and
the employee shall have no rights to them.
(f) For the purposes of this Agreement, "cause" shall exist if Employee
(i) breaches one of the fundamental terms of his Employment Agreement; (ii)
engages in willful misconduct or acts in bad faith with respect to the Company
in connection with and related to his employment; (iii) is convicted of a felony
or is held liable by a court of competent jurisdiction for fraud against the
Company; or (iv) fails to materially comply with the instructions of the
Company.
7A. PURCHASE OF SUBSTANTIAL PORTION OF COMPANY SHARES
In the event that a third xxxxx(ies) (the "Offeror") shall offer to purchase at
least 90% of the outstanding shares of the company and the holders of not less
than 75% of the company's outstanding shares agree to accept such offer, then
the Optionee shall sell the Shares (in the event the Option has been exercised
at such time) to the Offeror pursuant to the terms of said purchase.
The Shares shall be transferred to the Offeror pursuant to the terms set forth
herein free and clear of all security interests; full title thereto and all
rights thereof, shall be transferred to the Offeror pursuant to the terms of
said purchase. At the time of such transfer the Optionee shall represent and
warrant to the Offeror that the provisions of this paragraph are true.
The provisions of this Section 7A shall apply to and bind any and all
transferees who receive shares from the Optionee.
8. STOCK SPLITS., MERGERS, ETC.
(a) In case of any Change in Capitalization (as defined herein),
appropriate adjustments shall be made by the Board of Directors, whose
determination shall be final, to the number of shares which may be purchased
under the Plan, and the number of shares and option exercise price per share
which may be purchased under outstanding Options. The Company may provide for
immediate maturity of all outstanding Options prior to the effectiveness of a
merger, sale of all or substantially all of the Company's assets or similar
transaction, with all Options not being exercised within the time period
specified by the Board of Directors being terminated.
(b) It is also agreed that prior to the completion of an initial public
offering of the Company's securities (IPO), if all or substantially all of the
shares of the Company are to be sold, or upon a merger or reorganization or
other Change in Capitalization, 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
such Optionee purchased under the Option Plan, in accordance with the
instructions then issued by the Board whose determination shall by final.
(c) Not withstanding the aforesaid, in case of any Change in
Capitalization (as defined below) while unexercised Options remain outstanding
under the Option Plan, such
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options may be substituted for the Shares subject to the unexercised portions of
such outstanding Options an appropriate numbers 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 share, and appropriate adjustments shall be made in
the purchase price per share to reflect such action, all as determined by the
Board of Directors of the Company.
"Change in Capitalization" shall mean any increase, reduction or change or
exchange of shares for a different number or kind of shares or other securities
by reason of a reclassification, recapitalization, merger, consolidation,
reorganization, stock split, spin-off, combination or exchange of shares,
repurchase of shares, change in corporate structure or otherwise.
9. METHOD OF EXERCISING OPTION
Subject to the terms and conditions of this Agreement, the Option may be
exercised by written notice to the Company at its offices at 1 Maskit st., X.X.
Xxx 00000, Xxxxxxxx, Xxxxxx, 00000. Such notice shall state that the Option is
being exercised thereby and the number of shares of Ordinary Shares in respect
of which it is being exercised. It shall be signed by the person or persons so
exercising the Option and shall be accompanied by payment in full of the Option
Price for such shares of Ordinary Shares in cash or by certified check.
The Company shall issue shares, in the name of the Trustee for the benefit of
the person or persons exercising the Option or, in the case of free shares, in
the name of the person or persons exercising the Option, and deliver a
certificate or certificates to the Trustee or persons, as the case may be,
representing such shares as soon as practicable after notice and payment shall
be received.
In the event the Option shall be exercised by any person or persons other than
the Optionee, pursuant to Paragraph 7, such notice shall be accompanied by
appropriate proof of the right of such person or persons to exercise the Option.
For the removal of doubt, it is hereby clarified that the Company shall not be
responsible to notify the optionee of the exercisability/vesting of the Option.
Optionee only, shall be responsible for satisfying the terms and conditions with
respect to the exercise of the Option.
9A. SHAREHOLDER RIGHTS
The Optionee shall have no rights of a shareholder with respect to Ordinary
Shares to be acquired by the exercise of the Option until a certificate or
certificates representing such shares are issued to him or the Trustee for his
benefit, as the case may be. Upon issuance of a certificate or certificates,
Optionee shall have the rights of a shareholder, except that until the initial
public offering of the Company's securities ("IPO"), the Optionee's shares shall
be voted in accordance with the direction of the Board of Directors of the
Company. Simultaneously with the execution of this Agreement, Optionee shall
execute an irrevocable proxy in the form annexed hereto as Schedule A, such
proxy to remain in effect until the Company consummates its IPO.
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The Optionee hereby undertakes that none of the Company's shares held by him
will be transferred prior to the transferee signing an irrevocable proxy
substantially in the form attached hereto as Schedule A.
10. GENERAL
The Company shall at all times during the term of the Option reserve and keep
available such number of Shares as will be sufficient to satisfy the
requirements of this Agreement, shall pay all original issue stamp taxes, if
any, with respect to the issuance of the Shares pursuant hereto and all other
fees and expenses necessarily incurred by the Company in connection therewith,
and shall, from time to time, use its best efforts to comply with all laws and
regulations which, in the opinion of counsel for the Company, shall be
applicable thereto.
11. RESTRICTIVE LEGEND
All certificates representing any shares of the Shares subject to the provisions
of this Agreement shall have endorsed thereon the following legend:
"Any disposition of any interest in the securities represented by this
certificate is subject to certain restrictions, and the securities represented
by this certificate are subject to the terms of a Stock Option Agreement by the
record holder hereof and the Company, a copy of which will be mailed to any
holder of this certificate without charge with five (5) days of receipt by the
Company of a written request therefore."
12. NOTICES
Each notice relating to this Agreement shall be in writing and delivered in
person or by first class mail; postage prepaid, to the address as hereinafter
provided. Each notice shall be deemed to have been given on the date it is
received. Each notice to the Company shall be addressed to it at its offices at
1 Maskit st., X.X. Xxx 00000, Xxxxxxxx, Xxxxxx, 00000. Each notice to the
Optionee or other person or persons then entitled to exercise the Option shall
be addressed to the Optionee or such other person or persons at the Optionee's
last known address.
13. RESTRICTIONS ON ISSUING SHARES
The exercise of the Option shall be subject to the condition that if at any time
the Company shall determine in its discretion that the satisfaction of
withholding tax or other withholding liabilities, or that the listing,
registration, or qualification of any shares otherwise deliverable upon such
exercise upon any securities exchange or under any national, state or federal
law, or that the consent or approval of any regulatory body, is necessary or
desirable as a condition of, or in connection with, such exercise in the
delivery or purchase of shares pursuant thereto, then in any such event, such
exercise shall not be effective unless such withholding, listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Company.
The Company will require an additional payment equal to all applicable
withholding taxes (if withheld by the Company) which may be imposed on the
difference between the purchase price
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of shares issuable upon exercise of an option and the fair market value of such
shares as of the exercise date (which sum shall be paid in due course by the
Company to the applicable agencies as income taxes withheld on income resulting
from the exercise of the Option).
14. INCORPORATION OF PLAN
Notwithstanding the terms and conditions herein, this Agreement shall be subject
to and governed by all the terms and conditions of the Plan. A copy of the Plan
has been delivered to the Optionee and is hereby incorporated by reference. In
the event of any discrepancy or inconsistency between the terms and conditions
of this Agreement and of the Plan, the terms and conditions of the Plan shall
control.
14A. LOCK-UP
In any registration of the Company's shares, Optionee shall abide by a "lock-up"
period of up to one hundred and eighty (180) days, if requested by the
underwriter or the Company in such registration. In addition the employee shall
sign any other document as shall be required by the underwriter or the Company
prior to any registration of the Company's shares.
15. CONTINUANCE OF EMPLOYMENT
The granting of the Option is in consideration of the Optionee's continuing
employment or engagement by the Company, provided, however, nothing in this
Agreement shall confer upon the Optionee the right to continue in the service of
the Company or affect the right of the Company to terminate the Optionee's
service at any time in the sole discretion of the Company, with or without
cause.
16. INTERPRETATION
The interpretation and construction of any terms or conditions of the Plan, or
of this Agreement or other matters related to the Plan by the Stock Option
Committee shall be final and conclusive.
17. ENFORCEABILITY
This Agreement shall be binding upon the Optionee, his estate, his personal
representatives and beneficiaries.
18. GOVERNING LAW
This Agreement shall be governed by and construed under the laws of the State of
Israel.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed
and the Optionee has hereunto set his hand all as of the day and year first
above written.
SEAGULL SEMICONDUCTOR LTD. OPTIONEE:
By:
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/title
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SCHEDULE A
IRREVOCABLE PROXY
The undersigned, _____________, residing at__________________________________
hereby nominates, constitutes and appoints the designee of the Board of
Directors of Seagull Semiconductors Ltd. (as shall be designated by such Board
of Directors from time to time), my true and lawful attorney-in-fact and proxy
for me and in my name, place and xxxxx:
To appear and vote at any and all meetings of the shareholders of Seagull
Semiconductors Ltd. (the "Company"), an Israeli company, or sign on any
unanimous written consents of the shareholders of the Company, and otherwise act
as my proxy and representative in respect of all shares of the Company which may
be held by me or on my behalf now or in the future, and for that purpose, to
sign and execute in my name and on my behalf any proxies or other instruments
with respect to said shares.
This proxy shall remain in full force and effect until the consummation of the
Company's initial public offering ("IPO"), shall terminate upon the consummation
of the IPO, and shall bind any transferees to whom I may transfer shares of the
Company in the future.
IN WITNESS WHEREOF, the undersigned hereby signs this proxy effective as of the
_____ day of _____, 1999.
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Name: ------------------------------
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