LANOPTICS LTD.
(Name of Registrant)
1 HATAMAR STREET, P.O.B. 527, YOKNEAM 20692, ISRAEL
(Address of Principal Executive Office)
Indicate by check mark whether by furnishing the information contained in
this Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-
This Form 6-K is being incorporated by reference into the Registrant's Form F-3
Registration Statements File Nos. 333-126416 and 333-112136 and 333-121611 and
333-139707 and 333-144251 and Form S-8 Registration Statements File Nos.
33-71822 and 333-134593.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
LANOPTICS LTD.
By: /s/ Dror Israel
--------------------------
Dror Israel
Chief Financial Officer
Dated: December 3, 2007
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LANOPTICS LTD.
1 Hatamar Street
Yokneam 20692, Israel
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
DECEMBER 27, 2007
TO THE SHAREHOLDERS OF LANOPTICS LTD.:
We cordially invite you to attend the Annual General Meeting of
Shareholders of LanOptics Ltd. to be held on Thursday, December 27, 2007 at
11:00 A.M. (Israel time), at LanOptics' principal executive offices at 1 Hatamar
Street, Yokneam 20692, Israel (the telephone number at that address is
+972-4-959-6666).
The following matters are on the agenda for the meeting:
(1) the election of four directors - the terms of our current directors
(other than our outside directors) will expire at the meeting, and we
are proposing to elect four directors;
(2) the approval of the compensation of the new Chairman of our Board of
Directors;
(3) the approval of an amendment to our Articles of Association to
increase LanOptics' authorized share capital;
(4) the approval of an amendment to our 2003 Amended and Restated Equity
Incentive Plan to increase the number of Ordinary Shares reserved and
authorized for issuance thereunder and to adopt a new 2007 U.S. Equity
Incentive Plan to enable awards to U.S. employees;
(5) the approval of an amendment to our 2003 Amended and Restated Equity
Incentive Plan to provide for annual increases to the number of
Ordinary Shares reserved and authorized for issuance thereunder; and
(6) the ratification and approval of the appointment and compensation of
Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, as our
independent registered public accountants for the fiscal year ending
December 31, 2007; when this proposal is raised, you will also be
invited to discuss our 2006 consolidated financial statements.
RECORD DATE
Only shareholders who hold our Ordinary Shares, par value NIS 0.02 per
share, at the close of business on November 28, 2007 (the record date) will be
entitled to notice of, and to vote at, the meeting and any adjournments thereof.
According to the Companies Law Regulations (Confirmation of Ownership of
Shares for Voting at the General Meeting), 2000, if a shareholder holds shares
through a member of the Tel-Aviv Stock Exchange Ltd. (TASE Member) and the
shares are registered in the name of such TASE Member on the books of our
registration company, the shareholder may provide us, prior to the meeting, a
certification confirming his ownership of the shares on the record date. Such
certification may be obtained at the TASE Member's offices or may be sent to the
shareholder by mail (subject to payment of the cost of mailing), at the election
of the shareholder; provided that the shareholder's request is submitted with
respect to a specific securities account.
All shareholders of record on the record date are cordially invited to
attend and vote at the meeting in person or by proxy, pursuant to our Articles
of Association. Shareholders may send us standpoint notices no later than
December 9, 2007.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the voting power
represented at the meeting and voting in person or by proxy is required to
approve proposals Nos. 1, 2, 4, 5 and 6. The affirmative vote of the holders of
at least 75% of the voting power represented and voting in person or by proxy is
required to approve proposal No. 3.
REVIEW OF DOCUMENTS
Enclosed are the proxy statement and a proxy card for the meeting.
Shareholders may also review the proxy statement at our principal executive
offices stated above, upon prior notice and during regular working hours
(telephone number: +972-4-959-6666) until the date of the meeting. A copy of the
proxy statement will also be available at the following websites:
http://www.tase.co.il/tase/ or http://www.magna.isa.gov.il (the distribution
sites).
Each TASE Member will e-mail, upon request and without charge, a link to
the distribution sites, to each shareholder who is not listed in our shareholder
register and whose shares are held through the TASE Member, provided that each
such shareholder's request is submitted (a) with respect to a specific
securities account, and (b) prior to the record date.
By Order of the Board of Directors,
ELI FRUCHTER
CHAIRMAN OF THE BOARD OF DIRECTORS
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LANOPTICS LTD.
PROXY STATEMENT
ANNUAL GENERAL MEETING OF SHAREHOLDERS
DECEMBER 27, 2007
We invite you to attend LanOptics Ltd.'s Annual General Meeting of
Shareholders. The meeting will be held on Thursday, December 27, 2007 at 11:00
A.M. (Israel time), at LanOptics' principal executive offices at 1 Hatamar
Street, Yokneam 20692, Israel.
We are sending you this proxy statement because you hold Ordinary Shares,
par value NIS 0.02 per share, of LanOptics. Our Board of Directors is asking
that you sign and send in your proxy card, enclosed with this proxy statement,
in order to vote at the meeting or at any adjournment of the meeting.
AGENDA ITEMS
The following matters are on the agenda for the meeting:
(1) the election of four directors - the terms of our current directors
(other than our outside directors) will expire at the meeting, and we
are proposing to elect four directors;
(2) the approval of the compensation of the new Chairman of our Board of
Directors;
(3) the approval of an amendment to our Articles of Association to
increase LanOptics' authorized share capital;
(4) the approval of an amendment to our 2003 Amended and Restated Equity
Incentive Plan to increase the number of Ordinary Shares reserved and
authorized for issuance thereunder and to adopt a new 2007 U.S. Equity
Incentive Plan to enable awards to U.S. employees;
(5) the approval of an amendment to our 2003 Amended and Restated Equity
Incentive Plan to provide for annual increases to the number of
Ordinary Shares reserved and authorized for issuance thereunder; and
(6) the ratification and approval of the appointment of Kost Forer Gabbay
& Kasierer, a member of Ernst & Young Global, as our independent
registered public accountants for the fiscal year ending December 31,
2007; when this proposal is raised, you will also be invited to
discuss our 2006 consolidated financial statements.
HOW YOU CAN VOTE
You can vote your shares by attending the meeting or by completing and
signing a proxy card. Enclosed is a proxy card for the meeting that is being
solicited by our Board of Directors. Please follow the instructions on the proxy
card. You may change your mind and cancel your proxy card by sending us written
notice, by signing and returning a proxy card with a later date, or by voting in
person or by proxy at the meeting. We will not be able to count a proxy card
unless our registrar and transfer agent receives it in the enclosed envelope, by
December 26, 2007 at 6:59 A.M. (Israel time).
3
WHO CAN VOTE
You are entitled to notice of the meeting and to vote at the meeting if you
were a shareholder of record at the close of business on November 28, 2007. You
are also entitled to notice of the meeting and to vote at the meeting if you
held Ordinary Shares through a bank, broker or other nominee which was one of
our shareholders of record at the close of business on November 28, 2007, or
which appeared in the participant listing of a securities depository on that
date. We are mailing copies of this proxy statement and the proxy cards to our
shareholders on or about November 30, 2007, and we will solicit proxies
primarily by mail and email. The original solicitation of proxies by mail and
email may be further supplemented by solicitation by telephone, mail, email and
other means by certain of our officers, directors, employees and agents, but
they will not receive additional compensation for these services. We will bear
the cost of the solicitation of the proxy cards, including postage, printing and
handling, and we will reimburse the reasonable expenses of brokerage firms and
others for forwarding material to beneficial owners of Ordinary Shares.
QUORUM AND REQUIRED VOTE
On November 28, 2007, we had outstanding 18,312,245 Ordinary Shares. Each
Ordinary Share is entitled to one vote upon each of the matters to be presented
at the meeting. Under our Articles of Association, the meeting will be properly
convened if at least two shareholders attend the meeting in person or sign and
return proxies, provided that they hold Ordinary Shares representing more than
50% of our voting power. This is known as a quorum. If a quorum is not present
within half an hour from the time scheduled for the meeting, the meeting will be
adjourned to the same day in the next week (to the same time and place), or to a
day, time and place as the Chairman of our Board of Directors may determine with
the consent of the holders of a majority of the voting power represented at the
meeting in person or by proxy and voting on the adjournment. Any two
shareholders who attend an adjourned meeting in person or by proxy will
constitute a quorum. Under Israeli law, broker non-votes and abstentions will be
counted toward the required quorum, but will then have no effect on whether the
requisite vote is obtained (that is, they will not be counted as voting for or
against the proposals).
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" ALL
PROPOSALS UNDER ITEMS 1 THROUGH 6 BELOW.
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INFORMATION ON OWNERSHIP OF EZCHIP
We currently own approximately 78.5% of the issued and outstanding shares
of EZchip, or 68.9% on a fully diluted, as converted basis, taking into account
outstanding options to purchase shares of EZchip that are still held by current
and former employees of EZchip, and the conversion of outstanding EZchip
preferred shares into EZchip ordinary shares.
As previously reported, pursuant to an exchange right agreement EZchip and
we entered into with the minority shareholders of EZchip in 2003 pursuant to
shareholder approval, the last two of EZchip's principal shareholders (other
than LanOptics) have the right to exchange their EZchip shares for LanOptics
Ordinary Shares. If the exchange would have been completed before the date of
this proxy statement, we would have owned approximately 99.1% of the issued and
outstanding shares of EZchip, or 89.3% on a fully diluted basis. The remaining
10.7% that would not have been owned by us represents EZchip shares subject to
outstanding EZchip options that are held by current and former employees of
EZchip. As described below, we intend to discontinue our practice of granting
EZchip employees options to purchase shares of EZchip.
The exchange with the last two EZchip principal shareholders will be the
last major step in our long-term plan to acquire 100% ownership of EZchip, a
plan that was approved by our shareholders in April 2003. We believe it is
desirable to rationalize our corporate structure by unifying the shareholdings
in the two companies and that such unification will also allow various
efficiencies in the operation of the businesses.
At the meeting, we are proposing that the shareholders approve two
additional steps towards this goal.
First, in order to ensure our 100% ownership of EZchip, we intend to
discontinue our practice of granting EZchip employees options to purchase shares
of EZchip. Instead, all future incentive awards to EZchip employees will consist
of options or restricted share units to purchase our Ordinary Shares. To
implement this plan, we are proposing an amendment to our equity incentive plan,
the LanOptics Ltd. 2003 Amended and Restated Equity Incentive Plan, to increase
the number of Ordinary Shares reserved and authorized for issuance under the
plan and to adopt a new equity incentive plan to enable awards to U.S.
employees. We are also proposing to increase our authorized share capital. We do
not currently expect to grant a significant number of new awards until after we
complete the exchange with the last two EZchip principal shareholders. We
provide further details of these proposals in Items 3 through 5 below.
Second, we are proposing to elect Benny Hanigal, the Chairman of the Board
of Directors of EZchip, to our Board of Directors. The current members of our
Board of Directors have expressed their intention to elect Mr. Hanigal to serve
as the Chairman of our Board of Directors, promptly following his election to
our Board. We provide further details of this proposal in Items 1 and 2 below.
5
BENEFICIAL OWNERSHIP OF ORDINARY SHARES
BY CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows information as of November 28, 2007 for (i) each
person who, as far as we know, beneficially owns more than 5% of our outstanding
Ordinary Shares, (ii) each of our executive officers and directors who owns more
than 1% of our outstanding Ordinary Shares and (iii) our executive officers and
directors as a group. The information in the table below is based on 18,312,245
Ordinary Shares outstanding as of November 28, 2007. The calculations do not
take into account LanOptics Ordinary Shares that may be issued to the last two
EZchip principal shareholders in exchange for their EZchip shares.
NUMBER OF ORDINARY SHARES PERCENTAGE OF
NAME BENEFICIALLY OWNED ORDINARY SHARES
------------------------------------ ---------- ----------
James Cheney (1) 1,056,609 5.8%
Eli Fruchter (2) 535,382 2.9%
All directors and executive officers
as a group (6 persons)(3) 585,382 3.2%
----------
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(1) Based on Schedule 13G filed with the Securities and Exchange Commission on
September 12, 2007. The address of Mr. Cheney is c/o Visible World, 527
West 34th Street, New York, NY 10001.
(2) Based on Schedule 13G/A filed with the Securities and Exchange Commission
on February 9, 2007 and on other information provided to us. The address of
Mr. Fruchter is c/o LanOptics Ltd., 1 Hatamar Street, Yokneam 20692,
Israel.
(3) As of November 28, 2007, all directors and executives officers as a group
(six persons) held options exercisable within 60 days of November 28, 2007
into 50,000 Ordinary Shares.
ITEM 1 - PROPOSAL TO ELECT FOUR DIRECTORS
In accordance with our Articles of Association, our Board of Directors will
consist of not less than three nor more than fourteen directors, as may be fixed
from time to time by our shareholders. Our shareholders last fixed the maximum
number of directors at ten.
Our Board of Directors currently consists of five directors. You are being
asked to reelect three of our current directors, Eli Fruchter, Prof. Ran Giladi
and Karen Sarid, and to elect Benny Hanigal, the Chairman of our subsidiary,
EZchip Technologies Ltd., as one of our directors. If elected, Mr. Hanigal will
replace Mr. Fruchter as the Chairman of our Board of Directors, and our Board of
Directors will consist of six directors.
Our two outside directors, within the meaning of the Israeli Companies Law,
Shai Saul and David Schlachet, are not required to stand for reelection at the
meeting as their term of office expire in 2009 and 2008, respectively.
6
NOMINEES FOR DIRECTOR
As permitted by the NASDAQ Marketplace Rules, we follow Israeli law and
practice rather than the NASDAQ requirement regarding the process for the
nomination of directors. Under Israeli law and practice, directors are elected
by the shareholders, unless otherwise provided in a company's articles of
association. Our Articles of Association do not provide otherwise. Our practice
has been that director nominees are presented in the proxy statement for
election at the annual meetings of shareholders.
Accordingly, our Board of Directors recommends that the following four
nominees be elected to our Board of Directors at the meeting. If elected at the
meeting, these nominees will serve until next year's annual meeting of our
shareholders, and Mr. Hanigal will replace Mr. Fruchter as the Chairman of our
Board of Directors. Set forth below is information about each nominee, including
principal occupation, business history and any other directorships held.
ELI FRUCHTER serves as the President and Chief Executive Officer of EZchip,
a position that he has held since EZchip's inception in May 1999, and has served
as a director of our company since its inception and Chairman of our Board of
Directors since December 2006. Mr. Fruchter co-founded our company and from 1990
to 1999 he served as our General Manager and the Chairman of our Board of
Directors. Prior to that, he was also among the founders of Adacom Technologies
Ltd., a manufacturer of data communications products. Mr. Fruchter holds a B.Sc.
degree in Electrical Engineering from the Technion-Israel Institute of
Technology.
PROF. RAN GILADI has served as a director of our company since December
2001. Prof. Giladi is a faculty member of Ben-Gurion University of the Negev,
Beersheba, where he founded and was the Head of the Department of Communication
Systems Engineering from 1992 until 2000. Prof. Giladi was the active Chairman
of DiskSites, Inc., which was acquired by Expand Networks Ltd. in 2006. Prof.
Giladi co-founded InfoCyclone Inc., which produces storage appliances for owners
of massively accessed repositories and of which he was President and Chief
Executive Officer from 2000 until 2002. Prof. Giladi co-founded Ramir Ltd.,
which was later acquired by Harris-Adacom, and served as Vice President Research
& Development in both companies from 1984 until 1986. His research interests
include computer and communications systems performance, data networks and
communications, and network management systems. Prof. Giladi holds a B.Sc.
degree in Physics and M.Sc. degree in Biomedical Engineering, both from the
Technion - Israel Institute of Technology, and a Ph.D. in Computers and
Information Systems from Tel-Aviv University.
BENNY HANIGAL has served as the Chairman of the Board of Directors of
EZchip since December 2006. Since August 2001, Mr. Hanigal has been a partner in
Sequoia Capital Venture Fund. In 1985, Mr. Hanigal founded Lannet Ltd., of which
Mr. Hanigal served as President and Chief Executive Officer until 1995. In 1995,
Lannet was acquired by Madge Networks N.V., which thereafter employed Mr.
Hanigal until he left in June 1997. From January 1998 until 2001, Mr. Hanigal
served as a managing director of a company that manages one of the Star funds.
Mr. Hanigal also serves as a director of Alvarion Ltd. Mr. Hanigal has a B.Sc.
degree in Electrical Engineering from the Technion -Israel Institute of
Technology.
7
KAREN SARID has served as a director of our company since December 2001.
Ms. Sarid is the General Manager of Galil Medical Israel. Prior to that, Ms.
Sarid served as a General Manager of Orex Computed Radiography Ltd., a Kodak
Company focusing on radiography systems for the digital x-ray market. Prior
thereto and from September 2000, she held the position of Chief Operating
Officer and Chief Financial Officer at Orex Computed Radiography Ltd. From
September 1999 until September 2000, Ms. Sarid was Chief Financial Officer and a
member of the Board of Directors of Forsoft Ltd., a software solutions provider
and a subsidiary of the Formula Group. From 1996 until August 1999, Ms. Sarid
was Chief Financial Officer and a member of the Board of Directors of ESC
Medical Systems Ltd., a medical laser manufacturer that is traded on the NASDAQ
Stock Market. Ms. Sarid was Chief Financial Officer of our company from 1993
through 1996. Ms. Sarid also serves as a director of Oridion Systems Ltd., Gilat
Satellite Networks Ltd. and AudioCodes Ltd. (until December 2007). Ms. Sarid
holds a B.A. degree in Economics and Accounting from Haifa University and was
awarded the Chief Financial Officer of the Year award in 1998 by the Association
of Chief Financial Officers in Israel.
As noted above, the term of office of each of our outside directors, Shai
Saul and David Schlachet, will expire in 2009 and 2008, respectively. We are
providing biographical information concerning Messrs. Saul and Schlachet for
your information only, even though they are not standing for reelection at this
time.
SHAI SAUL has served as a director of our company since December 2006. Mr.
Saul is Managing General Partner of Tamir Fishman Ventures, an Israeli
technology-focused venture capital fund, which he co-founded in 1999. During
2001, he acted as interim chief executive of CopperGate Communications. From
1994 to 1999, Mr. Saul served as Executive Vice President of Aladdin Knowledge
Systems Ltd. (NASDAQ: ALDN), a leading provider of digital rights management and
security solutions. From 1993 to 1994, he served as Chief Executive Officer of
Ganot Ltd. Mr. Saul also serves as Chairman of the Board of CopperGate
Communications and as a director of Allot Communications Ltd. His past board
positions include Native Networks and Teleknowledge. Mr. Saul holds an LL.B.
degree from Tel Aviv University.
DAVID SCHLACHET has served as director of our company since September 2005.
Mr. Schlachet has served as chief executive officer of Syneron Medical Ltd.
since November 2005, after having served as chief financial officer of Syneron
Medical Ltd. from July 2004. From 2000 to June 2004, Mr. Schlachet served as
Managing Partner of Biocom, a venture capital fund specializing in the life
sciences area. From 1995 to 2000, Mr. Schlachet served as a senior Vice
President and Chief Financial Officer of Strauss Elite Holdings, a packaged food
group. He also served as an active Chairman of Elite Industries Ltd. From 1988
to 1995 Mr. Schlachet served first as CEO of Yeda, the Weizmann Institute
technology transfer company, and later as Vice President of Finance and
Administration of the Weizmann Institute of Science. Mr. Schlachet serves as a
director and chair of audit committee for NASDAQ listed companies Pharmos Inc.
and Compugen Ltd., and is a director of Adgar Investment and Development, which
is listed on the Tel Aviv Stock Exchange. Mr. Schlachet holds a B.Sc. degree in
chemical engineering and an M.B.A. from Tel-Aviv University.
8
We therefore propose that the following resolution be adopted:
"RESOLVED, that the election of the following four persons to the
Board of Directors of LanOptics Ltd. until the 2008 annual meeting of
shareholders of LanOptics be, and hereby is, approved: Eli Fruchter,
Prof. Ran Giladi, Benny Hanigal and Karen Sarid."
The affirmative vote of the holders of a majority of the voting power
represented and voting on this proposal in person or by proxy is necessary to
approve the resolution.
ITEM 2 - PROPOSAL TO APPROVE THE COMPENSATION
OF THE NEW CHAIRMAN OF OUR BOARD OF DIRECTORS
As discussed in Item 1, our Board of Directors has recommended that the
shareholders elect Benny Hanigal, the Chairman of the Board of Directors of our
subsidiary, EZchip, as a member of our Board of Directors. The current members
of our Board of Directors have expressed their intention to elect Mr. Hanigal to
serve as the Chairman of our Board of Directors, promptly following his election
to our Board.
Subject to the appointment of Mr. Hanigal as a director and Chairman of our
Board of Directors, our Audit Committee and Board of Directors have approved,
subject to shareholder approval, a monthly payment in the amount of $3,000 to
Mr. Hanigal for his services as our Chairman. Under the Israeli Companies Law,
we are required to seek the approval of our shareholders for any compensation
paid to any of our directors.
We therefore propose that the following resolution be adopted:
"RESOLVED, that a monthly payment in the amount of $3,000 to
Benny Hanigal, in connection with his services as the Chairman of the
Board of Directors of LanOptics Ltd., be, and it hereby is, approved."
The affirmative vote of the holders of a majority of the voting power
represented and voting on this proposal in person or by proxy is necessary to
approve the resolution.
ITEM 3 - PROPOSAL TO AMEND OUR ARTICLES OF ASSOCIATION TO INCREASE OUR
AUTHORIZED SHARE CAPITAL
Under our Articles of Association, our authorized share capital consists of
NIS 600,000 divided into 30,000,000 Ordinary Shares, par value NIS 0.02 per
share. As of November 28, 2007, we had 18,312,245 Ordinary Shares issued and
outstanding. On a fully diluted basis, assuming issuance of LanOptics Ordinary
Shares to the last two of EZchip's principal shareholders in exchange for their
shares of EZchip (as described above under "Information on Ownership of
EZchip"), the exchange or purchase of EZchip options and shares held by our
employees, and the exercise of all outstanding warrants, options and restricted
share units to purchase LanOptics Ordinary Shares, we would have had
approximately 26,700,000 Ordinary Shares issued and outstanding.
9
As described below in Items 4 and 5, our Board of Directors has approved,
and recommends that the shareholders approve, amendments to our 2003 Amended and
Restated Equity Incentive Plan providing for an increase in the number of
Ordinary Shares reserved and authorized for issuance thereunder and future
increases on an annual basis. In order for our Board of Directors to be able to
grant awards under our equity incentive plan following shareholder approval of
such amendments (if approved), our authorized share capital under our Articles
of Association will also need to increase. The increase to our authorized share
capital will also enable us to maintain our flexibility to raise capital in the
future by offering Ordinary Shares, such as the offerings we completed in August
2007 and September 2007.
Accordingly, our Board of Directors has approved, and recommends that the
shareholders approve, an amendment to our Articles of Association to increase
our authorized share capital by NIS 400,000 divided into 20,000,000 Ordinary
Shares, par value NIS 0.02 per share. Following the increase, our authorized
share capital will consist of NIS 1,000,000 divided into 50,000,000 Ordinary
Shares, par value NIS 0.02 per share.
We therefore propose that the following resolution be adopted:
"RESOLVED, to amend Section 4(a) of LanOptics Articles of
Association to read as follows:
Section 4(a). The authorized share capital of the Company is NIS
1,000,000 divided into 50,000,000 (Fifty Million) Ordinary Shares, par
value NIS 0.02 per share"
The affirmative vote of the holders of at least 75% of the voting power
represented and voting on this proposal in person or by proxy is necessary to
approve the resolution.
ITEM 4 - PROPOSAL TO AMEND OUR 2003 AMENDED AND RESTATED EQUITY INCENTIVE
PLAN TO INCREASE THE NUMBER OF ORDINARY SHARES RESERVED FOR ISSUANCE
THEREUNDER AND TO ADOPT A NEW 2007 U.S. EQUITY INCENTIVE PLAN TO ENABLE
AWARDS TO U.S. EMPLOYEES
As described above under "Information on Ownership of EZchip," in order to
ensure our 100% ownership of EZchip, we intend that future incentive awards to
EZchip employees will consist of options or restricted share units to purchase
our Ordinary Shares, rather than shares of EZhip.
Currently, all of the Ordinary Shares authorized and reserved for issuance
under our equity incentive plan, the LanOptics Ltd. 2003 Amended and Restated
Equity Incentive Plan, are reserved for issuance under outstanding options and
restricted share units that we granted in the past to our directors. As a
result, we are unable to grant any additional awards under our 2003 Amended and
Restated Equity Incentive Plan to EZchip employees (who in the past received
awards only under EZchip's equity incentive plans, a practice that we will now
discontinue).
10
In order to implement our plan to commence awards of options and restricted
share units to EZchip employees under our 2003 Amended and Restated Equity
Incentive Plan, our Board of Directors has approved, and recommends that the
shareholders approve, an amendment to the plan providing for an increase of
1,500,000 Ordinary Shares to the number of Ordinary Shares reserved and
authorized for issuance under that plan. Under the 2003 Amended and Restated
Equity Incentive Plan, our Board of Directors is authorized to grant options and
restricted share units. In accordance with the terms of the plan, the grant of
an option to purchase an Ordinary Share will reduce one Ordinary Share from the
plan's pool of reserved and authorized Ordinary Shares, while the grant of a
restricted share unit will reduce three Ordinary Shares from the plan's pool of
reserved and authorized Ordinary Shares.
To enable us to grant to U.S. employees of EZchip and our company options
that qualify as incentive stock options under the provisions of Section 422 of
the Internal Revenue Code, nonqualified stock options (to the extent provided in
the plan) and restricted share units, our Board of Directors has approved, and
recommends that the shareholders approve, the LanOptics Ltd. 2007 U.S. Equity
Incentive Plan. A copy of the proposed 2007 U.S. Equity Incentive Plan has been
publicly filed with the Securities and Exchange Commission and is available on
its website at www.sec.gov, as well as on our website at www.lanoptics.com.
Shareholders may receive a paper copy of the proposed 2007 U.S. Equity Incentive
Plan free of charge upon request (telephone number: +972-4-959-6666). Except as
required to address specific U.S. tax requirements, the general terms and
conditions of the 2007 U.S. Equity Incentive Plan are substantially similar to
the terms and conditions of the 2003 Amended and Restated Equity Incentive Plan.
In general, the exercise price of incentive stock options granted under the 2007
U.S. Equity Incentive Plan must be at least equal to 100% of the fair market
value of the Ordinary Shares on the date of grant. If, however, incentive stock
options are granted to an employee who owns shares possessing more than 10% of
the voting power of all classes of our share capital or the share capital of any
parent or subsidiary of us, the exercise price of any incentive stock option
granted must equal at least 110% of the fair market value on the grant date and
the maximum term of such incentive stock options must not exceed five years. In
addition, the number of Ordinary Shares reserved and authorized for issuance
under the 2007 U.S. Equity Incentive Plan will equal 500,000, which amount will
not increase unless otherwise approved by our shareholders.
We therefore propose that the following resolutions be adopted:
"RESOLVED, that the amendment to the LanOptics Ltd. 2003 Amended
and Restated Equity Incentive Plan providing for an increase of
1,500,000 Ordinary Shares to the number of Ordinary Shares reserved
and authorized for issuance thereunder be, and hereby is, approved.
FURTHER RESOLVED, that the LanOptics Ltd. 2007 U.S. Equity
Incentive Plan, be, and hereby is, approved."
The affirmative vote of the holders of a majority of the voting power
represented and voting on this proposal in person or by proxy is necessary to
approve the resolutions.
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ITEM 5 - PROPOSAL TO AMEND OUR 2003 AMENDED AND RESTATED EQUITY INCENTIVE
PLAN TO PROVIDE FOR AN ANNUAL INCREASE IN THE NUMBER OF ORDINARY SHARES
RESERVED AND AVAILABLE FOR ISSUANCE THEREUNDER
As described in Item 4 above, in order to implement our plan to commence
awards of options and restricted share units to EZchip employees under our 2003
Amended and Restated Equity Incentive Plan, we are seeking shareholder approval
for an amendment to the plan that provides for an increase of 1,500,000 Ordinary
Shares to the number of Ordinary Shares reserved and authorized for issuance
under our 2003 Amended and Restated Equity Incentive Plan, as well as for the
adoption of a new 2007 U.S. Equity Incentive Plan that will initially have
500,000 Ordinary Shares reserved and authorized for issuance.
While our Board of Directors believes that the increase in the number of
shares issuable under our 2003 Amended and Restated Equity Incentive Plan
together with the shares that will be issuable under the new 2007 U.S. Equity
Incentive Plan will be sufficient for our near future needs, our Board also
recognizes the importance of maintaining a sufficient number of Ordinary Shares
reserved and authorized for issuance in the next few years to be able to retain
and motivate employees as our company continues to grow. Accordingly, our Board
of Directors has approved, and recommends that the shareholders approve, an
amendment to the 2003 Amended and Restated Equity Incentive Plan to provide that
on January 1st of each year, commencing January 1, 2009, to the extent the
number of Ordinary Shares reserved, authorized and available for issuance under
the 2003 Amended and Restated Equity Incentive Plan on such date is less than 4%
of the number of Ordinary Shares issued and outstanding on such date, the number
of Ordinary Shares reserved, authorized and available for issuance under the
2003 Amended and Restated Equity Incentive Plan will automatically increase on
such date to equal 4% of the number of Ordinary Shares issued and outstanding on
such date. The proposed automatic increase will not affect the number of
Ordinary Shares reserved, authorized and available for issuance under the new
2007 U.S. Equity Incentive Plan (as described in Item 4 above), which amount
will not increase unless otherwise approved by our shareholders.
We therefore propose that the following resolution be adopted:
"RESOLVED, that an amendment to the LanOptics Ltd. 2003 Amended
and Restated Equity Incentive Plan as described in Item 5 of the proxy
statement be, and hereby is, approved."
The affirmative vote of the holders of a majority of the voting power
represented and voting on this proposal in person or by proxy is necessary to
approve the resolution.
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ITEM 6 - PROPOSAL TO RATIFY AND APPROVE THE APPOINTMENT AND COMPENSATION OF
OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS; REVIEW AND DISCUSSION OF OUR
2006 CONSOLIDATED FINANCIAL STATEMENTS
Our Audit Committee and Board of Directors have approved the appointment of
Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, as our
independent registered public accountants for the fiscal year ending December
31, 2007. At the meeting, shareholders will be asked to ratify and approve the
appointment.
At the meeting, shareholders will also be asked to authorize the Audit
Committee (subject to ratification of the Board of Directors) to fix the
remuneration of Kost Forer Gabbay & Kasierer in accordance with the volume and
nature of their services.
Representatives of Kost Forer Gabbay & Kasierer will attend the meeting and
will be invited to make a statement. They will be available to respond to
appropriate questions raised during the meeting. In accordance with Section
60(b) of the Israeli Companies Law, you are invited to discuss our 2006
consolidated financial statements, and questions regarding the consolidated
financial statements may be addressed to us or our auditors. Our Annual Report
on Form 20-F for the year ended December 31, 2006, including our 2006
consolidated financial statements, is available on our website at
www.lanoptics.com. To have a printed copy mailed to you, please contact us at 1
Hatamar Street, Yokneam 20692, Israel; tel: +972-4-959-6666.
We therefore propose that the following resolution be adopted:
"RESOLVED, that the appointment of Kost Forer Gabbay & Kasierer,
a member of Ernst & Young Global, as LanOptics Ltd.'s independent
registered public accountants for the fiscal year ending December 31,
2007 be, and it hereby is, ratified and approved, and that the Audit
Committee (subject to ratification of the Board of Directors) be, and
it hereby is, authorized to fix the remuneration of such independent
registered public accountants in accordance with the volume and nature
of their services."
The affirmative vote of the holders of a majority of the voting power
represented and voting on this proposal in person or by proxy is necessary to
approve the resolution.
By Order of the Board of Directors,
ELI FRUCHTER
CHAIRMAN OF THE BOARD OF DIRECTORS
Dated: November 28, 2007
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LANOPTICS LTD. 2007 U.S. EQUITY INCENTIVE PLAN
1. GENERAL.
(A) APPLICATION. The Company, by means of the Plan, seeks to secure and
retain the services of the group of persons eligible to receive Awards
as set forth in Section 1(b) of the Plan, to provide incentives for
such persons to exert maximum efforts for the success of the Company
and its Subsidiaries and to provide a means by which such eligible
recipients may be given and opportunity to benefit from increases in
value of the Ordinary Shares through the granting of Awards.
Notwithstanding anything to the contrary in the LanOptics Ltd. 2003
Amended and Restated Equity Incentive Plan, all grants of Awards to
participants who are subject to United States taxation shall be made
under and subject to the terms and conditions of this Plan. All
capitalized terms used herein shall have the meaning assigned in
Section 12 of this Plan.
(B) ELIGIBLE RECIPIENTS. The persons eligible to receive Awards are U.S.
Persons who are Employees, Directors or Consultants of or to the
Company or its Subsidiaries, provided, however, that Awards of
Incentive Stock Options may only be made to Employees of the Company
or its Subsidiaries.
(C) AVAILABLE OPTIONS. The Plan provides for the grant of Incentive Stock
Options, Nonstatutory Stock Options, and Restricted Share Units.
2. ADMINISTRATION.
(A) ADMINISTRATION BY BOARD OR COMMITTEE. The Plan shall be administered
by (A) the Board or (B) a Committee, which Committee shall be
constituted to satisfy applicable law and the Company's Articles of
Association (the "ADMINISTRATOR"). Notwithstanding the above, the
Board shall automatically have a residual authority if no Committee
shall be constituted or if such Committee shall cease to operate for
any reason whatsoever.
(B) COMMITTEE PROCEDURES. The Committee shall select one of its members as
its chairman and shall hold its meetings at such times and places as
the chairman shall determine. The Committee shall keep records of its
meetings and shall make such rules and regulations for the conduct of
its business as it shall deem advisable.
(C) AWARDS TO COMMITTEE MEMBERS. Any member of such Committee shall be
eligible to receive Awards under the Plan while serving on the
Committee, unless otherwise specified herein.
(D) POWERS OF THE ADMINISTRATOR. The Administrator shall have the power,
subject to, and within the limitations of, the express provisions of
the Plan, and, in the case of a Committee, subject to the reservation
of powers by the Board:
(I) To determine from time to time (A) which of the persons eligible
under the Plan shall be granted Awards; (B) when and how each
Award shall be granted; (C) the provisions of each Award granted
(which need not be identical), including the time or times when a
person shall be permitted to receive Ordinary Shares pursuant to
an Award; (D) the number of Ordinary Shares with respect to which
an Award shall be granted to each such person; and (E) the Fair
Market Value of the Awards, as provided in this Plan.
(II) To construe and interpret the Plan and Awards granted under it,
and to establish, amend and revoke rules and regulations for its
administration. The Administrator, in the exercise of this power,
may correct any defect, omission or inconsistency in the Plan or
in any Award Agreement, in a manner and to the extent it shall
deem necessary or expedient to make the Plan or Award fully
effective.
(III) To settle all controversies regarding the Plan and Awards
granted under it.
(IV) To suspend or terminate the Plan at any time. Suspension or
termination of the Plan shall not impair rights and obligations
under any Award granted while the Plan is in effect except with
the written consent of the affected Participant.
(V) To amend the Plan in any respect the Administrator deems
necessary or advisable, including, without limitation, relating
to Incentive Stock Options and certain nonqualified deferred
compensation under Section 409A of the Code and/or to bring the
Plan or Awards granted under the Plan into compliance therewith,
subject to the limitations, if any, of applicable law. However,
except as provided in Section 8(a) relating to Capitalization
Adjustments, shareholder approval shall be required for any
amendment of the Plan that (i) materially increases the number of
Ordinary Shares available for issuance under the Plan, (ii)
materially expands the class of individuals eligible to receive
Awards under the Plan, (iii) materially increases the benefits
accruing to Participants under the Plan or materially reduces the
price at which Ordinary Shares may be issued or purchased under
the Plan, or (iv) materially extends the term of the Plan, but
only to the extent required by applicable law or listing
requirements. Except as provided in Section 2(b)(vii), rights
under any Award granted before amendment of the Plan shall not be
impaired by any amendment of the Plan unless (i) the Company
requests the consent of the affected Participant, and (ii) such
Participant consents in writing.
(VI) To submit any amendment to the Plan for shareholder approval,
including, but not limited to, amendments to the Plan intended to
satisfy the requirements of (i) Section 162(m) of the Code and
the regulations thereunder regarding the exclusion of
performance-based compensation from the limit on corporate
deductibility of compensation paid to Covered Employees, (ii)
Section 422 of the Code regarding Incentive Stock Options or
(iii) Rule 16b-3.
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(VII) To amend the terms of any one or more Awards, including, but not
limited to, amendments to provide terms more favorable than
previously provided in the Award Agreement, subject to any
specified limits in the Plan that are not subject to the
Administrator's discretion; PROVIDED HOWEVER, that, the rights
under any Award shall not be impaired by any such amendment
unless (i) the Company requests the consent of the affected
Participant, and (ii) such Participant consents in writing.
Notwithstanding the foregoing, subject to the limitations of
applicable law, if any, and without the affected Participant's
consent, the Administrator may amend the terms of any one or more
Awards if necessary to maintain the qualified status of an Option
as an Incentive Stock Option, provided, however, that without the
written consent of the Optionholder, the Administrator may not
modify an Option in a manner which would cause the Option to fail
to qualify as an Incentive Stock Option.
(VIII) Generally, to exercise such powers and to perform such acts as
the Administrator deems necessary or expedient to promote the
best interests of the Company and that are not in conflict with
the provisions of the Plan or Awards.
(E) PROCEDURE. Subject to the Company's Articles of Association, all
decisions and selections made by the Administrator pursuant to the
provisions of the Plan shall be made by a majority of its members,
except that no member of the Administrator shall vote on, or be
counted for quorum purposes, with respect to any proposed action of
the Administrator relating to any Award to be granted to that member.
Any decision reduced to writing shall be executed in accordance with
the provisions of the Articles of Association of the Company.
(F) INDEMNIFICATION. Subject to the Articles of Association of the Company
and the Company's decision, and to all approvals legally required,
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 any 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 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
a director or otherwise under the Articles of Association of the
Company, any agreement, any vote of shareholders or disinterested
directors, insurance policy or otherwise.
(G) SECTION 162(M) AND RULE 16B-3 COMPLIANCE. In the sole discretion of
the Board, the Committee may consist solely of two or more Outside
Directors, in accordance with Section 162(m) of the Code, or solely of
two or more Non-Employee Directors, in accordance with Rule 16b-3. In
addition, the Board or the Committee, in its sole discretion, may (A)
delegate to a Committee of Directors who need not be Outside Directors
the authority to grant Awards to eligible persons who are either (I)
not then Covered Employees and are not expected to be Covered
Employees at the time of recognition of income resulting from such
Award, or (II) not persons with respect to whom the Company wishes to
comply with Section 162(m) of the Code, or (B) delegate to a Committee
of Directors who need not be Non-Employee Directors the authority to
grant Awards to eligible persons who are not then subject to Section
16 of the Exchange Act.
3
(H) EFFECT OF ADMINISTRATOR'S DECISION. All determinations,
interpretations and constructions made by the Administrator in good
faith shall not be subject to review by any person and shall be final,
binding and conclusive on all persons.
3. SHARES SUBJECT TO THE PLAN.
(A) SHARE RESERVE. Subject to the provisions of Section 8(a) relating to
adjustments upon changes in share capital, the aggregate number of
Ordinary Shares of the Company that may be issued pursuant to Awards
upon the Effective Date shall be five hundred thousand (500,000)
shares. Any Ordinary Shares which remain unissued and which are not
subject to outstanding Awards at the termination of the Plan shall
cease to be reserved for the purpose of the Plan, but until
termination of the Plan the Company shall at all times reserve
sufficient number of Ordinary Shares to meet the requirements of the
Plan. Should any Award for any reason expire or be canceled prior to
its exercise or relinquishment in full, the Ordinary Shares therefore
subject to such Award may again be subjected to an Award under the
Plan or under the Company's other equity incentive plans. Any Shares
subject to Options shall be counted against the numerical limits of
this Section 3(a) as one Ordinary Share for every Ordinary Share
subject thereto. Any Shares subject to Restricted Share Units with a
per Ordinary Share purchase price lower than 100% of Fair Market Value
on the date of grant shall be counted against the numerical limits of
this Section 3(a) as three Ordinary Shares for every one Ordinary
Share subject thereto. To the extent that an Ordinary Share that was
subject to a Restricted Share Unit that counted as three Shares
against the Plan reserve pursuant to the preceding sentence is
recycled back into the Plan in accordance with the second sentence of
this Section 3(a), the Plan shall be credited with three Ordinary
Shares.
(B) SOURCE OF SHARES. The shares issuable under the Plan shall be
authorized but unissued or reacquired Ordinary Shares, including
shares repurchased by the Company.
4. ELIGIBILITY.
(A) ELIGIBILITY FOR INCENTIVE STOCK OPTIONS. Incentive Stock Options may
be granted only to Employees of the Company or its Subsidiaries.
4
(B) TEN PERCENT SHAREHOLDERS. A Ten Percent Shareholder shall not be
granted an Incentive Stock Option unless the exercise price of such
Option is at least one hundred ten percent (110%) of the Fair Market
Value of the Ordinary Shares on the date of grant and the Option is
not exercisable after the expiration of five (5) years from the date
of grant.
(C) RESTRICTED SHARE UNITS, NONSTATUTORY STOCK OPTIONS. Restricted Share
Units and Nonstatutory Stock Options may be granted to Employees or
Directors of, or Consultants to the Company or its Subsidiaries.
5. AWARD PROVISIONS.
Each Award shall be in such form and shall contain such terms and conditions as
the Administrator shall deem appropriate. All Options intended to qualify as
Incentive Stock Options shall be designated as Incentive Stock Options at the
time of grant. The provisions of separate Awards need not be identical;
PROVIDED, HOWEVER, that each Award Agreement shall include (through
incorporation of provisions hereof by reference in the Award Agreement or
otherwise) the substance of each of the following provisions:
(A) TERM. Subject to the provisions of Section 4(b) regarding Ten Percent
Shareholders, no Award shall be exercisable after the expiration of
ten (10) years from the date of its grant or such shorter period as
may be specified in the Award Agreement.
(B) EXERCISE PRICE. Subject to the provisions of Section 4(b) regarding
Ten Percent Shareholders, the exercise price of each Option shall be
not less than one hundred percent (100%) of the Fair Market Value of
the Ordinary Shares subject to the Option on the date the Option is
granted. Notwithstanding the foregoing, an Option may be granted with
an exercise price lower than one hundred percent (100%) of the Fair
Market Value of the Ordinary Shares subject to the Option if such
Option is granted pursuant to an assumption or substitution for
another option in a manner consistent with the provisions of Section
424(a) of the Code.
(C) CONSIDERATION. The purchase price of Ordinary Shares acquired pursuant
to the exercise of an Option shall be paid, to the extent permitted by
applicable law and as determined by the Administrator in its sole
discretion, by any combination of the methods of payment set forth
below. The Administrator shall have the authority to grant Options
that do not permit all of the following methods of payment (or
otherwise restrict the ability to use certain methods) and to grant
Options that require the consent of the Company to utilize a
particular method of payment. The methods of payment permitted by this
Section 5(c) are:
(I) by cash, check, bank draft or money order payable to the Company;
(II) by delivery to the Company (either by actual delivery or
attestation) of Ordinary Shares;
5
(III) by a "net exercise" arrangement pursuant to which the Company
will reduce the number of Ordinary Shares issued upon exercise by
the largest whole number of shares with a Fair Market Value that
does not exceed the aggregate exercise price; PROVIDED, HOWEVER,
that the Company shall accept a cash or other payment from the
Optionholder to the extent of any remaining balance of the
aggregate exercise price not satisfied by such reduction in the
number of whole shares to be issued; PROVIDED, FURTHER, that
Ordinary Shares will no longer be outstanding under an Option and
will not be exercisable thereafter to the extent that (A) shares
are used to pay the exercise price pursuant to the "net
exercise," (B) shares are delivered to the Optionholder as a
result of such exercise, and (C) shares are withheld to satisfy
tax withholding obligations; or
(IV) in any other form of legal consideration that may be acceptable
to the Adminstrator.
(D) TRANSFERABILITY OF AWARDS. No Award or any right with respect thereto,
granted hereunder, whether fully paid or not, shall be assignable,
transferable or given as collateral or any right with respect to them
given to any third party whatsoever, and during the lifetime of the
Participant each and all of such Participant's rights to purchase or
receive Ordinary Shares hereunder shall be exercisable only by the
Participant. Any such action made directly or indirectly, for an
immediate validation or for a future one, shall be void. Prior to the
exercise of any Award, all rights of the Participant over the Awards
are personal, cannot be transferred, sold, assigned, pledged,
hypothecated, disposed of or mortgaged, other than by will or laws of
descent and distribution or pursuant to a valid court order.
(E) VESTING GENERALLY. Subject to the provisions of Section 5(h), below,
regarding distributions of shares with respect to Restricted Share
Units, Awards may be exercised by the Participant in whole at any time
or in part from time to time, to the extent that the Awards become
vested and exercisable, prior to the termination of the plan, and
provided that, subject to the provisions of Section 5(g) below, the
Participant is an Employee, Director or Consultant of the Company or
its Subsidiaries at all times beginning with the granting of the Award
and ending on the date of exercise.
(F) TERMINATION GENERALLY. Subject to the provisions of Section 5(g)
below, in the event of termination of Participant's employment or
services with the Company or any of its Subsidiaries, all Awards
granted to such Participant shall immediately terminate. A notice of
termination of employment or service shall be deemed to constitute
termination of employment or service. For the avoidance of doubt, in
case of such termination of employment or service, the unvested
portion of the Participant's Award shall not vest and shall not become
exercisable. Further, if termination of employment is for Cause, any
outstanding unexercised Award (whether vested or non-vested), will
immediately expire and terminate, and the Participant shall not have
any right in connection to such outstanding Awards.
6
(G) EXERCISE AFTER TERMINATION. Notwithstanding anything to the contrary
herein above, and unless otherwise determined in the Participant's
Award Agreement, an Award may be exercised after the date of
termination of the Participant's employment or service with the
Company or its Subsidiaries during an additional period of time beyond
the date of such termination, but only with respect to the number of
Awards already vested at the time of such termination according to the
terms of the Award Agreement , if:
(I) termination is without Cause, in which event any Awards still in
force and unexpired may be exercised within a period of ninety
(90) days from the date of such termination, but only with
respect to the number of shares purchasable or distributable at
the time of such termination, according to the terms of the Award
Agreement; or
(II) termination is the result of death or Disability of the
Participant, in which event any Awards still in force and
unexpired may be exercised within a period of twelve (12) months
after the date of termination, but only with respect to the
number of Awards already vested at the time of such termination
according to the terms of the Award Agreement.
(H) DISTRIBUTION OF SHARES PURSUANT TO RESTRICTED SHARE UNITS.
Notwithstanding anything in this Plan to the contrary, Restricted
Share Units granted to U.S. Participants shall not be distributed
until the later of (1) the date they vest, and (2) the earliest of the
following events to occur:
(I) death of the Participant,
(II) Disability of the Participant,
(III) a time or fixed schedule specified in the Award Agreement,
(IV) a Change in Control of the Company, or
(V) the Participant's separation from service with the Company.
(I) ACCELERATION. Notwithstanding anything in this Plan, the LanOptics
Ltd. 2003 Amended and Restated Equity Incentive Plan, or any Award
Agreement to the contrary, no Awards may provide for discretionary
acceleration of distribution by any party, except as expressly
provided in this Plan.
(J) NON-EXEMPT EMPLOYEES. No Award granted to an Employee that is a non-
exempt employee for purposes of the Fair Labor Standards Act shall be
first exercisable for any Ordinary Shares until at least six months
following the date of grant of the Award. The foregoing provision is
intended to operate so that any income derived by a non-exempt
employee in connection with the exercise or vesting of an Option will
be exempt from his or her regular rate of pay.
7
6. COVENANTS OF THE COMPANY.
(A) AVAILABILITY OF SHARES. During the terms of the Awards, the Company
shall keep available at all times the number of Ordinary Shares
reasonably required to satisfy such Awards.
(B) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from each
regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Awards and to issue and sell
Ordinary Shares upon exercise of the Awards; PROVIDED, HOWEVER, that
this undertaking shall not require the Company to register under the
Securities Act the Plan, any Award or any Ordinary Shares issued or
issuable pursuant to any such Award. If, after commercially reasonable
efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority that counsel for the Company deems
necessary for the lawful issuance and sale of Ordinary Shares under
the Plan, the Company shall be relieved from any liability for failure
to issue and sell Ordinary Shares upon exercise of such Awards unless
and until such authority is obtained.
(C) NO OBLIGATION TO NOTIFY. The Company shall have no duty or obligation
to any Participant to advise such Participant as to the time or manner
of exercising such Award. Furthermore, the Company shall have no duty
or obligation to warn or otherwise advise such holder of a pending
termination or expiration of an Award or a possible period in which
the Award may not be exercised. The Company has no duty or obligation
to minimize the tax consequences of an Award to the holder of such
Award.
7. MISCELLANEOUS.
(A) USE OF PROCEEDS FROM SALES OF ORDINARY SHARES. Proceeds from the sale
of Ordinary Shares pursuant to Awards shall constitute general funds
of the Company.
(B) CORPORATE ACTION CONSTITUTING GRANT OF AWARDS. Corporate action
constituting a grant by the Company of an Award to any Participant
shall be deemed completed as of the date of such corporate action,
unless otherwise determined by the Administrator, regardless of when
the instrument, certificate, or letter evidencing the Award is
communicated to, or actually received or accepted by, the Participant.
(C) SHAREHOLDER RIGHTS. No Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any
Ordinary Shares subject to such Award unless and until such
Participant has exercised the Option pursuant to its terms or received
a distribution of Ordinary Shares with respect to any such Restricted
Share Unit Award, and the Participant shall not be deemed to be a
shareholder of record until the issuance of the Ordinary Shares
pursuant to such exercise or distribution has been entered into the
books and records of the Company.
8
(D) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan, any Award
Agreement or other instrument executed thereunder or in connection
with any Award granted pursuant to the Plan shall confer upon any
Participant any right to continue to serve the Company or a Subsidiary
in the capacity in effect at the time the Award was granted or shall
affect the right of the Company or a Subsidiary to terminate the
employment of an Employee with or without notice and with or without
Cause pursuant to any applicable provisions of the Articles of
Association of the Company or a Subsidiary (if any), and any
applicable provisions of the corporate law of the country or state in
which the Company or the Subsidiary is incorporated, as the case may
be.
(E) INCENTIVE STOCK OPTION $ 100,000 LIMITATION. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of
Ordinary Shares with respect to which Incentive Stock Options are
exercisable for the first time by any Optionholder during any calendar
year (under all plans of the Company and any Subsidiaries) exceeds one
hundred thousand dollars ($100,000), the Options or portions thereof
that exceed such limit (according to the order in which they were
granted) shall be treated as Nonstatutory Stock Options,
notwithstanding any contrary provision of the applicable Award
Agreement(s).
(F) INVESTMENT ASSURANCES. The Company may require a Participant, as a
condition of exercising or acquiring Ordinary Shares under any Award,
(i) to give written assurances satisfactory to the Company as to the
Participant's knowledge and experience in financial and business
matters and/or to employ a purchaser representative reasonably
satisfactory to the Company who is knowledgeable and experienced in
financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the
merits and risks of exercising the Award; and (ii) to give written
assurances satisfactory to the Company stating that the Participant is
acquiring Ordinary Shares subject to the Award for the Participant's
own account and not with any present intention of selling or otherwise
distributing the Ordinary Shares. The foregoing requirements, and any
assurances given pursuant to such requirements, shall be inoperative
if (x) the issuance of the shares upon the exercise or acquisition of
Ordinary Shares under the Award has been registered under a then
currently effective registration statement under the Securities Act,
or (y) as to any particular requirement, a determination is made by
counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company
may, upon advice of counsel to the Company, place legends on share
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the
Ordinary Shares.
(G) WITHHOLDING OBLIGATIONS. Unless prohibited by the terms of an Award
Agreement, the Company may, in its sole discretion, satisfy any
federal, state or local tax withholding obligation relating to an
Award by any of the following means (in addition to the Company's
right to withhold from any compensation paid to the Participant by the
Company) or by a combination of such means: (i) causing the
Participant to tender a cash payment; (ii) withholding Ordinary Shares
from the Ordinary Shares issued or otherwise issuable to the
Participant in connection with the Award; or (iii) by such other
method as may be set forth in the Award Agreement.
9
(H) ELECTRONIC DELIVERY. Any reference herein to a "written" agreement or
document shall include any agreement or document delivered
electronically or posted on the Company's intranet.
8. ADJUSTMENTS UPON CHANGES IN ORDINARY SHARES; OTHER CORPORATE EVENTS.
(A) CAPITALIZATION ADJUSTMENTS. If the outstanding shares of the Company
shall at any time be changed or exchanged by declaration of a share
dividend, share split, combination or exchange of shares,
recapitalization, 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
Ordinary Shares subject to this Plan or subject to any Awards
theretofore granted, and the exercise prices or purchase prices, as
applicable, shall be appropriately and equitably adjusted so as to
maintain the proportionate number of Ordinary Shares without changing
the aggregate exercise price or purchase price, as applicable,,
provided, however, that no adjustment shall be made by reason of the
distribution of subscription rights (rights offering) on outstanding
shares. Upon occurrence of any of the foregoing, the class and
aggregate number of Ordinary Shares issuable pursuant to the Plan (as
set forth in Section 3 hereof), in respect of which Awards have not
yet been exercised, shall be appropriately adjusted, all as will be
determined by the Administrator whose determination shall be final.
(B) DISSOLUTION OR LIQUIDATION. Except as otherwise provided in the Award
Agreement, in the event of a dissolution or liquidation of the
Company, the Company shall immediately notify all unexercised Award
holders of such dissolution or liquidation, and the Award holders
shall then have ten (10) days to exercise any unexercised Award held
by them at that time, without regard to their vesting dates, in
accordance with the exercise procedure set forth herein and in their
Award Agreements. Upon the expiration of such ten day period, all
remaining outstanding Awards will terminate immediately.
(C) CORPORATE TRANSACTION. The following provisions shall apply to Awards
in the event of a Corporate Transaction unless otherwise provided in
the instrument evidencing the Award or any other written agreement
between the Company or any Subsidiary and the holder of the Award or
unless otherwise expressly provided by the Administrator at the time
of grant of an Award.
(I) ASSUMPTION OF AWARDS. In the event of a Corporate Transaction,
the unexercised Awards then outstanding under the Plan shall be
assumed or substituted for the Ordinary Shares subject to the
unexercised portions of such outstanding Awards for an
appropriate number of shares of each class of shares or other
securities of the Successor Company (or a parent or subsidiary of
the Successor Company) as were distributed to the shareholders of
the Company in respect of the Corporate Transaction, and
appropriate adjustments shall be made in the purchase price per
share to reflect such action, and all other terms and conditions
of the Award Agreements, such as the vesting dates, shall remain
in force, all as will be determined by the Administrator, whose
determination shall be final.
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(II) VESTING OF UNASSUMED AWARDS. Notwithstanding the above and
subject to any applicable law, the Administrator shall have full
power and authority to determine that in certain Award Agreements
there shall be a clause instructing that, if in any such
Corporate Transaction as described in Section 8(c)(i) above, the
Successor Company (or parent or subsidiary of the Successor
Company) does not agree to assume or substitute for the Awards,
the vesting of the Awards shall be accelerated so that any
unvested Award or any portion thereof shall be immediately vested
and exercisable as of the date which is ten (10) days prior to
the effective date of the Corporate Transaction.
(III) DETERMINING WHETHER AWARDS ARE ASSUMED. For the purposes of
Section 8(c)(i) above, an Award shall be considered assumed or
substituted if, following the Corporate Transaction, the Award
confers the right to purchase or receive, for each Ordinary Share
underlying an Award immediately prior to the Corporate
Transaction, the consideration (whether shares, options, cash, or
other securities or property) received in the Corporate
Transaction by holders of shares held on the effective date of
the Corporate Transaction (and if such holders were offered a
choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding shares); provided,
however, that if such consideration received in the Corporate
Transaction is not solely ordinary shares (or their equivalent)
of the Successor Company (or its parent or subsidiary), the
Administrator may, with the consent of the Successor Company,
provide for the consideration to be received upon the exercise of
the Award to be solely ordinary shares (or their equivalent) of
the Successor Company (or its parent or subsidiary) equal in Fair
Market Value to the per Ordinary Share consideration received by
holders of a majority of the outstanding shares in the Corporate
Transaction; and provided further that the Administrator may
determine, in its discretion, that in lieu of such assumption or
substitution of Awards for options or restricted share units, as
applicable, of the Successor Company or its parent or subsidiary,
such Awards will be substituted for any other type of asset or
property including cash which is fair under the circumstances.
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9. TERMINATION OR SUSPENSION OF THE PLAN.
(A) PLAN TERM. Unless sooner terminated by the Administrator pursuant to
Section 2, the Plan shall automatically terminate on the day before
the tenth (10th) anniversary of the date the Plan is adopted by the
Administrator or approved by the shareholders of the Company,
whichever is earlier. No Awards may be granted under the Plan while
the Plan is suspended or after it is terminated.
(B) NO IMPAIRMENT OF RIGHTS. Termination of the Plan shall not impair
rights and obligations under any Award granted while the Plan is in
effect except with the written consent of the affected Participant.
10. EFFECTIVE DATE OF PLAN.
This Plan shall become effective on the Effective Date.
11. CHOICE OF LAW.
This 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. The competent courts of Tel-Aviv, Israel shall have sole jurisdiction
in any matters pertaining to this Plan.
12. DEFINITIONS.
As used in the Plan and any Award Agreement conferring an Award under the Plan,
unless otherwise specified, the following terms shall have the meanings set
forth below:
(A) "AWARD" means, individually or collectively, a grant of Options or
Restricted Share Units under this Plan.
(B) "AWARD AGREEMENT" means the agreement setting forth the terms and
provisions applicable to each Award granted under the Plan. Each Award
Agreement is subject to the terms and conditions of the Plan.
(C) "BOARD" means the Board of Directors of the Company.
(D) "CAUSE" means (i) conviction of any felony involving moral turpitude
or affecting the Company; (ii) any refusal to carry out a reasonable
directive of the CEO which involves the business of the Company or its
Subsidiaries and was capable of being lawfully performed; (iii)
embezzlement of funds of the Company or its Subsidiaries; (iv) any
breach of the Participant's fiduciary duties or duties of care of the
Company, including without limitation disclosure of confidential
information of the Company; and (v) any conduct (other than conduct in
good faith) reasonably determined by the Administrator to be
materially detrimental to the Company.
(E) "CHANGE IN CONTROL" means a change in the effective control of the
Company within the meaning of Treasury Regulations Section
1.409A-3(i)(5).
(F) "CODE" means the Internal Revenue Code of 1986, as amended, and
regulations and other guidance thereunder.
(G) "COMMITTEE" means a committee to which authority has been delegated by
the Board in accordance with Section 2(a).
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(H) "COMPANY" means LanOptics Ltd., an Israeli company.
(I) "CONSULTANT" means any person, including an advisor, who is (i)
engaged by the Company or a Subsidiary to render consulting or
advisory services and is compensated for such services, or (ii)
serving as a member of the board of directors of a Subsidiary and is
compensated for such services. However, service solely as a Director,
or payment of a fee for such service, shall not cause a Director to be
considered a "Consultant" for purposes of the Plan.
(J) "CORPORATE TRANSACTION" means the occurrence, in a single transaction
or in a series of related transactions, of any one or more of the
following events:
(I) a sale or other disposition of all or substantially all, as
determined by the Administrator in its sole discretion, of the
consolidated assets of the Company and its Subsidiaries;
(II) a sale or other disposition of at least 90% of the outstanding
securities of the Company;
(III) the consummation of a merger, consolidation or similar
transaction following which the Company is not the surviving
corporation; or
(IV) the consummation of a merger, consolidation or similar
transaction following which the Company is the surviving
corporation but the Ordinary Shares outstanding immediately
preceding the merger, consolidation or similar transaction are
converted or exchanged by virtue of the merger, consolidation or
similar transaction into other property, whether in the form of
securities, cash or otherwise.
(K) "COVERED EMPLOYEE" shall have the meaning provided in ss. 162(m)(3) of
the Code and the regulations promulgated thereunder.
(L) "DIRECTOR" means a member of the Company's Board of Directors.
(M) "DISABILITY" in general, a Participant shall be considered to have a
Disability only if (A) the Participant is unable to engaged in any
substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death
or can be expected to last for a continuous period of not less than 12
months, or (B) the Participant is, by reason of any medically
determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of
not less than 12 months, receiving income replacement benefits for a
period of not less than three months under an accident and health plan
covering employees of the Company or its Subsidiaries. Notwithstanding
the above, to the extent that any Award constitutes a grant of ISOs,
"disability" shall mean the inability of the Optionholder to engage in
any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of
not less than 12 months.
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(N) "EFFECTIVE DATE" means the effective date of this Plan document, which
is the date of the annual meeting of shareholders of the Company held
in 2007, provided this Plan is approved by the Company's shareholders
at such meeting.
(O) "EMPLOYEE" means any person employed by the Company or a Subsidiary.
However, service solely as a Director, or payment of a fee for such
services, shall not cause a Director to be considered an "Employee"
for purposes of the Plan.
(P) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(Q) "FAIR MARKET VALUE" means, as of any date, the closing sales price for
the Company's Ordinary Shares on any established stock exchange on
which such Ordinary Shares are traded (or the closing bid, if no sales
were reported) as quoted on such exchange or market (or the exchange
or market with the greatest volume of trading in the Ordinary Shares)
on the date of determination, as reported in THE WALL STREET JOURNAL
or such other source as the Administrator deems reliable. Unless
otherwise provided by the Administrator, if there is no closing sales
price (or closing bid if no sales were reported) for the Ordinary
Shares on the date of determination, then the Fair Market Value shall
be the closing selling price (or closing bid if no sales were
reported) on the last preceding date for which such quotation exists.
If, as of any valuation date, the shares of the Company are not traded
on any established stock market, "Fair Market Value" shall be
determined in a manner consistent with Treasury Regulation Section
1.409A-1(b)(5)(iv)(B).
(R) "INCENTIVE STOCK OPTION" means an Option that is intended to be, and
qualifies as, an "incentive stock option" within the meaning of
Section 422 of the Code and the regulations promulgated thereunder.
(S) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current employee or officer of the Company or a Subsidiary, does not
receive compensation, either directly or indirectly, from the Company
or a Subsidiary for services rendered as a consultant or in any
capacity other than as a Director (except for an amount as to which
disclosure would not be required under Item 404(a) of Regulation S-K
promulgated pursuant to the Securities Act ("REGULATION S-K")), does
not possess an interest in any other transaction for which disclosure
would be required under Item 404(a) of Regulation S-K, and is not
engaged in a business relationship for which disclosure would be
required pursuant to Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule
16b-3.
(T) "NONSTATUTORY STOCK OPTION"("NSO") means any Option that does not
qualify as an Incentive Stock Option.
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(U) "OPTION" means an Incentive Stock Option or a Nonstatutory Stock
Option to purchase Ordinary Shares granted pursuant to the Plan.
(V) "OPTIONHOLDER" means a person to whom an Option is granted pursuant to
the Plan or, if permitted under the terms of this Plan, such other
person who holds an outstanding Option.
(W) "ORDINARY SHARES" means the ordinary shares, NIS 0.02 par value each,
of the Company.
(X) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the
meaning of Treasury Regulations promulgated under Section 162(m) of
the Code), is not a former employee of the Company or an "affiliated
corporation" who receives compensation for prior services (other than
benefits under a tax-qualified retirement plan) during the taxable
year, has not been an officer of the Company or an "affiliated
corporation," and does not receive remuneration from the Company or an
"affiliated corporation," either directly or indirectly, in any
capacity other than as a Director, or (ii) is otherwise considered an
"outside director" for purposes of Section 162(m) of the Code.
(Y) "PARTICIPANT" means a U.S. person granted an Award under this Plan.
(Z) "PLAN" means this LanOptics Ltd. 2007 Equity Incentive Plan.
(AA) "RESTRICTED SHARE UNITS" ("RSUS") means a unit granted pursuant to the
Plan entitling the Participant to acquire one or more Shares of the
Company in accordance with the terms of the Plan and the Award
Agreement.
(BB) "RULE 16B-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.
(CC) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(DD) "SUBSIDIARY" means, with respect to the Company, (i) any corporation
of which more than fifty percent (50%) of the outstanding capital
stock having ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether, at the time,
stock of any other class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency)
is at the time, directly or indirectly, owned by the Company, and (ii)
any partnership in which the Company has a direct or indirect interest
(whether in the form of voting or participation in profits or capital
contribution) of more than fifty percent (50%).
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(EE) "SUCCESSOR COMPANY" means any entity the Company is merged to or is
acquired by, in which the Company is not the surviving entity
(FF) "TEN PERCENT SHAREHOLDER" means a person who owns (or is deemed to own
pursuant to 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.
(GG) "U.S. PERSON" means a person subject to United States tax on worldwide
income under the Code.
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