Exhibit 4.3
SILICOM LTD.
SHARE OPTION PLAN (2004)
This plan,
as amended from time to time, shall be known as the Silicom Ltd.
Share Option Plan (2004) (the “Plan”).
| 2. |
PURPOSE AND DEFINITIONS. |
| 2.1 |
The purposes of this Plan are to attract and retain the best
available personnel for positions of substantial responsibility, to
provide additional incentive to employees, directors, office
holders and consultants of Silicom Ltd. (the “Company”)
and of any Subsidiary (as defined below), and to promote the
Company’s business by providing such individuals with
opportunities to receive options (the “Options”) to
purchase the Company’s Ordinary Shares, nominal value NIS
0.01 (the “Shares”) pursuant to the Plan. |
| 2.2 |
Options granted pursuant to this Plan to individuals or
entities that are subject to Israeli taxation may be granted (a)
pursuant to Section 102 of the Ordinance (as defined below) and
shall be held for the benefit of the Grantees and (b) pursuant to
Section 3(i) of the Ordinance. |
| 2.3 |
In the event that Options shall be granted under this Plan to
Service Providers (as defined below) who are not deemed to be
residents of Israel for Israeli tax law purposes, specific terms
and conditions for such grants shall be set forth in an appendix to
this Plan, approved by the Board of Directors of the Company (the
“Board”). |
| 2.4 |
Definitions . As used herein, the following definitions
shall apply: |
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(a) “102
Capital Gains Track Grant” means a 102 Trustee Grant elected
and designated to qualify under the capital gains tax treatment in
accordance with the provisions of Section 102(b)(2) of the
Ordinance. |
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(b) “102
Ordinary Income Track Grant” means a 102 Trustee Grant
elected and designated to qualify under the ordinary income tax
treatment in accordance with the provisions of Section 102(b)(1) of
the Ordinance. |
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(c) “102
Trustee Grant” means Options granted pursuant to Section
102(b) of the Ordinance and held in trust by a Trustee for the
benefit of the Grantee, and includes both 102 Capital Gains Track
Grants and 102 Ordinary Income Track Grants. |
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(d) “3(i)
Grant” means any Options granted pursuant to Section 3(i) of
the Ordinance to any person who is not an Eligible 102
Grantee. |
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(e)
“Cause” means any of the following: (i) the
Grantee’s embezzlement of any Company property or asset, or
any theft or intentional destruction of property, whether or not
criminal action is brought against the Grantee; (ii) the
Grantee’s negligently performing or neglecting his
responsibilities as Service Provider, or failure or inability to
perform any reasonable assigned duties, when such failure may harm
the Company’s business or commercial relationships, after
written notice from the Company of, and a reasonable opportunity to
cure, such failure or inability; (iii) any material breach of
the Grantee of any employment agreement between the Grantee and the
Company, which breach is not cured after written notice from the
Company of, and a reasonable opportunity to cure, such material
breach; or (iv) the Grantee’s conviction of any criminal
act which involves moral turpitude, or the Grantee’s
concealment of such conviction prior to commencement of his or her
relationship as Service Provider; (v) the Grantee’s breach of
Company regulations which breach is not cured after written notice
from the Company of, and a reasonable opportunity to cure, such
breach; or (vi) Grantee’s destruction of Company materials,
appliances or machines or reduction of yield or production. For
purposes of the definition of Cause, the “Company”
shall also refer to a Subsidiary for which a Grantee is employed or
provides services. |
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(f)
“Cessation” means termination of the Service
Provider’s relationship with the Company. In the event of
Cessation of a Grantee’s relationship with the Company, such
Grantee’s relationship with the Company shall be deemed to
have ceased upon the delivery to the Grantee of notice of discharge
or the delivery to the Company of the letter of resignation, as the
case may be, irrespective of the effective date of such resignation
or discharge. |
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(g) “Companies
Law” means the Israeli Companies Law 5759-1999, as amended
from time to time. |
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(h)
“Consultant” means any person who is engaged by the
Company or by a Subsidiary to render consulting, advisory or other
services to such entity who is not an Employee. |
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(i)
“Controlling Shareholder” means, pursuant to Section
32(9) of the Ordinance, an employee who prior to the grant or as a
result of the exercise of any Option, holds or would hold, directly
or indirectly, in his name or with a relative (as defined in the
Ordinance) either: (i) 10% of the outstanding shares of the
Company, (ii) 10% of the voting power of the Company, (iii) the
right to hold or purchase 10% of the outstanding equity or voting
power, (iv) the right to obtain 10% of the “profit” of
the Company (as defined in the Ordinance), or (v) the right to
appoint a director of the Company, or as such definition is amended
or replaced from time to time. |
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(j) “Eligible
102 Grantee” means an Employee deemed an Israeli resident for
taxation purposes, who is not a Controlling Shareholder of the
Company. |
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(k)
“Employee” means an employee, officer or director of
the Company or of a Subsidiary. |
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(l)
“Grantee”
means a person to whom Options shall be granted pursuant to this
Plan. |
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(m)
“Non-Trustee Grant” means an Option granted pursuant to
Section 102(c) of the Ordinance to an Eligible 102 Grantee and not
held in trust by a Trustee. |
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(n)
“Ordinance” means the Israeli Income Tax Ordinance (New
Version) 1961, as amended from time to time and, most recently, by
the Law Amending the Income Tax Ordinance (Number 132) 2002 and any
regulations, rules, orders, guidelines, interpretations or
procedures promulgated thereunder by the Israeli Income Tax
Authorities (the “ITA”), including but not limited to
the Income Tax Rules (Tax Benefits in Stock Issuance to Employees)
5763-2003 (the “Rules”). |
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(o) “Required
Holding Period” means the requisite period prescribed by the
Ordinance (including the Rules) or such other period as may be
required by the ITA, during which Options granted by the Company
and/or the underlying Shares from a 102 Trustee Grant must be held
by the Trustee for the benefit of the person to whom they were
granted subject to the applicable laws. |
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(p) “Service
Provider” means an Employee or Consultant. |
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(q)
“Subsidiary” means (i) any entity that, directly or
indirectly, is controlled by the Company or (ii) any entity in
which the Company has a significant equity interest, in either case
as determined by the Board. |
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(r)
“Trustee” means a person or entity designated by the
Company to serve as a trustee and who is approved by the ITA in
accordance with the provisions of the Ordinance. |
| 3.1 |
The Plan will be administered by the Board. The Board may, in
its discretion, appoint and maintain a Share Option Committee (the
“Committee”) to administer the Plan to the extent
permissible under applicable law as may be amended from time to
time, which will consist of such number of directors of the Company
(not less than two (2) in number), as may be determined from time
to time by the Board. The Board shall from time to time add,
appoint or remove members of the Committee and shall fill vacancies
in the Committee however caused. |
| 3.2 |
The Committee shall select one of its members as its Chairman
and shall hold its meetings at such times and places as it shall
determine. Actions at a meeting of the Committee at which a
majority of its members are present or acts approved in writing by
all members of the Committee, shall be the valid acts of the
Committee. The Committee may appoint a secretary, who shall keep
records of its meetings and shall make such rules and regulations
for the conduct of its business as it shall deem
advisable. |
| 3.3 |
Subject to the general terms and conditions of this Plan, the
Board shall have full authority in its discretion, from time to
time and at any time, to determine (i) the identity of the
Grantees, (ii) the number of Shares to be covered by each Option,
(iii) the time or times at which Options shall be granted, (iv) the
schedule and conditions on which Options may be exercised and on
which Shares shall be paid for including but not limited to vesting
terms, acceleration terms, restrictions and transferability, and
(v) any other matter which is necessary or desirable for, or
incidental to, the administration of the Plan including the
interpretation of the Plan. The Board may, in its sole discretion,
delegate some or all of the powers listed above to the Committee to
the extent permitted by applicable law. The Board may from time to
time adopt such rules and regulations for carrying out the Plan as
it may deem appropriate. Grants of Options shall be made pursuant
to written notification to Grantees setting out the terms of the
grant, all as further set forth below. |
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| 3.4 |
In the event that the Board appoints a Committee, the Committee
shall not be entitled to grant Options to the Grantees unless
permitted to do so under applicable law. However, in the event that
the Committee is authorized to do so by the Board, it may issue
Shares underlying Options which have been granted by the Board and
duly exercised pursuant to the provisions hereof, in accordance
with Section 112(a)(5) of the Companies Law. |
| 3.5 |
No member of the Board or of the Committee shall be liable for
any action or determination made in good faith with respect to the
Plan or any Option granted thereunder. 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 in accordance with the rights of indemnification the member may
have as a director or otherwise under the Company’s Articles
of Association, any agreement, any vote of stockholders or
disinterested directors, insurance policy or otherwise. |
| 3.6 |
The interpretation and construction by the Board of any
provision of the Plan or of any Option thereunder shall be final
and conclusive unless otherwise determined by the Board. In the
event that the Board appoints a Committee, the interpretation and
construction by the Committee of any provision of the Plan or of
any Option thereunder shall be final and conclusive unless
otherwise determined by the Board. |
| 3.7 |
Any additional costs associated in the administration and
implementation of this Plan including but not limited to the costs
involved in retaining a trustee, broker or any other third party
desired by the Company to facilitate the transactions contemplated
under this Plan, shall be borne solely by the Grantee unless
determined otherwise by the Board or by the Committee. |
| 4.1 |
No Option may be granted pursuant to this Plan to any director
of the Company at the time of the grant, unless such grant is
approved in the manner prescribed for the approval of compensation
of directors under the Companies Law. |
| 4.2 |
Subject to the limitation set forth in Section 4.1 above and
any restriction imposed by applicable law, Options may be granted
to any Service Provider. The grant of an Option to a Grantee
hereunder shall neither entitle such Grantee to participate, nor
disqualify such Grantee from participating, in any other grant of
Options pursuant to this Plan or any other share incentive or share
option plan of the Company. |
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| 4.3 |
102 Trustee Grants may be granted to Eligible 102 Grantees
only. Eligible 102 Grantees may receive only 102 Trustee Grants or
Non-Trustee Grants. Grantees who are not Eligible 102 Grantees may
only be granted 3(i) Options under this Plan. |
| 4.4 |
Subject to the terms of the Plan, the Option Agreement (as
defined below) and/or any other documents evidencing the Options
granted pursuant to this Plan shall indicate whether the grant is a
102 Trustee Grant, a Non-Trustee Grant or a 3(i) Grant; and, if the
grant is a 102 Trustee Grant, whether it is a 102 Capital Gains
Track Grant or a 102 Ordinary Income Track Grant. |
| 5. |
TERMS AND CONDITIONS OF 102 TRUSTEE OPTIONS |
| 5.1 |
Unless determined otherwise by the Board and to the extent
permitted by applicable law, each 102 Trustee Grant will be deemed
granted on the date stated in a written notice by the Company,
provided that on or before such date (i) the Company has provided
notification to the Trustee and (ii) the Grantee has signed all
documents required pursuant to this Section 5. |
| 5.2 |
Each 102 Trustee Grant made to a Grantee and each certificate
for Shares acquired pursuant to the exercise thereof shall be
issued to and registered in the name of a Trustee and shall be held
in trust for the benefit of the Grantee for the Required Holding
Period until the date in which the Grantee will decide to sell the
Shares or release the Shares from the Trustee subject to the
provisions of the Ordinance. After termination of the Required
Holding Period, the Trustee may release such Option and any such
Shares acquired pursuant to the exercise thereof, provided that (i)
the Trustee has received an acknowledgment from the ITA that the
Grantee has paid any applicable tax due pursuant to the Ordinance
or (ii) the Trustee and/or the Company and/or its Subsidiary has
withheld any applicable tax due pursuant to the Ordinance. The
Trustee shall at no time release any 102 Trustee Grant or Shares
issued upon exercise of such 102 Trustee Grant, prior to the full
payment of the Grantee’s tax liabilities. |
| 5.3 |
Each 102 Trustee Grant (whether a 102 Capital Gains Track Grant
or a 102 Regular Income Track Grant, as applicable) shall be
subject to the relevant terms of Section 102 of the Ordinance,
which shall be deemed an integral part of the 102 Trustee Grant and
which shall prevail over any term contained in the Plan or any
Option Agreement which is not consistent therewith. Any provision
of the Ordinance and any approval issued by the Income Tax
Commissioner not expressly specified in this Plan or in an Option
Agreement, that are necessary to receive or maintain any tax
benefit pursuant to the Ordinance, shall be binding on the Grantee.
Any 102 Trustee Grant made hereunder shall comply with the
Ordinance and the terms and conditions of any trust agreement
entered into between the Company and the Trustee. For avoidance of
doubt, it is reiterated that compliance with the Ordinance
specifically includes compliance with the Rules. Further, the
Grantee agrees to execute any and all documents which the Company
and/or the Trustee may reasonably determine to be necessary in
order to comply with the Ordinance and, particularly, the Rules
including but not limited to the entering into of a written
undertaking to the Company stating among other things (a) the type
of 102 Trustee Grant held or to be held by the Trustee for the
benefit of the Grantee, (b) that the provisions of the Ordinance
will apply to the 102 Trustee Grant and (c) that there are
restrictions on the sale of the Shares (or release of Shares by the
Trustee). |
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