EXHIBIT 10.3
AMENDED AND RESTATED COMMTOUCH SOFTWARE LTD.
1999 NONEMPLOYEE DIRECTORS STOCK OPTION PLAN
1. PURPOSE.
The purpose of this Plan is to offer Nonemployee Directors of
CommTouch Software Ltd. an opportunity to acquire a proprietary interest in the
success of the Company, or to increase such interest, by purchasing Ordinary
Shares of the Company. This Plan provides for the grant of Options to purchase
Shares. Options granted hereunder shall be "Nonstatutory Options," and shall not
include "incentive stock options" intended to qualify for treatment under
Sections 421 and 422 of the Internal Revenue Code of 1986, as amended.
2. DEFINITIONS.
As used herein, the following definitions shall apply:
(a) "Administrator" shall mean the entity, either the
Board or the committee of the Board, responsible for administering this Plan, as
provided in Section 3.
(b) "Affiliate" means a parent or subsidiary corporation
as defined in Sections 424(e) and (f) of the Code.
(c) "Annual Option" shall have the meaning set forth in
Section 6(b).
(d) "Board" shall mean the Board of Directors of the
Company, as constituted from time to time.
(e) "Change in Control" shall mean the occurrence of any
one of the following:
(i) any "person," as such term is used in
Sections 13(d) and 14(d) of the Exchange Act (other than the Company, an
Affiliate, or a Company employee benefit plan, including any trustee of such
plan acting as trustee) is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the Company's
then outstanding securities;
(ii) the election of any director of the Company
who was not a candidate proposed by a majority of the Board in office prior to
the time of such election; or
(iii) the dissolution or liquidation (partial or
total) of the Company or a sale of assets involving 50% or more of the assets of
the Company, or any merger or reorganization of the Company, whether or not
another entity is the survivor, or other transaction pursuant to which the
holders, as a group, of all of the shares of the Company outstanding prior to
the transaction hold, as a group, less than 50% of the shares of the Company
outstanding after the transaction.
(f) "Code" shall mean the Internal Revenue Code of 1986,
as amended from time to time, and any successor statute.
(g) "Company" shall mean CommTouch Software Ltd., an
Israeli corporation.
(h) "Disability" means permanent and total disability as
determined by the Administrator in accordance with the standards set forth in
Section 22(e)(3) of the Code.
(i) "Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and any successor statute.
(j) "Expiration Date" shall mean the last day of the term
of an Option established under Section 6(e).
(k) "Fair Market Value" means as of any given date (a)
the closing price of the Ordinary Shares as reported by the Nasdaq National
Market; (b) if the Ordinary Shares are no longer quoted on the Nasdaq National
Market but are listed on an established stock exchange or quoted on any other
established interdealer quotation system, the closing price for the Ordinary
Shares on such exchange or system, as reported in the Wall Street Journal; or
(c) if the Ordinary Shares are not traded on an exchange or quoted on the Nasdaq
National Market or a successor quotation system, the fair market value of an
Ordinary Share as determined by the Board in good faith. Such determination
shall be conclusive and binding on all persons.
(l) "Initial Option" shall have the meaning set forth in
Section 6(a).
(m) "Nonemployee Director" shall mean any person who is a
member of the Board but is not an employee of the Company or any Affiliate of
the Company and has not been an employee of the Company or any Affiliate of the
Company at any time during the preceding 12 months. Service as a director does
not in itself constitute employment for purposes of this definition.
(n) "Option" shall mean a stock option granted pursuant
to this Plan. Each Option shall be a nonstatutory option not intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
(o) "Option Agreement" shall mean the written agreement
described in Section 6 evidencing the grant of an Option to a Nonemployee
Director and containing the terms, conditions and restrictions pertaining to
such Option.
(p) "Optionee" shall mean a Nonemployee Director who
holds an Option.
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(q) "Ordinary Shares" shall mean the Ordinary Shares of
the Company.
(r) "Plan" shall mean this Amended and Restated Commtouch
Software Ltd. 1999 Nonemployee Directors Stock Option Plan, as it may be amended
from time to time.
(s) "Section" unless the context clearly indicates
otherwise, shall refer to a Section of this Plan.
(t) "Shares" shall mean the Ordinary Shares subject to an
Option granted under this Plan.
(u) "Tax Date" means the date defined in Section 7(c).
(v) "Termination" means, for purposes of the Plan, with
respect to an Optionee, that the Optionee has ceased to be, for any reason, a
director of the Company.
3. ADMINISTRATION.
(a) Administrator. The Plan shall be administered by the
Board or, upon delegation by the Board, by a committee consisting of not fewer
than two non-employee directors (as such term is defined in Rule 16b-3(b)(3)(i)
of the Exchange Act) (in either case, the "Administrator"). The Administrator
shall have no authority, discretion or power to select the Nonemployee Directors
who will receive Options hereunder or to set the number of shares to be covered
by each Option granted hereunder, the exercise price of such Option, the timing
of the grant of such Option or the period within which such Option may be
exercised; provided, however, that the Administrator shall have the discretion
to change the exercise price of an outstanding option granted under the Plan or
to issue new options under the Plan with a lower exercise price in exchange for
outstanding options granted under the Plan in connection with a general
repricing by the Company of outstanding options. In connection with the
administration of the Plan, the Administrator shall have the powers possessed by
the Board. The Administrator may act only by a majority of its members. The
Administrator may delegate administrative duties to such employees of the
Company as it deems proper, so long as such delegation is not otherwise
prohibited by Rule 16b-3 under the Exchange Act. The Board at any time may
terminate the authority delegated to any committee of the Board pursuant to this
Section 3(a) and revest in the Board the administration of the Plan.
(b) Administrator Determinations Binding. Subject to the
limitations set forth in Section 3(a), the Administrator may adopt, alter and
repeal administrative rules, guidelines and practices governing the Plan as it
from time to time shall deem advisable, may interpret the terms and provisions
of the Plan, any Option and any Option Agreement and may otherwise supervise the
administration of the Plan. All decisions made by the Administrator under the
Plan shall be binding on all persons, including the Company and Optionees. No
member of the Administrator shall be liable for any action that he or she has in
good faith taken or failed to take with respect to this Plan or any Option.
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4. ELIGIBILITY.
Only Nonemployee Directors may receive Options under this
Plan.
5. SHARES SUBJECT TO PLAN.
(a) Aggregate Number. Subject to Section 9, the total
number of Ordinary Shares reserved and available for issuance pursuant to
Options under this Plan shall be 2,290,000 shares, an increase of 840,000
shares. Such shares may consist, in whole or in part, of authorized and unissued
shares or shares reacquired in private transactions or open market purchases,
but all shares issued under the Plan regardless of source shall be counted
against the 2,290,000 share limitation. If any Option terminates or expires
without being exercised in full, the shares issuable under such Option shall
again be available for issuance in connection with other Options. If Ordinary
Shares issued pursuant to an Option are repurchased by the Company, such
Ordinary Shares shall not again be available for issuance in connection with
Options. To the extent the number of Ordinary Shares issued pursuant to an
Option is reduced to satisfy withholding tax obligations, the number of shares
withheld to satisfy the withholding tax obligations shall not be available for
later grant under the Plan.
(b) No Rights as a Shareholder. An Optionee shall have no
rights as a shareholder with respect to any Shares covered by his or her Option
until an electronic transfer (as evidenced by the appropriate entry on the books
of the Company or its duly authorized transfer agent) of such Shares is
effected. Subject to Section 9, no adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property),
distributions, or other rights for which the record date is prior to the date
the certificate is issued.
6. GRANT OF OPTIONS.
(a) Mandatory Initial Option Grants. Subject to the terms
and conditions of this Plan, if any person who is not presently an officer or
employee of the Company is elected or appointed a member of the Board, then on
the effective date of such appointment or election the Company shall grant to
such new Nonemployee Director an Option to purchase 150,000 shares at an
exercise price equal to the Fair Market Value of such Shares on the date of such
option grant. Any Option granted pursuant to this Section 6(a) shall be referred
to as an "Initial Option."
(b) Mandatory Annual Option Grants. Subject to the terms
and conditions of this Plan, on the date of the first meeting of the Board
immediately following the annual meeting of shareholders of the Company (even if
held on the same day as the meeting of shareholders), the Company shall grant to
each Nonemployee Director then in office (other than a Nonemployee Director who
received a grant under Section 6(a) on or after the record date for such annual
meeting) an Option to purchase up to 50,000 shares at an exercise price equal to
the Fair Market Value of such shares on the date of such option grant; provided,
however, that (i) in lieu of such annual grant for 2001, each Nonemployee
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Director in office immediately after the annual general meeting of shareholders
in August 2001 shall be granted a one-time Option grant of 33,750 shares, (ii)
each Nonemployee Director in office immediately after the extraordinary general
meeting of shareholders in February 2002 shall be granted a one-time Option
grant of 150,000 shares, and (iii) in lieu of such annual grant for 2002, each
Nonemployee Director in office immediately after the annual general meeting of
shareholders in November 2002 shall be granted a one-time Option grant of 50,000
shares. Any Option granted pursuant to this Section 6(b) shall be referred to as
an "Annual Option."
(c) Vesting of Initial Option and Annual Option. Each
Option granted under Section 6(a) or 6(b) shall become exercisable at a rate of
1/16th of the shares every three months.
(d) Term. Subject to the other provisions of this Plan,
each Option granted pursuant to this Plan shall have a term of ten years.
(e) Limitation on Other Grants. The Administrator shall
have no discretion to grant Options under this Plan other than as set forth in
Sections 6(a) and 6(b).
(f) Option Agreement. As soon as practicable after the
grant of an Option, the Optionee and the Company shall enter into a written
Option Agreement which specifies the date of grant, the number of Shares, the
option price, and the other terms and conditions applicable to the Option.
(g) Transferability. No Option shall be transferable
except that (I) an Option may be distributed by will or the laws of descent and
distribution; or (ii) Optionee may transfer or assign an Option to (a) any
family member or trust for the benefit of Optionee or a family member of
Optionee, or (b) any entity which is an investor in the Company and of which
Optionee is a general or limited partner or a member of senior management. The
terms of this Plan shall be binding upon the executors, administrators, heirs,
successors, assigns and transferees of the Optionee.
(h) Limits on Exercise. Subject to the other provisions
of this Plan, an Option shall be exercisable in such amounts as are specified in
the Option Agreement.
(i) Exercise Procedures. To the extent the right to
purchase Shares has accrued, Options may be exercised, in whole or in part, from
time to time, by written notice from the Optionee to the Company stating the
number of Shares being purchased, accompanied by payment of the exercise price
for the Shares, and other applicable amounts, as provided in Section 7.
(j) Termination. In the event of Termination, Options
held at the date of Termination, to the extent then exercisable, may be
exercised in whole or in part at any time within three months after the date of
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Termination, (but in no event after the Expiration Date), but not thereafter.
Notwithstanding the foregoing, if Termination is due to death or Disability,
Options held at the date of Termination, to the extent then exercisable, may be
exercised in whole or in part at any time within two years from the date of
Termination (but in no event after the Expiration Date) by the Optionee or by
the Optionee's guardian or legal representative in the case of Disability or in
the case of death, by the person to whom the Option is transferred by will or
the laws of descent and distribution.
7. PAYMENT AND TAXES UPON EXERCISE OF OPTIONS.
(a) Purchase Price. The purchase price of Shares issued
under this Plan shall be paid in full at the time an Option is exercised.
(b) Delivery of Purchase Price. Optionees may make all or
any portion of any payment due to the Company upon exercise of an Option or with
respect to federal, state, local or foreign tax payable in connection with the
exercise of an Option, by delivery of cash or check. Exercise of an Option may
be made pursuant to a "cashless exercise/sale" procedure pursuant to which funds
to pay for exercise of the Option are delivered to the Company by a broker upon
receipt of stock from the Company, or pursuant to which Optionees obtain margin
loans from brokers to fund the exercise of the Option.
(c) Tax Withholding. The Optionee shall pay to the
Company in cash, promptly upon exercise of an Option or, if later, the date that
the amount of such obligations becomes determinable (in either case, the "Tax
Date"), all applicable federal, state, local and foreign withholding taxes that
the Administrator, in its discretion, determines will result upon exercise of an
Option or from a transfer or other disposition of the Ordinary Shares acquired
upon exercise of an Option or otherwise related to an Option or the Ordinary
Shares acquired in connection with an Option.
A person who has exercised an Option may make an election to
have the Ordinary Shares to be obtained upon exercise of the Option withheld by
the Company on behalf of the Optionee, to pay the amount of tax that the
Administrator, in its discretion, determines to be required to be withheld by
the Company.
Any Ordinary Shares tendered to or withheld by the Company
will be valued at Fair Market Value on such date. The value of the Ordinary
Shares tendered or withheld may not exceed the required federal, state, local
and foreign withholding tax obligations as computed by the Company.
8. USE OF PROCEEDS.
Proceeds from the exercise of Options pursuant to this Plan
shall be used for general corporate purposes.
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9. ADJUSTMENT OF SHARES.
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split or other change in corporate
structure affecting the Ordinary Shares, appropriate adjustments shall be made
by the Administrator in the aggregate number and kind of shares of stock
reserved for issuance under the Plan and in the number, kind and exercise price
of shares subject to outstanding Options; provided, however, that the number of
shares subject to any Option shall always be a whole number.
10. EFFECT OF CHANGE IN CONTROL.
In the event of a "Change in Control," any Options outstanding
as of the date such Change in Control is determined to have occurred and not
then exercisable and vested shall become fully exercisable and vested.
11. NO RIGHT TO DIRECTORSHIP.
Neither this Plan nor any Option granted hereunder shall
confer upon any Optionee any right with respect to continuation of the
Optionee's membership on the Board or shall interfere in any way with provisions
in the Company's Memorandum of Association and Articles of Association relating
to the election, appointment, terms of office, and removal of members of the
Board.
12. LEGAL REQUIREMENTS.
The Company shall not be obligated to offer or sell any Shares
upon exercise of any Option unless the Shares are at that time effectively
registered or exempt from registration under the federal securities laws and the
offer and sale of the Shares are otherwise in compliance with all applicable
securities laws and the regulations of any stock exchange on which the Company's
securities may then be listed. The Company shall have no obligation to register
the securities covered by this Plan under the federal securities laws or take
any other steps as may be necessary to enable the securities covered by this
Plan to be offered and sold under federal or other securities laws. Upon
exercising all or any portion of an Option, an Optionee may be required to
furnish representations or undertakings deemed appropriate by the Company to
enable the offer and sale of the Shares or subsequent transfers of any interest
in the Shares to comply with applicable securities laws. Certificates or records
of electronic transfers evidencing Shares acquired upon exercise of Options
shall bear any legend required by, or useful for purposes of compliance with,
applicable securities laws, this Plan or the Option Agreements.
13. DURATION AND AMENDMENTS.
(a) Duration. This Plan shall become effective upon the
closing of the Company's initial public offering, provided that it has been
adopted by the Board and approved by the shareholders of the Company, either by
written consent or by approval of shareholders voting at a validly called
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shareholders' meeting. The Plan shall terminate automatically on the tenth
anniversary of its effective date.
(b) Amendment and Termination. The Board may amend, alter
or discontinue the Plan or any Option, but no amendment, alteration or
discontinuance shall be made which would impair the rights of an Optionee under
an outstanding Option without the Optionee's consent. No amendment shall require
shareholder approval except (i) an increase in the total number of shares
reserved for issuance under the Plan, (ii) to the extent required by applicable
laws, rules or regulations or (iii) to the extent that the Board otherwise
concludes that shareholder approval is advisable.
(c) Effect of Amendment or Termination. No Shares shall
be issued or sold under this Plan after the termination hereof, except upon
exercise of an Option granted before termination. Termination or amendment of
this Plan shall not affect any Shares previously issued and sold or any Option
previously granted under this Plan.
14. Rule 16b-3.
With respect to persons subject to Section 16 of the Exchange
Act, transactions under this Plan are intended to comply with the applicable
conditions of Rule 16b-3 under the Exchange Act. To the extent any provision of
this Plan or action by the Administrator fails to so comply, it shall be
adjusted to comply with Rule 16b-3, to the extent permitted by law and deemed
advisable by the Administrator. It shall be the responsibility of persons
subject to Section 16 of the Exchange Act, not of the Company or the
Administrator, to comply with the requirements of Section 16 of the Exchange
Act; and neither the Company nor the Administrator shall be liable if this Plan
or any transaction under this Plan fails to comply with the applicable
conditions of Rule 16b-3, or if any such person incurs any liability under
Section 16 of the Exchange Act.
Approved by the Board of Directors on April 18, 1999.
Approved by the Shareholders of the Company on June 8, 1999, to be effective on
the date of the closing of the Company's initial public offering of its ordinary
shares.
Last Amended by the Board of Directors on October 22, 2003, with approval of
Shareholders on December 26, 2003.
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