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COMMTOUCH SOFTWARE LTD.
AMENDED AND RESTATED ISRAELI SHARE OPTION PLAN
(*In compliance with Amendment No. 132 of the Israeli Tax Ordinance, 2002)
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TABLE OF CONTENTS
1. PURPOSE OF THE ISOP........................................................3
2. DEFINITIONS................................................................3
3. ADMINISTRATION OF THE ISOP.................................................6
4. DESIGNATION OF PARTICIPANTS................................................7
5. DESIGNATION OF OPTIONS PURSUANT TO SECTION 102 ............................7
6. TRUSTEE....................................................................8
7. SHARES RESERVED FOR THE ISOP...............................................9
8. PURCHASE PRICE.............................................................9
9. ADJUSTMENTS...............................................................10
10. TERM AND EXERCISE OF OPTIONS..............................................11
11. VESTING OF OPTIONS........................................................12
12. PURCHASE FOR INVESTMENT...................................................12
12. DIVIDENDS.................................................................13
13. RESTRICTIONS ON ASSIGNABILITY AND SALE OF OPTIONS.........................13
14. EFFECTIVE DATE AND DURATION OF THE ISOP...................................13
15. AMENDMENTS OR TERMINATION.................................................14
16. GOVERNMENT REGULATIONS....................................................14
17. CONTINUANCE OF EMPLOYMENT.................................................13
18. GOVERNING LAW & JURISDICTION..............................................14
19. TAX CONSEQUENCES..........................................................14
20. NON-EXCLUSIVITY OF THE ISOP...............................................15
21. MULTIPLE AGREEMENTS.......................................................15
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This plan, as amended from time to time, shall be known as Commtouch
Software Ltd Amended and Restated Israeli Share Option Plan (the "ISOP")
[formerly known as the Amended and Restated 1999 3(i) Share Option Plan],
and was amended and adopted on June 22, 2003 by the Board and further
amended by the shareholders on December 26, 2003.
1. PURPOSE OF THE ISOP
The ISOP is intended to provide an incentive to retain, in the employ of
the Company and its Affiliates (as defined below), persons of training,
experience, and ability, to attract new employees, directors, consultants,
service providers and any other entity which the Board shall decide their
services are considered valuable to the Company, to encourage the sense of
proprietorship of such persons, and to stimulate the active interest of
such persons in the development and financial success of the Company by
providing them with opportunities to purchase shares in the Company,
pursuant to the ISOP.
2. DEFINITIONS
For purposes of the ISOP and related documents, including the Option
Agreement, the following definitions shall apply:
2.1 "Affiliate" means any "employing company" within the meaning of
Section 102(a) of the Ordinance.
2.2 "Approved 102 Option" means an Option granted pursuant to Section
102(b) of the Ordinance and held in trust by a Trustee for the
benefit of the Optionee.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Capital Gain Option (CGO)" as defined in Section 5.4 below.
2.5 "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 chief executive officer, the Board or
the Optionee's direct supervisor, which involves the business of
the Company or its Affiliates and was capable of being lawfully
performed; (iii) embezzlement of funds of the Company or its
Affiliates; (iv) any breach of the Optionee'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 Board to be materially detrimental to the Company.
2.6 "Chairman" means the chairman of the Committee.
2.7 "Committee" means a share option compensation committee of the
Board, designated from time to time by the resolution of the Board,
which shall consist of no fewer than two members of the Board.
2.8 "Company" means Commtouch Software Ltd, an Israeli company.
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2.9 "Companies Law" means the Israeli Companies Law 5759-1999.
2.10 "Controlling Shareholder" shall have the meaning ascribed to it in
Section 32(9) of the Ordinance.
2.11 "Date of Grant" means, the date of grant of an Option, as
determined by the Board or authorized Committee and set forth in
the Optionee's Option Agreement.
2.12 "Employee" means a person who is employed by the Company or its
Affiliates, including an individual who is serving as a director or
an office holder, but excluding Controlling Shareholder.
2.13 "Expiration date" means the date upon which an Option shall expire,
as set forth in Section 10.2 of the ISOP.
2.14 "Fair Market Value" means as of any date, the value of a Share
determined as follows:
(i) If the Shares are listed on any established stock exchange
or a national market system, including without limitation
the NASDAQ National Market system, or the NASDAQ SmallCap
Market of the NASDAQ Stock Market, the Fair Market Value
shall be the closing sales price for such Shares (or the
closing bid, if no sales were reported), as quoted on such
exchange or system for the last market trading day prior to
time of determination, as reported in the Wall Street
Journal, or such other source as the Board deems reliable.
Without derogating from the above, solely for the purpose of
determining the tax liability pursuant to Section 102(b)(3) of the
Ordinance, if at the Date of Grant the Company's shares are listed
on any established stock exchange or a national market system or if
the Company's shares will be registered for trading within ninety
(90) days following the Date of Grant, the Fair Market Value of a
Share at the Date of Grant shall be determined in accordance with
the average value of the Company's shares on the thirty (30)
trading days preceding the Date of Grant or on the thirty (30)
trading days following the date of registration for trading, as the
case may be;
(ii) If the Shares are regularly quoted by a recognized
securities dealer but selling prices are not reported, the
Fair Market Value shall be the mean between the high bid and
low asked prices for the Shares on the last market trading
day prior to the day of determination, or;
(iii) In the absence of an established market for the Shares, the
Fair Market Value thereof shall be determined in good faith
by the Board.
2.15 "ISOP" means this 2003 Israeli Share Option Plan.
2.16 "ITA" means the Israeli Tax Authorities.
2.17 "Non-Employee" means a consultant, adviser, service provider,
Controlling Shareholder or any other person who is not an Employee.
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2.18 "Ordinary Income Option (OIO)" as defined in Section 5.5 below.
2.19 "Option" means an option to purchase one or more Shares of the
Company pursuant to the ISOP.
2.20 "102 Option" means any Option granted to Employees pursuant to
Section 102 of the Ordinance.
2.21 "3(i) Option" means an Option granted pursuant to Section 3(i) of
the Ordinance to any person who is Non- Employee.
2.22 "Optionee" means a person who receives or holds an Option under the
ISOP.
2.23 "Option Agreement" means the share option agreement between the
Company and an Optionee that sets out the terms and conditions of
an Option.
2.24 "Ordinance" means the 1961 Israeli Income Tax Ordinance [New
Version] 1961 as now in effect or as hereafter amended.
2.25 "Purchase Price" means the price for each Share subject to an
Option.
2.26 "Section 102" means section 102 of the Ordinance as now in effect
or as hereafter amended.
2.27 "Share" means the ordinary shares, NIS 0.05 par value each, of the
Company.
2.28 "Successor Company" means any entity the Company is merged to or is
acquired by, in which the Company is not the surviving entity.
2.29 "Transaction" means (i) merger, acquisition or reorganization of
the Company with one or more other entities in which the Company is
not the surviving entity, (ii) a sale of all or substantially all
of the assets of the Company.
2.30 "Trustee" means any individual appointed by the Company to serve as
a trustee and approved by the ITA, all in accordance with the
provisions of Section 102(a) of the Ordinance.
2.31 "Unapproved 102 Option" means an Option granted pursuant to Section
102(c) of the Ordinance and not held in trust by a Trustee.
2.32 "Vested Option" means any Option, which has already been vested
according to the Vesting Dates.
2.33 "Vesting Dates" means, as determined by the Board or by the
Committee, the date as of which the Optionee shall be entitled to
exercise the Options or part of the Options, as set forth in
section 11 of the ISOP.
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3. ADMINISTRATION OF THE ISOP
3.1 The Board shall have the power to administer the ISOP either
directly or upon the recommendation of the Committee, all as
provided by applicable law and in the Company's Articles of
Association. Notwithstanding the above, the Board shall
automatically have residual authority: (i) if no Committee shall be
constituted or; (ii) if such Committee shall cease to operate for
any reason or; (iii) with respect to the rights not delegated by
the Board to the Committee. In the event that no Committee shall be
appointed, any reference to the Committee in the ISOP or in the
Option Agreement shall refer to the Board.
3.2 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.
3.3 The Committee shall have the full power to recommend to the Board
and the Board shall have the full power and authority to: (i)
designate participants; (ii) determine the terms and provisions of
the respective Option Agreements, including, but not limited to,
the number of Options to be granted to each Optionee, the number of
Shares to be covered by each Option, provisions concerning the time
and the extent to which the Options may be exercised and the nature
and duration of restrictions as to the transferability or
restrictions constituting substantial risk of forfeiture and to
cancel or suspend awards, as necessary; (iii) determine the Fair
Market Value of the Shares covered by each Option; (iv) make an
election as to the type of Approved 102 Option; and (v) designate
the type of Options.The Committee shall have full power and
authority to :(i) alter any restrictions and conditions of any
Options or Shares subject to any Options (ii) interpret the
provisions and supervise the administration of the ISOP; (iii)
accelerate the right of an Optionee to exercise in whole or in
part, any previously granted Option; (iv) determine the Purchase
Price of the Option; (v) prescribe, amend and rescind rules and
regulations relating to the ISOP; and (vi) make all other
determinations deemed necessary or advisable for the administration
of the ISOP.
3.4 Notwithstanding the above, the Committee shall not be entitled to
grant Options to the Optionees, however, it will be authorized to
issue Shares underlying Options which have been granted by the
Board and duly exercised pursuant to the provisions herein in
accordance with section 112(a)(5) of the Companies Law.
3.5 The Board shall have the authority to grant, at its discretion, to
the holder of an outstanding Option, in exchange for the surrender
and cancellation of such Option, a new Option having a purchase
price equal to, lower than or higher than the Purchase Price of the
original Option so surrendered and canceled and containing such
other terms and conditions as the Board may prescribe in accordance
with the provisions of the ISOP.
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3.6 Subject to the Company's Articles of Association, all decisions and
selections made by the Board or the Committee pursuant to the
provisions of the ISOP shall be made by a majority of its members
except that no member of the Board or the Committee shall vote on,
or be counted for quorum purposes, with respect to any proposed
action of the Board or the Committee relating to any Option to be
granted to that member. Any decision reduced to writing shall be
executed in accordance with the provisions of the Company's
Articles of Association, as the same may be in effect from time to
time.
3.7 The interpretation and construction by the Committee of any
provision of the ISOP or of any Option Agreement thereunder shall
be final and conclusive unless otherwise determined by the Board.
3.8 Subject to the Company's Articles of Association and the Company's
decision, and to all approvals legally required, including, but not
limited to the provisions of the Companies Law, 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
ISOP 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 Company's Articles of
Association, any agreement, any vote of shareholders or
disinterested directors, insurance policy or otherwise.
4. DESIGNATION OF PARTICIPANTS
4.1 The persons eligible for participation in the ISOP as Optionees
shall include any Employees and/or Non-Employees of the Company or
of any Affiliate; provided, however, that (i) Employees may only be
granted 102 Options; (ii) Non-Employees may only be granted 3(i)
Options; and (iii) Controlling Shareholders may only be granted
3(i) Options.
4.2 The grant of an Option hereunder shall neither entitle the Optionee
to participate nor disqualify the Optionee from participating in,
any other grant of Options pursuant to the ISOP or any other option
or share plan of the Company or any of its Affiliates.
4.3 Anything in the ISOP to the contrary notwithstanding, all grants of
Options to directors and office holders shall be authorized and
implemented in accordance with the provisions of the Companies Law
or any successor act or regulation, as in effect from time to time.
5. DESIGNATION OF OPTIONS PURSUANT TO SECTION 102
5.1 The Company may designate Options granted to Employees pursuant to
Section 102 as Unapproved 102 Options or Approved 102 Options.
5.2 The grant of Approved 102 Options shall be made under this ISOP
adopted by the Board as described in Section 15 below, and shall be
conditioned upon the approval of this ISOP by the ITA as required
by Section 102.
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5.3 Approved 102 Option may either be classified as Capital Gain Option
("CGO") or Ordinary Income Option ("OIO").
5.4 Approved 102 Option elected and designated by the Company to
qualify under the capital gain tax treatment in accordance with the
provisions of Section 102(b)(2) shall be referred to herein as CGO.
5.5 Approved 102 Option elected and designated by the Company to
qualify under the ordinary income tax treatment in accordance with
the provisions of Section 102(b)(1) shall be referred to herein as
OIO.
5.6 The Company's election of the type of Approved 102 Options as CGO
or OIO granted to Employees (the "Election"), shall be
appropriately filed with the ITA before the Date of Grant of an
Approved 102 Option. Such Election shall become effective beginning
the first Date of Grant of an Approved 102 Option under this ISOP
and shall remain in effect until the end of the year following the
year during which the Company first granted Approved 102 Options.
The Election shall obligate the Company to grant only the type of
Approved 102 Option it has elected, and shall apply to all
Optionees who were granted Approved 102 Options during the period
indicated herein, all in accordance with the provisions of Section
102(g) of the Ordinance. For the avoidance of doubt, such Election
shall not prevent the Company from granting Unapproved 102 Options
simultaneously.
5.7 All Approved 102 Options must be held in trust by a Trustee, as
described in Section 6 below.
5.8 For the avoidance of doubt, the designation of Unapproved 102
Options and Approved 102 Options shall be subject to the terms and
conditions set forth in Section 102 of the Ordinance and the
regulations promulgated thereunder.
5.9 With regards to Approved 102 Options, the provisions of the ISOP
and/or the Option Agreement shall be subject to the provisions of
Section 102 and the Tax Assessing Officer's permit, and the said
provisions and permit shall be deemed an integral part of the ISOP
and of the Option Agreement. Any provision of Section 102 and/or
the said permit which is necessary in order to receive and/or to
keep any tax benefit pursuant to Section 102, which is not
expressly specified in the ISOP or the Option Agreement, shall be
considered binding upon the Company and the Optionees.
6. TRUSTEE
6.1 Approved 102 Options which shall be granted under the ISOP and/or
any Shares allocated or issued upon exercise of such Approved 102
Options and/or other shares received subsequently following any
realization of rights, including without limitation bonus shares,
shall be allocated or issued to the Trustee and held for the
benefit of the Optionees for such period of time as required by
Section 102 or any regulations, rules or orders or procedures
promulgated thereunder (the "Holding Period"). In the case the
requirements for Approved 102 Options are not met, then the
Approved 102 Options may be treated as Unapproved 102 Options, all
in accordance with the provisions of Section 102 and regulations
promulgated thereunder.
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6.2 Notwithstanding anything to the contrary, the Trustee shall not
release any Shares allocated or issued upon exercise of Approved
102 Options prior to the full payment of the Optionee's tax
liabilities arising from Approved 102 Options which were granted to
him and/or any Shares allocated or issued upon exercise of such
Options.
6.3 With respect to any Approved 102 Option, subject to the provisions
of Section 102 and any rules or regulation or orders or procedures
promulgated thereunder, an Optionee shall not sell or release from
trust any Share received upon the exercise of an Approved 102
Option and/or any share received subsequently following any
realization of rights, including without limitation, bonus shares,
until the lapse of the Holding Period required under Section 102 of
the Ordinance. Notwithstanding the above, if any such sale or
release occurs during the Holding Period, the sanctions under
Section 102 of the Ordinance and under any rules or regulation or
orders or procedures promulgated thereunder shall apply to and
shall be borne by such Optionee.
6.4 Upon receipt of Approved 102 Option, the Optionee will sign an
undertaking to release the Trustee from any liability in respect of
any action or decision duly taken and bona fide executed in
relation with the ISOP, or any Approved 102 Option or Share granted
to him thereunder.
7. SHARES RESERVED FOR THE ISOP; RESTRICTION THEREON
7.1 The Company has reserved 11,460,000 authorized Shares for the
purposes of the ISOP and for the purposes of the Commtouch Software
Ltd. Amended and Restated 1996 CSI Stock Option Plan and any other
share option plans which may be adopted by the Company in the
future, subject to adjustment as set forth in Section 9 below. Any
Shares which remain unissued and which are not subject to the
outstanding Options at the termination of the ISOP shall cease to
be reserved for the purpose of the ISOP, but until termination of
the ISOP the Company shall at all times reserve sufficient number
of Shares to meet the requirements of the ISOP. Should any Option
for any reason expire or be canceled prior to its exercise or
relinquishment in full, the Shares subject to such Option may again
be subjected to an Option under the ISOP or under the Company's
other share option plans.
7.2 Each Option granted pursuant to the ISOP, shall be evidenced by a
written Option Agreement between the Company and the Optionee, in
such form as the Board or the Committee shall from time to time
approve. Each Option Agreement shall state, among other matters,
the number of Shares to which the Option relates, the type of
Option granted thereunder (whether a CGO, OIO, Unapproved 102
Option or a 3(i) Option), the Vesting Dates, the Purchase Price per
share, the Expiration Date and such other terms and conditions as
the Committee or the Board in its discretion may prescribe,
provided that they are consistent with this ISOP.
8. PURCHASE PRICE
8.1 The Purchase Price of each Share subject to an Option shall be
determined by the Committee in its sole and absolute discretion in
accordance with applicable law, subject to any guidelines as may be
determined by the Board from time to time. Each Option Agreement
will contain the Purchase Price determined for each Optionee.
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8.2 The Purchase Price shall be payable upon the exercise of the Option
in a form satisfactory to the Committee, including without
limitation, by cash or check. The Committee shall have the
authority to postpone the date of payment on such terms as it may
determine.
8.3 The Purchase Price shall be denominated in the currency of the
primary economic environment of, either the Company or the Optionee
(that is the functional currency of the Company or the currency in
which the Option is paid) as determined by the Company.
9. ADJUSTMENTS
Upon the occurrence of any of the following described events, Optionee's
rights to purchase Shares under the ISOP shall be adjusted as hereafter
provided:
9.1 In the event of Transaction, the unexercised Options then
outstanding under the ISOP may be assumed or substituted 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 connection with the Transaction. In the case of such
assumption and/or substitution of Options, appropriate adjustments
shall be made to the Purchase Price so as to reflect such action,
all as subject to the determination of the Committee or the Board,
which determination shall be in their sole discretion and final. In
the event the Successor Company does not agree to assume or
substitute as described in this Section 9.1, the Options shall
terminate as of the date of the closing of the Transaction.
9.2 Notwithstanding the above and subject to any applicable law, the
Board or the Committee shall have full power and authority to
determine that in certain Option Agreements there shall be a clause
instructing that, if in any such Transaction as described in
section 9.1 above, the Successor Company (or parent or subsidiary
of the Successor Company) does not agree to assume or substitute
for the Options, the Vesting Dates shall be accelerated so that any
unvested Option or any portion thereof shall be immediately vested
as of the date which is ten (10) days prior to the effective date
of the Transaction.
9.3 For the purposes of section 9.1 above, an Option shall be
considered assumed or substituted if, following the Transaction,
the Option confers the right to purchase or receive, for each Share
underlying an Option immediately prior to the Transaction, the
consideration (whether shares, options, cash, or other securities
or property) received in the Transaction by holders of shares held
on the effective date of the 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 Transaction is
not solely ordinary shares (or their equivalent) of the Successor
Company or its parent or subsidiary, the Committee may, with the
consent of the Successor Company, provide for the consideration to
be received upon the exercise of the Option 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 Share
consideration received by holders of a majority of the outstanding
shares in the Transaction; and provided further that the Committee
may determine, in its discretion, that in lieu of such assumption
or substitution of Options for options of the Successor Company or
its parent or subsidiary, such Options will be substituted for any
other type of asset or property including cash which is fair under
the circumstances.
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9.4 In the event of a proposed liquidation or dissolution of the
Company, the Company shall notify all unexercised Option holders at
least fifteen (15) days prior to such action. To the extent not
previously exercised the Options shall terminate immediately prior
to the consummation of such proposed action.
9.5 If the outstanding shares of the Company shall at any time be
changed or exchanged by declaration of a share dividend (bonus
shares), 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 the Shares subject to the ISOP or subject to any Options
therefore granted, and the Purchase Prices, shall be appropriately
and equitably adjusted so as to maintain the proportionate number
of Shares without changing the aggregate Purchase Price, provided,
however, that no adjustment shall be made by reason of the
distribution of subscription rights (rights offering) on
outstanding shares. Upon happening of any of the foregoing, the
class and aggregate number of Shares issuable pursuant to the ISOP
(as set forth in Section 7 hereof), in respect of which Options
have not yet been exercised, shall be appropriately adjusted, all
as will be determined by the Board whose determination shall be
final.
10. TERM AND EXERCISE OF OPTIONS
10.1 Options shall be exercised by the Optionee by giving written notice
to the Company and/or to any third party designated by the Company
(the "Representative"), in such form and method as may be
determined by the Company and when applicable, by the Trustee in
accordance with the requirements of Section 102, which exercise
shall be effective upon receipt of such notice by the Company
and/or the Representative and the payment of the Purchase Price at
the Company's or the Representative's principal office. The notice
shall specify the number of Shares with respect to which the Option
is being exercised.
10.2 Each Option granted under this ISOP shall be exercisable following
the Vesting Dates and for the number of Shares as shall be provided
in Exhibit B to the Option Agreement. Options, to the extent not
previously exercised, shall terminate forthwith upon the earlier
of: (i) the date set forth in the Option Agreement; and (ii) the
expiration of any extended period in any of the events set forth in
section 10.5 below.
10.3 The Options may be exercised by the Optionee in whole at any time
or in part from time to time, to the extent that the Options become
vested and exercisable, prior to the Expiration Date, and provided
that, subject to the provisions of section 10.5 below, the Optionee
is employed by or providing services to the Company or any of its
Affiliates, at all times during the period beginning with the
granting of the Option and ending upon the date of exercise.
10.4 Subject to the provisions of section 10.5 below, in the event of
termination of Optionee's employment or services, with the Company
or any of its Affiliates, all Options granted to such Optionee will
immediately expire. 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 Optionee's
Option shall not vest and shall not become exercisable.
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10.5 Notwithstanding anything to the contrary hereinabove and unless
otherwise determined in the Optionee's Option Agreement, an Option
may be exercised after the date of termination of Optionee's
employment or service with the Company or any Affiliates during an
additional period of time beyond the date of such termination, but
only with respect to the number of Vested Options at the time of
such termination according to the Vesting Dates, if:
(i) termination is without Cause, in which event any Vested
Option still in force and unexpired may be exercised within
a period of ninety (90) days after the date of such
termination; or-
(ii) termination is the result of death or disability of the
Optionee, in which event any Vested Option still in force
and unexpired may be exercised within a period of ninety
(90) days after the date of such termination; or -
(iii) the Committee shall authorize an extension of the terms of
all or part of the Vested Options beyond the date of such
termination for a period not to exceed the period during
which the Options by their terms would otherwise have been
exercisable.
For avoidance of any doubt, if termination of employment or service
is for Cause, any outstanding unexercised Option (whether vested or
non-vested), will immediately expire and terminate, and the
Optionee shall not have any right in connection to such outstanding
Options.
10.6 To avoid doubt, the Optionees shall not have any of the rights or
privileges of shareholders of the Company in respect of any Shares
purchasable upon the exercise of any Option, nor shall they be
deemed to be a class of shareholders or creditors of the Company
for purpose of the operation of sections 350 and 351 of the
Companies Law or any successor to such section, until registration
of the Optionee as holder of such Shares in the Company's register
of shareholders upon exercise of the Option in accordance with the
provisions of the ISOP, but in case of Options and Shares held by
the Trustee, subject to the provisions of Section 6 of the ISOP.
10.7 Any form of Option Agreement authorized by the ISOP may contain
such other provisions as the Committee may, from time to time, deem
advisable.
10.8 With respect to Unapproved 102 Option, if the Optionee ceases to be
employed by the Company or any Affiliate, the Optionee shall extend
to the Company and/or its Affiliate a security or guarantee for the
payment of tax due at the time of sale of Shares, all in accordance
with the provisions of Section 102 and the rules, regulation or
orders promulgated thereunder.
11. VESTING OF OPTIONS
11.1 Unless Exhibit B to the Option Agreement provides otherwise,
one-fourth (1/4) of the Options shall vest (i.e., options shall
become exercisable) at the end of the first year of an Optionee's
continuous services or employment with the group, and one thirty
sixth (1/36) of the remaining Options shall vest per month of such
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continuous employment over the next thirty six months. However, no
Option shall be exercisable after the Expiration Date.
11.2 An Option may be subject to such other terms and conditions on the
time or times when it may be exercised, as the Committee may deem
appropriate. The vesting provisions of individual Options may vary.
12. PURCHASE FOR INVESTMENT
The Company's obligation to issue or allocate Shares upon exercise of an
Option granted under the ISOP is expressly conditioned upon: (a) the
Company's completion of any registration or other qualifications of such
Shares under all applicable laws, rules and regulations or (b)
representations and undertakings by the Optionee (or his legal
representative, heir or legatee, in the event of the Optionee's death) to
assure that the sale of the Shares complies with any registration exemption
requirements which the Company in its sole discretion shall deem
appropriate. Such required representations and undertakings may include
representations and agreements that such Optionee (or his legal
representative, heir, or legatee): (a) is purchasing such Shares for
investment and not with any present intention of selling or otherwise
disposing thereof; and (b) agrees to have placed upon the face and reverse
of any certificates evidencing such Shares a legend setting forth (i) any
representations and undertakings which such Optionee has given to the
Company or a reference thereto and (ii) that, prior to effecting any sale
or other disposition of any such Shares, the Optionee must furnish to the
Company an opinion of counsel, satisfactory to the Company, that such sale
or disposition will not violate the applicable laws, rules, and
regulations, whether of the State of Israel or of the United States or any
other State having jurisdiction over the Company and the Optionee.
13. DIVIDENDS
With respect to all Shares (but excluding, for avoidance of any doubt, any
unexercised Options) allocated or issued upon the exercise of Options
purchased by the Optionee and held by the Optionee or by the Trustee, as
the case may be, the Optionee shall be entitled to receive dividends in
accordance with the quantity of such Shares, subject to the provisions of
the Company's Articles of Association (and all amendments thereto) and
subject to any applicable taxation on distribution of dividends, and when
applicable subject to the provisions of Section 102 and the rules,
regulations or orders promulgated thereunder.
14. RESTRICTIONS ON ASSIGNABILITY AND SALE OF OPTIONS
14.1 No Option or any right with respect thereto, purchasable hereunder,
whether fully paid or not, shall be assignable, transferable or
given as collateral or any right with respect to it given to any
third party whatsoever, except as specifically allowed under the
ISOP, and during the lifetime of the Optionee each and all of such
Optionee's rights to purchase Shares hereunder shall be exercisable
only by the Optionee.
Any such action made directly or indirectly, for an immediate
validation or for a future one, shall be void.
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14.2 As long as Options and/or Shares are held by the Trustee on behalf
of the Optionee, all rights of the Optionee over the Shares are
personal, can not be transferred, assigned, pledged or mortgaged,
other than by will or pursuant to the laws of descent and
distribution.
15. EFFECTIVE DATE AND DURATION OF THE ISOP
The ISOP shall be effective as of the day it was adopted by the Board and
shall terminate at the end of ten (10) years from such day of adoption,
unless otherwise extended by the Board, subject to any further requirements
under applicable law.
The Company shall obtain the approval of the Company's shareholders for the
adoption of this ISOP or for any amendment to this ISOP, if shareholders'
approval is necessary or desirable to comply with any applicable law
including without limitation the US securities law or the securities laws
of other jurisdiction applicable to Options granted to Optionees under this
ISOP, or if shareholders' approval is required by any authority or by any
governmental agencies or national securities exchanges including without
limitation the US Securities and Exchange Commission.
16. AMENDMENTS OR TERMINATION
The Board may at any time, but when applicable, after consultation with the
Trustee, amend, alter, suspend or terminate the ISOP. No amendment,
alteration, suspension or termination of the ISOP shall impair the rights
of any Optionee, unless mutually agreed otherwise between the Optionee and
the Company, which agreement must be in writing and signed by the Optionee
and the Company. Termination of the ISOP shall not affect the Committee's
ability to exercise the powers granted to it hereunder with respect to
Options granted under the ISOP prior to the date of such termination.
17. GOVERNMENT REGULATIONS
The ISOP, and the granting and exercise of Options hereunder, and the
obligation of the Company to sell and deliver Shares under such Options,
shall be subject to all applicable laws, rules, and regulations, whether of
the State of Israel or of the United States or any other State having
jurisdiction over the Company and the Optionee, including the registration
of the Shares under the United States Securities Act of 1933, and the
Ordinance and to such approvals by any governmental agencies or national
securities exchanges as may be required. Nothing herein shall be deemed to
require the Company to register the Shares under the securities laws of any
jurisdiction.
18. CONTINUANCE OF EMPLOYMENT OR HIRED SERVICES
Neither the ISOP nor the Option Agreement with the Optionee shall impose
any obligation on the Company or an Affiliate thereof, to continue any
Optionee in its employ or service, and nothing in the ISOP or in any Option
granted pursuant thereto shall confer upon any Optionee any right to
continue in the employ or service of the Company or an Affiliate thereof or
restrict the right of the Company or an Affiliate thereof to terminate such
employment or service at any time.
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19. GOVERNING LAW & JURISDICTION
The ISOP shall be governed by and construed and enforced in accordance with
the laws of the State of Israel applicable to contracts made and to be
performed therein, without giving effect to the principles of conflict of
laws. The competent courts of Tel-Aviv, Israel shall have sole jurisdiction
in any matters pertaining to the ISOP.
20. TAX CONSEQUENCES
20.1 Any tax consequences arising from the grant or exercise of any
Option, from the payment for Shares covered thereby or from any
other event or act (of the Company and/or its Affiliates, the
Trustee or the Optionee), hereunder, shall be borne solely by the
Optionee. The Company and/or its Affiliates and/or the Trustee
shall withhold taxes according to the requirements under the
applicable laws, rules, and regulations, including withholding
taxes at source. Furthermore, the Optionee shall agree to indemnify
the Company and/or its Affiliates and/or the Trustee and hold them
harmless against and from any and all liability for any such tax or
interest or penalty thereon, including without limitation,
liabilities relating to the necessity to withhold, or to have
withheld, any such tax from any payment made to the Optionee.
20.2 The Company and/or, when applicable, the Trustee shall not be
required to release any Share certificate to an Optionee until all
required payments have been fully made.
21. NON-EXCLUSIVITY OF THE ISOP
The adoption of the ISOP by the Board shall not be construed as amending,
modifying or rescinding any previously approved incentive arrangements or
as creating any limitations on the power of the Board to adopt such other
incentive arrangements as it may deem desirable, including, without
limitation, the granting of Options otherwise than under the ISOP, and such
arrangements may be either applicable generally or only in specific cases.
22. MULTIPLE AGREEMENTS
The terms of each Option may differ from other Options granted under the
ISOP at the same time, or at any other time. The Board may also grant more
than one Option to a given Optionee during the term of the ISOP, either in
addition to, or in substitution for, one or more Options previously granted
to that Optionee.
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