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EXHIBIT 10.2
COMMTOUCH SOFTWARE LTD.
THE 1999
SECTION 3(i) SHARE OPTION PLAN
1. NAME
This share option plan, as amended from time to time, shall be known as
the CommTouch Software Ltd. 1999 Section 3(i) Share Option Plan (the
"OPTION PLAN").
2. PURPOSE OF THE OPTION PLAN
The Option Plan is intended as an incentive to retain in the employ of
CommTouch Software Ltd. (the "COMPANY") or a Subsidiary of the Company
which now exists or hereafter is organized or acquired by the Company,
persons of training, experience, and ability, to attract new directors,
employees, consultants and contractors, whose services are considered
valuable, 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 (the "OPTIONS"), pursuant to this Option
Plan approved by the Board of Directors of the Company (the "BOARD").
The term "PARENT" shall mean for the purposes of the Option Agreement
and the Option Plan: any company (other than the Company) in an unbroken
chain of companies ending with the Company if, at the time of granting
an Option, each of the companies (other than the Company), owns stock
possessing fifty percent (50%) or more of total combined voting power of
all classes of stock in one of the other companies in such chain.
The term "SUBSIDIARY" shall mean for the purposes of the Plan: any
company (other than the Company) in an unbroken chain of companies
beginning with the Company if, at the time of granting an option, each
of the companies other than the last company in the unbroken chain owns
stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other companies in
such chains.
3. ADMINISTRATION OF THE OPTION PLAN
The Board or a share option committee appointed and maintained by the
Board for such purpose (the "COMMITTEE") shall have the power to
administer the Option Plan. 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
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whatsoever.
The Committee shall consist of such number of members (not less than two
(2) in number) as may be fixed by the Board. The Committee shall select
one of its members as its chairman (the "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.
Any member of such Committee shall be eligible to receive Options under
the Option Plan while serving on the Committee, unless otherwise
specified herein.
The Committee shall have full power and authority to:
3.1 Designate participants.
3.2 Determine the terms and provisions of respective Option agreements
(which need not be identical) including, but not limited to, the
number of shares in the Company to be covered by each Option,
provisions concerning the time or times when and the extent to
which the Options may be exercised and the nature and duration of
restrictions as to transferability or restrictions constituting
substantial risk of forfeiture.
3.3 Accelerate the right of an Optionee to exercise, in whole or in
part, any previously granted Option.
3.4 Interpret the provisions and supervise the administration of the
Option Plan;
3.5 Determine the Fair Market Value (as defined below) of the Shares
(as defined below).
3.6 Determine any other matter which is necessary or desirable for, or
incidental to administration of the Option Plan.
The Committee shall have the authority to grant, in 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 provided in the Option
so surrendered and canceled, and containing such other terms and
conditions as the Committee may prescribe in accordance with the
provisions of the Option Plan.
All decisions and selections made by the Board or the Committee pursuant
to the provisions of this Option Plan 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 and signed by a
majority of the members who
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are authorized to make such decision shall be fully effective as if it
had been made by a majority at a meeting duly held.
The interpretation and construction by the Committee of any provision of
the Option Plan or of any Option thereunder shall be final and
conclusive unless otherwise determined by the Board.
Subject to the Company's decision, 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 Option 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 Company's
Articles of Association, any agreement, any vote of shareholders or
disinterested directors, insurance policy or otherwise.
"FAIR MARKET VALUE" shall mean in the Plan, 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 Administrator deems reliable.
(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
Committee.
4. DESIGNATION OF PARTICIPANTS
The persons eligible for participation in this Option Plan as recipients
of Options may include any employees, directors and consultants of the
Company, or a Subsidiary of the Company or a company or a Parent or a
subsidiary company of such company issuing or assuming the Options in a
transaction described in Section 9.1 of this Option Plan (the foregoing
collectively, the "GROUP"). The grant of an Option hereunder shall
neither entitle the recipient thereof to participate nor disqualify him
from participating in any other grant
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of Options pursuant to this Option Plan or any other option or stock
plan of the Company or any of its affiliates.
Anything in the Option Plan to the contrary notwithstanding, all grants
of Options to directors and office holders ("NOSEI MISRA" - as such term
is defined in the Companies Ordinance (New Version), 1983 (the
"COMPANIES ORDINANCE")) shall be authorized and implemented only in
accordance with the provisions of the Companies Ordinance, as in effect
from time to time.
5. TRUSTEE
The Options which shall be granted to employees consultants and
contractors of the Group or any Shares (as defined below) issued upon
exercise of such Options and/or other shares received subsequently
following any realization of rights, shall be issued to a Trustee
nominated by the Committee) the "TRUSTEE" (and held for the benefit of
the Optionees from the date of grant.
Anything to the contrary notwithstanding, the Trustee shall not release
any Options and/or any Shares issued upon exercise of Options, prior to
the full payment of the Optionee's tax liabilities arising from Options
which were granted to him and/or any Shares issued upon exercise of such
Options.
Upon receipt of the Option, the Optionee will sign an undertaking to
exempt the Trustee from any liability in respect of any action or
decision duly taken and bona fide executed in relation with the Option
Plan, or any Option or Share granted to him thereunder.
6. SHARES RESERVED FOR THE OPTION PLAN; RESTRICTION THEREON
6.1 The Company has reserved 250,000 authorized but unissued Ordinary
Shares nominal value NIS 1.00 per share, of the Company (the
"SHARES"), for purposes of the Option Plan (subject to adjustment
as set forth in paragraph 9 below), the 1996 CommTouch Software,
Inc. Stock Option Plan and Israeli Option Agreements previously
issued to Israeli employees. Any of such Shares which may remain
unissued and which are not subject to outstanding Options at the
termination of the Option Plan shall cease to be reserved for the
purpose of the Option Plan, but until termination of the Option
Plan the Company shall at all times reserve sufficient number of
Shares to meet the requirements of the Option Plan. 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 Option Plan.
6.2 An optionee who purchased Shares hereunder upon exercise of
Options shall have no voting rights as a shareholder (in any and
all matters whatsoever) until the consummation of an initial
public offering of the Company's securities (an "IPO"). Until an
IPO, such Shares shall be voted by a proxy pursuant to the
directions of the Board, such proxy to be to the person or
persons designated by the Board. All Shares issued upon exercise
of the Options shall entitle the holder thereof to receive
dividends and other distributions thereon.
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7. VESTING
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 continuous employment over the next
thirty-six months (the "VESTING DATES").
8. OPTION PRICE
8.1 The purchase price of each Share subject to an Option or any
portion thereof 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.
8.2 The Option 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.
9. ADJUSTMENTS
Upon the occurrence of any of the following described events, the
Optionee's rights to purchase Shares under the Option Plan shall be
adjusted as hereafter provided:
9.1 In the event of a merger of the Company with or into another
corporation, or the sale of substantially all of the assets of
the Company while unexercised Options remain outstanding under
the Option Plan the successor corporation or a Parent or
subsidiary of such successor corporation or the purchasing
corporation may assume the unexercised Options outstanding under
the Option Plan or may substitute for the Shares subject to the
unexercised portions of such outstanding Options an appropriate
number of shares of each class of shares or other securities of
the successor or purchasing corporation or cash or property which
were distributed to the shareholders of the Company in respect of
such shares. In the event of substitution of shares or securities
appropriate adjustments shall be made to the purchase price per
share to reflect such action, all as will be determined by the
Committee whose determination shall be final. In the event that
the successor or purchasing corporation 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 above merger or
sale, as applicable.
9.2 In the event of the proposed liquidation or dissolution of the
Company, the Company shall notify the Optionee at least fifteen
(15) days prior to such proposed action. To
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the extent not previously exercised, the Options shall terminate
immediately prior to the consummation of such proposed action.
9.3 If the outstanding shares of the Company shall at any time be
changed or exchanged by declaration of a stock dividend, stock
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 Shares
subject to this Option Plan or subject to any Options therefore
granted, and the Option prices, shall be appropriately and
equitably adjusted so as to maintain the proportionate number of
Shares without changing the aggregate Option price, provided,
however, that no adjustment shall be made by reason of the
distribution of subscription rights on outstanding shares. Upon
the occurrence of any of the foregoing, the class and aggregate
number of Shares issuable pursuant to this Option Plan (as set
forth in Section 6 hereof), in respect of which Options have not
yet been exercised, shall be appropriately adjusted, all as may
be determined by the Board who's determination shall be final.
9.4 Anything herein to the contrary notwithstanding, if prior to the
completion of an IPO, all or substantially all of the shares of
the Company are to be sold, or upon a merger or reorganization or
the like, the shares of the Company, or any class thereof, are to
be exchanged for securities of another Company, then in such
event, each Optionee shall be obliged to sell or exchange, as the
case may be, the shares such Optionee purchased under the Option
Plan, in accordance with the instructions then issued by the
Board whose determination shall be final.
10. TERM AND EXERCISE OF OPTIONS
10.1 The Options shall be exercised by the Optionee by giving written
notice to the Company, in such form and method as may be
determined by the Company and the Trustee, which exercise shall
be effective upon receipt of such notice by the Company at its
principal office. The notice shall specify the number of Shares
with respect to which Options are being exercised.
10.2 Each Option granted under this Option Plan shall be exercisable
following the exercise dates and for the number of Shares as
shall be provided in EXHIBIT B to the Option Agreement. However
no Option shall be exercisable after the Expiration Date, as
defined for each Optionee in his Option Agreement.
10.3 Options granted under the Option Plan shall not be transferable
by Optionees other than by will or laws of descent and
distribution, and during an Optionee's lifetime shall be
exercisable only by that Optionee.
10.4 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, prior to the Expiration
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Date, and provided that, subject to the provisions of Section
10.6 below, the Optionee is an employee, a consultant or a
contractor of the Group at all times during the period beginning
with the granting of the Option and ending upon the date of
exercise.
10.5 Subject to the provisions of Section 10.6 below, in the event of
termination of the Optionee's employment or services with the
Group, all Options granted to the Optionee will immediately
expire. A notice of termination of employment or services shall
be deemed to constitute termination of employment or services
with Group.
10.6 Notwithstanding anything to the contrary previously stated, an
Option may be exercised after the date of termination of the
Optionee's services or employment with the Group during an
additional period of time beyond the date of such termination,
but only with respect to the number of Options already vested
according to the Vesting Dates, if:
10.6.1 termination is without Cause, in which event any Options
still in force and unexpired may be exercised within a
period of 90 (ninety) days from the date of such
termination.
10.6.2 termination is the result of death or disability of the
Optionee, in which event any Options still in force and
unexpired may be exercised within a period of 90 (ninety)
days from the date of termination.
10.6.3 prior to the date of such termination, the Committee shall
authorize an extension of the terms of all or part of the
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.
The term "CAUSE" shall mean any action, omission or state
of affairs related to the Optionee which the Committee or
the Boards decides, in its sole discretion, is against the
interests of the Company.
10.7 To avoid doubt, the holders of Options 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 part of an
Option, nor shall they be deemed to be a class of shareholders or
creditors of the Company for purpose of the operation of section
233 of the Companies Ordinance or any successor to such section,
until registration of the Optionee as holder of such Shares in
the Company's register of members.
10.8 Any form of Option Agreement authorized by this Option Plan may
contain such other provisions as the Committee may, from time to
time, deem advisable. Without limiting the foregoing, the
Committee may, with the consent of the Optionee, from time to
time cancel all or any portion of any Option then subject to
exercise, and the
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Company's obligation in respect of such Option may be discharged
by (i) payment to the Optionee of an amount in cash equal to the
excess, if any, of the Fair Market Value of the Shares at the
date of such cancellation subject to the portion of the Option so
canceled over the aggregate purchase price of such Shares, (ii)
the issuance or transfer to the Optionee of Shares of the Company
with a Fair Market Value at the date of such transfer equal to
any such excess, or (iii) a combination of cash and shares with a
combined value equal to any such excess, all as determined by the
Committee in its sole discretion.
11. DIVIDENDS
With respect to all Shares (but not unexercised Options) issued upon the
exercise of Options purchased by the Optionee and held by the Trustee,
the Optionee shall be entitled to receive dividends in accordance with
the quantity of such Shares, and subject to any applicable taxation on
distribution of dividends. During the period in which Shares issued to
the Trustee on behalf of a Optionee are held by the Trustee, the cash
dividends paid with respect thereto shall be paid directly to the
Optionee.
12. ASSIGNABILITY AND SALE OF OPTIONS
No Option, purchasable 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 Optionee each and all of such Optionee's rights to
purchase Shares hereunder shall be exercisable only by the Optionee.
As long as the Shares are held by the Trustee in favor of the Optionee,
then all rights the Optionee possesses over the Shares are personal, can
not be transferred, assigned, pledged or mortgaged, other than by will
or laws of descent and distribution.
13. TERM OF THE OPTION PLAN
The Option Plan shall be effective as of the day it was adopted by the
Board and shall terminate at the end of 60 months from such day of
adoption.
14. AMENDMENTS OR TERMINATION
The Board may, at any time and from time to time, subject to the written
consent of the Trustee, amend, alter or discontinue the Option Plan,
except that no amendment or alteration shall be made which would impair
the rights of the holder of any Option therefore granted, without his
consent.
15. GOVERNMENT REGULATIONS
The Option Plan, 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 to such approvals by any governmental
agencies or national securities exchanges as may be required.
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16. CONTINUANCE OF EMPLOYMENT OR HIRED SERVICES
Neither the Option Plan nor the Option Agreement with the Optionee shall
impose any obligation on the Group, to continue any Optionee in its
employ or the hiring by the Group of the Optionee's services, and
nothing in this Option Plan or in any Option granted pursuant thereto
shall confer upon any Optionee any right to continue in the employ or
service of the Group or restrict the right of the Group to terminate
such service or employment at any time.
17. GOVERNING LAW & JURISDICTION
This Option 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, 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 this Option
Plan.
18. TAX CONSEQUENCES
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, the Trustee or the Optionee), hereunder, shall be
borne solely by the Optionee. The Company 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 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. The
Committee and/or the Trustee shall not be required to release any Share
certificate to an Optionee until all required payments have been fully
made.
19. NON-EXCLUSIVITY OF THE OPTION PLAN
The adoption of the Option Plan 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 stock options otherwise
than under the Option Plan or under the Share Option Agreements
previously issued to Israeli employees, and such arrangements may be
either applicable generally or only in specific cases.
20. MULTIPLE AGREEMENTS
The terms of each Option may differ from other Options granted under
this Option Plan at the same time, or at any other time. The Committee
may also grant more than one Option to a given Optionee during the term
of this Option Plan, either in addition to, or in substitution for, one
or more Options previously granted to that Optionee.
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EXHIBIT B TO THE OPTION AGREEMENT
TERMS OF THE OPTION
1. NAME OF THE OPTIONEE:
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2. NUMBER OF OPTIONS GRANTED:
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3. PRICE PER SHARE:
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4. EXPIRATION DATE:
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5. DATE OF GRANT:
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EXHIBIT C TO THE OPTION AGREEMENT
PROXY
Mr.____________ and Mr.______________, or any of them, with power of
substitution in each, are hereby authorized to represent the undersigned at any
and all general meetings of CommTouch Software Ltd. (the "Company") (including
general meetings convened for the purpose of adopting extraordinary resolutions)
and to vote thereat on any and all matters the same number of Ordinary Shares of
the Company as the undersigned would be entitled to vote if then personally
present.
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NAME DATE
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SIGNATURE
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