M-WISE, INC.
INTERNATIONAL SHARE OPTION PLAN (2001)
1. Purposes of the Plan. The purposes of this Share Option Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and
Consultants of the Company and its subsidiaries, m-Wise, Ltd. (the "Israeli
Subsidiary") and m-Wise Limited (the "UK Subsidiary") and to promote the success
of the Company's business. Options granted under the Plan may be Incentive Stock
Options or Nonstatutory Stock Options, as determined by the Administrator at the
time of grant. 2. Definitions. As used herein, the following definitions shall
apply: (i) "Administrator" means the Board or any of its Committees as shall be
administering the Plan, in accordance with Section 4 hereof. (ii) "Applicable
Laws" means the requirements relating to the administration of share option
plans under the applicable laws of the United States (except for matters with
respect to the employees or consultants of the Israeli Subsidiary, and, in such
cases, the laws of the state of Israel shall apply). (iii) "Articles" means the
By-Laws of the Company. (iv) "Board" means the Board of Directors of the
Company. (v) "Code" means the U.S. Internal Revenue Code of 1986, as amended.
(vi) "Committee" means a committee of Directors appointed by the Board in
accordance with Section 4 hereof and the Articles. (vii) "Company" means m-Wise,
Inc., a corporation incorporated under the laws of the State of Delaware, USA.
(viii) "Consultant" means any person who is engaged by the Company or any
Subsidiary of the Company to render consulting or advisory services to such
entity. (ix) "Director" means a member of the Board of Directors of the Company.
(x) "Employee" means any person, including Officers and Directors, employed by
the Company or any Parent or Subsidiary of the Company. An Employee shall not
cease to be an Employee in the case of (i) any leave of absence approved by the
Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. For purposes of Incentive
Stock Options, no such leave may exceed ninety days, unless reemployment upon
expiration of such leave is guaranteed by statute or contract. If reemployment
upon expiration of a leave of absence approved by the Company is not so
guaranteed, on the 181st day of such leave any Incentive Stock Option held by
the Optionee shall cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Nonstatutory Stock Option. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company. (xi) "Exchange Act" means the Securities
Exchange Act of 1934, as amended. (xii) "Fair Market Value" means, as of any
date, the value of
a Share determined as follows:
(a) If the Shares are listed on the Nasdaq National Market or The
Nasdaq SmallCap Market of The Nasdaq Stock Market, their 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
system for the last market trading day prior to the time of
determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable;
(b) If the Shares are listed on the Tel Aviv Stock Exchange, but
are not traded on the Nasdaq National Market or The Nasdaq Small
Cap Market, their 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 for the last market trading
day prior to the time of determination, as reported in Globes,
HaAretz or such other source as the Administrator deems reliable;
(c) If the Shares are regularly quoted by a recognized securities
dealer but selling prices are not reported, their 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;
(d) In the absence of an established market for the Shares, the
Fair Market Value thereof shall be determined in good faith by the
Board.
(xiii) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section
422 of the Code.
(xiv) "Nonstatutory Stock Option" means an Option not intended
to qualify as an Incentive Stock Option.
(xv) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules
and regulations promulgated thereunder.
(xvi) "Option" means a share option granted pursuant to the
Plan.
(xvii) "Option Agreement" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the
terms and conditions of the Plan, unless and to the extent
otherwise stated in such Option Agreement.
(xviii) "Optioned Shares" means the Shares subject to an Option.
(xix) "Optionee" means the holder of an outstanding Option
granted under the Plan.
(xx) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(xxi) "Plan" means this International Share Option Plan
(2001).
(xxii) "Service Provider" means an Employee, Director or
Consultant.
(xxiii) "Share" means a share of the Company's Common Stock
having a nominal value of US$0.01, as adjusted in accordance with
Section 11 below.
(xxiv) "Subsidiary" means a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the
Code.
3. Shares Subject to the Plan. Subject to the provisions of
Section 11 of the Plan, the maximum aggregate number of Shares that may be
subject to option and sold under the Plan is 230,612 Shares. The Shares may be
authorized, but unissued, or reacquired. If an Option expires or becomes
unexercisable without having been exercised in full, the unpurchased Shares
which were subject thereto shall become available for future grant or sale under
the Plan (unless the Plan has terminated); provided, however, that Shares that
have actually been issued under the Plan shall not be returned to the Plan and
shall not become available for future distribution under the Plan. 4.
Administration of the Plan. (i) Procedure. The Plan shall be administered by the
Board or a Committee appointed by the Board, subject to the Articles, which
Committee shall be constituted to comply with Applicable Laws. (ii) Powers of
the Administrator. Subject to the provisions of the Plan and, in the case of a
Committee, the specific duties delegated by the Board to such Committee, and
subject to the approval of any relevant authorities, the Administrator shall
have the authority, in its discretion: (a) to recommend to the Board to update
the Fair Market Value; (b) to grant Options and to select the Service Providers
to whom Options may from time to time be granted hereunder; (c) to determine the
number of Shares to be covered by each such award granted hereunder; (d) to
approve forms of agreement for use under the Plan; (e) to determine the terms
and conditions of any Option granted hereunder; (f) to recommend to the Board to
reduce the exercise price of any Option to the then current Fair Market Value,
if the Fair Market Value of the Shares covered by such Option has declined since
the date of grant of the Option as defined in Section 12 below (the "Date of
Grant"); (g) to prescribe, amend and rescind rules and regulations under the
Plan; (h) to construe and interpret the terms of the Plan and awards granted
pursuant to the Plan. (iii) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees. 5. Eligibility. (i) Nonstatutory Stock may be granted
to Service Providers. Incentive Stock Options may be granted only to Employees.
(ii) Each Option shall be designated in the Option Agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding
such designation, to the extent that the aggregate Fair Market Value of the
Shares with respect to which Incentive Stock Options are exercisable for the
first time by the Optionee during any calendar year (under all plans of the
Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be
treated as Nonstatutory Stock Options. For purposes of this Section 5(b),
Incentive Stock Options shall be taken into accin the order in which they were
granted. The Fair Market Value of the Shares shall be determined as of the time
the Option with respect to such Shares is granted.
(iii) The Plan shall not confer upon any Optionee any right with respect to
continuing the Optionee's relationship as a Service Provider with the Company,
nor shall it interfere in any way with his or her right or the Company's right
to terminate such relationship at any time, with or without cause. 6. Term of
Plan. The Plan shall become effective upon its adoption by the Board. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 13 of the Plan. 7. Term of Option. The term of each Option shall be
stated in the Option Agreement; provided, however, that the term shall be no
more than ten (10) years from the Date of Grant thereof. In the case of an
Incentive Stock Option granted to an Optionee who, at the time the Option is
granted, owns shares representing more than ten percent (10%) of the voting
power of all classes of issued and outstanding share capital of the Company or
any Parent or Subsidiary, notwithstanding the Option Agreement, the term of the
Option shall be five (5) years from the date of grant or such shorter term as
may be provided in the Option Agreement. 8. Option Exercise Price and
Consideration. (i) The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following: (a) In the case of an
Incentive Stock Option (I) granted to an Employee who, at the time of the grant
of such Incentive Stock Option, owns shares representing more than ten percent
(10%) of the voting power of all classes of issued and outstanding share capital
of the Company or any Parent or Subsidiary, the exercise price shall be no less
than 110% of the Fair Market Value per Share on the Date of Grant. (II) granted
to any Employee other than an Employee described in the preceding subparagraph,
the per Share exercise price shall be no less than 100% of the Fair Market Value
per Share on the Date of Grant. (b) In the case of a Nonstatutory Stock Option
(I) granted to an Employee who, at the time of grant of such Option, owns shares
representing more than ten percent (10%) of the voting power of all classes of
issued and outstanding share capital of the Company or any Parent or Subsidiary,
the exercise price shall be no less than 110% of the Fair Market Value per Share
on the Date of Grant. (II) granted to any other Employee, the per Share exercise
price shall be no less than 85% of the Fair Market Value per Share on the Date
of Grant. (c) Notwithstanding the foregoing, pursuant to a merger or other
corporate transaction, Options may be granted in substitution for options held
by service providers of another corporation with per Share exercise prices
(other than as required above) of less than 100% of Fair Market Value on the
Date of Grant. (ii) The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be determined
by the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the Date of Grant) and may
consist entirely of (1) cash, (2) check, (3) promissory note, (4) consideration
received by the Company under a formal cashless exercise program adopted by the
Company in connection with the Plan, or (5) any combination of the foregoing
methods of payment. To the extent that the consideration paid for the Shares is
denominated in US Dollars, the exchange rate to be used to obtain a New Israeli
Shekel value of such consideration shall be the noon buying rate as reported by
the Federal Reserve Bank of New York (expressed in shekels per unit of US
Dollar) on the date of exercise of the Option. The Administrator shall
determine, at its own discretion, the type of consideration to be accepted by
the Company. Unless determined otherwise the consideration shall be paid to the
Company in US Dollars. 9. Exercise of Option. (i) Procedure for Exercise; Rights
as a Shareholder. Any Option granted hereunder shall be exercisable according to
the terms of the Plan and the Option Agreement, and at such times and under such
conditions as determined by the Administrator and set forth in the Option
Agreement. Except in the case of Options granted to Officers, Directors, and
Consultants, Options shall become exercisable at a rate of no less than 20% per
year over five (5) years from the Date of Grant. An Option may not be exercised
for a fraction of a Share.
An Option shall be deemed exercised when the Company
receives: (i) written notice of exercise (in accordance with the Option
Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee to
___________________ as trustee (the "Trustee"), to be held by the Trustee on
behalf of the Optionee until the initial underwritten public offering of equity
securities of the Company. Until the Shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company), no right to vote or any other rights as a shareholder
shall exist with respect to the Shares, notwithstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such Shares promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the Shares are
issued, except as provided in Section 11 of the Plan.
Exercise of an Option in any manner shall result in
a decrease in the number of Shares thereafter available, both for purposes of
the Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised. (ii) Termination of Relationship as a Service Provider. If
an Optionee ceases to be a Service Provider, other than upon the Optionee's
death or Disability, the Optionee may exercise his or her Options within such
period of time (of at least thirty (30) days) as is specified in the Option
Agreement to the extent that the Option is vested on the date of termination
(but in no event later than the expiration of the term of such Option as set
forth
in the Option Agreement). In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for three (3) months following
the Optionee's termination. If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan. (iii) Disability of Optionee. If an Optionee ceases to
be a Service Provider as a result of the Optionee's disability, the Optionee may
exercise his or her Option within such period of time as is specified in the
Option Agreement (of at least six (6) months) to the extent the Option is vested
on the date of termination, but in no event later than the expiration date of
the term of such Option as set forth in the Option Agreement. In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable
for twelve (12) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to the entire Option, the Shares
covered by the unvested portion of the Option shall revert to the Plan. If,
after termination, the Option is not exercised within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall revert
to the Plan. If such disability is not a "disability" as such term is defined in
Section 22(e)(3) of the Code, in the case of an Incentive Stock Option such
Incentive Stock Optshall automatically cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option on
the day three months and one day following such termination. (iv) Death of
Optionee. If an Optionee dies while a Service Provider, the Option may be
exercised within such period of time as is specified in the Option Agreement (of
at least six (6) months) to the extent that the Option is vested on the date of
death (but in no event later than the expiration of the term of such Option as
set forth in the Option Agreement) by the Optionee's estate or by a person who
acquires the right to exercise the Option by bequest or inheritance. In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for twelve (12) months following the Optionee's termination. If, at
the time of death, the Optionee is not vested as to the entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If the Option is not so exercised within the time specified herein, the Option
shall terminate, and the Shares covered by such Option shall revert to the Plan.
10. Non-Transferability of Options. Options may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent and may be exercised, during the lifetime of the Optionee,
only by the Optionee. 11. Adjustments Upon Changes in Capitalization or Merger.
(i) Changes in Capitalization. In the event the Shares shall be subdivided or
combined into a greater or smaller number of Shares or if, upon a
reorganization, recapitalization or the like, the
Shares shall be exchanged for other securities of the Company, each Optionee
shall be entitled, subject to the conditions herein stated, to purchase such
number of Shares or amount of other securities of the Company as were
exchangeable for the number of Shares of the Company which such Optionee would
have been entitled to purchase except for such action, and appropriate
adjustments shall be made in the purchase price per share to reflect such
subdivision, combination or exchange.
In the event that the Company shall issue any of its Shares or other
securities as bonus shares or a stock dividend upon or with respect to any
Shares which shall at the time be subject to an Option hereunder, each Optionee
upon exercising such Option shall be entitled to receive (for the purchase price
payable upon such exercise), the Shares as to which he or she is exercising such
Option and, in addition thereto (at no additional cost), such number of shares
of the class or classes in which such bonus shares or stock dividend were
declared, and such amount of Shares (and the amount in lieu of fractional
Shares) as is equal to the Shares which he would have received had he been the
holder of the Shares as to which he is exercising his Option at all times
between the Date of Grant of such Option and the date of its exercise.
Upon the occurrence of any of the foregoing events, the class
and aggregate number of Shares or other securities issuable pursuant to the
Plan, in respect of which Options have not yet been granted, shall also be
appropriately adjusted to reflect the events specified above. (ii) Dissolution
or Liquidation. In the event of the proposed dissolution or liquidation of the
Company, the Administrator shall notify each Optionee as soon as practicable
prior to the effective date of such proposed transaction. The Administrator in
its discretion may provide for an Optionee to have the right to exercise his or
her Option until fifteen (15) days prior to such transaction as to all of the
Optioned Shares, including Shares as to which the Option would not otherwise be
exercisable. To the extent it has not been previously exercised, an Option will
terminate immediately prior to the consummation of such proposed action. (iii)
Merger or Asset Sale. 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, each outstanding Option shall be assumed or an equivalent option
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Option, the Optionee shall fully vest in and have
the right to exercise the Option as to all of the Optioned Stock, including
Shares as to which it would not otherwise be vested or exercisable. If an Option
becomes fully vested and exercisable in lieu of assumption or substitution in
the event of a merger or sale of assets, the Administrator shall notify the
Optionee in writing or electronically that the Option shall be fully exercisable
for a period of fifteen (15) days from the date of such notice, and the Option
shall terminate upon the expiration of such period. For the purposes of this
paragraph, the Option shall be considered assumed if, following the merger or
sale of
assets, the option confers the right to purchase or receive, for each Share of
Optioned Shares immediately prior to the merger or sale of assets, the
consideration (whether shares, cash, or other securities or property) received
in the merger or sale of assets by holders of Shares for each Share 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 merger or sale of assets is not solely ordinary shares (or their
equivalent) of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation, provide for the consideration to
be received upon the exercise of the Option, for each Share of Optioned Shares,
to be solely ordinary shares (or their equivalent) of the successor corporation
or its Parent equal in fair market value to the per Share consideration received
by holders of in the merger or sale of assets. 12. Date of Grant. The date of
grant of an Option shall, for all purposes, be the date on which the
Administrator makes the determination granting such Option, or such other date
as is determined by the Board. Notice of the determination shall be given to
each Service Provider to whom an Option is so granted within a reasonable time
after the date of such grant. 13. Amendment and Termination of the Plan. (i)
Amendment and Termination. The Board may at any time amend, alter, suspend or
terminate the Plan. (ii) Shareholder Approval. The Board shall obtain
shareholder approval of any Plan amendment to the extent necessary and desirable
to comply with Applicable Laws. (iii) Effect of Amendment or Termination. No
amendment, alteration, suspension or termination of the Plan shall adversely
affect the rights of any Optionee, unless mutually agreed otherwise between the
Optionee and the Administrator, which agreement must be in writing and signed by
the Optionee and the Company. Termination of the Plan shall not affect the
Administrator's ability to exercise the powers granted to it hereunder with
respect to Options granted under the Plan prior to the date of such termination.
14. Conditions Upon Issuance of Shares. (i) Legal Compliance. Shares shall not
be issued pursuant to the exercise of an Option unless the exercise of such
Option and the issuance and delivery of such Shares shall comply with Applicable
Laws and shall be further subject to the approval of counsel for the Company
with respect to such compliance. (ii) Investment Representations. As a condition
to the exercise of an Option, the Administrator may require the person
exercising such Option to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required. 15. Inability to Obtain
Authority. The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issue and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained. 16.
Reservation of Shares. The Company, during the term of this Plan, shall at all
times reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan. 17. Shareholder Approval. The Plan shall
be subject to approval by the shareholders of the Company within twelve (12)
months after the date the Plan is adopted. Such shareholder approval shall be
obtained in the manner and to the degree required under Applicable Laws. 18.
Information to Optionees and Purchasers. The Company shall provide to each
Optionee and to each individual who acquires Shares pursuant to the Plan, not
less frequently than annually during the period such Optionee or purchaser has
one or more Options outstanding, and, in the case of an individual who acquires
Shares pursuant to the Plan, during the period such individual owns such Shares,
copies of annual financial statements. The Company shall not be required to
provide such statements to key employees whose duties in connection with the
Company assure their access to equivalent information.