102 OPTION AGREEMENT
(the "Option Agreement")
Made as of the ________ day of ______, 2001
By and between
COMMTOUCH SOFTWARE LTD.
an Israeli Company located at
00 Xxxxxxxxxx Xxxxxx
Ein Vered, Israel
(the "Company")
of the first part
and
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ID _______________________
(the "Optionee")
of the second part
PREAMBLE
Whereas In _____, 1999, the Company adopted its 1999 Section 3(i) Share
Option Plan (the "Option Plan"), a copy of which is attached
hereto as Exhibit A, forming an integral part hereof; and
Whereas The Company obtained approval for the Plan under Section 102 of
the Israeli Income Tax Ordinance, and the Company took such steps
as are required with respect to such approval.
Whereas The Company has determined that the Optionee be granted Options
under the Option Plan to buy Shares of the Company, and the
Optionee has agreed to such grant, all on the terms and subject to
the conditions set forth in the Option Plan and in this Option
Agreement.
NOW, THEREFORE, it is agreed as follows:
1. PREAMBLE AND DEFINITIONS
1.1 The preamble to this Option Agreement constitutes an integral
part hereof.
1.2 Unless otherwise defined herein, capitalized terms used herein
shall have the meaning ascribed to them in the Option Plan.
2. GRANT OF OPTION
2.1 The Company hereby grants the Optionee the number of Options
set forth in Section 2 of Exhibit B attached hereto to
purchase Shares at the price per Share set forth in Section 3
of Exhibit B attached hereto (the "Option Price"), on the
terms and subject to the conditions hereinafter provided.
The Option Price will be paid in NIS in accordance with the
representative rate of exchange of the U.S. dollar, last
published by the Bank of Israel and known at the time of
giving the notice of exercise (as set forth in Section 5.1
hereinafter).
2.2 The Optionee is aware that the Company intends to issue
additional shares in the future to various entities and
individuals, as the Company in its sole discretion shall
determine.
3. PERIOD OF OPTION AND CONDITIONS OF EXERCISE
3.1 The term of this Option Agreement shall commence on the date
hereof (the "Date of Grant") and terminate on the Expiration
Date (as defined in Section 6 below), or at the time at which
all of the Options have expired or been terminated pursuant to
the terms of the Option Plan or pursuant to this Option
Agreement.
3.2 The Options may be exercised by the Optionee in whole at any
time or in part from time to time, as determined by the Board,
and to the extent that the Options become vested in accordance
with section 4 of Exhibit B , prior to the Expiration Date,
and provided that, subject to the provisions of Section 3.4
below, the Optionee is an employee 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 7.1 of the
Agreement ( the foregoing collectively, the "Group" ), or
continuing to provide services to the Group, at all times
during the period beginning with the granting of the Option
and ending upon the date of exercise.
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.
3.3 Subject to the provisions of Section 3.4 below, in the event
of termination of the Optionee's employment with the Company
the Group, or, if applicable, the termination of the provision
of services by the Optionee to the Group , all Options granted
to the Optionee will immediately expire. A notice of
termination of employment or services by either the Group or
the Optionee shall be deemed to constitute termination of
employment or services.
3.4 Notwithstanding anything to the contrary previously stated, an
Option may be exercised after the date of termination of the
Optionee's service or employment with Group, during an
additional period of time beyond the date of such termination,
but only with respect to the number of Options already vested
at the time of such termination according to the Vesting
Dates, if:
3.4.1 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.
3.4.2 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.
3.4.3 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.
3.5 The Options may be exercised only to purchase whole Shares,
and in no case may a fraction of a Share be purchased. If any
fractional Shares would be deliverable upon exercise, such
fraction shall be rounded up if one-half or more, or otherwise
rounded down, to the nearest whole number.
4. VESTING
Subject to the requirements as to the number of Shares for which an
Option is exercisable, as set forth in Section 2.1 above, Options shall
vest (i.e., Options shall become exercisable) at the dates set forth in
Section 3 of exhibit B hereto (the "Vesting Periods").
Preconditions to vesting: Notwithstanding anything to the contrary
contained in this Option Agreement, vesting of the Option shall only
occur if:
4.1 Optionee maintains a Continuous Status as an Employee or
Consultant throughout the relevant Vesting Period, as defined
above; and
4.2 Optionee provides Commtouch with adequate assurance, as
determined by Commtouch, that Optionee has made all relevant
tax-related arrangements as may be required under relevant tax
laws in order for Commtouch to withhold taxes imposed on
income received by Optionee upon vesting of the Option or any
portion thereof.
5. METHOD OF EXERCISE
5.1 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 (the "Exercise
Notice"), which exercise shall be effective upon receipt of
the Exercise Notice by the Company at its principal office.
The Exercise Notice shall specify the number of Shares with
respect to which the Options are being exercised.
5.2 The Shares shall immediately be issued to the Trustee and be
held by the Trustee in accordance with the provisions of
Section 5 of the Option Plan. The Trustee shall not transfer
any Options to the Optionee prior to the exercise of the
Options into Shares, and thereafter, the Trustee will transfer
the Shares to the Optionee upon demand. Options granted under
section 102 ("102 options") and any Shares received
subsequently following exercise of 102 Options, shall be held
by the Trustee for a period of not less than two years (24
months) from the Date Of Grant.
The Trustee shall not release any Shares allocated or issued
upon exercise of 102 Options prior to the full payment of the
Optionee's tax liabilities arising from Options which were
granted to him and/or any Shares allocated or issued upon
exercise of such Options.
Upon receipt of the 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 Option Plan, or any Option or
Share granted to him thereunder. If any law or regulation
requires the Company to take any action with respect to the
Shares so demanded before the issuance thereof, then the date
of their issuance shall be extended for the period necessary
to take such action. The Optionee hereby authorizes the
Trustee to sign an agreement with the Company whereby Shares
will not be transferred without deduction of taxes at source.
5.3 The Optionee hereby declares not to transfer Shares issued
upon the exercise of 102 Options, nor any other shares
received subsequently following any realization of rights
which are subject to Section 102, by a way of a tax - exempt
transfer or a transfer under sections 104(a), 104(b) or 97(a)
of the Income Tax Ordinance.
6. TERMINATION OF OPTION
6.1 Except as otherwise stated in this Option Agreement, the
Options, to the extent not previously exercised, shall
terminate forthwith upon the earlier of: (i) the date set
forth in Section 4 of Exhibit B hereto; and (ii) the
expiration of any extended period in any of the events set
forth in Section 3.4 above (and such earlier date shall be
hereinafter referred to as the "Expiration Date").
6.2 Without derogating from the above, the Committee may, with the
prior written consent of the Optionee, from time to time
cancel all or any portion of the Options then subject to
exercise, and the Company's obligation in respect of such
Options 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 pertaining to such canceled Options, at
the date of such cancellation, 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 determined by the Committee in its sole
discretion.
7. ADJUSTMENTS
7.1 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 7.1, the Options shall
terminate as of the date of the closing the above merger or
sale, as applicable.
7.2 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 the extent
not previously exercised, the Options shall terminate
immediately prior to the consummation of such proposed action.
7.3 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, re-capitalization,
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 the Option therefore granted, and the Option
Price, 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 stock, all as will be
determined by the Board who's determination shall be final.
7.4 Anything herein to the contrary notwithstanding, if prior to
the consummation of an initial public offering of the
securities of the Company 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, the Optionee shall be obliged to
sell or exchange (in accordance with the value of his Shares
in accordance with the deal) as the case may be, the Shares
such Optionee purchased hereunder, in accordance with the
instructions then issued by the Board, whose determination
shall be final.
8. RIGHTS PRIOR TO EXERCISE OF OPTION; LIMITATIONS AFTER PURCHASE OF
SHARES
8.1 Subject to the provisions of Sections 8.2 and 8.4 below, the
Optionee 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 unless
and until, following exercise, but in case of Options and
Shares held by the Trustee, subject always to the provisions
of Section 5 of the Option Plan, registration of the Optionee
as holder of such Shares in the Company's register of members.
8.2 With respect to all Shares )contrary to 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 the Optionee are held by the Trustee, the
cash dividends paid with respect thereto shall be paid
directly to the Optionee.
8.3 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 the 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, 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.
Any such action made directly or indirectly, whether for
immediate or future validity, shall be void.
8.4 Until the consummation of an IPO, 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. A copy of
the proxy is attached hereto as Exhibit C.
8.5 The Optionee acknowledges that once the Company's shares will
be traded in any public market, his right to sell his Shares
may be subject to some limitations, as required by the
Company's underwriters. In such event, the Optionee will
unconditionally agree to any such limitations.
8.6 The Optionee shall not dispose of any Shares in transactions
which violate, in the opinion of the Company, any applicable
rules and regulations.
8.7 The Optionee agrees that the Company shall have the authority
to endorse upon the certificate or certificates representing
the Shares such legends referring to the foregoing
restrictions, and any other applicable restrictions, as it may
deem appropriate (which do not violate the Optionee's rights
according to this Option Agreement).
9. GOVERNMENT REGULATIONS
The Option Plan, and the granting and exercise of the Options
thereunder, and the Company's obligation to sell and deliver Shares or
cash under the Option Plan, are 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.
10. CONTINUANCE OF EMPLOYMENT
Nothing in this Option Agreement shall be construed to impose any
obligation on the Company or a subsidiary, consultant or contractor
thereof to continue the Optionee's employment with it, to confer upon
the Optionee any right to continue in the employ of the Company or a
subsidiary thereof, or to restrict the right of the Company or a
subsidiary thereof to terminate such employment at any time.
11. GOVERNING LAW & JURISDICTION
This Option Agreement 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 Agreement.
12. 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 applicable laws,
rules, and regulations, including the withholding of 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.
13. FAILURE TO ENFORCE NOT A WAIVER
The failure of any party to enforce at any time any provisions of this
Option Agreement shall in no way be construed to be a waiver of such
provision or of any other provision hereof.
14. PROVISIONS OF THE OPTION PLAN
The Options provided for herein are granted pursuant to the Option
Plan, and said Options and this Option Agreement are in all respects
governed by the Option Plan and subject to all of the terms and
provisions whether such terms and provisions are incorporated in this
Option Agreement solely by reference or are expressly cited herein. Any
interpretation of this Option Agreement will be made in accordance with
the Option Plan but in the event of any contradiction between the
provisions of this Option Agreement and the Option Plan, the provisions
of this Option Agreement will prevail.
15. BINDING EFFECT
This Option Agreement shall be binding upon the heirs, executors,
administrators, and successors of the parties hereof.
16. NOTICES
Any notice required or permitted under this Option Agreement shall be
deemed to have been duly given if delivered, faxed or mailed, if
delivered by certified or registered mail or return receipt requested,
either to the Optionee at his or her address set forth above or such
other address as he or she may designate in writing to the Company, or
to the Company at the address set forth above or such other address as
the Company may designate in writing to the Optionee, within one week.
17. ENTIRE AGREEMENT
This Option Agreement and the Option Plan exclusively concludes all of
the terms of the Optionee's option plan and, subject to the provisions
of Section 19 of the Option Plan, annuls and supersedes any other
agreement, arrangement or understanding whether oral or in writing,
relating to the grant of options in the Company to the Optionee. Any
change of any kind to this Option Agreement will be valid only if made
in writing and signed by both the Optionee and the Company's authorized
representative and approved by the Board.
IN WITNESS WHEREOF, the Company has executed this Option Agreement in duplicate
on the day and year first above written.
COMMTOUCH SOFTWARE LTD.
By:
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The undersigned hereby accepts, and agrees to, all terms and provisions of the
foregoing Option Agreement.
______________
The Optionee
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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6. Designation: 102 Options
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7. Vesting Dates:
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Number of Options Vesting Date
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33.33%
------------------------------ --------------------------------
16.665%
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16.665%
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16.665%
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16.665%
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EXHIBIT C
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
