Document:

EX-10.15

 

Exhibit 10.15

VOLTAIRE ADVANCED DATA SECURITY LTD.

2001 STOCK OPTION PLAN

     1. Purpose.

     The purpose of this plan (the “Plan”) is to secure for Voltaire Advanced Data Security Ltd.,
an Israeli corporation (the “Company”) and its shareholders the benefits arising from capital stock
ownership by employees, officers and directors of, and consultants or advisors to, the Company and
its Parent and subsidiary corporations who are expected to contribute to the Company’s future
growth and success. Except where the context otherwise requires, the term “Company” shall include
the parent and all present and future subsidiaries of the Company as defined in Sections 424(e) and
424(f) of the Internal Revenue Code of 1986, as amended or replaced from time to time (the “Code”).
Those provisions of the Plan which make express reference to Section 422 shall apply only to
Incentive Stock Options (as that term is defined in the Plan).

     2. Type of options and Administration.

     (a) Types of Options. Options granted pursuant to the Plan shall be authorized by
action of the Board of Directors of the Company (or a Committee designated by the Board of
Directors, as provided below) and may be either incentive stock options (“Incentive Stock Options”)
meeting the requirements of Section 422 of the Code or non-statutory options which are not intended
to meet the requirements of Section 422 of the Code.

     (b) Administration.

     The Plan shall be administered by a Stock Option Committee (the “Committee”) appointed by the
Board of Directors of the Company. The Committee shall consist of no fewer than two members who may
also be members of the Board of Directors of the Company. Subject to the terms and conditions of
the Plan, all applicable laws and relevant commitments of the Company, the Committee shall have
full and maximum authority in its discretion, from time to time, and at any time, to grant, or
recommend to the Board of Directors of the Company, as applicable, the employees to whom Options or
Purchase Agreements shall be granted, to determine or recommend the number of shares to be covered
by each Option or Purchase Agreement, the time at which the Option shall be granted, the terms and
conditions of Option Agreements or Purchase Agreements, and, except as hereinafter provided, the
purchase price of Option or Purchased Shares, the term during which the Options may be exercised,
and to authorize the shares allotment pursuant to the exercise of the options.

     The Board of Directors of the Company may at any time appoint or remove members of the
Committee and may fill vacancies, however caused, in the Committee. The Committee shall select one
of its members as its Chairman, and shall hold its meetings at such time and place as it shall deem
advisable. All actions of the Committee shall be taken by a majority of its members and can be
taken by written consent in lieu of a meeting. The Committee shall make such rules

 

 

and regulations
for the conduct of its business as it shall deem advisable.

     3. Eligibility.

     Options may be granted to persons who are, at the time of grant, employees, officers or
directors of, or consultants or advisors to, the Company, its parent, or any subsidiary;
provided, that the class of employees to whom Incentive Stock Options may be granted shall
be limited to all employees of the Company, its parent, or any subsidiary. A person who has been
granted an option may, if he or she is otherwise eligible, be granted additional options if the
Board of Directors shall so determine.

     4. Shares Subject to Plan.

     The number of Shares which may be issued and sold pursuant to Options granted under the Plan
from time to time shall be 1,185,000 Ordinary Shares, 0.01 NIS par value each (“Ordinary Shares” or
“Shares”). If an option granted under the Plan shall expire or terminate for any reason without
having been exercised in full, the un-purchased Shares subject to such option shall again be
available for subsequent option grants under the Plan.

     5. Forms of Option Agreements.

     As a condition to the grant of an option under the Plan, each recipient of an option shall
execute an option agreement in such form not inconsistent with the Plan as may be approved by the
Board of Directors. Such option agreements may differ among recipients.

     6. Purchase Price.

     (a) General. The purchase price per Ordinary Share deliverable upon the exercise of
an option shall be determined by the Board of Directors, provided, however, that in the
case of an Incentive Stock Option, the exercise price shall not be less than 100% of the fair
market value of such share, as determined in good faith by the Board of Directors, at the time of
grant of such option, or less than 110% of such fair market value in the case of options described
in Section 11(b).

     (b) Payment of Purchase Price. Options granted under the Plan may provide for the
payment of the exercise price by delivery of cash or a check to the order of the Company in an
amount equal to the exercise price of such options, to the extent provided in the applicable option
agreement.

     7. Option Period.

     Each option and all rights thereunder shall expire on such date as shall be set forth in the
applicable option agreement, except that, in the case of an Incentive Stock Option, such date shall
not be later than ten years after the date on which the option is granted and, in all cases,
options shall be subject to earlier termination as provided in the Plan.

 

 

     8. Exercise of Options.

     Each option granted under the Plan shall be exercisable either in full or in installments at
such time or times and during such period as shall be set forth in the agreement evidencing such
option, subject to the provisions of the Plan.

     9. Nontransferability of Options.

     Except as the Board of Directors may otherwise determine or provide in an option, options
shall not be assignable or transferable by the person to whom they are granted, either voluntarily
or by operation of law, except by will or the laws of descent and distribution, and, during the
life of the optionee, shall be exercisable only by the optionee.

     10. Effect of Termination of Employment or Other Relationship.

     Subject to the provisions of the Plan, the option agreement shall specify the extent to which
the Option may be exercised following (i) the termination of the optionee’s employment or other
relationship with the Company or its parent or any subsidiary, or (ii) the death or disability of
the optionee. Such periods shall be set forth in the agreement evidencing such option. Employment
shall not be deemed to be terminated because an optionee is transferred from one of the Company,
its parent, or any subsidiary to another one of the Company, its parent, or any subsidiary.

     11. Incentive Stock Options.

     Options granted under the Plan which are intended to be Incentive Stock Options shall be
subject to the following additional terms and conditions:

     (a) Express Designation. All Incentive Stock Options granted under the Plan shall, at
the time of grant, be specifically designated as such in the option agreement covering such
Incentive Stock Options.

     (b) 10% Shareholder. If any employee to whom an Incentive Stock Option is to be
granted under the Plan is, at the time of the grant of such option, the owner of stock possessing
more than 10% of the total combined voting power of all classes of stock of the Company (after
taking into account the attribution of stock ownership rules of Section 424(d) of the Code), then
the following special provisions shall be applicable to the Incentive Stock Option granted to such
individual:

     (i) the purchase price per Ordinary Share subject to such Incentive Stock Option shall not be
less than 110% of the fair market value of one Ordinary Share at the time of grant; and

     (ii) the option exercise period shall not exceed five years from the date of grant.

 

 

     (c) Dollar Limitation. For so long as the Code shall so provide, options granted to
any employee under the Plan (and any other incentive stock option plans of the Company) which
are intended to constitute Incentive Stock Options shall not constitute Incentive Stock Options to
the extent that such options, in the aggregate, become exercisable for the first time in any one
calendar year for Ordinary Shares with an aggregate fair market value (determined as of the
respective date or dates of grant) of more than $100,000.

     (d) Termination of Employment, Death or Disability. No Incentive Stock Option may be
exercised unless, at the time of such exercise, the optionee is, and has been continuously since
the date of grant of his or her option, employed by the Company, its parent, or any subsidiary,
except that:

     (i) an Incentive Stock Option may be exercised within the period of three months after the
date the optionee ceases to be an employee of the Company, its parent, or any subsidiary (or within
such lesser period as may be specified in the applicable option agreement); provided, that
the agreement with respect to such option may designate a longer exercise period and that the
exercise after such three-month period shall be treated as the exercise of a non-statutory option
under the Plan;

     (ii) if the optionee dies while in the employ of the Company, its parent, or any subsidiary,
or within three months after the optionee ceases to be such an employee, the Incentive Stock Option
may be exercised by the person to whom it is transferred by will or the laws of descent and
distribution within the period of one year after the date of death (or within such lesser period as
may be specified in the applicable option agreement); and

     (iii) if the optionee becomes disabled (within the meaning of Section 22(e)(3) of the Code or
any successor provision thereto) while in the employ of the Company, its parent, or any subsidiary,
the Incentive Stock Option may be exercised within the period of one year after the date the
optionee ceases to be such an employee because of such disability (or within such lesser period as
may be specified in the applicable option agreement).

     For all purposes of the Plan and any option granted hereunder, “employment” shall be defined
in accordance with the provisions of Section 1.421-7(h) of the Income Tax Regulations (or any
successor regulations) and shall include employment by the Company, its parent, or any subsidiary.
Employment shall not be deemed to be terminated because an optionee is transferred from one of the
Company, its parent, or any subsidiary to another one of the Company, its parent, or any
subsidiary. Notwithstanding the foregoing provisions, no Incentive Stock Option may be exercised
after its expiration date.

     12. Additional Provisions.

     (a) Additional Option Provisions. The Board of Directors may, in its sole discretion,
include additional provisions in option agreements covering options granted under the Plan,
including without limitation restrictions on transfer or such other provisions as shall be
determined by the Board of Directors; provided that such additional provisions shall not be

 

 

inconsistent with any other term or condition of the Plan and such additional provisions shall not
cause any Incentive Stock Option granted under the Plan to fail to qualify as an Incentive Stock
Option within the meaning of Section 422 of the Code.

     (b) Extension. The Board of Directors may, in its sole discretion, extend the dates
during which all, or any particular, option or options granted under the Plan may be exercised;
provided, however, that no such extension shall be permitted if it would cause the Plan to
fail to comply with Section 422 of the Code.

     13. General Restrictions.

     (a) Investment Representations. The Company may require any person to whom an option
is granted, as a condition of exercising such option, to give written assurances in substance and
form satisfactory to the Company to the effect that such person is acquiring the Ordinary Shares
subject to the option for his or her own account for investment and not with any present intention
of selling or otherwise distributing the same, and to such other effects as the Company deems
necessary or appropriate in order to comply with federal and applicable state securities laws, or
with covenants or representations made by the Company in connection with any public offering of its
Ordinary Shares.

     (b) Compliance with Securities Laws. Each option shall be subject to the requirement
that if, at any time, counsel to the Company shall determine that the listing, registration or
qualification of the shares subject to such option upon any securities exchange or under any state
or federal law, or the consent or approval of any governmental or regulatory body, or that the
disclosure of non-public information or the satisfaction of any other condition is necessary as a
condition of, or in connection with, the issuance or purchase of shares thereunder, such option may
not be exercised, in whole or in part, unless such listing, registration, qualification, consent or
approval, or satisfaction of such condition shall have been effected or obtained on conditions
acceptable to the Board of Directors. Nothing herein shall be deemed to require the Company to
apply for or to obtain such listing, registration or qualification, or to satisfy such condition.

     14. Rights as a Shareholder.

     The holder of an option shall have no rights as a shareholder with respect to any shares
covered by the option (including, without limitation, any rights to receive dividends or non-cash
distributions with respect to such shares) until the date of issue of a stock certificate to him or
her for such shares. In addition, the option agreements may provide certain limitations with
respect of voting and/or transferring the Ordinary Shares issued as a result of exercising the
option. No adjustment shall be made for dividends or other rights for which the record date is
prior to the date such stock certificate is issued.

     15. Adjustment Provisions for Recapitalizations and Related Transactions.

     (a) General. If, through or as a result of any merger, consolidation, sale of all or
substantially all of the assets of the Company, reorganization, recapitalization, reclassification,

 

 

stock dividend, stock split, reverse stock split or other similar transaction, (i) the outstanding
Ordinary Shares are increased, decreased or exchanged for a different number or kind of shares or
other securities of the Company, or (ii) additional shares or new or different shares or other
securities of the Company or other non-cash assets are distributed with respect to such Ordinary
Shares or other securities, an appropriate and proportionate adjustment shall be made in (x) the
maximum number and kind of shares reserved for issuance under the Plan, (y) the number and kind of
shares or other securities subject to any then outstanding options under the Plan, and (z) the
price for each share subject to any then outstanding options under the Plan, without changing the
aggregate purchase price as to which such options remain exercisable. Notwithstanding the
foregoing, no adjustment shall be made pursuant to this Section 15 if such adjustment would cause
the Plan to fail to comply with Section 422 of the Code. If this Section 15 applies and Section 16
also applies to any event, then Section 16 shall be applicable to such event and this Section 15
shall not be applicable.

     (b) Board Authority to Make Adjustments. Any adjustments under this Section 15 will
be made by the Board of Directors, whose determination as to what adjustments, if any, will be made
and the extent thereof will be final, binding and conclusive. No fractional shares will be issued
under the Plan on account of any such adjustments.

     16. Merger, Consolidation, Asset Sale, Liquidation, etc.

     (a) General. Upon the occurrence of an Acquisition Event (as defined below) the Board
of Directors of the Company shall take any one or more of the following actions with respect of the
then outstanding options: (i) provide that such options shall be assumed, or equivalent options
shall be substituted, by the acquiring or succeeding corporation (or an affiliate thereof),
provided that any such options substituted for the Options shall meet the requirements of
Section 102 of the Ordinance, (ii) upon written notice to the Optionees, provide that all the then
unexercised options will become exercisable in full as of a specified time (the “Acceleration
Time”) prior to the Acquisition Event and will terminate immediately prior to the consummation of
such Acquisition Event, except to the extent exercised by the Optionees between the Acceleration
Time and the consummation of such Acquisition Event, (iii) in the event of a merger under the terms
of which holders of outstanding Ordinary Shares of the Company will receive upon consummation
thereof a cash payment for each share surrendered in the merger (the “Merger Price”), make or
provide for a cash payment to the Optionees equal to the difference between (A) the Merger Price
times the number of shares of Ordinary Shares subject to such outstanding options (whether or not
then exercisable at prices not in excess of the Merger Price) and (B) the aggregate exercise price
of all such outstanding options in exchange for the termination of such options, or (iv) upon
written notice to the Optionees, provide that all the then vested and unvested outstanding options
will terminate immediately prior to the consummation of such Acquisition Event, and to the extent
the vested Options shall have not been exercised prior to the Acquisition Event, all such Options
shall become null and void at the consummation of such Acquisition Event.

     Notwithstanding the above, the Company, by the Committee, may provide in the Option Agreement
itself the action/s to be taken with respect to the outstanding options at the time of an

 

 

Acquisition Event from the actions listed above. In such a case, the Board of Directors shall not
be entitled to take a different action at the Acquisition Event with respect of such options
without the consent of the Optionee.

     An “Acquisition Event” shall mean: (a) any merger or consolidation which results in the voting
securities of the Company outstanding immediately prior thereto representing immediately
thereafter (either by remaining outstanding or by being converted into voting securities of
the surviving or acquiring entity) less than 50% of the combined voting power of the voting
securities of the Company or such surviving or acquiring entity outstanding immediately after such
merger or consolidation, (b) any sale of all or substantially all of the assets of the Company, or
(c) the complete liquidation of the Company.

     (b) Substitute Options. The Company may grant options under the Plan in substitution
for options held by employees of another corporation who become employees of the Company, or a
subsidiary of the Company, as the result of a merger or consolidation of the employing corporation
with the Company or a subsidiary of the Company, or as a result of the acquisition by the Company,
or one of its subsidiaries, of property or stock of the employing corporation. The Company may
direct that substitute options be granted on such terms and conditions as the Board of Directors
considers appropriate in the circumstances.

     17. No Special Employment Rights.

     Nothing contained in the Plan or in any option shall confer upon any optionee any right with
respect to the continuation of his or her employment by the Company, its parent, or any subsidiary
or interfere in any way with the right of the Company at any time to terminate such employment or
to increase or decrease the compensation of the optionee.

     18. Other Employee Benefits.

     Except as to plans which by their terms include such amounts as compensation, the amount of
any compensation deemed to be received by an employee as a result of the exercise of an option or
the sale of shares received upon such exercise will not constitute compensation with respect to
which any other employee benefits of such employee are determined, including, without limitation,
benefits under any bonus, pension, profit-sharing, life insurance or salary continuation plan,
except as otherwise specifically determined by the Board of Directors.

     19. Amendment of the Plan.

     (a) The Board of Directors may at any time, and from time to time, modify or amend the Plan in
any respect, except that if at any time the approval of the shareholders of the Company is required
under Section 422 of the Code or any successor provision with respect to Incentive Stock Options,
the Board of Directors may not effect such modification or amendment without such approval.

     (b) The termination or any modification or amendment of the Plan shall not, without

 

 

the
consent of an optionee, affect his or her rights under an option previously granted to him or her.
With the consent of the optionee affected, the Board of Directors may amend outstanding option
agreements in a manner not inconsistent with the Plan. The Board of Directors shall have the right
to amend or modify the terms and provisions of the Plan and of any outstanding Incentive Stock
Options granted under the Plan to the extent necessary to qualify any or all such options for such
favorable federal income tax treatment (including deferral of taxation upon exercise) as may be
afforded incentive stock options under Section 422 of the Code.

     20. Withholding.

     The Company shall have the right to deduct from payments of any kind otherwise due to the
optionee any federal, state or local taxes of any kind required by law to be withheld with respect
to any shares issued upon exercise of options under the Plan. Subject to the prior approval of the
Company, which may be withheld by the Company in its sole discretion, the optionee may elect to
satisfy such obligations, in whole or in part, by causing the Company to withhold Ordinary Shares
otherwise issuable pursuant to the exercise of an option. The shares so delivered or withheld
shall have a fair market value equal to such withholding obligation. The fair market value of the
shares used to satisfy such withholding obligation shall be determined by the Company as of the
date that the amount of tax to be withheld is to be determined.

     21. Cancellation and New Grant of Options, Etc.

     The Board of Directors shall have the authority to effect, at any time and from time to time,
with the consent of the affected optionees, (i) the cancellation of any or all outstanding options
under the Plan and the grant in substitution therefor of new options under the Plan covering the
same or different numbers of Ordinary Shares and having an option exercise price per share which
may be lower or higher than the exercise price per share of the cancelled options, or (ii) the
amendment of the terms of any and all outstanding options under the Plan to provide an option
exercise price per share which is higher or lower than the then current exercise price per share of
such outstanding options.

     22. Effective Date and Duration of the Plan.

     (a) Effective Date. The Plan shall become effective as of the date marked below, but
no Incentive Stock Option granted under the Plan shall become exercisable unless and until the Plan
shall have been approved by the Company’s shareholders. If such shareholder approval is not
obtained within twelve months after the effective date of the Plan, no options previously granted
under the Plan shall be deemed to be Incentive Stock Options and no Incentive Stock Options shall
be granted thereafter. Amendments to the Plan not requiring shareholder approval shall become
effective when adopted by the Board of Directors; amendments requiring shareholder approval (as
provided also in Section 19) shall become effective when adopted by the Board of Directors, but no
Incentive Stock Option granted after the date of such amendment shall become exercisable (to the
extent that such amendment to the Plan was required to enable the Company to grant such Incentive
Stock Option to a particular optionee) unless and until such amendment shall have been approved by
the Company’s shareholders. If such shareholder

 

 

approval is not obtained within twelve months of
the Board’s adoption of such amendment, any Incentive Stock Options granted on or after the date of
such amendment shall terminate to the extent that such amendment to the Plan was required to enable
the Company to grant such option to a particular optionee. Subject to this limitation, options may
be granted under the Plan at any time after the effective date and before the date fixed for
termination of the Plan.

     (b) Termination. Unless sooner terminated in accordance with Section 16, the Plan
shall terminate, with respect to all options granted in accordance to the Plan (Incentive Stock
Options and options which are not Incentive Stock Options), upon the earlier of (i) the close of
business on the day next preceding the tenth anniversary of the date of its adoption by the Board
of Directors, or (ii) the date on which all shares available for issuance under the Plan shall have
been issued pursuant to the exercise or cancellation of options granted under the Plan. If the
date of termination is determined under (i) above, then options outstanding on such date shall
continue to have force and effect in accordance with the provisions of the instruments evidencing
such options.

     23. Provision for Foreign Participants.

     The Board of Directors may, without amending the Plan, modify awards or options granted to
participants who are foreign nationals or employed outside the United States to recognize
differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to
tax, securities, currency, employee benefit or other matters.

     24. Issuance to Escrow Agent.

     The Company may issue non Incentive Options to an escrow agent (the “Escrow Agent”), approved
by the Israel Income Tax Authority for the purpose of Section 102 of the Israeli Income Tax
Ordinance (New Version) and its regulations, as amended from time to time (the “Ordinance”). Such
escrowed Options, although not subject to Section 102 of the Ordinance, shall be held by the Escrow
Agent in escrow for the benefit of such optionees until exercised or expired in accordance with the
provisions of the Plan or the Stock Option Agreement.EX-10.16

 

Exhibit 10.16

VOLTAIRE ADVANCED DATA SECURITY LTD.

(The “Company”)

2001 SECTION 102 STOCK OPTION/STOCK PURCHASE PLAN

(the “Plan”)

	1.	 	Purpose

The Plan is intended to provide a method whereby employees (including officers and directors who
are employees) of the Company may be offered an opportunity to acquire Ordinary Shares, par value
NIS 4.00 (“Ordinary Shares” or “Shares”) of the Company, in order to increase their proprietary
interests in the Company and their incentive to remain in and advance in the employ of the Company.

Accordingly, the Company may, from time to time, grant restricted employee stock options (“Employee
Stock Options”) or enter into restricted stock purchase agreements (“Restricted Stock Purchase
Agreements”) for the purchase of Ordinary Shares of the Company on the terms and conditions
hereinafter established, to such employees as may be selected in the manner hereinafter provided.
Such Option Agreements or Purchase Agreements may differ among recipients. Employee Stock Options
or Restricted Stock Purchase Agreements and the Shares issuable thereunder shall be held in escrow
for the benefit of such employees by or in the name of an escrow agent approved for such purposes
by the Israel Income Tax Authority (the “EscrowAgent”), as set forth herein.

Employee Stock Options are referred to herein as “Option(s)”, Stock Option Agreements as “Option
Agreements” and the Shares acquired pursuant to an Option Agreement as “Exercised Shares”.
Recipient/s of Options under this Plan are herein referred to as “Optionee” or “Optionees”.
Restricted Stock Purchase Agreements are referred to herein as “Purchase Agreement(s)” and the
Shares acquired pursuant to a Purchase Agreement as “Purchased Shares”.

	2.	 	Application of Section 102 of the Income Tax Ordinance

	 	(a)	 	The provisions governing the exemption of tax for options granted or shares issued
to employees as embodied in Section 102 of the Israeli Income Tax Ordinance (New Version)
and its regulations, as amended from time to time(the “Ordinance”), and the Income Tax
Rules (Tax Benefits in Stock Issuance to Workers) 5349-1989, as amended from time to time
(the “Rules”), shall apply to the Plan, the Options and the Purchased Shares. The Escrow
Agent and each employee participating in this Plan shall comply with the Ordinance and
Rules and with the Escrow Agreement entered into between the Company and the Escrow
Agent.
	 
	 	(b)	 	The Option, the Exercised Shares or the Purchased Shares, as the case may be, shall
be held by the Escrow Agent for at least two years from the date of the grant of the
Option or of the acquisition of the Purchased Shares, as the case may be, or for a
different minimum escrow period required under the Ordinance if Section

 

2

	 	 	 	102(a)(2) of the Ordinance is amended (such minimum escrow period, as shall be from
time to time, shall hereinafter be referred to as the “Minimum Holding Period”).
Subject to any additional period agreed to under the Option Agreement or the Purchase
Agreement, the Escrow Agent may release the Options or Shares to the employee only
after (i) the receipt by the Escrow Agent of an acknowledgment from the Income Tax
Authority that the employee has paid any applicable tax due pursuant to the Ordinance
and the Rules, or (ii) the Escrow Agent withholds any applicable tax due pursuant to
the Ordinance and Rules.
	 
	 	(c)	 	No Optionee participating in this Plan shall claim an exemption from Israeli tax
pursuant to part E of the Ordinance or Section 95 or Section 97(a) of the Ordinance in
connection with a transfer by such Optionee of an Option or Purchased Shares prior to the
end of the “Holding Period” as defined in Rule 1(i) of the Rules.
	 
	 	(d)	 	Each participating Optionee shall be obligated to immediately notify the Company
and the Escrow Agent of his request, if any, to the Income Tax Authority pursuant to Rule
6(b) of the Rules in the event the Purchased Shares or the Shares underlying the Options
are registered on any stock exchange. Nothing herein shall obligate the Company to
register its shares or any portion of its shares on a stock exchange.
	 
	 	(e)	 	In the event a share dividend (bonus shares) is declared by the Company, such
dividend shares with respect of the Option or the Purchased Shares shall be subject to
the provisions of Sections 2 and 7 and the holding period for such dividend shares shall
be measured from the commencement of the holding period for the relevant Option or
Purchased Shares.
	 
	 	(f)	 	The exemption under Section 102 of the Ordinance shall be forfeited and the
Optionee shall be required to pay any applicable tax promptly at such time as: (i) the
Optionee’s employment is terminated during the two year holding period (other than
because of death or some other reason acceptable to the Income Tax Authority); (ii) the
Company or the Optionee fails to comply with one or more other conditions for the
exemption as required by the Ordinance, Rules or Income Tax Authority; or (iii) the
Income Tax Authority withdraws or cancels the exemption for the Plan or the particular
Optionee. Notwithstanding the loss of an exemption, the Escrow Agent shall continue to
hold the Purchased Shares or Option (to the extent the Option remains exercisable
following termination of employment) for the remainder of the applicable holding period
under Section 102 of the Ordinance.

	3.	 	Administration.
	 
	 	 	The Plan shall be administered by a Stock Option Committee (the “Committee”) appointed by the
Board of Directors of the Company. The Committee shall consist of no fewer than two members who
may also be members of the Board of Directors of the Company. Subject to the terms and
conditions of the Plan, all applicable laws and relevant commitments of the Company, the
Committee shall have full and maximum authority in its discretion, from time to time, and at
any time, to grant, or recommend to the Board of Directors of the Company, as applicable, the
employees to whom Options or Purchase Agreements shall be granted, to determine or recommend
the number of shares to be
covered by each Option or Purchase Agreement, the time at which the Option shall

 

3

	 	 	be granted,
the terms and conditions of Option Agreements or Purchase Agreements, and, except as
hereinafter provided, the purchase price of Option or Purchased Shares, the term during which
the Options may be exercised, and to authorize the shares allotment pursuant to the exercise of
the options.
	 
	 	 	The Board of Directors of the Company may at any time appoint or remove members of the
Committee and may fill vacancies, however caused, in the Committee. The Committee shall select
one of its members as its Chairman, and shall hold its meetings at such time and place as it
shall deem advisable. All actions of the Committee shall be taken by a majority of its members
and can be taken by written consent in lieu of a meeting. The Committee shall make such rules
and regulations for the conduct of its business as it shall deem advisable.
	 
	4.	 	Interpretation and Amendment
	 
	 	 	The interpretation, construction or determination of any provisions of the Plan by the
Committee or the Board of Directors of the Company shall be final and conclusive. No member of
the Board of Directors or the Committee shall be liable for any action or determination made in
good faith with respect to the Plan.
	 
	 	 	The Board of Directors may, at any time, amend, alter, suspend or terminate the Plan; provided,
however, that any such action shall not adversely affect any Options or Purchase Agreements
granted under the Plan.
	 
	5.	 	Participants
	 
	 	 	Options may be granted and Purchase Agreements may be entered into pursuant to the Plan solely
to or with employees of the Company (including employees who are also directors or officers of
the Company) (recipients of stock options under this Plan are herein referred to as “Optionee”
or “optionees”).
	 
	 	 	Receipt of stock options or Purchased Shares under this Plan or under any other stock option
plan maintained by the Company shall not, for that reason, preclude an Optionee from receiving
Options or Purchased Shares under the Plan, provided however, that no Optionee shall be granted
an Option or Purchase Agreement if prior to the grant or as a result of the exercise of the
Option or acquisition of Purchased Shares, such Optionee would hold, directly or indirectly in
his name or with a relative as defined in the Ordinance (i) 10% of the outstanding shares of
the Company, (ii) 10% of the voting power of the Company, (iii) the right to hold or purchase
10% of the outstanding equity or voting power, (iv) the right to obtain 10% of the “profit” or
(v) the right to appoint a director, all as defined in section 32(9) of the Ordinance.
	 
	6.	 	Shares Subject to the Plan

	 	(a)	 	The number of Shares which may be issued and sold pursuant to Purchase Agreements
or Options granted under the Plan from time to time shall be determined from time to time
by the Board of Directors of the Company.
	 
	 	(b)	 	Purchased Shares will be issued to the Escrow Agent for the benefit of the employee
who shall have only such rights of a shareholder as are set forth in the
Purchase Agreement therefor, including restrictions on voting and on the right to
consent to or approve action affecting the Company or its shareholders.

 

4

	 	(c)	 	The Escrow Agent shall vote the Purchased Shares in accordance with the directions
of the Board of Directors of the Company. The Escrow Agent will have no rights to equity
participation as to Ordinary Shares held in escrow except as otherwise specified by the
Board of Directors.
	 
	 	(d)	 	In the event an employee’s rights do not vest in the Options or Purchased Shares,
such options or shares may be reissued under the Plan and, pending re-issuance, the
Escrow Agent shall vote the Purchased Shares in accordance with the directions of the
Board of Directors.

	7.	 	Adjustment Provisions for Recapitalizations and Related Transactions

	 	(a)	 	General. If, through or as a result of any merger, consolidation, sale of
all or substantially all of the assets of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other similar
transaction, (i) the outstanding Ordinary Shares of the Company are increased, decreased
or exchanged for a different number or kind of shares or other securities of the Company,
or (ii) additional shares or new or different shares or other securities of the Company or
other non-cash assets are distributed with respect to such Ordinary Shares or other
securities, an appropriate and proportionate adjustment shall be made in (x) the maximum
number and kind of shares reserved for issuance under the Plan, (y) the number and kind of
            shares or other securities subject to any then outstanding options under the Plan, and (z)
the price for each share subject to any then outstanding options under the Plan, without
changing the aggregate purchase price as to which such options remain exercisable.
Notwithstanding the foregoing, no adjustment shall be made pursuant to this Section 7 if
such adjustment would cause the Plan to fail to comply with Section 102 of the Ordinance.
If this Section 7 applies and Section 8 also applies to any event, then Section 8 shall be
applicable to such event and this Section 7 shall not be applicable.
	 
	 	(b)	 	Board Authority to Make Adjustments. Any adjustments under this Section 7
will be made by the Board of Directors of the Company, whose determination as to what
adjustments, if any, will be made and the extent thereof will be final, binding and
conclusive. No fractional shares will be issued under the Plan on account of any such
adjustments.

	8.	 	Merger, Consolidation, Asset Sale, Liquidation, etc.

	 	(a)	 	General. Upon the occurrence of an Acquisition Event (as defined below) the
Board of Directors of the Company shall take any one or more of the following actions with
respect of the then outstanding options: (i) provide that such options shall be assumed,
or equivalent options shall be substituted, by the acquiring or succeeding corporation (or
an affiliate thereof), provided that any such options substituted for the Options
shall meet the requirements of Section 102 of the Ordinance, (ii) upon written notice to
the Optionees, provide that all the then unexercised options will become exercisable in
full as of a specified time (the “Acceleration Time”) prior to the Acquisition Event and
will terminate
immediately prior to the consummation of such Acquisition Event, except to the extent
exercised by the Optionees between the Acceleration Time and the consummation of such
Acquisition Event, (iii) in the event of a merger under the

 

5

	 	 	 	terms of which holders of
outstanding Ordinary Shares of the Company will receive upon consummation thereof a
cash payment for each share surrendered in the merger (the “Merger Price”), make or
provide for a cash payment to the Optionees equal to the difference between (A) the
Merger Price times the number of shares of Ordinary Shares subject to such
outstanding options (whether or not then exercisable at prices not in excess of the
Merger Price) and (B) the aggregate exercise price of all such outstanding options in
exchange for the termination of such options, or (iv) upon written notice to the
Optionees, provide that all the then vested and unvested outstanding options will
terminate immediately prior to the consummation of such Acquisition Event, and to the
extent the vested Options shall have not been exercised prior to the Acquisition
Event, all such Options shall become null and void at the consummation of such
Acquisition Event.
	 
	 	 	 	Notwithstanding the above, the Company, by the Committee, may provide in the Option
Agreement itself the action/s to be taken with respect to the outstanding options at
the time of an Acquisition Event from the actions listed above. In such a case, the
Board of Directors shall not be entitled to take a different action at the
Acquisition Event with respect of such options without the consent of the Optionee.
	 
	 	 	 	An “Acquisition Event” shall mean: (a) any merger or consolidation which results in
the voting securities of the Company outstanding immediately prior thereto
representing immediately thereafter (either by remaining outstanding or by being
converted into voting securities of the surviving or acquiring entity) less than 50%
of the combined voting power of the voting securities of the Company or such
surviving or acquiring entity outstanding immediately after such merger or
consolidation, (b) any sale of all or substantially all of the assets of the Company,
or (c) the complete liquidation of the Company.
	 
	 	(b)	 	Substitute Options. The Company may grant options under the Plan in
substitution for options held by employees of another corporation who become employees of
the Company, or a subsidiary of the Company, as the result of a merger or consolidation of
the employing corporation with the Company or a subsidiary of the Company, or as a result
of the acquisition by the Company, or one of its subsidiaries, of property or stock of the
employing corporation. the Company may direct that substitute options be granted on such
terms and conditions as the Board of Directors of the Company considers appropriate in the
circumstances.

	9.	 	Terms and Conditions of Options and Purchase Agreements

Options and Purchase Agreements granted pursuant to the Plan shall be in such form and on such
terms as the Committee shall, from time to time, approve, but subject, nevertheless, to the
following terms and conditions:

	 	(a)	 	The Option or Purchase Agreement shall state the total number of Shares to which it
relates and no fractional shares shall be issued.
	 
	 	(b)	 	The purchase price or exercise price per Share issuable upon execution of the
Purchase Agreement or upon the exercise of an Option, as the case may be, shall be such
amount as may be determined by the Board of Directors or the Committee, and such price
shall be set forth in the Purchase Agreement or

 

6

	 	 	 	Option Agreement, as the case may be.
	 
	 	(c)	 	Notwithstanding any other provision of the Plan, the term of an Option shall be for a
period of not more than ten (10) years from the date such Option is granted.
	 
	 	(d)	 	Notwithstanding any other provisions of the Plan, the Escrow Agent shall hold the
Purchased Shares or the Option, as the case may be, in favor of an employee or his
successors or heirs for at least the Minimum Holding Period of the Option or purchase of
Purchased Shares or such longer period as may be required for the full exercise of the
Option or vesting of rights in the Purchased Shares as provided under the Option Agreement
or Purchase Agreement, as the case may be.
	 
	 	(e)	 	The Option Agreement shall state the time or times at which it may be exercised in
whole or in part and such terms shall be incorporated into and be made a part of the
Option Agreement.
	 
	 	(f)	 	The Options or Purchased Shares acquired pursuant to a Purchase Agreement under the
Plan shall not be sold, transferred, or otherwise disposed of and shall not be pledged or
otherwise hypothecated, except as provided in this Plan and restrictions against
disposition shall lapse and the employee’s interest therein shall vest as set forth in the
Purchase or Option Agreement.
	 
	 	(g)	 	All tax liabilities (as may apply from time to time) in connection with the grant
and/or exercise of the Options, will be born by the Optionee, and the Optionee will be
solely liable for all such taxes.

	10.	 	Limitations on Exercising the Options 

The Option Agreement may provide that even if such Option is fully vested in accordance to the
Option Agreement, the Optionee shall not be entitled to exercise the Option prior to a certain
period of time or the occurrence of certain events as shall be set forth in the Option Agreement.

	11.	 	Termination of Employment

Subject to the provisions of the Plan, the Option Agreement shall specify the extent to which the
Option may be exercised following (i) the termination of the optionee’s employment or other
relationship with the Company or its parent or any subsidiary, or (ii) the death or disability of
the optionee. Such periods shall be set forth in the agreement evidencing such option. Employment
shall not be deemed to be terminated because an optionee is transferred from one of the Company,
its parent, or any subsidiary to another one of the Company, its parent, or any subsidiary.

Notwithstanding the foregoing, any termination of employment prior to the expiration of the Minimum
Holding Period required under Section 102 of the Ordinance and Rules may subject the employee to
forfeiture of the tax benefits available under Section 102 of the Ordinance.

	12.	 	Death

Subject to Section 10 above and to the provisions of Section 102 of the Ordinance, the Option
Agreement may provide that if the Optionee shall die while in the employ of the Company,

 

7

his
estate, personal representative or beneficiary as determined be a competent court shall have the
right to exercise the Option granted to the Optionee with respect of the total number of shares as
to which the Optionee would have been entitled to exercise at the date of his death in accordance
with Section 102 of the Ordinance and under the terms and conditions stated in the Option
Agreement.

	13.	 	Non Transferability

Options are not assignable or transferable, except by will or the laws of descent and distribution
to the extent set forth in Section 12 above. During the Optionee’s lifetime the Options may be
exercised only by the Optionee.

	14.	 	Exercise of Options

An Optionee electing to exercise an Option shall give written notice to the Company to that effect.
Such notice will identify the number and part of options to be exercised, will be signed by
Optionee along with full payment for the option as specified in Section 16 (b) below. Upon the
receipt of the exercise price as above mentioned the Company shall notify the Escrow Agent who
shall then act in accordance with Section 2(b) above, the Company shall deliver to the Escrow Agent
or the option holder the Exercised Shares.

An Optionee shall have no rights of a stockholder with respect to Exercised Shares until the
issuance to him of a stock certificate representing the Exercised Shares. A holder of Purchased
Shares shall have such rights of a stockholder as are set forth in the Purchase Agreement therefor.

	15.	 	Written Option and Purchase Agreement

Purchase Agreements and Option Agreements shall be in writing, duly executed and delivered by or on
behalf of the Company and the employee, and shall contain such terms and conditions as the
Committee deems advisable. If case of any conflict between the terms and conditions of any Option
Agreement or Purchase Agreement and those of the Plan, the terms and conditions of the Plan shall
take precedence and prevail.

	16.	 	Payment

	 	(a)	 	The employee shall waive a portion of his salary payment in consideration for the
Option or Purchased Shares, as the case may be.
	 
	 	(b)	 	The purchase price or option exercise price, as the case may be, shall be payable in
cash or by certified check or by any other means agreed upon, at the discretion of the
Board of Directors. Conversion of NIS into foreign currency shall be according to the
official rate of exchange on the date of payment.

	17.	 	Restrictions on Issuing Shares

The exercise of each Option or issuance of Purchased Shares shall be subject to the condition that
if at any time the Company shall determine in its discretion that the satisfaction of withholding
tax or other withholding liabilities, or that the listing, registration, or qualification of any
shares otherwise deliverable upon such exercise by any securities exchange or under any national,
state or federal law, or that the consent or approval of any regulatory body, is necessary or
desirable as a condition of, or in connection with, such

 

8

exercise or purchase of shares pursuant
thereto, then such exercise or issuance of Shares shall not be effective unless such withholding,
listing, registration, qualification, consent or approval shall have been effected or obtained free
of any conditions not acceptable to the Company.

	18.	 	Shares Subject To Right of First Refusal
	 
	(a)	 	Notwithstanding anything to the contrary in the Articles of Association of the Company, none
of the Optionees shall have a right of first refusal in relation with any sale of the
Exercised Shares.
	 
	(b)	 	Until such time as the Company shall effectuate an IPO or an Acquisition Event, the sale of
Exercised Shares by the Optionee shall be subject to a right of first refusal and Bring Along
of other shareholders, as set forth in the Articles of Association of the Company and/or in
the Option Agreement.
	 
	19.	 	Term of Plan

The Plan shall terminate ten (10) years after its adoption by the Board of Directors, and no Option
shall be granted pursuant to the Plan after that date.

	20.	 	Application of Funds

The proceeds received by the Company from the sale of Shares pursuant to Purchase Agreements or the
exercise of Options granted under the Plan will be used for general corporate purposes.

	21.	 	Obligation to Exercise Option

The grant of Option shall impose no obligation on the option holder to exercise such option.

	22.	 	Continuance of Employment

Neither the Plan nor any Purchase Agreement or Option Agreement shall impose any obligation on the
Company to continue the employment of any Optionee or purchaser, and nothing in the Plan or in any
Option or Purchase Agreement shall confer upon any holder any right to continue in the employment
of the Company or conflict with the right of either to terminate such employment at any time.

	23.	 	Effectiveness of the Plan

The Plan shall become effective on the date of its adoption by the Board of Directors, but subject,
nevertheless, to such approvals as may be required by any public authorities, including but not
limited to the Income Tax Authority.

	24.	 	Liability, Indemnification and Termination of Escrow Agent 

In no event shall the Escrow Agent be liable to the Company and/or any participant of the Plan
and/or any third party (including but not limited to the income tax authorities and any other
governmental or administrative authority, or to a purchaser of shares from any participant of the
Plan) with respect to any act which has been or will be carried out and/or any opinion which has
been or will be given in relation to the Plan, its execution and any

 

9

matter connected thereto or
arising therefrom. The Company will not, and the participant will be required to covenant upon
signing the Option Agreement or the Purchase Agreement that he/she will not, make any claim against
the Escrow Agent in any manner whatsoever; The Company and the participant expressly agree that if
the Escrow Agent is sued by any of them, then the Escrow Agent shall be entitled by virtue of this
Section to dismiss of the action filed against it, with costs. The Company covenants and agrees
that if an action is commenced by any third party against the Escrow Agent in connection with the
Plan, it shall agree to participate in such an action, whether as a defendant or as a third party,
as the case may be, and any judgement or expense decided by the court against the Escrow Agent will
be paid by the Company.

The Company further covenants and any participant will be required to covenant to indemnify the
Escrow Agent against any liability in relation to any claim and/or demand made against the Escrow
Agent by any person whatsoever, including the tax authorities, in relation to its acts or omissions
in connection with the Plan.

Subject to ninety (90) days prior written notice, each of the Company or the Escrow Agent shall be
entitled to notify the other party of its intention to terminate this trusteeship with respect to
the Plan. Within the aforementioned notice period, the Company shall nominate a new Escrow Agent
for the Plan, and shall then notify the existing Escrow Agent and the tax authority of the new
escrow agent’s identity. The existing Escrow Agent shall then transfer its obligations under the
Plan to the new escrow agent. The Company and/or the participants shall have no claim against the
Escrow Agent under such circumstances, and the Company and/or the participants shall take all
necessary actions in order to facilitate such transfer.

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