Document:

Unassociated Document

Exhibit 10.8

 

AMENDED AND RESTATED

 

WHITESMOKE, INC.

 

INVESTORS’ RIGHTS AGREEMENT

 

June 30, 2009

 

  

  

  

  

WHITESMOKE, INC.

 

AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

 

This Amended and Restated Investors’ Rights Agreement (the “Agreement”) is made as of June 30, 2009 by and among WhiteSmoke, Inc., a Delaware corporation (the “Company”), and the investors listed on Exhibit A hereto, each of which is herein referred to as an “Investor” and together the “Investors”, and (i) the holders of Series A Preferred Stock and the holders of Series A-1 Preferred Stock listed on Exhibit B hereto; (ii) the holders of Series B Preferred Stock and the holders of Series B-l Preferred Stock listed on Exhibit C hereto.

 

RECITALS

 

The Company and the Investors have entered into an Investors’ Rights Agreement dated January 1, 2008 (the “IRA”), and whereas the parties have determined to amend Sections 1.12 and 1.13 of the IRA in accordance with the terms herewith and to restate the IRA in its entirety including such amendments.

 

The Company and the Investors are parties to the Series C Preferred Stock Purchase Agreement of even date herewith (the “Purchase Agreement”).  In order to induce the Investors to purchase shares of Series C Preferred Stock and invest funds in the Company pursuant to the Purchase Agreement, the Company hereby agrees that this Agreement shall govern the rights of the Investors, the holders of Series B Preferred Stock and the holders of Series B-l Preferred Stock, to cause the Company to register shares of Common Stock issued or issuable to them and certain other matters as set forth herein.

 

AGREEMENT

 

The parties hereby agree as follows:

 

1.           Registration Rights.  The Company and the Investors covenant and agree as follows:

 

1.1           Definitions.  For purposes of this Agreement:

 

(a)           The term “Affiliated Fund” means, with respect to a Holder that is a limited liability company or a limited liability partnership, a fund or entity managed by the same manager or managing member or general partner or management company or by an entity controlling, controlled by, or under common control with such manager or managing member or general partner or management company;

 

(b)          The term “Exchange Act” means the Securities Exchange Act of 1934, as amended (and any successor thereto) and the rules and regulations promulgated thereunder;

 

  

 

  

(c)           The term “Form S-3” means such form under the Securities Act as in effect on the date hereof or any successor form under the Securities Act that permits significant incorporation by reference of the Company’s subsequent public filings under the Exchange Act;

 

(d)          The term “Holder” means any person owning or having the right to acquire Registrable Securities or any assignee thereof in accordance with Section 1.12 of this Agreement;

 

(e)           The term “Major Investor” means any holder of Preferred Stock holding that holds at least 5% of the outstanding shares of Common Stock (assuming conversion of all outstanding Preferred Shares) of the Company;

 

(f)           The term “Major Investors Group” means the groups of holders of Preferred Stock listed on Exhibit D hereto;

 

(g)          The term “Qualified IPO” means a firm commitment underwritten public offering by the Company of shares of its Common Stock with aggregate offering proceeds of at least $10 million, at a Company’s valuation of at least $50 million, in connection with which all the then-outstanding shares of Preferred Stock are converted into shares of Common Stock pursuant to the Company’s Restated Certificate of Incorporation as such Restated Certificate of Incorporation may be amended from time to time;

 

(h)          The terms “register,” “registered,” and “registration” refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement or document;

 

(i)           The term “Registrable Securities” means (i) the shares of Common Stock issuable or issued upon conversion of the Series C Preferred Stock, the holders of Series B Preferred Stock and Series B-l Preferred Stock, other than shares for which registration rights have terminated pursuant to Section 1.15 hereof, and (ii) any other shares of Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares listed in (i); excluding in all cases any Registrable Securities sold by a person in a transaction in which his or her rights under this Agreement are not assigned.  Notwithstanding the foregoing, Common Stock or other securities shall only be treated as Registrable Securities if and so long as (A) they have not been sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction, (B) they have not been sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act under Section 4(1) thereof so that all transfer restrictions, and restrictive legends with respect thereto, if any, are removed upon the consummation of such sale, or (C) the Holder thereof is entitled to exercise any right provided in Section 1 in accordance with Section 1.15 below;

 

  

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(j)           The number of shares of “Registrable Securities then outstanding” shall be determined by the number of shares of Common Stock outstanding which are, and the number of shares of Common Stock issuable pursuant to then exercisable or convertible securities which are, Registrable Securities;

 

(k)           The term “SEC” means the Securities and Exchange Commission; and

 

(l)            The term “Securities Act” means the Securities Act of 1933, as amended (and any successor thereto) and the rules and regulations promulgated thereunder.

 

1.2           Request for Registration.

 

(a)           If the Company shall receive at any time after six months after the effective date of the Qualified IPO, a written request from the Holders of a majority of the Registrable Securities then outstanding (the “Initiating Holders”) that the Company file a registration statement under the Securities Act covering the registration of Registrable Securities with an anticipated aggregate offering price of at least $2,000,000 (net of any underwriters’ discounts or commissions), then the Company shall, within 20 days of receiving such request, give written notice of such request to all Holders and shall, subject to the limitations of subsection 1.2(b), use all commercially reasonable efforts to effect a registration statement under the Securities Act covering all Registrable Securities which the Holders request to be registered within 20 days of the mailing of such notice by the Company.

 

(b)           If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request and the Company shall include such information in the written notice referred to in subsection 1.2(a).  The underwriter will be selected by the Company, which underwriter shall be reasonably acceptable to a majority in interest of the Holders whose Registrable Securities are to be included in the underwriting.  In such event, the right of any Holder to include his Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder) to the extent provided herein.  The Company and all Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting.  Notwithstanding any other provision of this Section 1.2, if the underwriter advises the Company in good faith that marketing factors require a limitation of the number of shares to be underwritten, then there shall be excluded from such registration and underwriting to the extent necessary to satisfy such limitation, first shares held by stockholders other than the Holders, secondly, shares which the Company may wish to register for its own account, and finally to the extent necessary Registrable Securities (pro rata to the respective number of Registrable Securities held by each Holder); provided, however, that in any event all Registrable Shares must be included in such registration prior to any other shares of the Company.

 

  

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(c)           Notwithstanding the foregoing, if the Company shall furnish to Holders requesting a registration statement pursuant to this Section 1.2, a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholders for such registration statement to be filed, the Company shall have the right to defer such filing for a period of not more than 120 days after receipt of the request of the Initiating Holders; provided, however, that the Company may not utilize this right more than once in any twelve-month period, and provided, further, that the Company shall not register any securities for the account of itself or any other stockholder during such 120-day period (other than in a Qualified IPO, a registration relating solely to the sale of securities of participants in a Company stock plan, a registration relating to a corporate reorganization or transaction under Rule 145 of the Securities Act, or a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities which are also being registered).

 

(d)           In addition, the Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to this Section 1.2:

 

(i)           After the Company has effected two (2) registrations pursuant to this Section 1.2 and such registrations have been declared or ordered effective;

 

(ii)          During the period starting with the date 90 days prior to the Company’s good faith estimate of the date of filing of, and ending on a date 90 days after the effective date of, a registration subject to Section 1.3 hereof unless such offering is the initial public offering of the Company’s securities, in which case, ending on a date 180 days after the effective date of such registration subject to Section 1.3 hereof; provided that the Company is actively employing in good faith all commercially reasonable efforts to cause such registration statement to become effective;

 

(iii)         If the Initiating Holders propose to dispose of shares of Registrable Securities that may be immediately registered on Form S-3 pursuant to a request made pursuant to Section 1.4 below; or

 

(iv)        In any jurisdiction in which the Company would be required to qualify to do business or execute a general consent to service of process in effecting such registration, unless the Company is already qualified to do business or subject to service of process in such jurisdiction.

 

  

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1.3           Company Registration.

 

(a)           If the Company proposes to register (including for this purpose a registration effected by the Company for stockholders other than the Holders) any of its stock under the Securities Act in connection with the public offering of such securities solely for cash (other than a registration relating solely to the sale of securities to participants in a Company stock plan or a transaction covered by Rule 145 under the Securities Act, a registration in which the only stock being registered is Common Stock issuable upon conversion of debt securities which are also being registered, or any registration on any form which does not include substantially the same information as would be required to be included in a registration statement covering the sale of the Registrable Securities), the Company shall, at such time, promptly give each Holder written notice of such registration.  Upon the written request of each Holder given within 20 days after mailing of such notice by the Company in accordance with Section 3.4, the Company shall, subject to the provisions of Section 1.8, use all commercially reasonable efforts to cause to be registered under the Securities Act all of the Registrable Securities that each such Holder has requested to be registered.

 

(b)           The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 1.3 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration.  The expenses of such registration shall be borne by the Company, in accordance with Section 1.7 hereof.

 

1.4           Form S-3 Registration.  In case the Company shall receive from any Holder or Holders a written request or requests that the Company effect a registration on Form S-3 and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holder or Holders where the aggregate net proceeds from the sale of such Registrable Shares equals to at least five hundred United States dollars ($500,000), the Company will within twenty (20) days after receipt of any such request:

 

(a)           promptly give written notice of the proposed registration, and any related qualification or compliance, to all other Holders; and

 

  

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(b)           use all commercially reasonable efforts to effect, as soon as practicable, such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holder’s or Holders’ Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holder or Holders joining in such request as are specified in a written request given within 15 days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance, pursuant to this Section 1.4:  (i) if Form S-3 is not available for such offering by the Holders; (ii) if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public of less than $5,000,000(net of any underwriters’ discounts or commissions); (iii) if the Company shall furnish to the Holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholders for such Form S-3 Registration to be effected at such time, in which event the Company shall have the right to defer the filing of the Form S-3 registration statement for a period of not more than 120 days after receipt of the request of the Holder or Holders under this Section 1.4; provided, however, that the Company shall not utilize this right more than once in any 12-month period; (iv) if the Company has, within the 12-month period preceding the date of such request, already effected two registrations on Form S-3 for the Holders pursuant to this Section 1.4; (v) in any jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already qualified to do business or subject to service of process in that jurisdiction; or (vi) during the period ending 180 days after the effective date of a registration statement subject to Section 1.3.

 

(c)           Subject to the foregoing, the Company shall file a registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable after receipt of the request or requests of the Holders.  Registrations effected pursuant to this Section 1.4 shall not be counted as demands for registration or registrations effected pursuant to Sections 1.2 or 1.3, respectively.

 

1.5           Obligations of the Company.  Whenever required under this Section 1 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

 

(a)           Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use all commercially reasonable efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for up to 120 days, or until the distribution described in such registration statement is completed, if earlier.

 

(b)           Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement for up to 120 days, or until the distribution described in such registration statement is completed, if earlier.

 

  

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(c)           Furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them.

 

(d)           Use all commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions unless the Company is already qualified to do business or subject to service of process in that jurisdiction.

 

(e)           In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering.  Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement.

 

(f)           Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, such obligation to continue for 120 days.

 

(g)           Cause all such Registrable Securities registered pursuant to this Section 1 to be listed on each national securities exchange or trading system on which similar securities issued by the Company are then listed.

 

(h)           Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration.

 

1.6           Information From Holders.  It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 1 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be required to effect the registration of such Holder’s Registrable Securities.  The Company shall have no obligation with respect to any registration requested pursuant to Section 1.2 or Section 1.4 of this Agreement if, as a result of the application of the preceding sentence, the anticipated aggregate offering price of the Registrable Securities to be included in the registration does not equal or exceed the anticipated aggregate offering price required to originally trigger the Company’s obligation to initiate such registration as specified in subsection 1.2(a) or subsection 1.4(b)(2), whichever is applicable.

 

  

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1.7           Expenses of Registration.  All expenses other than underwriting discounts and commissions incurred in connection with registrations, filings or qualifications pursuant to Sections 1.2, 1.3 and 1.4 including (without limitation) all registration, filing and qualification fees, printers’ and accounting fees, fees and disbursements of counsel for the Company, and the reasonable fees and disbursements of one counsel for the selling Holders selected by them with the approval of the Company, which approval shall not be unreasonably withheld, shall be borne by the Company; provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 1.2 or 1.4 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all participating Holders shall bear such expenses), unless the Holders of a majority of the Registrable Securities agree to forfeit their right to one demand registration pursuant to Section 1.2; provided further, however, that if at the time of such withdrawal, the Holders (i) have learned of a material adverse change in the condition, business, or prospects of the Company that was not known to the Holders at the time of their request and (ii) have withdrawn the request with reasonable promptness following disclosure by the Company of such material adverse change, then the Holders shall not be required to pay any of such expenses and shall not forfeit their rights pursuant to Section 1.2.

 

1.8           Underwriting Requirements.  In connection with any offering involving an underwriting of shares of the Company’s capital stock, the Company shall not be required under Section 1.3 to include any of the Holders’ securities in such underwriting unless they accept the terms of the underwriting as agreed upon between the Company and the underwriters selected by the Company (or by other persons entitled to select the underwriters), and then only in such quantity as the underwriters determine in their sole discretion will not jeopardize the success of the offering by the Company.  If the total amount of securities, including Registrable Securities, requested by stockholders to be included in such offering exceeds the amount of securities sold other than by the Company that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters determine in their sole discretion will not jeopardize the success of the offering (the securities so included to be apportioned pro rata among the selling stockholders according to the total amount of securities entitled to be included therein owned by each selling stockholder or in such other proportions as shall mutually be agreed to by such selling stockholders) but in no event shall the amount of securities of the selling Holders included in the offering be reduced below 40% of the total amount of securities included in such offering, unless such offering is the initial public offering of the Company’s securities, in which case, the selling stockholders may be excluded if the underwriters make the determination described above and no other stockholder’s securities are included.  For purposes of the preceding parenthetical concerning apportionment, for any selling stockholder which is a holder of Registrable Securities and which is a venture capital fund, or a partnership or corporation, the Affiliated Funds, partners, retired partners and stockholders of such holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single “selling stockholder,” and any pro-rata reduction with respect to such “selling stockholder” shall be based upon the aggregate amount of shares carrying registration rights owned by all entities and individuals included in such “selling stockholder,” as defined in this sentence.

 

  

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1.9           Delay of Registration.  No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 1.

 

1.10         Indemnification.  In the event any Registrable Securities are included in a registration statement under this Section 1:

 

(a)           To the extent permitted by law, the Company will indemnify and hold harmless each Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a “Violation”):  (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law; and the Company will pay to each such Holder, underwriter or controlling person, as incurred, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this subsection 1.10(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable to any Holder, underwriter or controlling person for any such loss, claim, damage, liability, or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder, underwriter or controlling person.

 

  

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(b)           To the extent permitted by law, each selling Holder will indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter, any other Holder selling securities in such registration statement and any controlling person of any such underwriter or other Holder, against any losses, claims, damages, or liabilities (joint or several) to which any of the foregoing persons may become subject, under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will pay, as incurred, any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this subsection 1.10(b), in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this subsection 1.10(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; provided, that in no event shall any indemnity under this subsection 1.10(b) exceed the net proceeds from the offering received by such Holder, except in the case of willful fraud by such Holder.

 

(c)           Promptly after receipt by an indemnified party under this Section 1.10 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 1.10, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the reasonable fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding.  The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 1.10, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 1.10.

 

  

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(d)           If the indemnification provided for in this Section 1.10 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable considerations; provided, that in no event shall any contribution by a Holder under this Subsection 1.10(d) exceed the net proceeds from the offering received by such Holder, except in the case of willful fraud by such Holder.  The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission.

 

(e)           Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

 

(f)           The obligations of the Company and Holders under this Section 1.10 shall survive the completion of any offering of Registrable Securities in a registration statement under this Section 1, and otherwise.

 

1.11         Reports Under the Exchange Act.  With a view to making available to the Holders the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company agrees to:

 

(a)           Make and keep public information available, as those terms are understood and defined in SEC Rule 144, at all times after 90 days after the effective date of the Qualified BPO so long as the Company remains subject to the periodic reporting requirements under Sections 13 or 15(d) of the Exchange Act;

 

(b)           Take such action, including the voluntary registration of its Common Stock under Section 12 of the Exchange Act, as is necessary to enable the Holders to utilize Form F-3 for the sale of their Registrable Securities, such action to be taken as soon as practicable after the end of the fiscal year in which the first registration statement filed by the Company for the offering of its securities to the general public is declared effective;

 

(c)           File with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

 

  

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(d)           Furnish to any Holder upon request, so long as the Holder owns any Registrable Securities, (i) a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144 (at any time after 90 days after the effective date of the Qualified IPO), the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form F-3 (at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC which permits the selling of any such securities without registration or pursuant to such form.

 

1.12         Assignment of Registration Rights.  The rights to cause the Company to register Registrable Securities pursuant to this Section 1 may be assigned (but only with all related obligations) by a Holder to a transferee or assignee (i) of at least 100,000 shares of such securities (subject to adjustment for stock splits, stock dividends, reclassification or the like), (ii) that is a subsidiary, parent, partner, limited partner, retired partner, member, retired member or stockholder of a Holder, (iii) that is an Affiliated Fund, (iv) who is a Holder’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (such a relation, a Holder’s “Immediate Family Member”, which term shall include adoptive relationships), or (v) that is a trust for the benefit of an individual Holder or such Holder’s Immediate Family Member, provided that the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; and provided, further, that such assignment shall be effective only if the transferee agrees to be bound by this Agreement and immediately following such transfer the further disposition of such securities by the transferee or assignee is restricted under the Securities Act.  For the purposes of determining the number of shares of Registrable Securities held by a transferee or assignee, the holdings of transferees and assignees of (x) a partnership who are partners or retired partners of such partnership or (y) a limited liability company who are members or retired members of such limited liability company (including Immediate Family Members of such partners or members who acquire Registrable Securities by gift, will or intestate succession) shall be aggregated together and with the partnership or limited liability company; provided that all assignees and transferees who would not qualify individually for assignment of registration rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices or taking any action under Section 1.  For the avoidance of doubt, the foregoing terms of this Section 1.12 shall not apply to the Warrant issued to Kreos (each, as defined below) (which may be freely assigned subject to the terms of the Warrant), but shall apply with respect to the Conversion Shares (as defined in the Warrant) following the exercise of the Warrant.

 

  

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1.13         Limitations on Subsequent Registration Rights.  Other than with respect to the issuance by the Company to Kreos Capital III (“Kreos”) of a Warrant dated________, attached hereto as Exhibit 1.13 (the “Warrant”), for the purchase by Kreos of up to 80,000 Series C Preferred Shares (the “Warrant Shares”), including with respect to the Conversion Shares, as defined in the Warrant, into which the Warrant Shares are convertible and which Conversion Shares would constitute Registrable Securities hereunder, from and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the outstanding Registrable Securities, enter into any agreement with any holder or prospective holder of any securities of the Company which would allow such holder or prospective holder (a) to include any of such securities in any registration filed under Section 1.2 hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of his securities will not reduce the amount of the Registrable Securities of the Holders which is included or (b) to make a demand registration which could result in such registration statement being declared effective prior to the earlier of either of the dates set forth in subsection 1.2(a) or within 120 days of the effective date of any registration effected pursuant to Section 1.2.  For the avoidance of doubt, the foregoing restrictions shall not apply to the Conversion Shares underlying the Warrant issued to Kreos.

 

1.14           Lock-Up Agreement.

 

(a)           Lock-Up Period; Agreement.  In connection with the initial public offering of the Company’s securities and upon request of the underwriters managing such offering of the Company’s securities, each Holder agrees not to sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company, however or whenever acquired (other than those included in the registration) without the prior written consent of such underwriters for such period of time (not to exceed 180 days) from the effective date of such registration statement as may be requested by the managing underwriters and to execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of the Company’s initial public offering.

 

(b)           Limitations.  The obligations described in Section 1.14(a) shall apply only if all officers and directors of the Company and all holders of greater than 1% (one percent) of the Company’s securities enter into similar agreements, and shall not apply to a registration relating solely to employee benefit plans, or to a registration relating solely to a transaction pursuant to Rule 145 under the Securities Act.

 

(c)           Stop-Transfer Instructions.  In order to enforce the foregoing covenants, the Company may impose stop-transfer instructions with respect to the securities of each Holder (and the securities of every other person subject to the restrictions in Section 1.14(a)).

 

(d)           Transferees Bound.  Each Holder agrees that prior to the Company’s initial public offering it will not transfer securities of the Company unless each transferee agrees in writing to be bound by all of the provisions of this Section 1.14, provided that this Section 1.14(d) shall not apply to transfers pursuant to a registration statement or transfers after the 12-month anniversary of the effective date of the Company’s initial registration statement subject to this Section 1.14.

 

  

13

  

 

1.15         Termination of Registration Rights.  No Holder shall be entitled to exercise any right provided for in this Section 1 after the earlier of (i) five (5) years following the consummation of a Qualified IPO, (ii) with respect to any Holder, at such time after the Qualified IPO as Rule 144 or another similar exemption under the Securities Act is available for the sale of all of such Holder’s shares during a three-month period without registration, or (iii) upon termination of the Agreement, as provided in Section 3.1.

 

2.           Covenants of the Company.

 

2.1           Delivery of Financial Statements.  The Company shall deliver to each Major Investor and to shareholders designated as representatives for such purpose by each Major Investors Group:

 

(a)           as soon as practicable, but in any event within 90 days after the end of each fiscal year of the Company, an income statement for such fiscal year, a balance sheet of the Company and statement of stockholder’s equity as of the end of such year, and a statement of cash flows for such year, such year-end financial reports to be in reasonable detail, prepared in accordance with generally accepted accounting principles (“GAAP”), and audited and certified by an accounting firm associated with one of the “Big 4” US accounting firms selected by the Company;

 

(b)           as soon as practicable, but in any event within 45 days after the end of each of the first three quarters of each fiscal year of the Company, an unaudited profit or loss statement, a statement of cash flows for such fiscal quarter and an unaudited balance sheet as of the end of such fiscal quarter, reviewed by an accounting firm associated with one of the “Big 4” US accounting firms selected by the Company;

 

(c)           within 14 days of the end of each month, a monthly report in a form agreed by the Board of Directors;

 

(d)           as soon as practicable, but in any event 45 days prior to the end of each fiscal year, a budget and operating plan for the next fiscal year, prepared on a monthly basis, and, as soon as prepared, any other updated or revised budgets for such fiscal year prepared by the Company; and

 

(e)           with respect to the financial statements called for in subsections (b) and (c) of this Section 2.1, an instrument executed by the Chief Financial Officer or President of the Company and certifying that such financials were prepared in accordance with GAAP consistently applied with prior practice for earlier periods (with the exception of footnotes that may be required by GAAP) and fairly present the financial condition of the Company and its results of operation for the period specified, subject to year-end audit adjustment, provided that the foregoing shall not restrict the right of the Company to change its accounting principles consistent with GAAP, if the Board of Directors determines that it is in the best interest of the Company to do so.

 

  

14

  

 

2.2           Inspection.  The Company shall permit each Major Investor and each shareholder designated as a representative for such purpose by each Major Investors Group, at such Major Investor’s and Major Investors Group’s expense, to visit and inspect the Company’s properties, to examine its books of account and records and to discuss the Company’s affairs, finances and accounts with its officers, all at such reasonable times as may be requested by the Major Investor or by such representatives of the Major Investors Groups; provided, however, that the Company shall not be obligated pursuant to this Section 2.2 to provide access to any information which it reasonably considers to be a trade secret or similar confidential information.

 

2.3           Right of First Offer.  Subject to the terms and conditions specified in this Section 2.3, the Company hereby grants to each Major Investor and the Major Investors Groups listed in Exhibit D hereto (as long as each Major Investors Group continues to hold in the aggregate at least 5% of the Company’s voting rights) (collectively for the purpose of this Section 2.3, “Investors”) a right of first offer with respect to future sales by the Company of its Shares (as hereinafter defined).  A Major Investor or a Major Investors Group who chooses to exercise the right of first offer may designate as purchasers under such right itself or its partners or affiliates, including Affiliated Funds and any member of the Major Investors Groups, in such proportions as it deems appropriate.

 

Each time the Company proposes to offer any shares of, or securities convertible into for any shares of, any class of its capital stock (“Shares”), the Company shall first make an offering of such Shares to each Major Investor and each Major Investors Group in accordance with the following provisions:

 

(a)           The Company shall deliver a notice (the “RFO Notice”) to the Major Investors and to the shareholders designated as representatives for this purpose by each of the Major Investors Groups stating (i) its bona fide intention to offer such Shares, (ii) the number of such Shares to be offered, and (iii) the price and terms, if any, upon which it proposes to offer such Shares.

 

(b)           Within 15 calendar days after delivery of the RFO Notice, each Investor may elect to purchase or obtain, at the price and on the terms specified in the RFO Notice, up to that portion of such Shares which equals the proportion that the number of shares of Common Stock issued and held, or issuable upon conversion of all convertible securities then held, by such Investor bears to the total number of shares of Common Stock then outstanding (assuming full conversion of all convertible securities), provided that a Major Investors Group may only elect to purchase at least 5% of the Shares.  Such purchase shall be completed at the same closing as that of any third party purchasers or at an additional closing thereunder.  The Company shall promptly, in writing, inform each Investor that purchases all the shares available to it (each, a “Fully-Exercising Investor”) of any other Investor’s failure to do likewise.  During the 10-day period commencing after receipt of such information, each Fully-Exercising Investor shall be entitled to obtain that portion of the Shares for which Investors were entitled to subscribe but which were not subscribed for by the Investors that is equal to the proportion that the number of shares of Common Stock issued and held, or issuable upon conversion of all convertible securities then held, by such Fully-Exercising Investor bears to the total number of shares of Common Stock then outstanding (assuming full conversion of all convertible securities).

 

  

15

  

 

(c)           The Company may, during the 45-day period following the expiration of the period provided in subsection 2.3(b) hereof, offer the remaining unsubscribed portion of the Shares to any person or persons at a price not less than, and upon terms no more favorable to the offeree than those specified in the RFO Notice.  If the Company does not enter into an agreement for the sale of the Shares within such period, or if such agreement is not consummated within 90 days of the execution thereof, the right provided hereunder shall be deemed to be revived and such Shares shall not be offered unless first reoffered to the Major Investors and the Major Investors Groups in accordance herewith.

 

(d)           The right of first offer in this Section 2.3 shall not be applicable to (i)the issuance of securities in connection with stock dividends, stock splits or similar transactions; (ii) the issuance or sale of Common Stock (or options therefor) to employees, consultants and directors of the Company, directly or pursuant to a stock option plan, restricted stock purchase plans or other stock plan approved by the Board of Directors; (iii) the issuance of securities in connection with bona fide acquisition, merger or similar transaction, the terms of which are approved by the Board of Directors; (iv) the issuance or sale of the Series C Preferred Stock or the Common Stock issuable upon conversion of the Series A Preferred Stock, the Series A-l Preferred Stock, the Series B Preferred Stock, the Series B-l Preferred Stock and the Series C Preferred Stock; (v) the issuance of Common Stock in a Qualified IPO; or (vi) the issuance of securities with the affirmative vote of at least a majority of the then outstanding shares of Series C Preferred Stock, voting together as a class.  In addition to the foregoing, the right of first offer in this Section 2.3 shall not be applicable with respect to any Major Investor or to any member of a Major Investors Group and any subsequent securities issuance, if (x) at the time of such subsequent securities issuance, the Major Investor or such member of the Major Investor Group is not an “accredited investor”, as that term is then defined in Rule 501(a) under the Securities Act, and (y) such subsequent securities issuance is being offered only to accredited investors according to the unanimous written consent of the Company’s Board of Directors.

 

2.4           Termination of Covenants.

 

(a)           The covenants set forth in Sections 2.1 through Section 2.3 shall terminate as to each Holder and be of no further force or effect (i) immediately prior to the consummation of a Qualified IPO, or (ii) upon termination of the Agreement, as provided in Section 3.1.

 

  

16

  

 

(b)           The covenants set forth in Sections 2.1 and 2.2 shall terminate as to each Holder and be of no further force or effect when the Company first becomes subject to the periodic reporting requirements of Sections 13 or 15(d) of the Exchange Act, if this occurs earlier than the events described in Section 2.4(a) above.

 

3.           Termination of the Investor’s Right Agreement dated December 6, 2006

 

The Company, the holders of Series B Preferred Stock, the holders of Series B-l Preferred Stock the holders of Series A Preferred Stock and the holders of Series A-1 Preferred Stock agree that this Agreement restated, amends, supersedes, and terminates the Investor’s Right Agreement dated December 6, 2006.

 

4.           Miscellaneous

 

4.1           Termination.  This Agreement shall terminate, and have no further force and effect, when the Company shall consummate a transaction or series of related transactions deemed to be a liquidation, dissolution or winding up of the Company pursuant to the Company’s Restated Certificate of Incorporation, as such Restated Certificate of Incorporation may be amended from time to time.

 

4.2           Entire Agreement.  This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof, and any and all other written or oral agreements relating to the subject matter hereof existing between the parties hereto are expressly canceled.

 

4.3           Successors and Assigns.  Except as otherwise provided in this Agreement, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties (including transferees of any of the Series C Preferred Stock, the Series B Preferred Stock, the holders of Series B-l Preferred Stock the Series A Preferred Stock, the holders of Series A-1 Preferred Stock or any Common Stock issued upon conversion thereof).  Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

4.4           Amendments and Waivers.  Any term of this Agreement may be amended or waived only with the written consent of the Company and the holders of a majority of the Registrable Securities then outstanding; provided, however, if such amendment or waiver would adversely affect the rights of a specific series of Preferred Stock in a manner different from the other series of Preferred Stock, then such amendment or waiver shall require the consent of the Investors holding a majority in interest of such series of Preferred Stock; and any amendment or waiver of the rights granted to the Major Investors in Section 2 above shall require the consent of a majority in interest of the Registrable Securities held by the Major Investors.  Any amendment or waiver effected in accordance with this paragraph shall be binding upon each party to the Agreement, whether or not such party has signed such amendment or waiver, each future holder of all such Registrable Securities, and the Company.

 

  

17

  

 

4.5           Notices.  Unless otherwise provided, any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon delivery, when delivered personally or by overnight courier or sent by facsimile, or 48 hours after being deposited in the U.S. mail, as certified or registered mail, with postage prepaid, and addressed to the party to be notified at such party’s address or facsimile number as set forth on Exhibit A hereto or as subsequently modified by written notice.

 

4.6           Severability.  If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement, and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

 

4.7           Governing Law.  This Agreement and all acts and transactions pursuant hereto shall be governed, construed and interpreted in accordance with the laws of the State of Israel, without giving effect to principles of conflicts of laws.

 

4.8           Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

4.9           Titles and Subtitles.  The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

 

4.10         Aggregation of Stock.  All shares of the Preferred Stock held or acquired by affiliated entities or persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.

 

[Signature Page Follows]

 

  

18

  

Exhibit 10.8

 

The parties have executed this Investors’ Rights Agreement as of the date first above written.

 

	
COMPANY:

	  	  
	 	 	 
	
WHITESMOKE, INC.

	  	  
	 	 	 
	
By:

	   	  	  
	
Address: 

	  	  	  
	
Fax:

	  	  	  

INVESTORS

	  	  	  	  	  	  	  	  
	
Alex Hilman Holdings Ltd.

	  	
Lesser Trust.

	  	
Kaedan Investments Ltd.

	  	  	  	  	  	  	  	  
	
By:

	  	  	
By:

	
   

	  	
By:

	
   

	  	  	  	  	  	  	  	  
	
Name: 

	
  

	  	
Name:

	
   

	  	
Name:

	
   

	  	  	  	  	  	  	  	  
	
Title:

	
   

	  	
Title:

	
   

	  	
Title:

	
   

	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	
Gideon Michonik

	  	
G.K Capital Ltd.

	  	
Yair Goldfinger

	  	  	  	  	  	  	  	  
	
By:

	
    

	  	
By:

	
    

	  	
By:

	
    

	  	  	  	  	  	  	  	  
	
 

	   	   	

Name:

	   	  	  	  
	  	  	  	  	   	  	  	  
	
 

	
 

	   	

Title:

	   	   	  	   
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	
BRMR, LLC.

	  	
Robert Gladestone

	  	
Roger Gladestone

	  	  	  	  	  	  	  	  
	
By:

	
  

	  	
By:

	
    

	  	
By:

	
    

	  	  	  	  	  	  	  	  
	
Name:

	
    

	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	
Title:

	
   

	  	  	  	  	  	  

[SIGNATURE PAGE OF INVESTORS’ RIGHTS AGREEMENT]

  

 

  

	  	  	  	  	  	  	  	  
	
Marc Thalheim

	  	
Lindsay Thalheim

	  	
David Thalheim

	  	  	  	  	  	  	  	  
	
By:

	  	  	
By:

	
   

	  	
By:

	
   

	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	
Partam Properties (1993)

Ltd.

	  	
Evolution Venture Capital

Fund I (Israel) LP

	  	
Evolution Venture Capital

Fund I (Exempt) LP

	  	  	  	  	  	  	  	  
	
By:

	
    

	  	
By:

	
    

	  	
By:

	
    

	  	  	  	  	  	  	  	  
	
Name:

	  	  	
Name:

	  	  	
Name:

	  
	  	  	  	  	  	  	  	  
	
Title:

	  	  	
Title:

	  	  	
Title:

	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	
Isard Dunietz (or his successor)1.

	  	
Hagay Tal

	  	
Avenue International Corp.

	  	  	  	  	  	  	  	  
	
By:

	
  

	  	
By:

	
    

	  	
By:

	
    

	 	 	 	 	 	 	 
	
Kopelman Ltd.

	 	 	 	 	 	  
	  	  	  
	
By:

	
  

	  
	  	  	  
	
Name:

	
    

	  
	  	  	  
	
Title:

	
   

	  

 

1 as Trustee of the Isard Dunietz 2006 Trust, created by a Declaration of Trust dated July 19, 2006, as it may be amended or restated from time to time thereafter

 

[SIGNATURE PAGE OF INVESTORS’ RIGHTS AGREEMENT]

  

 

  

Exhibit 10.8

	
HOLDERS OF SERIES A PREFERRED STOCK AND HOLDERS OF SERIES A-1 PREFERRED STOCK:

	  	  	  	  	  	  	  	  
	
Joel Ovil

	  	
Lea Ovil

	  	
Runway Ltd.

	  	  	  	  	  	  	  	  
	
By:

	  	  	
By:

	
   

	  	
By:

	
   

	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	
Name:

	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	
Title:

	  
	  	  	  	  	  	  	  	  
	 	 	 	 	 
	
Netivim School for Professional 

	  	
Aaron Nahumi

	  	
David Aber

	Training and Advanced Studies Ltd.	 	 	 	 	 	 
	  	  	  	
By:

	  	  	
By:

	  
	
By:

	
    

	  	
 

	
     

	   	
 

	
     

	  	  	  	  	  	  	  	  
	
Name:

	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	
Title:

	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	
Chen Zur

	  	
Shani Levona Nechasim Ltd.

	  	
Kaedan Investments Ltd.

	  	  	  	  	  	  	  	  
	
By:

	
  

	  	
By:

	
    

	  	
By:

	
    

	  	  	  	  	  	  	  	  
	  	  	  	
Name:

	  	  	
Name:

	  
	  	  	  	  	  	  	  	  
	  	  	  	
Title:

	  	  	
Title:

	  

	 	 	 	 	 
	
G.K Capital Ltd.

	  	
Gideon Michonik

	  	
Shabtai Nuriel

	  	  	  	  	  	  	  	  
	
By:

	
  

	  	
By:

	
    

	  	
By:

	
    

	  	  	  	  	  	  	  	  
	
Name:

	
    

	  	  	  	  	  	  
	  	  	  	  	  	  	  	  
	
Title:

	
   

	  	  	  	  	  	  

 

[SIGNATURE PAGE OF INVESTORS’ RIGHTS AGREEMENT]

  

 

  

	  	  	  	  	  
	
Yair Goldfinger

	  	
Atom Corp.

	  	
Robert Gladstone

	  	  	  	  	  	  	  	  
	
By:

	  	  	
By:

	  	  	
By:

	  
	  	  	  	  	  	  	  	  
	
 

	   	  	
Name:

	   	  	 	 
	  	  	  	  	  	  	  	  
	
 

	 	 	
Title:

	 	  	 	 
	  	  	  	  	  	  	  	  
	  	  	  	  	  
	
Roger Gladstone

	  	
David Nussbaum

	  	
BRMR, LLC

	  	  	  	  	  	  	  	  
	
By:

	  	  	
By:

	  	  	
By:

	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	
Name:

	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	
Title:

	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  
	
Ted Struhl

	  	
Dalewood Assoc.

	  	
Marc Thalheim

	  	  	  	  	  	  	  	  
	
By:

	  	  	
By:

	  	  	
By:

	  
	  	  	  	  	  	  	  	  
	  	  	  	
Name:

	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	
Title:

	  	  	  	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  
	
Lindsay Thalheim

	  	
David Thalheim

	  	
Zeevi Aber

	  	  	  	  	  	  	  	  
	
By:

	  	  	
By:

	  	  	
By:

	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  
	
Fire Guarantee Ltd.

	  	
Alex Hilman Holdings Ltd.

	  	
Lucian Ventures, Inc.

	  	  	  	  	  	  	  	  
	
By:

	  	  	
By:

	  	  	
By:

	  
	  	  	  	  	  	  	  	  
	
Name:

	  	  	
Name:

	  	  	
Name:

	  
	  	  	  	  	  	  	  	  
	
Title:

	  	  	
Title:

	  	  	
Title:

	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  
	
Oded Broshi

	  	
Arie Kopelman

	  	  	  
	  	  	  	  	  	  	  	  
	
By:

	  	  	
By:

	  	  	  	  

[SIGNATURE PAGE OF INVESTORS’ RIGHTS AGREEMENT]

  

 

  

Exhibit 10.8

	
HOLDERS OF SERIES B PREFERRED STOCK AND HOLDERS OF SERIES B-1 PREFERRED STOCK:

	  	  	  	  	  
	
Joel Ovil

	  	
Lea Ovil

	  	
Runway Ltd.

	  	  	  	  	  
	
By:

	  	  	
By:

	  	  	
By:

	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	
Name:

	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	
Title:

	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  
	
Netivim Ltd.

	  	
Aaron Nahumi

	  	
Lucian Ventures, Inc.

	  	  	  	  	  
	
By:

	  	  	
By:

	  	  	
By:

	  
	  	  	  	  	  	  	  	  
	
Name:

	  	  	  	  	  	
Name:

	  
	  	  	  	  	  	  	  	  
	
Title:

	  	  	  	  	  	
Title:

	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  
	
Chen Zur

	  	
Shani Levona Nechasim Ltd.

	  	
Kaedan Investments Ltd.

	  	  	  	  	  
	
By:

	  	  	
By:

	  	  	
By:

	  
	  	  	  	  	  	  	  	  
	
 

	 	  	
Name:

	 	  	
Name:

	  
	  	  	  	  	  	  	  	  
	
 

	 	  	
Title:

	  	  	
Title:

	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  
	
Gideon Micholnik

	  	
G.K Capital Ltd.

	  	
Shabtai Nuriel

	  	  	  	  	  
	
By:

	  	  	
By:

	  	  	
By:

	  
	  	  	  	  	  	  	  	  
	
 

	 	  	

Name:

	 	  	  	  
	  	  	  	  	  	  	  	  
	
 

	 	  	

Title:

	 	  	  	  

 

	  	  	  	  	  	  	  	  
	  	  	  	  	  
	
Yair Goldfinger

	  	
Richard Gladstone

	  	
Robert Gladstone

	  	  	  	  	  
	
By:

	  	  	
By:

	  	  	
By:

	  

[SIGNATURE PAGE OF INVESTORS’ RIGHTS AGREEMENT]

  

 

  

	  	  	  	  	  	  	  	  
	
Roger Gladstone

	  	
David Nussbaum

	  	
BRMR, LLC.

	  	  	  	  	  
	
By:

	  	  	
By:

	  	  	
By:

	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	
Name:

	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	
Title:

	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  
	
Lindsay Thalheim

	  	
David Thalheim

	  	
Alex Hilman Holdings Ltd.

	  	  	  	  	  	  	  	  
	
By:

	  	  	
By:

	  	  	
By:

	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	
Name:

	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  	
Title:

	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  
	
Andrew Rosen

	  	
Avenue International Corp.

	  	
Partam Properties (1993) Ltd.

	  	  	  	  	  	  	  	  
	
By:

	  	  	
By:

	  	  	
By:

	  
	  	  	  	  	  	  	  	  
	  	  	  	
Name:

	  	  	
Name:

	  
	  	  	  	  	  	  	  	  
	  	  	  	
Title:

	  	  	
Title:

	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  
	
Petty & Chris Conway

	  	
Evolution Venture Capital  Fund I (Israel) LP

	  	
Evolution Venture Capital Fund I (Exempt) LP

	  	  	  	  	  	  	  	  
	
By:

	  	  	
By:

	  	  	
By:

	  
	  	  	  	  	  	  	  	  
	  	  	  	
Name:

	  	  	
Name:

	  
	  	  	  	  	  	  	  	  
	  	  	  	
Title:

	  	  	
Title:

	  
	  	  	  	  	  	  	  	  
	  	  	  	  	  	  
	
Oded Broshi

	  	
Arie Kopelman

	  	  	  
	  	  	  	  	  	  	  	  
	
By:

	  	  	
By:

	  	  	  	  

[SIGNATURE PAGE OF INVESTORS’ RIGHTS AGREEMENT]

  

 

  

Exhibit 10.8

 

EXHIBIT B

 

INVESTORS

 

	
Name

	  
	
Lesser Trust

	  
	
BRMR, LLC

	  
	
Kaedan Investments Ltd.

	  
	
Marc Thalheim

	  
	
G.K. Capital Ltd.

	  
	
Lindsay Thalheim

	  
	
Gideon Michonik

	  
	
David Thalheim

	  
	
Yair Goldfinger

	  
	
Alex Hilman Holdings Ltd.

	  
	
Roger Gladstone

	  
	
Partam Properties (1993) Ltd.

	  
	
Robert Gladstone

	  
	
Evolution Venture Capital Fund I (Israel) LP

	  
	
Plimus Corporation, Inc.

	  
	
Evolution Venture Capital Fund (Exempt) LP

	  
	
Isard Dunietz (or his successor)) as Trustee of the Isard Dunietz 2006 Trust, created by a Declaration of Trust dated July 19, 2006, as it may be amended or restated from time to time thereafter

	  
	
Avenue International Corp.

	  
	
Kopelman Ltd.

  

B-1

  

 

Exhibit 10.8

 

EXHIBIT B

 

HOLDERS OF SERIES A PREFERRED STOCK AND HOLDERS OF SERIES A-1 PREFERRED STOCK

 

	
Name

	  
	
Joel Ovil

	  
	
Lea Ovil

	  
	
Runway Ltd.

	  
	
Netivim Ltd.

	  
	
Aaron Nahumi

	  
	
David Aber

	  
	
Lucian Ventures, Inc.

	  
	
Chen Zur

	  
	
Shani Levona Nechasim Ltd.

	  
	
Kaedan Investments Ltd.

	  
	
G.K. Capital Ltd.

	  
	
Gideon Michonik

	  
	
Shabtai Nuriel

	  
	
Yair Goldfinger

	  
	
Atom Corp.

	  
	
Robert Gladstone

	  
	
Roger Gladstone

	  
	
David Nussbaum

	  
	
BRMR, LLC

	  
	
Ted Struhl

	  
	
Dalewood Assoc.

	  
	
Marc Thalheim

  

B-1

  

	
Lindsay Thalheim

	  
	
David Thalheim

	  
	
Zeevi Aber

	  
	
Fire Guarantee Ltd.

	  
	
Alex Hilman Holdings Ltd.

	  
	
Oded Broshi

	  
	
Arie Kopelman

  

B-2

  

Exhibit 10.8

EXHIBIT C

 

HOLDERS OF SERIES B PREFERRED STOCK AND HOLDERS OF SERIES B-1 PREFERRED STOCK

 

	
Name

	  
	
Joel Ovil

	  
	
Lea Ovil

	  
	
Runway Ltd.

	  
	
Netivim Ltd.

	  
	
Aaron Nahumi

	  
	
Lucian Ventures, Inc.

	  
	
Chen Zur

	  
	
Shani Levona Nechasim Ltd.

	  
	
Kaedan Investments Ltd.

	  
	
G.K Capital Ltd.

	  
	
Gideon Michonik

	  
	
Shabtai Nuriel

	  
	
Yair Goldfinger

	  
	
Richard Gladstone

	  
	
Robert Gladstone

	  
	
Roger Gladstone

	  
	
David Nussbaum

	  
	
BRMR, LLC

	  
	
Ted Struhl

	  
	
Dalwood Assoc.

	  
	
Marc Thalheim

	  
	
Lindsay Thalheim

  

C-1

  

 

	
David Thalheim

	  
	
Alex Hilman Holdings Ltd.

	  
	
Avenue International Corp.

	  
	
Partam Properties (1993) Ltd.

	  
	
Andrew Rosen

	  
	
Petty & Chris Conway

	  
	
Evolution Venture Capital Fund I (Israel) LP

	  
	
Evolution Venture Capital Fund I (Exempt) LP

	  
	
Oded Broshi

	  
	
Arie Kopelman

  

C-2

  

Exhibit 10.8

 

EXHIBIT D

 

MAJOR INVESTORS GROUPS

 

	
Group A

	
Joel Ovil

	
Lea Ovil

	
Runway Ltd.

	
Netivim Ltd.

	
Aaron Nahumi

	
David Aber

	
Lucian Ventures, Inc.

	
Chen Zur

	
Shani Levona Nechasim Ltd.

	
Zeevi Aber

	
Fire Guarantee Ltd.

	
Alex Hilman Holdings Ltd.

	
Arnon Katz

	
Partam Properties (1993) Ltd.

	  
	
Group B

	
Kaedan Investments Ltd.

	
G.K. Capital Ltd.

	
Gideon Michonik

	
Shabtai Nuriel

	
Yair Goldfinger

	  
	
Group C

	
Atom Corp.

	
Robert Gladstone

	
Roger Gladstone

	
David Nussbaum

	
BRMR, LLC

	
Ted Struhl

	
Dalewood Assoc.

	
Marc Thalheim

	
Lindsay Thalheim

	
David Thalheim

	
Andrew Rosen

	
Petty & Chris Conway

  

D-1

  

Exhibit 10.8

WhiteSmoke, Inc.

	  	 	
Capitalization Table as of Nov 2010

	 	 	 	 
	
Shareholder

	 	
Common

stock

	 	 	
Series A

convertible

preferred

stock

	 	 	
Series A-1

convertible

preferred

stock

	 	 	
Series B

convertible

preferred

stock

	 	 	
Series B-1

convertible

preferred

stock

	 	 	
Series C

preferred

stock

	 	 	
Series D

preferred

stock -

from

two

bridgle

loans

	 	 	
Series D

preferred

stock –

conversion

from

C shares

	 	 	
Total

Shares

	 	 	
Options

(common

stock)

	 	 	
Warrants

to

purchase

shares

(common

unless

otherwise

stated)

	 	 	
Options

from

round 09

	 	 	
Warrants

to

purchase

shares D

	 	 	
Total

	 	 	
%

Shares

	 	 	
% Fully

Diluted

	 
	
Liran Brenner

	 	 	82,900	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	82,900	 	 	 	273,696	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	358,595	 	 	 	1.16	%	 	 	3.88	%
	
Hilla Ovil-Brenner

	 	 	82,900	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	82,900	 	 	 	273,698	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	358,598	 	 	 	1.16	%	 	 	3.88	%
	
Joel Ovil

	 	 	58,500	 	 	 	53,100	 	 	 	 	 	 	 	6,200	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	117,800	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	117,800	 	 	 	1.65	%	 	 	1.26	%
	
Lea Ovil

	 	 	58,500	 	 	 	53,000	 	 	 	 	 	 	 	6,200	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	117,700	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	117,700	 	 	 	1.65	%	 	 	1.26	%
	
Michael Hartman *

	 	 	15,000	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	15,000	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	15,000	 	 	 	0.21	%	 	 	0.10	%
	
Tara Hartman *

	 	 	15,000	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	15,000	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	15,000	 	 	 	0.21	%	 	 	0.10	%
	
Nadine Nelson

	 	 	7,500	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	7,500	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	7,500	 	 	 	0.11	%	 	 	0.08	%
	
Simone Dell

	 	 	7,500	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	7,500	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	7,500	 	 	 	0.11	%	 	 	0.08	%
	
Porsa Morris

	 	 	4,500	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	4,500	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	4,500	 	 	 	0.00	%	 	 	0.05	%
	
2003 ESOP****

	 	 	600	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	600	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	800	 	 	 	0.01	%	 	 	0.01	%
	
Ofir Shabtal

	 	 	40,624	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	40,624	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	40,824	 	 	 	0.57	%	 	 	0.44	%
	
Avi Saranga

	 	 	1,200	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	1,200	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	1,200	 	 	 	0.02	%	 	 	0.01	%
	
Shiri Tzadok

	 	 	600	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	600	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	600	 	 	 	0.01	%	 	 	0.01	%
	
Nitzan Gadot *

	 	 	6,000	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	6,000	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	6,000	 	 	 	0.08	%	 	 	0.07	%
	
Yochial Kimhi **

	 	 	6,000	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	6,000	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	6,000	 	 	 	0.05	%	 	 	0.07	%
	
Eyal Babagani

	 	 	41,250	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	41,250	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	41,250	 	 	 	0.58	%	 	 	0.45	%
	
D.N.L.U. Trustees Ltd.

	 	 	0	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	3,100	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	3,100	 	 	 	0.00	%	 	 	0.03	%
	
FBC & Co.

	 	 	0	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	9,200	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	9,200	 	 	 	0.00	%	 	 	0.10	%
	
Atir Hardof

	 	 	0	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	2,300	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	2,300	 	 	 	0.00	%	 	 	0.03	%
	
Runway Ltd.

	 	 	0	 	 	 	152,400	 	 	 	 	 	 	 	10,629	 	 	 	 	 	 	 	6,000	 	 	 	 	 	 	 	 	 	 	 	169,028	 	 	 	0	 	 	 	0	 	 	 	1,500	 	 	 	 	 	 	 	170,526	 	 	 	2.37	%	 	 	1.85	%
	
Netivim Ltd.

	 	 	0	 	 	 	70,100	 	 	 	 	 	 	 	3,543	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	73,643	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	73,043	 	 	 	1.03	%	 	 	0.80	%
	
Aaron Nahumi

	 	 	0	 	 	 	70,100	 	 	 	 	 	 	 	5,314	 	 	 	 	 	 	 	2,681	 	 	 	 	 	 	 	 	 	 	 	76,095	 	 	 	0	 	 	 	0	 	 	 	670	 	 	 	 	 	 	 	78,765	 	 	 	1.10	%	 	 	0.60	%
	
David Aber

	 	 	0	 	 	 	37,200	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	37,200	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	37,200	 	 	 	0.52	%	 	 	0.40	%
	
Lesser Trust

	 	 	0	 	 	 	205,500	 	 	 	 	 	 	 	162,483	 	 	 	 	 	 	 	0	 	 	 	110,954	 	 	 	76,764	 	 	 	577,682	 	 	 	0	 	 	 	0	 	 	 	3,715	 	 	 	110,954	 	 	 	692,351	 	 	 	8.11	%	 	 	7.53	%
	
Chen Zur

	 	 	41,360	 	 	 	140,500	 	 	 	 	 	 	 	28,344	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	210,204	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	210,204	 	 	 	2.95	%	 	 	2.29	%
	
Shani O.D.E. 1094 ltd.

	 	 	0	 	 	 	32,000	 	 	 	 	 	 	 	4,825	 	 	 	 	 	 	 	0	 	 	 	10,501	 	 	 	2,200	 	 	 	49,624	 	 	 	0	 	 	 	0	 	 	 	327	 	 	 	10,501	 	 	 	60,451	 	 	 	0.70	%	 	 	0.06	%
	
Kaedan Investments Ltd.

	 	 	1,750	 	 	 	56,200	 	 	 	 	 	 	 	45,338	 	 	 	 	 	 	 	0	 	 	 	28,593	 	 	 	17,557	 	 	 	149,438	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	28,593	 	 	 	178,032	 	 	 	2.10	%	 	 	1.94	%
	
Kaedan Capital Ltd.

	 	 	0	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	1,016	 	 	 	6,963	 	 	 	7,978	 	 	 	0	 	 	 	0	 	 	 	992	 	 	 	1,016	 	 	 	9,988	 	 	 	0.11	%	 	 	0.11	%
	
G.K. Capital Ltd.

	 	 	0	 	 	 	56,200	 	 	 	 	 	 	 	32,772	 	 	 	 	 	 	 	0	 	 	 	25,212	 	 	 	16,464	 	 	 	130,647	 	 	 	0	 	 	 	0	 	 	 	844	 	 	 	25,212	 	 	 	156,703	 	 	 	1.83	%	 	 	1.70	%
	
Gideon Michonik

	 	 	1,250	 	 	 	56,200	 	 	 	 	 	 	 	43,567	 	 	 	 	 	 	 	0	 	 	 	29,670	 	 	 	28,046	 	 	 	158,733	 	 	 	0	 	 	 	0	 	 	 	994	 	 	 	29,670	 	 	 	189,397	 	 	 	2.23	%	 	 	2.06	%
	
Shabtai Nuriel

	 	 	0	 	 	 	56,200	 	 	 	 	 	 	 	4,429	 	 	 	 	 	 	 	0	 	 	 	9,197	 	 	 	3,785	 	 	 	73,611	 	 	 	0	 	 	 	0	 	 	 	538	 	 	 	 	 	 	 	74,150	 	 	 	1.03	%	 	 	0.81	%
	
Yair Goldfinger

	 	 	0	 	 	 	175,600	 	 	 	 	 	 	 	144,433	 	 	 	 	 	 	 	0	 	 	 	83,283	 	 	 	77,068	 	 	 	490,394	 	 	 	0	 	 	 	0	 	 	 	3,124	 	 	 	93,283	 	 	 	586,811	 	 	 	0.88	%	 	 	6.38	%
	
Richard Gladstone

	 	 	0	 	 	 	51,700	 	 	 	 	 	 	 	24,012	 	 	 	 	 	 	 	0	 	 	 	11,576	 	 	 	4,763	 	 	 	92,651	 	 	 	0	 	 	 	0	 	 	 	678	 	 	 	 	 	 	 	93,329	 	 	 	1.30	%	 	 	1.02	%
	
Robert Gladstone

	 	 	0	 	 	 	51,700	 	 	 	 	 	 	 	18,678	 	 	 	 	 	 	 	0	 	 	 	10,534	 	 	 	4,393	 	 	 	85,305	 	 	 	0	 	 	 	0	 	 	 	626	 	 	 	 	 	 	 	85,931	 	 	 	1.20	%	 	 	0.93	%
	
Roger Gladstone

	 	 	0	 	 	 	51,700	 	 	 	 	 	 	 	24,812	 	 	 	 	 	 	 	0	 	 	 	20,494	 	 	 	25,191	 	 	 	121,998	 	 	 	0	 	 	 	0	 	 	 	776	 	 	 	20,484	 	 	 	143,270	 	 	 	1.71	%	 	 	1.58	%
	
David Nussbaum

	 	 	0	 	 	 	51,700	 	 	 	 	 	 	 	14,711	 	 	 	 	 	 	 	0	 	 	 	17,630	 	 	 	4,145	 	 	 	88,188	 	 	 	0	 	 	 	0	 	 	 	500	 	 	 	17,630	 	 	 	106,406	 	 	 	1.24	%	 	 	1.16	%
	
BRMR, LLC

	 	 	0	 	 	 	51,700	 	 	 	 	 	 	 	36,004	 	 	 	 	 	 	 	24,953	 	 	 	 	 	 	 	 	 	 	 	112,857	 	 	 	0	 	 	 	0	 	 	 	1,238	 	 	 	 	 	 	 	113,895	 	 	 	1.58	%	 	 	1.24	%
	
Ted Struhl

	 	 	0	 	 	 	51,700	 	 	 	 	 	 	 	24,612	 	 	 	 	 	 	 	0	 	 	 	11,693	 	 	 	6,161	 	 	 	94,165	 	 	 	0	 	 	 	0	 	 	 	877	 	 	 	 	 	 	 	95,042	 	 	 	1.32	%	 	 	1.03	%
	
Dalewood Assoc.

	 	 	2,785	 	 	 	51,700	 	 	 	 	 	 	 	24,612	 	 	 	 	 	 	 	0	 	 	 	20,258	 	 	 	4,763	 	 	 	104,128	 	 	 	0	 	 	 	0	 	 	 	675	 	 	 	20,258	 	 	 	125,084	 	 	 	1.40	%	 	 	1.36	%
	
Mark Thalheim

	 	 	0	 	 	 	10,300	 	 	 	 	 	 	 	4,464	 	 	 	 	 	 	 	0	 	 	 	4,342	 	 	 	3,815	 	 	 	22,822	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	4,342	 	 	 	27,264	 	 	 	0.32	%	 	 	0.30	%
	
Lindsay Thalheim

	 	 	0	 	 	 	10,300	 	 	 	 	 	 	 	4,464	 	 	 	 	 	 	 	0	 	 	 	4,342	 	 	 	3,815	 	 	 	22,922	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	4,342	 	 	 	27,264	 	 	 	0.32	%	 	 	0.30	%
	
David Thalheim

	 	 	0	 	 	 	31,100	 	 	 	 	 	 	 	13,449	 	 	 	 	 	 	 	0	 	 	 	13,101	 	 	 	11,516	 	 	 	69,156	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	13,101	 	 	 	52,268	 	 	 	0.97	%	 	 	0.89	%
	
Zeevi Aber

	 	 	0	 	 	 	12,400	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	12,400	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	12,400	 	 	 	0.17	%	 	 	0.13	%
	
Fire Guarantee Ltd.

	 	 	0	 	 	 	13,900	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	13,900	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	13,900	 	 	 	0.20	%	 	 	0.15	%
	
Alex Hilman Holdings Ltd.

	 	 	913	 	 	 	20,700	 	 	 	 	 	 	 	9,125	 	 	 	 	 	 	 	0	 	 	 	9,149	 	 	 	10,297	 	 	 	50,184	 	 	 	0	 	 	 	0	 	 	 	369	 	 	 	9,148	 	 	 	59,702	 	 	 	0.70	%	 	 	0.05	%
	
2005 ESOP

	 	 	0	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	154,524	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	154,524	 	 	 	0.00	%	 	 	1.68	%
	
Avenue International Corp.

	 	 	0	 	 	 	0	 	 	 	 	 	 	 	132,881	 	 	 	 	 	 	 	0	 	 	 	23,534	 	 	 	46,650	 	 	 	202,865	 	 	 	0	 	 	 	0	 	 	 	1,752	 	 	 	 	 	 	 	204,617	 	 	 	2.85	%	 	 	2.23	%
	
Partam High-Tech Ltd.

	 	 	0	 	 	 	0	 	 	 	 	 	 	 	177,148	 	 	 	 	 	 	 	0	 	 	 	30,829	 	 	 	55,450	 	 	 	266,457	 	 	 	0	 	 	 	0	 	 	 	1,807	 	 	 	 	 	 	 	205,204	 	 	 	3.74	%	 	 	2.02	%
	
Andrew Rosen

	 	 	0	 	 	 	0	 	 	 	 	 	 	 	22,143	 	 	 	 	 	 	 	0	 	 	 	3,359	 	 	 	1,382	 	 	 	20,884	 	 	 	0	 	 	 	0	 	 	 	107	 	 	 	 	 	 	 	27,081	 	 	 	0.38	%	 	 	0.29	%
	
Patty & Chris Conway

	 	 	0	 	 	 	0	 	 	 	 	 	 	 	22,143	 	 	 	 	 	 	 	0	 	 	 	3,721	 	 	 	5,724	 	 	 	31,588	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	31,588	 	 	 	0.44	%	 	 	0.34	%
	
Reservation for ESOP

	 	 	0	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	230,638	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	230,638	 	 	 	0.00	%	 	 	2.51	%
	
Oded Broshi

	 	 	205,703	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	205,703	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	205,703	 	 	 	2.69	%	 	 	2.24	%
	
Arie Kopelman

	 	 	66,568	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	68,588	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	68,568	 	 	 	0.98	%	 	 	0.75	%
	
Evolution Venture Capital Fund I (Israel) LP

	 	 	0	 	 	 	0	 	 	 	 	 	 	 	527,398	 	 	 	 	 	 	 	0	 	 	 	266,758	 	 	 	236,172	 	 	 	1,330,358	 	 	 	0	 	 	 	0	 	 	 	8,719	 	 	 	266,788	 	 	 	1,605,866	 	 	 	18.67	%	 	 	17.47	%
	
Evolution Venture Capital Fund I (Exempt) LP

	 	 	0	 	 	 	0	 	 	 	 	 	 	 	501,212	 	 	 	 	 	 	 	0	 	 	 	161,612	 	 	 	143,008	 	 	 	805,893	 	 	 	0	 	 	 	0	 	 	 	5,262	 	 	 	161,612	 	 	 	972,787	 	 	 	11.31	%	 	 	10.58	%
	
EarliBirdCapital Inc. ***

	 	 	0	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	0.00	%	 	 	0.00	%
	
Maxim Partners LLC ***

	 	 	0	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	0.00	%	 	 	0.00	%
	
Kroos Capital III ****

	 	 	0	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	0	 	 	 	0.00	%	 	 	0.00	%
	
Iaard Dunlotz (or his successor), as Trustee of

	 	 	0	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	116,098	 	 	 	73,634	 	 	 	189,730	 	 	 	0	 	 	 	0	 	 	 	465	 	 	 	116,090	 	 	 	306,311	 	 	 	2.66	%	 	 	3.33	%
	
Plimus Corporation, Inc

	 	 	0	 	 	 	0	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	40,000	 	 	 	 	 	 	 	 	 	 	 	40,000	 	 	 	0	 	 	 	0	 	 	 	 	 	 	 	 	 	 	 	40,000	 	 	 	0.56	%	 	 	0.44	%
	
Kopelman Ltd

	 	 	 	 	 	 	 	 	 	 	47,635	 	 	 	 	 	 	 	75,500	 	 	 	0	 	 	 	37,718	 	 	 	42,138	 	 	 	202,891	 	 	 	 	 	 	 	0	 	 	 	2,500	 	 	 	37,718	 	 	 	243,209	 	 	 	2.85	%	 	 	2.85	%
	
Panoom LTD Nadev Poios

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	75,497	 	 	 	 	 	 	 	75,487	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	75,497	 	 	 	150,994	 	 	 	1.06	%	 	 	1.04	%
	
Bernardo Cohen Investments Ltd.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	35,115	 	 	 	 	 	 	 	35,115	 	 	 	 	 	 	 	0	 	 	 	 	 	 	 	35,115	 	 	 	70,230	 	 	 	0.40	%	 	 	0.70	%
	
TOTAL

	 	 	760,913	 	 	 	1,674,900	 	 	 	47,638	 	 	 	2,400,306	 	 	 	75,500	 	 	 	73,634	 	 	 	1,186,648	 	 	 	917,066	 	 	 	7,125,609	 	 	 	947,168	 	 	 	0	 	 	 	39,201	 	 	 	1,001,383	 	 	 	9,193,411	 	 	 	100	%	 	 	100	%
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	13090497.68	 	 	 	 	 	 	 	 	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1,357,963	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Evolution Venture Capital Fund I (Israel) LP

	 	 	17.39	%	 	$	36,124	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Evolution Venture Capital Fund I (Exempt) LP

	 	 	10.53	%	 	$	21,574	 	 	$	57,998	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Yair Goldfinger

	 	 	8.35	%	 	$	13,191	 	 	$	13,191	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Lesser Trust

	 	 	7.50	%	 	$	15,580	 	 	$	15,580	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Kopelman Ltd.

	 	 	2.63	%	 	$	5,463	 	 	$	5,463	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
G.K. Capital Ltd.

	 	 	1.70	%	 	$	3,531	 	 	$	3,531	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
Kaedan Investments Ltd.

	 	 	2.04	%	 	$	4,238	 	 	$	4,238	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	  	 	 	48	%	 	$	100,000	 	 	$	100,000Exhibit 10.9

 

WhiteSmoke, Inc.

Write Technologies - Research & Development Ltd.

 

	
THE 2003 STOCK OPTION PLAN

	
1.

	
NAME

 

This plan, as amended from time to time, shall be known as the White Smoke, Inc. 2003 Stock Option Plan (“Plan”).

 

	
2.

	
PURPOSES OF THE PLAN

 

	
  

	
2.1

	
The purpose of the Plan is to afford an incentive to employees of White Smoke, Inc. (“Company”) and/or of Write Technologies - Research & Development Ltd. (“Subsidiary”) and/or of any other subsidiary or parent company of the Company, which now exists or hereafter is organized or acquired by the Company, to continue as employees and directors and consultants, to increase their efforts on behalf of the Company and to promote the success of the Company’s business.

 

	
  

	
2.2

	
It is further intended that the options granted hereunder to employees as defined in section 102, shall be Stock Options (“Options”) as defined under the recently amended provisions of Section 102 of the Israeli Income Tax Ordinance [New Version], 1961 (“New Section 102”), and any regulations, rules, orders or procedures promulgated thereunder.

 

	
  

	
2.3

	
Pursuant to the New Section 102 which governs this Plan, it is intended that gains realized from the sale of shares received from the exercise of Options will be taxed as capital gains and not as ordinary income (“New Options”).

 

	
  

	
2.4

	
Each Option granted under this Plan shall be an option to purchase one Company’s share of common stock, without par value per share.

 

	
3.

	
ADMINISTRATION OF THE PLAN

 

	
  

	
3.1

	
Both the Company’s board of directors and the Subsidiary’s board of directors (each, “Board”) shall have the power to administer the Plan.  The Board shall have full power and authority (i) to designate participants, (ii) to designate Options or any portion thereof as Incentive Stock Options, or otherwise, (iii) to determine the terms and provisions of applicable Option agreements, including, but not limited to, the number of Options in the Company to be granted, provisions concerning the time or times when and the extent to which the Options may be exercised and the nature and duration of restrictions as to transferability or restrictions constituting substantial risk of forfeiture, (iv) to accelerate the right of an optionee to exercise, in whole or in part, any previously granted Option, and (v) to determine any other matter which is necessary or desirable for, or incidental to, administration of the Plan.

 

  

 

  

 

	
  

	
3.2

	
The Board shall have the authority to grant in its discretion to the holder of an outstanding Option, in exchange for the surrender and cancellation of such Option, a new Option having a purchase price lower than provided in the Option so surrendered and cancelled and containing such other terms and conditions as the Board may prescribe in accordance with the provisions of the Plan.

 

	
  

	
3.3

	
All decisions and selections made by the Board pursuant to the provisions of the Plan shall be made by a majority of its members except that no member of the Board shall vote on, or be counted for quorum purposes, with respect to any proposed action of the Board relating to any Option to be granted to that member.  Subject to the Company’s Certificate of Incorporation, any decision reduced to writing and signed by all of the members who are lawfully authorized to make such decisions shall be fully effective as if it had been made at a meeting duly held.

 

	
  

	
3.4

	
Each member of the Board shall be indemnified and held harmless by the Company against any cost or expense (including legal fees) reasonably incurred by him, or liability (including any sum paid in settlement of a claim with the approval of the Company) arising out of any act or omission to act in connection with the Plan, unless arising out of such member’s own fraud or bad faith, to the extent permitted by applicable law.  Such indemnification shall be in addition to any rights of indemnification the member may have as directors or otherwise under the Company’s Certificate of Incorporation, any agreement, any vote of shareholders or disinterested directors, or otherwise.

 

	
4.

	
DESIGNATION OF PARTICIPANTS

 

The persons eligible for participation in the Plan’ as recipients of Options shall include any employees of the Company, of the Subsidiary and/or of any other subsidiary of the Company as defined by section 102 (“Optionee(s)”).  A person who has been granted an Option hereunder may be granted additional Options, if the Board shall so determine.

 

	
5.

	
TRUSTEE

 

	
  

	
5.1

	
The Options which shall be granted to employees of the Subsidiary shall be issued to a trustee nominated by the Board (in accordance with the provisions of New Section 102) (“Trustee”) and held for the benefit of the Optionee(s) for a period of no less than two years (24 months) from the end of the tax year in which the Options were issued and deposited with the Trustee (“Holding Period”).

 

	
  

	
5.2

	
The Trustee may also hold in trust any shares issued upon exercise of Stock Options pursuant to the provisions of New Section 102, and shall hold such shares until the conclusion of the aforementioned Holding Period in the event that such shares are the result of the exercise of a Stock Option within the Holding Period.

 

  

- 2 -

  

 

	
  

	
5.3

	
The Trustee shall not release any Shares allocated or issued upon exercise of the New Options prior to the full payment of the Optionee’s tax liabilities arising from Section 102 Options, which were granted to him and/or any Shares allocated or issued upon exercise of such Options.

 

	
  

	
5.4

	
With respect to any New Options, subject to the provisions of Section 102 and any rules or regulation or orders or procedures promulgated thereunder, an Optionee shall not sell or release from trust any Share received upon the exercise of an Approved 102 Option and/or any share received subsequently following any realization of rights, including without limitation, bonus shares, until the lapse of the Holding Period required under Section 102 of the Ordinance.  Notwithstanding the above, if any such sale or release occurs during the Holding Period, (the sanctions under Section 102 of the Ordinance and under any rules or regulation or orders or procedures promulgated thereunder shall apply to and shall be borne by such Optionee.

 

	
  

	
5.5

	
With respect to all Shares (but excluding, for avoidance of any doubt, any unexercised Options) allocated or issued upon the exercise of Options purchased by the Optionee and held by the Optionee, or by the Trustee, as the case may be, the Optionee shall be entitled to receive dividends in accordance with the quantity of such Shares, subject to the provisions of the Company’s Articles of Association (and all amendments thereto) and subject to any applicable taxation on distribution of dividends, and-when applicable subject to the provisions of Section 102 and the rules, regulations or orders promulgated thereunder.

 

	
6.

	
SHARES RESERVED FOR THE PLAN

 

	
  

	
6.1

	
Subject to the adjustment as provided in Paragraph 8 hereof, a total of four hundred and thirty (430) Company’s shares of common stock, “with no par value per share (“Share(s)”) shall be subject to the Plan.  The Shares subject to the Plan are hereby reserved for sale for such purpose.  Any of such Shares which may remain unsold and which are not subject to outstanding Options at the termination of the Plan shall cease to be reserved for the purpose of the Plan, but until termination of the Plan the Company shall at all times reserve a sufficient number of Shares to meet the requirements of the Plan.  Should any Option for any reason expire or be canceled prior to its exercise or relinquishment in full, the Share theretofore subject to such Option may again be subjected to an Option under the Plan.

 

	
  

	
6.2

	
The Shares purchased hereunder upon exercise of Options shall have voting rights, but such voting rights shall not be exercisable as long as the Shares are held by the Trustee (in any and all matters whatsoever).

 

	
7.

	
EXERCISE PRICE OF THE OPTIONS

 

	
  

	
7.1

	
The purchase price of each Share subject to an Option (“Exercise Price”) shall be determined by the Board, in its sole and absolute discretion in accordance with applicable law subject to guidelines as shall be suggested by the Board from time to time.

 

  

- 3 -

  

 

	
  

	
7.2

	
The Exercise Price shall be payable upon the exercise of the Option in cash, by check or by other form of consideration that is satisfactory to the Board.

 

	
  

	
7.3

	
The proceeds received by the Company from the exercise of Options subject to an Option granted under the Plan will be added to the general funds of the Company and used for its corporate purposes.

 

	
8.

	
ADJUSTMENTS

 

Upon the occurrence of any of the following described events, an Optionee’s rights for Options under the Plan shall be adjusted as hereinafter provided.

 

	
  

	
8.1

	
Subject to a Board resolution approving such substitution, if the Company is separated, reorganized, merged, consolidated or amalgamated with or into another corporation while unexercised/unvested Options remain outstanding under the Plan, there shall be substituted for the Shares subject to the unexercised/unvested portions of such outstanding Options an appropriate number of Shares of each class of Shares or other securities of the separated, reorganized, merged, consolidated or amalgamated corporation which were distributed to the shareholders of the Company in respect of such Shares, and appropriate adjustments shall be made in the Purchase Price per Share to reflect such action.

 

	
  

	
8.2

	
Subject to a Board resolution approving such exercise/vesting, if the Company is liquidated or dissolved while unexercised/unvested Options remain outstanding under the Plan, then all such outstanding Options may be exercised/vested in full by the Optionees as of the effective date of any such liquidation or dissolution of the Company without regard to the provisions of Section 9.2, by the Optionees giving notice in writing to the Company of their intention to so exercise.

 

	
  

	
8.3

	
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, extraordinary dividend payable in stock of a corporation other than the Company, or any other like event by or of the Company, and as often as the same shall occur, then the number, class and kind of Shares subject to this Plan or subject to any Options theretofore granted, and the Exercise Prices, shall be appropriately and equitably adjusted so as to maintain the proportionate number of Shares without changing the aggregate Exercise Prices; provided, however, that no adjustment shall be made by reason of the distribution of subscription rights on outstanding stock.  Upon the happening of any of the foregoing, the class and aggregate number of Shares issuable pursuant to the Plan (as set forth in Section 6.1 hereof), in respect of which Options have not yet been exercised/vested, shall be appropriately adjusted.

 

  

- 4 -

  

 

	
9.

	
TERM AND EXERCISE OF OPTIONS

 

	
  

	
9.1

	
Options shall be exercised by the Optionee by giving written notice to the Company which exercise shall be effective upon receipt of such notice by the Company at its principal office.  The notice shall specify the number of Shares with respect to which Option is being exercised.

 

	
  

	
9.2

	
Each Option granted under this Plan shall be exercisable on the date and for the number of Shares as shall be provided in the option agreement evidencing die Option and setting forth the terms thereof.  However, as explained in Section 5 hereof, the New Section 102 directs that no Share(s) that resulted from the exercise of Options during the Holding Period may be realized until after the expiration of the Holding Period.  Without derogating from Section 12 hereof, no Option shall be exercisable after the expiration often (10) years from the date of grant.

 

	
  

	
9.3

	
Unless otherwise agreed between the Company and Optionee, Options granted under the Plan shall not be transferable by Optionees other than by will or the laws of descent and distribution, and during an Optionee’s lifetime shall be exercisable only by that Optionee.

 

	
  

	
9.4

	
Options granted to employees or directors shall cease to vest at, and may not be exercised after, the termination of employment for any reason whatsoever and/or service as a director for any reason whatsoever and/or providing the Company with consulting services for any reason whatsoever (notice of termination of any of the foregoing shall be considered as the date of the termination) unless:

 

	
  

	
(a)

	
Prior to the date of such termination, the Board shall authorize, in the relevant option agreement or otherwise, an extension of the term of all or part of the Option beyond the date of such termination for a period not to exceed the period during which the Option by its terms would otherwise have been exercisable;

 

	
  

	
(b)

	
Termination is without cause (as reasonably determined by the Board), due to non-renewal of the Optionee’s employment agreement by the Company or by the Subsidiary or not under circumstances which entitled the Company or the Subsidiary the right to terminate the employee’s employment without prior notice, or to reduce or deny severance payments in connection with such termination, in which event all unvested Options will vest immediately and any Options still in force and unexpired may be exercised within a period of one ninety (90) days from the date of such termination;

 

	
  

	
(c)

	
The employee resigns, in which event all unvested Options will cease to vest and Options vested may be exercised by the employee within ninety (90) days following the date of termination;

 

	
  

	
(d)

	
Termination is the result of death or disability, in which event any vested Options will terminate upon their normal term; or

 

  

- 5 -

  

 

	
  

	
(e)

	
If prior to the completion of the initial public offering of Shares 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, all unvested Options will vest and each Optionee shall be obligated to exercise his Options and obliged to sell or exchange, as the case may be, the Shares he purchased under the Plan in accordance with the instructions then issued by the Board.  In the event the employee has not exercised his Options within the period determined by the Board, the Options to which he is entitled shall expire and shall be of no further force or effect.

 

	
  

	
9.5

	
A termination for “Cause” is a termination due to (i) the employee being convicted of any felony; or (ii) the employee’s embezzlement of funds of the Company; or (iii) the employee’s material breach of the terms and conditions of this Plan, provided the employee has been granted the opportunity to cure such breach (if applicable) within fifteen (15) days of being notified by the Company of such material breach; or (iv) the employee being involved in an act which constitutes a breach of duty of loyalty between himself and the Company or constitutes a breach of discipline; or (v) the employee’s conduct causes material injury to the Company, monetarily or otherwise; or (vi) the employee’s refusal to comply with the Board’s instructions, provided that with respect to (iv), (v) and (vi), the employee has been granted the opportunity to cure such breach within fifteen (15) days of being notified by the Company or the Subsidiary of the Cause.  However, such right to cure may be rescinded by the Board in the event it reasonably determines, in its sole discretion, that the Cause is not curable or that it has caused an irreparable breach of trust between the Company or the Subsidiary and the employee.

 

	
  

	
9.6

	
“Disability” shall mean the employee’s inability to carry out his duties for a period exceeding sixty (60) consecutive days, or a total of ninety (90) days in any twelve (12) months period.

 

	
  

	
9.7

	
The holders of Options shall not be or have any of the rights or privileges of shareholders of the Company in respect of any Shares unless and until, following exercise date but subject always to the provisions of Section 5 above, certificates representing such Shares shall have been issued by the Company and delivered to such holders or its Trustee.

 

	
  

	
9.8

	
Any form of option agreement authorized by the Plan may contain such other provisions as the Board may, from time to time, deem advisable.

 

  

- 6 -

  

 

	
10.

	
CONDITIONS TO GRANT AND EXERCISE OF OPTIONS

 

As a pre-requisite and a condition to the grant of an Option, each Optionee shall covenant in an undertaking in form and substance satisfactory to the Board (i) not to compete with the business of the Company or any subsidiary thereof for’ as long as the Optionee is employed by the Company or the Subsidiary or serves as a director or provides the Company or the Subsidiary with services and for a period of no less than two (2) years thereafter, and (ii) not to disclose any confidential information (as reasonably determined by the Board) about the Company, any subsidiary or affiliate thereof or about the business in which the Company or any subsidiary or affiliate are engaged or involved, excluding information that has become part of the public knowledge, for an indefinite period.

 

	
11.

	
PURCHASE FOR INVESTMENT

 

Unless Shares covered by the Plan have been listed for trade on any stock exchange (of any jurisdiction), or the Company has determined that such registration is unnecessary, each person exercising an Option under the Plan may be required by the Company to give a representation in writing that he is acquiring such Shares for his own account, for investment and not with a view to, or for sale in connection with, the distribution of any part thereof.

 

	
12.

	
TERM OF THE PLAN

 

The Plan shall be effective as of August 1, 2003 and shall terminate on July 31, 2013.

 

	
13.

	
AMENDMENTS OR TERMINATION

 

The Board may, at any time and from time to time, amend, alter, or discontinue the Plan, except that, no amendment or alteration shall be made which would impair the rights of the holder of any Options theretofore granted without his consent.

 

	
14.

	
GOVERNMENT REGULATIONS

 

The 2003 Plan, and the granting and exercise and/or transfer and/or otherwise dealing with Options hereunder, and the obligation of the Company to sell and deliver Shares under such Options, shall be subject to all applicable laws, rules, and regulations, whether of the United States or of the State of Israel or any other nation or locality having jurisdiction over the Company, the Subsidiary and the Optionee, and to such approvals by any governmental agencies or national securities exchanges as may be required.  The Plan is subject to any further revisions of the New Section 102 that have not yet been published.

 

	
15.

	
CONTINUANCE OF EMPLOYMENT

 

Neither the Plan nor the option agreement with the Optionee shall impose any obligation on the Company, the Subsidiary or any subsidiary thereof, to continue any Optionee in its employ, or to continue such Optionee’s service as a director, or to continue such Optionee’s providing the Company with consulting services, and nothing in the Plan or in any Option granted pursuant thereto shall confer upon any Optionee any right to continue in the employ of the Company or a subsidiary thereof or to continue to serve as director or to continue providing the Company, the Subsidiary or any subsidiary thereof with consulting services, or restrict the right of the Company, the Subsidiary or any subsidiary thereof to terminate such employment, directorship or provision of consulting services, at any time.

 

  

- 7 -

  

 

	
16.

	
GOVERNING LAW

 

This Plan shall be governed by and construed and enforced in accordance with the laws of the State of Israel applicable to contracts made and to be performed therein, without giving effect to the principles of conflict of laws.

 

	
17.

	
TAX CONSEQUENCES

 

Any tax consequences arising from the grant or exercise of any Options, from the payment for Shares covered thereby or from any other event or act (of the Company or the Optionee) hereunder (including without limitation any tax consequences if for any reason, or by any authority, legal or other, according to any law or regulation, local or foreign, the Options or Shares of any type or kind granted under this Plan or any portion thereof, would not constitute or not qualify for any type or kind of tax consequences), shall be borne solely by the Optionee.  Furthermore, the Optionee shall agree to indemnify the Company and me Trustee and hold them harmless against and from any and all liability for any such tax or interest or penalty thereon, provided however, that any liabilities relating to the failure to withhold, or to have withheld, any such tax from any payment made to the Optionee shall be borne by the Company.

 

	
18.

	
NON-EXCLUSIVITY OF THE PLAN

 

The adoption of the Plan by the Board shall not be construed as amending, modifying or rescinding any previously approved incentive arrangement or as creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of shares or options otherwise than under the Plan, and such arrangements may be either applicable generally or only in specific cases.

 

	
19.

	
MULTIPLE AGREEMENTS

 

The terms of each Option may differ from other Options granted under the Plan at the same time, or at any other time.

 

  

- 8 -

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