Document:

Exhibit 10.1

 

ISRAELI SHARE OPTION PLAN

	
 
    

 

MediWound Ltd.

 

THE 2003 ISRAELI SHARE OPTION PLAN

 

(*In compliance with Amendment No. 132 of the Israeli Tax Ordinance, 2002)

 

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TABLE OF CONTENTS

 

	
1.
    	
PURPOSE OF THE ISOP
    	
3
    
	
2.
    	
DEFINITIONS
    	
3
    
	
3.
    	
ADMINISTRATION OF THE ISOP
    	
6
    
	
4.
    	
DESIGNATION OF   PARTICIPANTS
    	
7
    
	
5.
    	
DESIGNATION OF OPTIONS   PURSUANT TO SECTION 102
    	
8
    
	
6.
    	
TRUSTEE
    	
9
    
	
7.
    	
SHARES RESERVED FOR THE   ISOP
    	
9
    
	
8.
    	
PURCHASE PRICE
    	
10
    
	
9.
    	
ADJUSTMENTS
    	
11
    
	
10.
    	
TERM AND EXERCISE OF   OPTIONS
    	
13
    
	
11.
    	
VESTING OF OPTIONS
    	
14
    
	
12.
    	
PURCHASE FOR INVESTMENT
    	
14
    
	
13.
    	
SHARES SUBJECT TO RIGHT OF   FIRST REFUSAL
    	
15
    
	
14.
    	
DIVIDENDS
    	
16
    
	
15.
    	
RESTRICTIONS ON   ASSIGNABILITY AND SALE OF OPTIONS
    	
16
    
	
16.
    	
EFFECTIVE DATE AND   DURATION OF THE ISOP
    	
16
    
	
17.
    	
AMENDMENTS OR TERMINATION
    	
17
    
	
18.
    	
GOVERNMENT REGULATIONS
    	
17
    
	
19.
    	
CONTINUANCE OF EMPLOYMENT   OR HIRED SERVICES
    	
17
    
	
20.
    	
GOVERNING LAW &   JURISDICTION
    	
17
    
	
21.
    	
TAX CONSEQUENCES
    	
18
    
	
22.
    	
NON-EXCLUSIVITY OF THE   ISOP
    	
18
    
	
23.
    	
MULTIPLE AGREEMENTS
    	
18
    

 

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This plan, as amended from time to time, shall be known as MediWound Ltd. 2003 Israeli Share Option Plan (the “ISOP”).

 

1.                                      PURPOSE OF THE ISOP

 

The ISOP is intended to provide an incentive to retain, in the employ of the Company and its Affiliates (as defined below), persons of training, experience, and ability, to attract new employees, officers, directors, consultants, service providers and any other entity which the Board shall decide their services are considered valuable to the Company, to encourage the sense of proprietorship of such persons, and to stimulate the active interest of such persons in the development and financial success of the Company by providing them with opportunities to purchase shares in the Company, pursuant to the ISOP.

 

2.                                      DEFINITIONS

 

For purposes of the ISOP and related documents, including the Option Agreement, the following definitions shall apply:

 

2.1                               “Affiliate” means any “employing company” within the meaning of Section 102(a) of the Ordinance.

 

2.2                               “Approved 102 Option” means an Option granted pursuant to Section 102(b) of the Ordinance and held in trust by a Trustee for the benefit of the Optionee.

 

2.3                               “Board” means the Board of Directors of the Company.

 

2.4                               “Capital Gain Option (CGO)” as defined in Section 5.4 below.

 

2.5                               “Cause” means, (i) conviction of any felony involving moral turpitude or affecting the Company; (ii) any refusal to carry out a reasonable directive of the chief executive officer, the Board or the Optionee’s direct supervisor, which involves the business of the Company or its Affiliates and was capable of being lawfully performed; (iii) embezzlement of funds of the Company or its Affiliates; (iv) any breach of the Optionee’s fiduciary duties or duties of care of the Company; including without limitation disclosure of confidential information of the Company; and (v) any conduct (other than conduct in good faith) reasonably determined by the Board to be materially detrimental to the Company.

 

2.6                               “Chairman” means the chairman of the Committee.

 

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2.7                               “Committee” means a share option compensation committee appointed by the Board, which shall consist of no fewer than two members of the Board.

 

2.8                               “Company” means MediWound Ltd., an Israeli company.

 

2.9                               “Companies Law” means the Israeli Companies Law 5759-1999.

 

2.10                        “Controlling Shareholder” shall have the meaning ascribed to it in Section 32(9) of the Ordinance.

 

2.11                        “Date of Grant” means, the date of grant of an Option, as determined by the Board and set forth in the Optionee’s Option Agreement.

 

2.12                        “Employee” means a person who is employed by the Company or its Affiliates, including an individual who is serving as a director or an office holder, but excluding Controlling Shareholder.

 

2.13                        “Expiration date” means the date upon which an Option shall terminate, as set forth in Section 10.2 of the ISOP.

 

2.14                        “Fair Market Value” means as of any date, the value of a Share determined as follows:

 

(i)                                     If the Shares are listed on any established stock exchange or a national market system, including without limitation the NASDAQ National Market system, or the NASDAQ Small Cap Market of the NASDAQ Stock Market, the Fair Market Value shall be the closing sales price for such Shares (or the closing bid, if no sales were reported), as quoted on such exchange or system for the last market trading day prior to time of determination, as reported in the Wall Street Journal, or such other source as the Board deems reliable.

 

Without derogating from the above, solely for the purpose of determining the tax liability pursuant to Section 102(b)(3) of the Ordinance, if at the Date of Grant the Company’s shares are listed on any established stock exchange or a national market system or if the Company’s shares will be registered for trading within ninety (90) days following the Date of Grant, the Fair Market Value of a Share at the Date of Grant shall be determined in accordance with the average value of the Company’s shares on the thirty (30) trading days preceding the Date of Grant or on the thirty (30) trading days following the date of registration for trading, as the case may be;

 

(ii)                                  If the Shares are regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value shall be the mean between the high bid and low asked prices for the Shares on the last market trading day prior to the day of determination, or;

 

(iii)                               In the absence of an established market for the Shares, the Fair Market Value thereof shall be determined in good faith by the Board.

 

2.15                        “Flip Tax” means restructure the form of incorporation under which the current shareholders would hold shares in a U.S. resident company which owns 100% of the shares of the Company.

 

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2.15                        “IPO” means the initial public offering of the Company’s shares and the listing of such shares for trading on any recognized stock exchange or over-the-counter or computerized securities trading system.

 

2.16                        “ISOP” means this 2003 Israeli Share Option Plan.

 

2.17                        “ITA” means the Israeli Tax Authorities.

 

2.18                        “Non-Employee” means any person who is not an Employee, including without limitation, consultant, adviser, service provider, Controlling Shareholder.

 

2.19                        “Ordinary Income Option (OIO)” as defined in Section 5.5 below.

 

2.20                        “Option” means an option to purchase one or more Shares of the Company pursuant to the ISOP.

 

2.21                        “102 Option” means any Option granted to Employees pursuant to Section 102 of the Ordinance.

 

2.22                        “3(i) Option” means an Option granted pursuant to Section 3(i) of the Ordinance to any person who is Non-Employee.

 

2.23                        “Optionee” means a person who receives or holds an Option under the ISOP.

 

2.24                        “Option Agreement” means the share option agreement between the Company and an Optionee that sets out the terms and conditions of an Option.

 

2.25                        “Ordinance” means the Israeli Income Tax Ordinance [New Version], 1961 as now in effect or as hereafter amended.

 

2.26                        “Purchase Price” means the price for each Share subject to an Option.

 

2.27                        “Section 102” means section 102 of the Ordinance as now in effect or as hereafter amended.

 

2.28                        “Share” means the ordinary shares, NIS 0.01 par value each, of the Company.

 

2.29                        “Successor Company” means any entity the Company is merged to or is acquired by, in which the Company is not the surviving entity.

 

2.30                        “Transaction” means (i) merger, acquisition or reorganization of the Company with one or more other entities in which the Company is not the surviving entity, (ii) a sale of all or substantially all of the assets of the Company.

 

2.31                        “Trustee” means any individual appointed by the Company to serve as a trustee and approved by the ITA, all in accordance with the provisions of Section 102(a) of the Ordinance.

 

2.32                        “Unapproved 102 Option” means an Option granted pursuant to Section 102(c) of the Ordinance and not held in trust by a Trustee.

 

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2.33                        “Vested Option” means any Option, which has already been vested according to the Vesting Dates.

 

2.34                        “Vesting Dates” means, as determined by the Board or by the Committee, the date as of which the Optionee shall be entitled to exercise the Options or part of the Options, as set forth in section 11 of the ISOP.

 

3.                                      ADMINISTRATION OF THE ISOP

 

3.1                               The Board shall have the sole and absolute power to administer the ISOP either directly or upon the recommendation of the Committee, all as provided by applicable law and in the Company’s Articles of Association.  Notwithstanding the above, the Board shall automatically have residual authority if no Committee shall be constituted or if such Committee shall cease to operate for any reason.

 

3.2                               The Committee shall select one of its members as its Chairman and shall hold its meetings at such times and places as the Chairman shall determine.  The Committee shall keep records of its meetings and shall make such rules and regulations for the conduct of its business as it shall deem advisable.  Any member of such Committee shall be eligible to receive Options under the ISOP while serving on the Committee, unless otherwise specified herein.

 

3.3                               The Committee shall have the power to recommend to the Board and the Board shall have the full power and authority to:  (i) designate participants; (ii) determine the terms and provisions of the respective Option Agreements, including, but not limited to, the number of Options to be granted to each Optionee, the number of Shares to be covered by each Option, provisions concerning the time and the extent to which the Options may be exercised and the nature and duration of restrictions as to the transferability or restrictions constituting substantial risk of forfeiture and to cancel or suspend awards, as necessary; (iii) determine the Fair Market Value of the Shares covered by each Option; (iv) make an election as to the type of Approved 102 Option; and (v) designate the type of Options.  The Committee shall have full power and authority to: (i) alter any restrictions and conditions of any Options or Shares subject to any Options (ii) interpret the provisions and supervise the administration of the ISOP; (iii) accelerate the right of an Optionee to exercise in whole or in part, any previously granted Option; (iv) determine the Purchase Price of the Option; (v) prescribe, amend and rescind rules and regulations relating to the ISOP; and (vi) make all other determinations deemed necessary or advisable for the administration of the ISOP.

 

3.4                               Notwithstanding the above, the Committee shall not be entitled to grant Options to the Optionees, however, it will be authorized to issue Shares underlying Options which have been granted by the Board and duly exercised pursuant to the provisions herein in accordance with section 112(a)(5) of the Companies Law.

 

3.5                               The Board shall have the authority to grant, at its discretion, to the holder of an outstanding Option, in exchange for the surrender and cancellation of such Option, a new

 

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Option having a purchase price equal to, lower than or higher than the Purchase Price of the original Option so surrendered and canceled and containing such other terms and conditions as the Committee may prescribe in accordance with the provisions of the ISOP.

 

3.6                               All decisions and selections made by the Board or the Committee pursuant to the provisions of the ISOP shall be made in accordance with the Companies Law and the Company’s Articles of Association.

 

3.7                               The interpretation and construction by the Committee of any provision of the ISOP or of any Option Agreement thereunder shall be final and conclusive unless otherwise determined by the Board.

 

3.8                               Subject to the Company’s Articles of Association and the Company’s decision, and to all approvals legally required, including, but not limited to the provisions of the Companies Law, each member of the Board or the Committee shall be indemnified and held harmless by the Company against any cost or expense (including counsel fees) reasonably incurred by him, or any liability (including any sum paid in settlement of a claim with the approval of the Company) arising out of any act or omission to act in connection with the ISOP unless arising out of such member’s own fraud or bad faith, to the extent permitted by applicable law.  Such indemnification shall be in addition to any rights of indemnification the member may have as a director or otherwise under the Company’s Articles of Association, any agreement, any vote of shareholders or disinterested directors, insurance policy or otherwise.

 

4.                                      DESIGNATION OF PARTICIPANTS

 

4.1                               The persons eligible for participation in the ISOP as Optionees shall include any Employees and/or Non-Employees of the Company or of any Affiliate; provided, however, that (i) Employees may only be granted 102 Options; (ii) Non-Employees may only be granted 3(i) Options; and (iii) Controlling Shareholders may only be granted 3(i) Options.

 

4.2                               The grant of an Option hereunder shall neither entitle the Optionee to participate nor disqualify the Optionee from participating in, any other grant of Options pursuant to the ISOP or any other option or share plan of the Company or any of its Affiliates.

 

4.3                               Anything in the ISOP to the contrary notwithstanding, all grants of Options to directors and office holders shall be authorized and implemented in accordance with the provisions of the Companies Law or any successor act or regulation, as in effect from time to time.

 

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5.                                      DESIGNATION OF OPTIONS PURSUANT TO SECTION 102

 

5.1                               The Company may designate Options granted to Employees pursuant to Section 102 as Unapproved 102 Options or Approved 102 Options.

 

5.2                               The grant of Approved 102 Options shall be made under this ISOP adopted by the Board as described in Section 15 below, and shall be conditioned upon the approval of this ISOP by the ITA.

 

5.3                               Approved 102 Option may either be classified as Capital Gain Option (“CGO”) or Ordinary Income Option (“OIO”).

 

5.4                               Approved 102 Option elected and designated by the Company to qualify under the capital gain tax treatment in accordance with the provisions of Section 102(b)(2) shall be referred to herein as CGO.

 

5.5                               Approved 102 Option elected and designated by the Company to qualify under the ordinary income tax treatment in accordance with the provisions of Section 102(b)(1) shall be referred to herein as OIO.

 

5.6                               The Company’s election of the type of Approved 102 Options as CGO or OIO granted to Employees (the “Election”), shall be appropriately filed with the ITA before the Date of Grant of an Approved 102 Option.  Such Election shall become effective beginning the first Date of Grant of an Approved 102 Option under this ISOP and shall remain in effect until the end of the year following the year during which the Company first granted Approved 102 Options.  The Election shall obligate the Company to grant only the type of Approved 102 Option it has elected, and shall apply to all Optionees who were granted Approved 102 Options during the period indicated herein, all in accordance with the provisions of Section 102(g) of the Ordinance.  For the avoidance of doubt, such Election shall not prevent the Company from granting Unapproved 102 Options simultaneously.

 

5.7                               All Approved 102 Options must be held in trust by a Trustee, as described in Section 6 below.

 

5.8                               For the avoidance of doubt, the designation of Unapproved 102 Options and Approved 102 Options shall be subject to the terms and conditions set forth in Section 102 of the Ordinance and the regulations promulgated thereunder.

 

5.9                               With regards to Approved 102 Options, the provisions of the ISOP and/or the Option Agreement shall be subject to the provisions of Section 102 and the Tax Assessing Officer’s permit, and the said provisions and permit shall be deemed an integral part of the ISOP and of the Option Agreement.  Any provision of Section 102 and/or the said permit which is necessary in order to receive and/or to keep any tax benefit pursuant to Section 102, which is not expressly specified in the ISOP or the Option Agreement, shall be considered binding upon the Company and the Optionees.

 

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6.                                      TRUSTEE

 

6.1                               Approved 102 Options which shall be granted under the ISOP and/or any Shares allocated or issued upon exercise of such Approved 102 Options and/or other shares received subsequently following any realization of rights, including without limitation bonus shares, shall be allocated or issued to the Trustee and held for the benefit of the Optionees for such period of time as required by Section 102 or any regulations, rules or orders or procedures promulgated thereunder (the “Holding Period”). In the case the requirements for Approved 102 Options are not met, then the Approved 102 Options may be treated as Unapproved 102 Options, all in accordance with the provisions of Section 102 and regulations promulgated thereunder.

 

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

 

6.3                               With respect to any Approved 102 Option, 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 solely by such Optionee.

 

6.4                               Upon receipt of Approved 102 Option, the Optionee will sign an undertaking to release the Trustee from any liability in respect of any action or decision duly taken and bona fide executed in relation with the ISOP, or any Approved 102 Option or Share granted to him thereunder.

 

7.                                      SHARES RESERVED FOR THE ISOP; RESTRICTION THEREON

 

7.1                               The Company has reserved four hundred and fifty thousand (450,000) authorized but unissued Shares, for the purposes of the ISOP and for the purposes of any other share option plans which may be adopted by the Company in the future, subject to adjustment as set forth in Section 9 below.  Any Shares which remain unissued and which are not subject to the outstanding Options at the termination of the ISOP shall cease to be reserved for the purpose of the ISOP, but until termination of the ISOP the Company shall at all times reserve sufficient number of Shares to meet the requirements of the ISOP.  Should any Option for any reason expire or be canceled prior to its exercise or

 

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relinquishment in full, the Shares subject to such Option may again be subjected to an Option under the ISOP or under the Company’s other share option plans.

 

7.2                               Each Option granted pursuant to the ISOP, shall be evidenced by a written Option Agreement between the Company and the Optionee, in such form as the Board or the Committee shall from time to time approve.  Each Option Agreement shall state, among other matters, the number of Shares to which the Option relates, the type of Option granted thereunder (whether a CGO, OIO, Unapproved 102 Option or a 3(i) Option), the Vesting Dates, the Purchase Price per share, the Expiration Date and such other terms and conditions as the Committee or the Board in its discretion may prescribe, provided that they are consistent with this ISOP.

 

7.3                               Until the consummation of an IPO, such Shares shall be voted by an irrevocable proxy (the “Proxy”) pursuant to the directions of the Board, such Proxy to be assigned to the person or persons designated by the Board. Such person or persons designated by the Board shall be indemnified and held harmless by the Company against any cost or expense (including counsel fees) reasonably incurred by him/her, or any liability (including any sum paid in settlement of a claim with the approval of the Company) arising out of any act or omission to act in connection with the voting of such Proxy 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 person(s) may have as a director or otherwise under the Company’s Articles of Association, any agreement, any vote of shareholders or disinterested directors, insurance policy or otherwise.  Without derogating from the above, with respect to Approved 102 Options, such shares shall be voted in accordance with the provisions of Section 102 and any rules, regulations or orders promulgated thereunder.

 

8.                                      PURCHASE PRICE

 

8.1                               The Purchase Price of each Share subject to an Option shall be determined by the Committee in its sole and absolute discretion in accordance with applicable law, subject to any guidelines as may be determined by the Board from time to time.  Each Option Agreement will contain the Purchase Price determined for each Optionee.

 

8.2                               The Purchase Price shall be payable upon the exercise of the Option in a form satisfactory to the Committee, including without limitation, by cash or check.  The Committee shall have the authority to postpone the date of payment on such terms as it may determine.

 

8.3                               The Purchase Price shall be denominated in the currency of the primary economic environment of, either the Company or the Optionee (that is the functional currency of the Company or the currency in which the Optionee is paid) as determined by the Company.

 

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9.                                      ADJUSTMENTS

 

Upon the occurrence of any of the following described events, Optionee’s rights to purchase Shares under the ISOP shall be adjusted as hereafter provided:

 

9.1                               In the event of Transaction, the unexercised Options then outstanding under the ISOP shall be assumed or substituted for an appropriate number of shares of each class of shares or other securities of the Successor Company (or a patent or subsidiary of the Successor Company) as were distributed to the shareholders of the Company in connection and with respect to the Transaction. In the case of such assumption and/or substitution of Options, appropriate adjustments shall be made to the Purchase Price so as to reflect such action and all other terms and conditions of the Option Agreements shall remain unchanged, including but not limited to the vesting schedule, all subject to the determination of the Committee or the Board, which determination shall be in their sole discretion, final and binding.

 

9.2                               Notwithstanding the above and subject to any applicable law, the Board or the Committee shall have full power and authority to determine that in certain Option Agreements and at its sole discretion there shall be a clause instructing that, if in any such Transaction as described in section 9.1 above, the Successor Company (or parent or subsidiary of the Successor Company) does not agree to assume or substitute for the Options, the Vesting Dates shall be accelerated so that any unvested Option or any portion thereof shall be immediately vested as of the date which is ten (10) days prior to the effective date of the Transaction.  For avoidance of doubt if in any such Transaction as described in section 9.1 above, the Successor Company (or parent or subsidiary of the Successor Company) does not agree to assume or substitute for the Options or if a decision of acceleration is not made by the Board or the Committee then all non exercised or non vested options shall expire upon the effective date of such Transaction.

 

9.3                               For the purposes of section 9.1 above, an Option shall be considered assumed or substituted if, following the Transaction, the Option confers the right to purchase or receive, for each Share underlying an Option immediately prior to the Transaction, the consideration (whether shares, options, cash, or other securities or property) received in the Transaction by holders of shares held on the effective date of the Transaction (and if such holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in the Transaction is not solely ordinary shares (or their equivalent) of the Successor Company or its parent or subsidiary, the Committee may, with the consent of the Successor Company, provide for the consideration to be received upon the exercise of the Option to be solely ordinary shares (or their equivalent) of the Successor Company or its parent or subsidiary equal in Fair Market Value to the per Share consideration received by holders of a majority of the outstanding shares in the Transaction; and provided further that the Committee may determine, in its discretion, that in lieu of such assumption or substitution of Options for options of the Successor Company or its parent or subsidiary, such Options will be substituted for any other type of asset or property including cash which is fair under the circumstances.

 

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9.4                               If the Company is voluntarily liquidated or dissolved while unexercised Options remain outstanding under the ISOP, the Company shall immediately notify all unexercised Option holders of such liquidation, and the Option holders shall then have ten (10) days to exercise any unexercised Vested Option held by them at that time, in accordance with the exercise procedure set forth herein.  Upon the expiration of such ten (10) days period, all remaining outstanding Options will terminate immediately.

 

9.5                               If the outstanding shares of the Company shall at any time be changed or exchanged by declaration of a share dividend (bonus shares), share split, combination or exchange of shares, recapitalization, or any other like event by or of the Company, and as often as the same shall occur, then the Board may (in its sole discretion) adjust the number, class and kind of the Shares subject to the ISOP or subject to any Options therefore granted, and the Purchase Prices, shall be appropriately and equitably adjusted so as to maintain the proportionate number of Shares without changing the aggregate Purchase Price, provided, however, that no adjustment shall be made by reason of the distribution of subscription rights (rights offering) on outstanding shares.  Upon happening of any of the foregoing, the class and aggregate number of Shares issuable pursuant to the ISOP (as set forth in Section 7 hereof), in respect of which Options have not yet been exercised, shall be appropriately adjusted, all as will be determined by the Board whose determination shall be final and binding.

 

9.6                               In the event of a “Flip Tax” the Purchase Price and the number of Shares to which Optionee is entitled pursuant to this ISOP shall be proportionately substituted so that the ratio of the Purchase Price per share to the Fair Market Value of each Share shall not be changed and appropriate adjustment shall maintain the aggregate Intrinsic Value (as defined below) of the Options granted unchanged.

 

Notwithstanding anything to the contrary, any grant of 102 Options following an event described in this sub-section 9.6 shall take place subject to the approval obtained by Israeli Tax authority for such grant.

 

“Intrinsic Value” means the excess of the Fair Market Value of the Shares over the Purchase price on the Date of Grant.

 

9.7                               Anything herein to the contrary notwithstanding, if prior to the completion of the IPO all or substantially all of the shares of the Company are to be sold, or in case of a Transaction, all or substantially all of the shares of the Company are to be exchanged for securities of another Company, then each Optionee shall be obliged to sell or exchange, as the case may be, any Shares such Optionee purchased under the ISOP, in accordance with the instructions issued by the Board in connection with the Transaction, whose determination shall be final and binding.

 

9.8                               The Optionee acknowledges that in the event that the Company’s shares shall be registered for trading in any public market, Optionee’s rights to sell the Shares may be subject to certain limitations (including a lock-up period), as will be requested by the Company or its underwriters, and the Optionee unconditionally agrees and accepts to be bound by any such limitations.

 

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10.                               TERM AND EXERCISE OF OPTIONS

 

10.1                        Options shall be exercised by the Optionee by giving written notice to the Company and/or to any third party designated by the Company (the “Representative”), in such form and method as may be determined by the Company and when applicable, by the Trustee in accordance with the requirements of Section 102, which exercise shall be effective upon receipt of such notice by the Company and/or the Representative and the payment of the Purchase Price at the Company’s or the Representative’s principal office.  The notice shall specify the number of Shares with respect to which the Option is being exercised.

 

10.2                        Options, to the extent not previously exercised, shall terminate forthwith upon the earlier of:  (i) the date set forth in the Option Agreement; and (ii) the expiration of any extended period in any of the events set forth in section 10.5 below.

 

10.3                        The Options may be exercised by the Optionee in whole at any time or in part from time to time, to the extent that the Options become vested and exercisable, prior to the Expiration Date, and provided that, subject to the provisions of section 10.5 below, the Optionee is employed by or providing services to the Company or any of its Affiliates, at all times during the period beginning with the granting of the Option and ending upon the date of exercise.

 

10.4                        Subject to the provisions of section 10.5 below, in the event of termination of Optionee’s employment or services, with the Company or any of its Affiliates, all Options granted to such Optionee will immediately expire.  A notice of termination of employment or service shall be deemed to constitute termination of employment or service.  For the avoidance of doubt, in case of such termination of employment or service, the unvested portion of the Optionee’s Option shall not vest and shall not become exercisable.

 

10.5                        Notwithstanding anything to the contrary hereinabove and unless otherwise determined in the Optionee’s Option Agreement, an Option may be exercised after the date of termination of Optionee’s employment or service with the Company or any Affiliates during an additional period of time beyond the date of such termination, but only with respect to the number of Vested Options at the time of such termination according to the Vesting Dates, if:

 

(i)                                     termination is without Cause, in which event any Vested Option still in force and unexpired may be exercised within a period of ninety (90) days after the date of such termination; or -

 

(ii)                                  termination is the result of death or disability of the Optionee, in which event any Vested Option still in force and unexpired may be exercised within a period of six (6) months after the date of such termination; or -

 

(iii)                               prior to the date of such termination, the Committee shall authorize an extension of the terms of all or part of the Vested Options beyond the date of such termination for a period not to exceed the period during which the Options by their terms would otherwise have been exercisable.

 

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For avoidance of any doubt, if termination of employment or service is for Cause, any outstanding unexercised Option (whether vested or non-vested), will immediately expire and terminate, and the Optionee shall not have any right in connection to such outstanding Options.

 

10.6                        To avoid doubt, the Optionees shall not have any of the rights or privileges of shareholders of the Company in respect of any Shares purchasable upon the exercise of any Option, nor shall they be deemed to be a class of shareholders or creditors of the Company for purpose of the operation of sections 350 and 351 of the Companies Law or any successor to such section, until registration of the Optionee as holder of such Shares in the Company’s register of shareholders upon exercise of the Option in accordance with the provisions of the ISOP, but in case of Options and Shares held by the Trustee, subject to the provisions of Section 6 of the ISOP.

 

10.7                        Any form of Option Agreement authorized by the ISOP may contain such other provisions as the Committee may, from time to time, deem advisable.

 

10.8                        With respect to Unapproved 102 Option, if the Optionee ceases to be employed by the Company or any Affiliate, the Optionee shall extend to the Company and/or its Affiliate a security or guarantee for the payment of tax due at the time of sale of Shares, all in accordance with the provisions of Section 102 and the rules, regulation or orders promulgated thereunder.

 

11.                               VESTING OF OPTIONS

 

11.1                        Subject to the provisions of the ISOP, each Option shall vest following the Vesting Dates and for the number of Shares as shall be provided in the Option Agreement.  However, no Option shall be exercisable after the Expiration Date.

 

11.2                        An Option may be subject to such other terms and conditions on the time or times when it may be exercised, as the Committee may deem appropriate.  The vesting provisions of individual Options may vary.

 

12.                               PURCHASE FOR INVESTMENT

 

The Company’s obligation to issue or allocate Shares upon exercise of an Option granted under the ISOP is expressly conditioned upon:  (a) the Company’s completion of any registration or other qualifications of such Shares under all applicable laws, rules and regulations or (b) representations and undertakings by the Optionee (or his legal representative, heir or legatee, in the event of the Optionee’s death) to assure that the sale of the Shares complies with any registration exemption requirements which the Company in its sole discretion shall deem necessary or advisable.

 

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Such required representations and undertakings may include representations and agreements that such Optionee (or his legal representative, heir, or legatee):  (a) is purchasing such Shares for investment and not with any present intention of selling or otherwise disposing thereof; and (b) agrees to have placed upon the face and reverse of any certificates evidencing such Shares a legend setting forth (i) any representations and undertakings which such Optionee has given to the Company or a reference thereto and (ii) that, prior to effecting any sale or other disposition of any such Shares, the Optionee must furnish to the Company an opinion of counsel, satisfactory to the Company, that such sale or disposition will not violate the applicable laws, rules, and regulations, whether of the State of Israel or of the United States or any other State having jurisdiction over the Company and the Optionee.

 

13.                               SHARES SUBJECT TO RIGHT OF FIRST REFUSAL

 

13.1                        Notwithstanding anything to the contrary in the Articles of Association of the Company, none of the Optionees shall have a right of first refusal in relation with any sale of shares in the Company.

 

13.2                        Unless otherwise determined by the Committee, until such time as the Company shall complete an IPO, an Optionee shall not have the right to sell Shares issued upon the exercise of an Option within six (6) months and one day of the date of exercise of such Option or issuance of such Shares.  Unless otherwise determined by the Committee, until such time as the Company shall complete an IPO, the sale of Shares issuable upon the exercise of an Option shall be subject to a right of first refusal on the part of the Repurchaser(s).

 

Repurchaser(s) means (i) any shareholder who is entitled to the right of first refusal according to the Company’s Articles of Association at the time of such sale of Shares and in accordance with the manner determined in the Company’s Articles of Association; (ii) if the right described in (i) above is not exercised, the Company, if permitted by applicable law, or (iii) if the Company is not permitted by applicable law, then any affiliate of the Company designated by the Committee.  The Optionee shall give a notice of sale (hereinafter the “Notice”) to the Company in order to offer the Shares to the Repurchaser(s).

 

13.3                        The Notice shall specify the name of each proposed purchaser or other transferee (hereinafter the “Proposed Transferee”), the number of Shares offered for sale, the price per Share and the payment terms.  The Repurchaser(s) will be entitled for thirty (30) days from the day of receipt of the Notice (hereinafter the “Notice Period”), to purchase all or part of the offered Shares on a pro rata basis based upon their respective holdings in the Company.

 

13.4                        If by the end of the Notice Period not all of the offered Shares have been purchased by the Repurchaser(s), the Optionee shall be entitled to sell such Shares at any time during the ninety (90) days following the end of the Notice Period on terms not more favorable than those set out in the Notice, provided that the Proposed Transferee agrees in writing that the provisions of this section shall continue to apply to the Shares in the hands of such Proposed Transferee.  Any sale of Shares issued under the ISOP by the Optionee

 

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that is not made in accordance with the ISOP or the Option Agreement shall be null and void.

 

14.                               DIVIDENDS

 

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.

 

15.                               RESTRICTIONS ON ASSIGNABILITY AND SALE OF OPTIONS

 

15.1                        No Option or any right with respect thereto, purchasable hereunder, whether fully paid or not, shall be assignable, transferable or given as collateral or any right with respect to it given to any third party whatsoever, except as specifically allowed under the ISOP, and during the lifetime of the Optionee each and all of such Optionee’s rights to purchase Shares hereunder shall be exercisable only by the Optionee.

 

Any such action made directly or indirectly, for an immediate validation or for a future one, shall be void.

 

15.2                        As long as Options and/or Shares are held by the Trustee on behalf of the Optionee, all rights of the Optionee over the Shares are personal, cannot be transferred, assigned, pledged or mortgaged, other than by will or pursuant to the laws of descent and distribution.

 

16.                              EFFECTIVE DATE AND DURATION OF THE ISOP

 

The ISOP shall be effective as of the day it was adopted by the Board and shall terminate at the end of ten (10) years from such day of adoption.

 

The Company shall obtain the approval of the Company’s shareholders for the adoption of this ISOP or for any amendment to this ISOP, if shareholders’ approval is necessary or desirable to comply with any applicable law including without limitation the US securities law or the securities laws of other jurisdiction applicable to Options granted to Optionees under this ISOP, or if shareholders’ approval is required by any authority or by any governmental agencies or

 

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national securities exchanges including without limitation the US Securities and Exchange Commission.

 

17.                               AMENDMENTS OR TERMINATION

 

The Board may at any time, but when applicable, after consultation with the Trustee, amend, alter, suspend or terminate the ISOP.  No amendment, alteration, suspension or termination of the ISOP shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Company, which agreement must be in writing and signed by the Optionee and the Company.  Termination of the ISOP shall not affect the Board’s ability to exercise the powers granted to it hereunder with respect to Options granted under the ISOP prior to the date of such termination.

 

18.                               GOVERNMENT REGULATIONS

 

The ISOP, and the granting and exercise of Options hereunder, and the obligation of the Company to sell and deliver Shares under such Options, shall be subject to all applicable laws, rules, and regulations of the State of Israel.

 

19.                               CONTINUANCE OF EMPLOYMENT OR HIRED SERVICES

 

Neither the ISOP nor the Option Agreement with the Optionee shall impose any obligation on the Company or an Affiliate thereof, to continue any Optionee in its employ or service, and nothing in the ISOP or in any Option granted pursuant thereto shall confer upon any Optionee any right to continue in the employ or service of the Company or an Affiliate thereof or restrict the right of the Company or an Affiliate thereof to terminate such employment or service at any time.

 

20.                               GOVERNING LAW & JURISDICTION

 

The ISOP shall be governed by and construed and enforced in accordance with the laws of the State of Israel applicable to contracts made and to be performed therein, without giving effect to the principles of conflict of laws.  The competent courts of Tel-Aviv, Israel shall have sole jurisdiction in any matters pertaining to the ISOP.

 

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21.                               TAX CONSEQUENCES

 

21.1                        Any tax consequences arising from the grant or exercise of any Option, from the payment for Shares covered thereby or from any other event or act (of the Company and/or its Affiliates, the Trustee or the Optionee), hereunder, shall be borne solely by the Optionee. The Company and/or its Affiliates and/or the Trustee shall withhold taxes according to the requirements under the applicable laws, rules, and regulations, including withholding taxes at source.  Furthermore, the Optionee shall agree to indemnify the Company and/or its Affiliates and/or the Trustee and hold them harmless against and from any and all liability for any such tax or interest or penalty thereon, including without limitation, liabilities relating to the necessity to withhold, or to have withheld, any such tax from any payment made to the Optionee.

 

21.2                        The Company and/or, when applicable, the Trustee shall not be required to release any Share certificate to an Optionee until all required payments have been fully made.

 

22.                               NON-EXCLUSIVITY OF THE ISOP

 

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

 

For the avoidance of doubt, prior grant of options to Optionees of the Company under their employment agreements, and not in the framework of any previous option plan, shall not be deemed an approved incentive arrangement for the purpose of this Section.

 

23.                               MULTIPLE AGREEMENTS

 

The terms of each Option may differ from other Options granted under the ISOP at the same time, or at any other time.  The Board may also grant more than one Option to a given Optionee during the term of the ISOP, either in addition to, or in substitution for, one or more Options previously granted to that Optionee.

 

18Exhibit 10.2

 

FOUNDERS AND SHAREHOLDERS AGREEMENT

 

THIS AGREEMENT is made as of the   day of January, 2001

 

AMONG:

 

(1)                                 Clal Biotechnology Industries Ltd.

an Israeli Company. No. 51-189883-5

of Atidim Tower, Atidim Industrial Park

Israel, (“CBI”); and

 

(2)                                 L.R. R&D Ltd.

an Israeli Company, No. 51-181950-0

of 13 Harduf Street, Omer,

Israel, (“LR”); and

 

(3)                                 Prof. Lior Rosenberg

Israeli ID No. 0809587-9

of 13 Harduf Street, Omer,

Israel, (“Rosenberg”); and

 

(4)                                 Mediwound Ltd.

an Israeli Company, No.51-289494-0

of Atidim Tower, Atidim Industrial Park

Israel, (“Company” or “Mediwound”)

 

WHEREAS

 

(1)                                 On or about January, 2000, CBI and LR jointly established the company for the purpose of the research and development, manufacturing, marketing and sale of wound healing and burn treating products and modalities, including, without limitation, a product derived from Pineapple stems and used for wound healing (“Debridase”) and other activities ancillary or incidental thereto (collectively, the “Business”);

 

(2)                                 LR is one of the Initiators of this project and is the sole rightful owner of clinical results and intellectual property related to Debridase included in the patents and patent applications, details of which are set forth in Exhibit A attached hereto (Appendix A to the MOU executed between the parties, dated January 20th, 2000), and all information, know-how and materials relating thereto (the “IP”);

 

(3)                                 The parties wish to work together and co-operate with each other to enable the grant of the exclusive license of the IP to the Company and to assist the company in the future development, clinical use and commercial exploitation of the IP and any products deriving therefore including without limitation, the Debridase, and other activities ancillary or incidental to the Business;

 

 

(4)                                 Prior to or shortly following the signing of this Agreement by the parties, the Company has entered or will enter into: (a) an Agreement with Mark Klein/Bioproducts Inc. for the transfer of its intellectual property relating to Debridase to the sole ownership of the Company, a copy of which is attached hereto as Exhibit B; and (b) Agreement with Challenge Bioproducts Corporation Ltd./Dr. CK Lin, for the exclusive supply of Debridase-related raw material to the Company, and for Technology Transfer relating to said raw material, copies of which is attached hereto as Exhibits C1 and C2 (collectively, the “Related IP and Supply Agreements”);

 

(5)                                 The parties have agreed upon certain matters relating to the manner in which the Company is to be held and conducted, including the ownership, administration and management thereof, and upon certain other matters and are desirous of recording such agreement in writing.

 

NOW THEREFORE, it is hereby agreed among the parties hereto as follows:

 

1.                                      Defined Terms

 

1.1                               The following words and expressions shall bear meanings set opposite them:

 

	
“Affiliate”
    	
 
    	
a Person directly or indirectly   controlling, controlled by or under common control with any other Person. As   used in this definition “control” of an entity means the possession, directly   or indirectly, of the unilateral power to cause the direction of the   management and polices of such entity, whether through the ownership of   voting securities or otherwise.
    
	
 
    	
 
    	
 
    
	
“Business”
    	
 
    	
the business, as defined in the   Preamble.
    
	
 
    	
 
    	
 
    
	
“Board”
    	
 
    	
the Board of Directors of the Company.
    
	
 
    	
 
    	
 
    
	
“Commencement Date”
    	
 
    	
the date of the commencement of the term   of this Agreement, as provided in Section 13.
    
	
 
    	
 
    	
 
    
	
“Company”
    	
 
    	
Mediwound Ltd., a company incorporated   in the State of Israel.
    
	
 
    	
 
    	
 
    
	
“Dollar” or “$”
    	
 
    	
a dollar of the United States of   America.
    
	
 
    	
 
    	
 
    
	
“Person”
    	
 
    	
a natural person or corporation trust,   association partnership, limited liability company, joint venture or other   entity (including a governmental agency or instrumentality).
    
	
 
    	
 
    	
 
    
	
“Shareholders”
    	
 
    	
CBI and LR.
    

 

1.2                               In this Agreement, unless there is something in the subject or context Inconsistent therewith:

 

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1.2.1                     words importing the singular shall (where appropriate) mean and include the plural and vice versa;

 

1.2.2                     words importing any one gender shall (where appropriate) mean and include the other gender and vice versa;

 

1.2.3                     words importing natural persons shall (where appropriate) mean and include corporations and other entities and vice versa; and

 

1.2.4                     the headings are for convenience of reference only and shall not be construed as affecting the meaning or interpretation of this Agreement.

 

2.                                      Constituent Document — the Company

 

It is hereby acknowledged and agreed that the Memorandum and Articles of Association of the Company are or will be in the Form attached hereto as Exhibit D, as may be amended from time to time in accordance with the provisions of this agreement and the Articles of Association of the Company.

 

3.                                      Shareholder — Company

 

3.1                               Subject to the provisions of this Agreement, the issued and outstanding share capital of the Company, which shall initially comprise of 10,000 (ten thousand) Ordinary Shares of NIS 1.0 per share, shall be held, in the following proportions:

 

CBI — eighty per cent (80%), 8000 shares;

LR — twenty per cent (20%), 2000 shares (“LR’s Initial Percentage Shareholding”).

 

3.2                               In consideration of LR granting the license to the Company pursuant to Section 7.1, it is hereby agreed that in the event of the issuance of any shares by the Company to CBI and/or any third parties in exchange for the investment by such parties in the Company, LR shall be entitled to maintain LR’s Initial Percentage Shareholding through the issuance of such sufficient additional number of fully paid issued ordinary shares by the Company to LR, for no additional payment, as shall be necessary to restore LR’s Initial Percentage Shareholding, provided that the anti-dilution protection provided in this Section 3.2 shall cease to apply after a total of [Twelve Million United States Dollars (US$12,000,000)] shall have been invested in the Company by CBI and/or any third parties.

 

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4.                                      Board of Directors — Company

 

4.1                               The Shareholders undertake towards each other to vote and/or procure the voting at all meetings of the Shareholders and Board to elect the directors of the Company in accordance with the provisions of this Section 4.

 

4.2                               Each of the Shareholders shall be entitled to designate such number of persons to the Board as shall be pro rata to its respective shareholding in the Company.

 

4.3                               Directors of the Company designated by any of the Shareholders shall be removed or replaced upon the written instruction of the party which nominated such director.

 

4.4                               The Board shall consist of at least 3 (three) persons, and shall initially consist of the following persons:

 

Dr. Avri Havron, Adv. Ophir Shahaf, as designated by CBI; and

 

Rosenberg, designated by LR (“LR’s Director”).

 

4.5                               The Board shall convene at least once every quarter, or as required.

 

5.                                      Active Chairman and Chief Medical Director

 

5.1                               The Active Chairman of the Company shall be nominated and appointed by the Board.

 

5.2                               Rosenberg shall be appointed as Chief Medical Director of the Company and, in connection therewith, Rosenberg and the Company shall sign the Employment Agreement on the date hereof, in the form attached hereto as Exhibit E.

 

6.                                      Decision-Making — Fundamental Matters and Procedures

 

6.1                               It is hereby expressly agreed that so long as LR holds at least ten percent (10%) of the issued shares of the Company on a fully diluted basis, and prior to the Company’s IPO (i) actions of the Company or any of its subsidiaries (as applicable) involving any of the following matters shall require the affirmative vote of LR, if such action is presented to the shareholders of the Company and (ii) the Company shall refrain from taking and, as applicable, shall not allow the company’s subsidiaries to take, the following actions should LR’s Directorsvote against the taking of said action, if such action may be taken by the Board of Directors:

 

6.1.1                     Appointment or removal of the Active Chairman of the Company.

 

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6.1.2                     an acquisition of another company or business entity by the Company, or by another person or entity of the Company, whether through merger, purchase of shares, purchase of assets or otherwise.

 

6.1.3                     entering into any agreement or arrangement between the Company and (a) one of the Shareholders, or (b) an Affiliate of any of the Shareholders.

 

6.1.4                     offering, issuance or sale of additional securities or any instruments convertible into securities, or options to acquire shares in the Company, provided that this Section 6.1.4 shall not apply to any such issuance effected in accordance with the provisions of Section 8.

 

6.1.5                     purchase or redemption of the securities of the Company, or the pledge thereof.

 

6.1.6                     stock split, consolidation, merger, recapitalization or capital contribution.

 

6.1.7                     amendment to the Articles of Association of the Company.

 

6.1.8                     approval or making of any voluntary bankruptcy or reorganization filing, or approval of the dissolution, liquidation or other termination of business or operations of the Company.

 

6.1.9                     entering into any new fields of activity other than the Business.

 

6.1.10              The sub-licensing of any part of the IP by the Company.

 

6.1.11              Changing the duties and responsibilities of the Company’s Chief Medical Director, other than termination.

 

6.2                               Subject to Section 6.1, all decisions at meetings of the Board and Shareholders of the Company shall be made on a simple majority basis, provided that a member of the Board may vote by proxy.  The Board and Shareholders may also act by unanimous written consent in lieu of a meeting.

 

6.3                               The Company shall adopt, a set of procedures concerning such of the following matters as the Company deems appropriate, and concerning any other matters that the Company deems appropriate:

 

6.3.1                     calling of meetings, including notice requirements and procedures for waiver of notice;

 

6.3.2                     place of meetings;

 

6.3.3                     participating in meetings by telephone;

 

6.3.4                     procedures for developing information required by the Board; and

 

6.3.5                     keeping of minutes and approval thereof.

 

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7.                                      License of Intellectual Property

 

7.1                               Exclusive License.  In consideration of LR receiving the shares in the Company, at par value, as provided in Section 3.1 and also being provided with the benefit of the anti-dilution protection expressly provided in Section 3.2 and in further consideration of the due and proper payment of the amounts provided in Section 7.6, LR hereby grants the Company, and the Company hereby accepts, an exclusive non-revocable royalty-free worldwide license (the “Exclusive License”), to use and exploit the IP and any part thereof, including without limitation to sublicense (subject to Section 7.3 below), copy, reproduce and/or modify the IP or any part thereof, and to research, develop, produce license (subject to Section 7.3 below), market, distribute and sell products based on, or involving the use of, the IP, for any legal use whatsoever (the “Products”).

 

7.2                               Term.  The Exclusive License shall remain in force in perpetuity, unless terminated by mutual written agreement of the parties hereto, or in the event that the Company shall not have a yearly financial cash flow or transactions of any kind of at least Three Hundred Thousand United States Dollars ($300,000).

 

7.3                               Sublicense.  The Company may upon the execution hereof grant sublicenses to use and exploit the IP and any part thereof, including without limitation to sublicense, copy, reproduce and/or modify the IP or any part thereof, and to research, develop, produce, market, distribute and sell any of the Products (the “Sublicenses”), provided that such sublicenses shall be pursuant to an agreement which shall provide as follows:

 

(i)                                     The Sublicense may be used solely for any legal use; and

 

(ii)                                  The Sublicense shall terminate promptly upon the termination of the Exclusive License.

 

7.4                               Representations.  LR and Rosenberg hereby jointly and severally represent and warrant that:

 

7.4.1                     The IP is in the exclusive, full and legal ownership of LR free and clear of all liens, claims and restrictions and, to the best of its knowledge, without infringing upon or violating any right, lien, or claim of others.  LR is not obligated or under any liability whatsoever to make any payments by way of royalties, fees or otherwise to any owner or licensee of, or other claimant to, any patent, trademark, service mark, trade name, copyright or other intangible asset, with respect to the use of the IP.  LR has taken of all the IP, which measures are reasonable and customary in the industry in which CBI operates.

 

7.4.2                     To LR’s best knowledge, the rights in the IP are not currently infringed or violated by any person or entity.

 

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7.5                               Title.  Any and all new intellectual property of any kind, whether patentable or not, including without limitation, documentation, drawings, reports, surveys, correspondence, formula data and specification which are not existing and dated prior to the date hereof, which is currently or will be developed in the future, by the Company, Rosenberg, LR and their respective employees, officers or consultants relating to chemical or Enzymatic Debridement shall be the property solely of the Company.

 

7.5.1                     LR hereby grants the Company a right of first offer to commercialize any and all other intellectual property, not included in this agreement, that it has developed or will develop, in all fields.  The Company shall inform LR of its decision regarding commercialization of said intellectual property within 60 days of the proposal.

 

7.6                               Payments by Company.  In consideration of LR hereby granting the Exclusive License to the Company, it hereby agrees to make the following payments to LR:

 

7.6.1                     One Hundred and Fifty Thousand United States Dollars (US$150,000) — immediately upon the execution of this Agreement by LR and Rosenberg and the execution of the Related IP and Supply Agreements by all the parties thereto;

 

7.6.2                     Fifty Thousand United States Dollars (US$50,000) — on the first anniversary of the later of the execution of this Agreement by the parties and the date of execution of the Related IP and Supply Agreements by all the parties thereto (the later of such dates being referred to as the “Relevant Date”);

 

7.6.3                     Fifty Thousand United States Dollars (US$50,000) — eighteen (18) months after the Relevant Date;

 

7.6.4                     Fifty Thousand United States Dollars (US$50,000) — upon first filing for registration of the Company’s Debridase-based product with the FDA (US) or with the equivalent European authorities, if filed in a Western European country; and

 

7.6.5                     One Thousand United States Dollars (US$100,000) — upon first approval for registration of the Company’s Debridase-based product by the FDA (US) or by the equivalent European or Japanese authorities, if approved in a Western European country or Japan.

 

7.6.6                     The Company shall reimburse LR for expenses related to the registration of IP that shall be assigned to the Company, that have occurred since January 2000, and until the signing of this agreement, against proper documentation.

 

7.7                               LR and Rosenberg shall, at the request of the Company, sign, execute, deliver and file all such documents, agreements, consents, forms, and statements as may be requested at any time hereafter by the Company for the purposes of perfecting the Exclusive License

 

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hereby granted and securing the rights of the Company therein and to the IP.  LR shall sign and deliver to the Company a separate form of License Agreement, to be prepared by the Company and which substantially reflects the terms of the Exclusive License as contained in this Section 7.

 

8.                                      Pre-emptive Rights

 

8.1                               If the Company proposes to issue or sell any New Securities (as defined in Section 8.2.1) prior to the consummation of an IPO, the Company shall before such issuance offer to all holders of shares in the Company (“Shares”) the right to purchase a pro-rata share of the New Securities.  A Shareholder’s pro-rata share, for purposes of this section, is the ratio of the number of shares owned by such Shareholder immediately prior to the issuance of New Securities in relation to the total number of Shares outstanding immediately prior to the issuance of New Securities.  Each holder of Shares shall have a right of over-allotment such that if any shareholder fails to exercise its right hereunder to purchase its pro-rata share of New Securities, each other Shareholder exercising its preemptive rights hereunder may purchase the non-purchasing shareholder’s portion pro-rata according to the respective total number of Shares owned by such other Shareholders exercising this right of over allotment within seven (7) days from the date such non-purchasing shareholder fails to exercise its rights hereunder to purchase its pro-rata share of New Securities.  This preemptive right shall be subject to the following provisions:

 

8.1.1                     “New Securities” shall mean any equity interest in the Company, whether now authorized or not, and rights, options or warrants to purchase such equity interest, and securities of any type whatsoever that are convertible into equity interests; provided that the term “New Securities” does not include:  (a) securities issuable upon conversion of convertible securities or upon the exercise of warrants which were New Securities when issued; (b) the Company’s Shares issued in connection with any stock split, stock dividend, recapitalization, reclassification or similar event by the Company; or (c) shares to be issued to employees, directors or consultants of the Company in accordance with the resolutions of the Board as part of a bona fide employee share option plan approved by the Board.

 

8.1.2                     In the event the Company proposes to undertake an issuance of New Securities, it shall give each Shareholder written notice of its intention, describing the type of New Securities, their price and the general terms upon which the Company proposes to issue the same.  Subject to Section 8.1, each Shareholder shall have seven (7) days after any such notice is mailed or delivered to agree to purchase such Shareholder’s pro rata share of such New Securities of the price and upon the terms specified in the notice by giving written notice to the Company stating therein the quantity of New Securities to be purchased and transferring the full consideration for those New Securities to the Company’s bank account.

 

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8.2                               Subject to Section 8.1, in the event the Shareholders fail to exercise fully the preemptive right within the said fourteen (14) day period and after the expiration of the ten-day period for the exercise of the over-allotment or allotment provisions of Section 8.1, the Company shall have one hundred sixty (160) days thereafter to sell or enter into an agreement to sell the New Securities respecting which the Shareholders’ preemptive right set forth in Section 8.1 is not exercised, at a price and upon terms no more favorable to the purchasers thereof than specified in the Company’s notice to the Shareholders pursuant to Section 8.1.  In the event the Company has not sold or entered into an agreement to sell the New Securities in accordance with the foregoing within one hundred sixty (160) days, the Company shall not thereafter issue or sell any New Securities without first again offering such securities to the Shareholders in the manner provided in Section 8.3.

 

8.3                               Notwithstanding anything to the contrary herein contained, the Company may issue New Securities to CBI and/or any third party for a total investment in the Company of up to [Twelve Million Unites States Dollars (US$12,000,000)] without complying with the foregoing provisions of this Section 8 or Section 6.1.4.

 

9.                                      Right of First Refusal

 

9.1                               The term “Permitted Transferee” means any of the following:

 

9.1.1                     the spouse (or widow or widower) of the transferor and the transferor’s children (including step and adopted children) (each of the Transferees in Section 9.1.1 are referred to as a “Privileged Relation”).

 

9.1.2                     a trust which does not permit any of the settled property or the income therefrom to be applied otherwise than for the benefit of the relevant transferor-shareholder and/or a Privileged Relation of that transferor-shareholder and no power of control over the voting powers conferred by any shares are subject to the consent of any person other than the trustees of such transferor-shareholder or his Privileged Relations.

 

9.1.3                     a company in which the transferor owns directly or indirectly more than 50% of the equity and voting capital or has the right or power to direct the policy and management of such company or a company that owns directly or indirectly more than 50% of the equity and voting capital or has the right or power to direct the policy and management of the transferor, provided that the transferor agrees to reacquire the transferred securities in the event the conditions set forth in this Section 9.1.3 cease to be satisfied.

 

9.1.4                     in the case of a transferor being a partnership, its general or limited partner or any affiliated partnership managed by the same or affiliated management company or of which the general partner of the transferor is a general partner, or to a trustee or beneficiary of a trust which holds all of the shares in the body corporate, provided that the transferor agrees to reacquire the transferred securities in the event the conditions set forth in this Section 9.1.4 cease to be satisfied.

 

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9.2                               The term “Permitted Transfer” means a Transfer to a Permitted Transferee, subject to any terms and conditions contained in this Agreement and the Articles of Association of the Company; provided, that a Transfer of any share pursuant to this Section shall only be treated as a Permitted Transfer if it is a Transfer of the entire legal and beneficial interest in such share free from all liens, charges and other encumbrances and if the transferee agrees in writing to be bound by the terms and conditions of this Agreement and the Articles of Association of the Company.

 

9.3                               Except for Permitted Transfer in accordance with Section 9.2, in any case where a Shareholder (in this Section 9.3, the “Selling Shareholder”) desires to sell or Transfer any or all of his or its shares in the Company (the “Offered Shares”), it shall first give written notice thereof (“Notice of Sale”) to all of the holders of the Shares (the “Optionholders”).

 

9.3.1                     The Notice of Sale shall state the number of Offered Shares, that the Offered Shares will, upon the sale, be free of all liens, charges and encumbrances, that a bona fide offer has been received from a third party, and the price, terms of payment and conditions for this purchase of the Offered Shares.  Upon receipt of the Notice of Sale, the Optionholders shall have the right to the exercise the option (the “Option”) contained in Section 9.3.2.

 

9.3.2                     For a period of 30 days after receipt of the Notice of Sale, the Optionholders may elect to purchase all (but not part) of the Offered Shares.  The Option shall be exercised by delivery of a notice to such effect to the Selling Shareholders within 30 days of receipt of the Notices of Sale.  If more than one of the Optionholders exercises the Option (the “Buying Shareholders”), they shall acquire the Offered Shares pro rata according to the shareholding ratio among such Buying Shareholders as of the date immediately prior to the sale of such Offered Shares pursuant to this Section.  The purchase of the Offered Shares shall be on the same terms and conditions as stated in the Notice of Sale.

 

9.3.3                     If all of the Offered Shares are not sold to the Optionholders, then the Selling Shareholder shall be free, within 60 days of the date of expiration of the Option, to sell such shares to a prospective buyer, at the price and on the terms contained in the Notice of Sale.  If there is no sale within such 60 day period, the Selling Shareholder shall not sell or Transfer the Offered Shares, or any other shares acquired before or after the date hereof, without again complying with the provisions of this Section 9.3.

 

9.4                               In the event that there is a situation in which fractional shares will need to be transferred, the number of shares will be rounded up so that only full shares will be transferred.

 

9.5                               The provisions of Section 8, 9 and 10 shall be of no further force and effect upon the consummation of an IPO by the Company.

 

10

 

10.                               Bring Along Rights

 

10.1                        Prior to IPO, in the event that shareholders in the Company holding more than 66% of the Company’s issued shares (on a fully diluted, as if converted basis) (the “Proposing Shareholders”) accept an offer (“Section 13.1 Offer”) to sell all of their shares of the Company to a third party, and such sale is conditioned upon the sale of all remaining shares of the Company to such third party, all other Shareholders (“Non-Proposing Shareholders”) shall be required to sell their shared in such transaction, on the same terms and conditions.  Said requirement shall enter into effect only in the event that the mentioned sale is performed at a Company pre-money valuation of at least $ 20 M (Twenty million United States Dollars).

 

10.2                        In the event that the threshold percentages of Section 10.1 are met, any Transfer or hypothecation of shares by the Non-Proposing Shareholders other than in connection with the proposed acquisition shall be absolutely prohibited, and at the closing of such Offer all the Shareholders of the Company shall sell all of their shares to the person or entity making such Offer on the same terms and conditions as contained in the Offer, provided, however, that the aggregate consideration provided pursuant to the closing of such Offer shall be allocated among the Company’s Shareholders in accordance with the Articles of Association of the Company.  In the event that a Shareholder fails to surrender its share certificate in connection with the consummation of a Section 10.1 Offer, such certificate shall be deemed cancelled and the Company shall be authorized to issue a new certificate in the name of the person making the Offer and the Board shall be authorized to establish an escrow account, for the benefit of the Shareholder, into which the consideration for such cancelled shares shall be deposited and to appoint a trustee to administer such account.

 

10.3                        In any event of said sale (CBI’s and LR’s shares of the Company to a third party), LR will have the opportunity to join the sale on same terms, pro-rata to the parties holdings of the Company shares at the time of the sale.

 

11.                               Non-Competition and Confidential Information

 

Each of the parties, except for the Company, covenants and undertakes that for as long as it maintains any shares in the Company (and in the case of Rosenberg, it or LR), and for two (2) years thereafter (hereafter “the Restricted Period”), except as otherwise agreed in writing with the Company:

 

11.1                        neither it nor its Affiliates shall, either solely or jointly with or as manager agent or consultant of any other person (corporate or unincorporated) carry on or be engaged or concerned or interested, directly or indirectly, in Israel, the United States, the European

 

11

 

Community or Japan in the business of research and development, manufacturing, marketing and sale of bio-chemical debridement agents, including without limitation, a product derived from Pineapple stems and used for would healing, other than through the Company (“Restricted Activity”).

 

11.2                        it and its Affiliates will keep confidential and not disclose or make use of any financial information of the Company or other information relating to the business and affairs of the Company and its property and assets, including but not limited to any such information about current or future affairs or plans or clients or other persons with whom any of the parties hereto or the Company has had dealings or is or has been concerned in relation to the business and affairs of the Company and its property and assets.  For the avoidance of doubt, it is clarified that membership on the Board of Directors of any company does not constitute a breach of this section 11.2, provided that this section 11.2 is otherwise complied with.

 

This section does not apply to information:

 

a)                                     which is now or hereafter is published or becomes known publicly or otherwise becomes part of the public domain through no fault of the parties or Affiliates thereof; or

 

b)                                     which is received by the parties or Affiliates thereof from sources other than the Company, which sources were not known by the parties or Affiliates thereof to be under any obligation of secrecy to the Company; or

 

c)                                      which is specifically required to be disclosed in compliance with applicable laws or regulations or by order of a court or other regulatory body of competent jurisdiction.

 

12.                               Successors and Assigns

 

Except as otherwise specifically provided herein this Agreement shall be binding upon and enure for the benefit of the parties and their legal representatives, successors, heirs and permitted assigns.

 

13.                               Commencement and Term of Agreement

 

This Agreement shall take effect as and from the date of the signing hereof and shall continue in full force and effect to govern the relationship of the parties hereto until the liquidation or other termination of the business and operations of the Company.

 

12

 

14.                               Governing Law

 

This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Israel, without regard to principles of conflicts of law.

 

15.                               Notices

 

Any notice, declaration or other communication required or authorized to be given by any party under this agreement to any other party shall be in writing and shall be personally delivered or sent by facsimile transmission addressed to the other party at the address or facsimile number stated for such party in the preamble to this Agreement or such other address as shall be specified by the party in question by notice in accordance with the provisions of this Section 15.  Any notice shall operate and be deemed to have been served on the next following business day.

 

16.                               General

 

16.1                        All of the parties to this Agreement will do acts and things and sign and execute all documents and deeds and procure the passing of all corporate resolutions requisite for the purpose of implementing the terms of this Agreement.

 

16.2                        Except as provided herein, this Agreement contains the whole agreement between the parties relating to the subject matter hereof and supersedes all previous agreements or Memoranda of Understanding between such parties in respect of such.

 

16.3                        Nothing contained in this Agreement whether express or implied shall be read and construed so as to place all or any of the parties hereto in the relationship of a partnership.

 

16.4                        No failure or delay by either of the parties in exercising any claim, remedy, right, power or privilege under this Agreement shall operate as a waiver nor shall any single or partial exercise of any claim, remedy, right, power of privilege preclude any further exercise thereof or exercise of any other claim, right, power or privilege.

 

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

 

16.6                        Save as expressly provided herein, this Agreement may be amended or terminated, and any of the terms hereof waived, only by a document in writing specifically referring to this Agreement and executed by the parties hereto or, in the case of a waiver, by the party waiving compliance.

 

13

 

16.7                        In case of any inconsistency between this Agreement and the Articles of Association of the Company, the provisions of this Agreement shall govern, and the parties shall promptly amend the Articles of Association, as applicable, of the Company to conform to this Agreement.

 

14

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and the year first above written.

 

 

	
Clal Biotechnology Industries Ltd.
    	
L.R. R&D Ltd.
    
	
 
    	
 
    
	
By:
    	
/s/D. Haselkorn   /s/G. Bieber
    	
 
    	
By: 
    	
/s/ Lior Rosenberg
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
D. Haselkorn /   G. Bieber
    	
 
    	
Name: 
    	
/s/ Lior Rosenberg
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
CEO / CFO
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Prof. Lior Rosenberg
    	
 
    	
Mediwound Ltd.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
By:
    	
/s/ Lior   Rosenberg
    	
 
    	
By: 
    	
/s/MediWound Ltd.
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    

 

15

 

Exhibit A

 

The IP

 

The summary of the IP to be provided by Licensor to Licensee

 

Appendix A (copy of the original MOU with the addition of the Ultra Sound Enhanced Debriding patent application number that at the time of the MOU did not exist as yet)

 

1.                                      All the clinical data and material, patient’s files, photographic material, literature etc. concerning the Debridase project, wounds and burn handling generated and gathered by the Licensor during the last 16 years in clinical and in vivo settings.  International endorsement of the product and its application.  Rights for the new Minimal Invasive modality of wounds and burn treatment announced internationally at the ISBI meeting, November 1998 Jerusalem.

 

1.1.                            Completion (with Licensee support) of copying all required hospital patient’s files.

 

1.2.                            Support in compilation, analysis, documentation, edition and presentation of all retro and prospective clinical and other data in Israel and abroad, owned by the Licensor or by others, concerning Debridase.

 

1.3.                            Rights to Licensee of all the future publications based on Licensor existing (published and unpublished) clinical material.

 

2.                                      Rights relating to enzymatic debridement in several patents based on the two patent applications: PCT 4131/WO/96 and PCT 4132/WO/96 and the patent application number 10164 (2000) (Luzzatto&Luzzatto).

 

3.                                      Definition and development (with Licensee support) of the First Generation of Debridase clinical formulation(s) based on the above mentioned patents.

 

3.1.                            Support and supervision in establishing function efficacy evaluation and quality control test system that includes bioassay model (live piglets) and in-vitro model starting with fresh human skin (with licensee support).

 

3.2.                            Right of First Refusal to all future inventions.

 

4.                                      Definition and establishment (with Licensee support) of a multicenter clinical trial protocol.

 

4.1.                            Presentation and assessment of the existing data and the new multicenter protocol to the regulatory authorities.

 

4.2.                            Organization and coordination of leading burn centers for the multicenter trial.

 

4.3.                           Presenting, supporting and endorsing the project and the Debridase with the various, medical and military services.

 

16

 

Exhibit B

 

Assignment

 

·                  Whereas, all of the undersigned have entered into and executed two separate Memorandums of Understanding (“MOU”), detailing the terms and conditions of the in-licensing of IP and other rights and know-how related to Debridase; and

 

·                  Whereas, all undefined terms in this assignment document shall have the same definition and meanings as detailed in the MOU; and

 

·                  Whereas, CBI has established Mediwound Ltd., an Israeli private company (“Mediwound”) for the purpose of R&D, manufacturing, marketing and sales of the products derived from Pineapple stems and used for wound healing (“Debridase”); and

 

·                  Whereas, it is the Intention of the undersigned that Mediwound shall be the sole entity that shall be active in the R&D, manufacturing, marketing and sales of Debridase-related products;

 

Therefore, the undersigned agree:

 

All terms, rights and obligations detailed in the MOU and its Appendixes, relating to CBI - are hereby exclusively and irrevocably assigned to Med1wound, and all documents shall be construed as if Mediwound is a party to them instead of CBI.

 

 

	
 
    	
/s/Mark Klein
    	
 
    	
/s/Clal Biotechnology Industries Ltd.
    
	
 
    	
Mark Klein
    	
 
    	
Clal Biotechnology Industries Ltd.
    
	
 
    	
 
    	
 
    
	
 
    	
/s/CBC Ltd.
    	
 
    	
 
    	
/s/Lior Rosenberg
    
	
 
    	
CBC Ltd.
    	
 
    	
 
    	
LR R&D Ltd.
    
						

 

	
Date:
    	
28/1/2000
    	
 
    	
 
    

 

17

 

Exhibit C-1 and C-2

 

[Omitted — Supply Agreement]

 

18

 

Exhibit D

 

[Omitted - Memorandum and Articles of Association of the Company]

 

19

 

Exhibit E

 

[Omitted — Form of Employee Agreement]

 

20

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