Document:

exv10w2

 

Exhibit 10.2

MELLANOX TECHNOLOGIES LTD.

THE 1999

ISRAELI SHARE OPTION PLAN

As amended effective as of September 3, 2004

	1.	 	NAME
	 
	 	 	This Plan, as amended from time to time, shall be known as the Mellanox Technologies Ltd.
1999 Israeli Share Option Plan (the “ISOP”).
	 
	2.	 	PURPOSE OF THE ISOP
	 
	 	 	The ISOP is intended as an incentive to retain, in the employ of Mellanox Technologies Ltd.
(“the Company”) and its Subsidiaries, persons of training, experience, and ability, to
attract new employees, directors or consultants, whose services are considered valuable, 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 approved by the
board of directors of the Company (“the Board”). Options granted under the ISOP may or may
not contain such terms as will qualify such Options for the special tax treatment under
Section 102 of the Israeli Income Tax Ordinance (New Version) 1961 (the “Ordinance”) and
any regulations, rules, orders or procedures promulgated thereunder, including the Income
Tax Rules (Tax Benefits in Stock Issuance to Employees) 5349-1989 (“Section 102”).
	 
	 	 	Options containing such terms as will qualify them for the special tax treatment under
Section 102 shall be referred to herein as “102 Options”.
	 
	 	 	Options that do not contain such terms as will qualify them for the special tax treatment
under Section 102 shall be referred to herein as “3(I) Options”.
	 
	 	 	All Options granted hereunder, whether together or separately, shall be hereinafter
referred to as “Options”.
	 
	 	 	The term “Subsidiary” shall mean for the purposes of the ISOP: any company (other than the
Company) in an unbroken chain of companies beginning with the Company

 

2

	 	 	if, at the time of granting an option, each of the companies other than the last company in
the unbroken chain owns shares possessing fifty percent (50%) or more of the total combined
voting power of all classes of shares in one of the other companies in such chains.
	 
	3.	 	ADMINISTRATION OF THE ISOP
	 
	 	 	The Board or a share option committee appointed and maintained by the Board for such purpose
(“the Committee”) shall have the power to administer the ISOP. Notwithstanding the above,
the Board shall automatically have a residual authority if no Committee shall be constituted
or if such Committee shall cease to operate for any reason whatsoever.
	 
	 	 	The Committee shall consist of such number of members (not less than two (2) in number) as
may be fixed by the Board. The Committee shall select one of its members as its chairman
(“the 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.
	 
	 	 	The Committee shall have full power and authority (i) to designate participants; (ii) to
determine the terms and provisions of respective Option Agreements (which need not be
identical) including, but not limited to, the number of Shares in the Company to be covered
by each Option, provisions concerning the time or times when and the extent to which the
Options may be exercised, any conditions upon which the vesting of the Options may be
accelerated, and the nature and duration of restrictions as to transferability or
restrictions constituting substantial risk of forfeiture; (iii) to accelerate the right of
an Optionee to exercise, in whole or in part, any previously granted Option; (iv) to
interpret the provisions and supervise the administration of the ISOP; (v) to determine the
Fair Market Value ( as defined below) of the Shares ( as defined below); (vi) to designate
Options as 102 Options or 3(I)Options and (vii) to determine any other matter which is
necessary or desirable for, or incidental to administration of the ISOP.
	 
	 	 	All decisions and selections made by the Board or the Committee pursuant to the provisions
of the ISOP shall be made by a majority of its members except that no member of the Board
or the Committee shall vote on, or be counted for quorum purposes, with respect to any
proposed action of the Board or the Committee relating to any Option to be granted to that
member. Any decision reduced to writing and signed by a majority of the members who are
authorized to make such decision shall be fully effective as if it had been made by a
majority at a meeting duly held.
	 
	 	 	The interpretation and construction by the Committee of any provision of the ISOP or of any
Option thereunder shall be final and conclusive unless otherwise determined by the Board.

 

3

	 	 	Subject to the Company’s decision, 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.
	 
	 	 	“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 SmallCap 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
Administrator deems reliable.
	 
	 	(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 committee.

	4.	 	DESIGNATION OF PARTICIPANTS
	 
	 	 	The persons eligible for participation in the ISOP as recipients of Options shall include
any employees, directors and consultants of the Company or of any Subsidiary of the
Company. The grant of an Option hereunder shall neither entitle the recipient thereof to
participate nor disqualify the recipient from participating in, any other grant of Options
pursuant to the ISOP or any other option or stock plan of the Company or any of its
affiliates.
	 
	 	 	Anything in the ISOP to the contrary notwithstanding, all grants of Options to directors
and office holders (“Nosei Misra” — as such term is defined in the Companies Ordinance
(New Version), 1983 — the “Companies Ordinance”) shall be authorized and implemented in
accordance with the provisions of the Companies Ordinance, as in effect from time to time.
	 
	5.	 	TRUSTEE
	 
	 	 	Options which shall be granted under the ISOP and/or any Shares issued upon exercise of
such Options and/or other shares received subsequently following any realization of rights,
shall be issued to a Trustee nominated by the Committee, and approved in accordance with
the provisions of Section 102 (the “Trustee”) and held

 

4

	 	 	for the benefit of the Optionees. 102 Options and any Shares received subsequently
following exercise of 102 Options, shall be held by the Trustee for a period of not less
than two years (24 months) from the Date Of Grant.
	 
	 	 	Anything to the contrary notwithstanding, the Trustee shall not release any Options which
were not already exercised into Shares by the Optionee or release any Shares issued upon
exercise of Options prior to the full payment of the Optionee’s tax liabilities arising
from Options which were granted to the Optionee and/or any Shares issued upon exercise of
such Options.
	 
	 	 	Upon receipt of the Option, the Optionee will sign an undertaking to release the Trustee
from any liability in respect of any action or decision duly taken and bona fide executed
in relation with the ISOP, or any Option or Share granted to the Optionee thereunder.
	 
	6.	 	SHARES RESERVED FOR THE ISOP; RESTRICTION THEREON

	 	6.1	 	The Company shall reserve Two Million Two Hundred and Seventy Thousand
(2,270,000) authorized but unissued Ordinary Shares, nominal value NIS 0.01 each, of
the Company (the “Shares”) for purposes of the ISOP and for the purposes of the
Mellanox Technologies Ltd 1999 United States Equity Incentive Plan, subject to
adjustment as set forth in paragraph 8 below. Any of such Shares which may remain
unissued and which are not subject to 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 relinquishment in full, the Shares therefore subject to such Option
may again be subjected to an Option under the ISOP or under the Mellanox Technologies
Ltd. 1999 United States Equity Incentive Plan.
	 
	 	6.2	 	Each Option granted pursuant to the ISOP shall be evidenced by a written
agreement between the Company and the Optionee (the “Option
Agreement”), in such form as the Committee shall from time to time approve. Each Option
Agreement shall state, inter- alia, a number of the Shares to which the Option relates
and the type of Option granted thereunder (whether a 102 Option or a 3(I) Option).
	 
	 	6.3	 	All Shares issued upon exercise of the Options shall entitle the holder thereof
to receive dividends and other distributions thereon.

	7.	 	OPTION PRICE

	 	7.1	 	The purchase price of each Share subject to an Option or any portion thereof
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 (the “Purchase Price”).
	 
	 	7.2	 	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 cheque.

 

5

	8.	 	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:

	 	8.1	 	In the event of a merger of the Company with or into another corporation, or
the sale of all or substantially all of the assets or shares of the Company while
unexercised Options remain outstanding under the ISOP, each outstanding Option shall
be assumed or there shall be substituted for the Shares subject to the unexercised
portions of such outstanding Options an appropriate number of shares of each class of shares or other securities of the successor company (or a parent or subsidiary of the
successor company) 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, all as will be determined by the Committee
whose determination shall be final.
	 
	 	8.2	 	Notwithstanding the above and subject to any applicable law, the Committee,
in its discretion, may determine that there shall be a clause in an Option Agreement
instructing that, if in any such transaction as described in section 8.1 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 shall be immediately vested in full as of the date ten (10) days
prior to the effective date of such transaction.
	 
	 	8.3	 	For the purposes of section 8.1 above, the Option shall be considered assumed
or substituted if, following the merger or acquisition, the Option confers the right
to purchase or receive, for each Share of Optioned Shares immediately prior to the
merger or acquisition, the consideration (whether shares, options, cash, or other
securities or property) received in the merger or acquisition by holders of Shares for
each Share held on the effective date of the transaction (and if such holders were
offered a choice of consideration, the type of consideration chosen by the holders of
a majority of the outstanding Shares); provided, however, that if such consideration
received in the merger or acquisition 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 merger or acquisition; 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.
	 
	 	8.4	 	If the Company is liquidated or dissolved while unexercised Options remain
outstanding under the ISOP, then the Committee, in its discretion, may determine that
such outstanding Options may be exercised in full by the

 

6

	 	 	 	Optionees as of the effective date of any such liquidation or dissolution of the
Company without regard to the installment exercise provisions of Paragraph 9(2) of
the ISOP, by the Optionees giving notice in writing to the Company of their
intention to so exercise.
	 
	 	8.5	 	If the outstanding shares of the Company shall at any time be changed or
exchanged by declaration of a stock dividend (bonus shares), stock 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 number, class and kind of 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 stock. Upon happening of any of the foregoing, the class and
aggregate number of Shares issuable pursuant to the ISOP (as set forth in paragraph 6
hereof), in respect of which Options have not yet been exercised, shall be
appropriately adjusted, all as will be determined by the Committee whose determination
shall be final.
	 
	 	8.6	 	Anything herein to the contrary notwithstanding, if prior to the completion of
an IPO all or substantially all of the shares of the Company are to be sold, or upon a
merger or reorganization or the like, all or substantially all of the shares of the
Company are to be exchanged for securities of another company (a “Transaction”), 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
Committee in connection with the Transaction, whose determination shall be final.

	9.	 	TERM AND EXERCISE OF OPTIONS

	 	9.1	 	Options shall be exercised by the Optionee by giving written notice to the
Company, in such form and method as may be determined by the Company and the Trustee
and when applicable, in accordance with the requirements of Section 102, which exercise
shall be effective upon receipt of such notice and the Purchase Price by the Company at
its principal office. The notice shall specify the number of Shares with respect to
which the Option is being exercised.
	 
	 	9.2	 	Each Option granted under the ISOP shall be exercisable following the Vesting
Dates and for the number of Shares as shall be provided in Exhibit B to the Option
Agreement. However no Option shall be exercisable after the Expiration Date.
	 
	 	9.3	 	Options granted under the ISOP shall not be transferable by Optionees other
than by will or laws of descent and distribution, and during an Optionee’s lifetime
shall be exercisable only by that Optionee.
	 
	 	9.4	 	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 excercisable, prior
to the Expiration Date, and provided that, subject to the

 

7

	 	 	 	provisions of Section 9.6 below, the Optionee is an employee or director or consultant of
the Company or any of its Subsidiaries, at all times during the period beginning with the
granting of the Option and ending upon the date of
exercise.
	 
	 	9.5	 	Subject to the provisions of Section 9.6 below, in the event of termination of Optionee’s
employment or service as a consultant or director with the Company or any of its
Subsidiaries, all Options granted to him will immediately be expired. A notice of termination
of employment or service shall be deemed to constitute termination of employment.
	 
	 	9.6	 	Notwithstanding anything to the contrary hereinabove, an Option may be exercised after the
date of termination of Optionee’s employment or service with the Company or any Subsidiary of
the Company during an additional period of time beyond the date of such termination, but only
with respect to the number of Options already vested at the time of such termination according
to the Vesting Periods of the Options set forth in Section 4 of such Optionee’s Option
agreement, if: (i) termination is without Cause (as defined below), in which event any Options
still in force and unexpired may be exercised within a period of three months from the date of
such termination, (ii) termination is the result of death or disability of the Optionee, in
which event any Options still in force and unexpired may be exercised within a period of 18
(eighteen) months from the date of termination in the event of death and 12 (twelve) months
from the date of termination in the event of disability, or (iii) prior to the date of such
termination, the Committee shall authorize an extension of the terms of all or part of the
Options beyond the date of such termination for a period not to exceed the period during which
the Options by their terms would otherwise have been exercisable.
	 
	 	 	 	The term “Cause” shall mean (i) conviction of any felony involving moral turpitude or
affecting the Company; (ii) any refusal to carry out a reasonable directive of the CEO
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 of Directors
to be materially detrimental to the Company.
	 
	 	9.7	 	To avoid doubt, the holders of Options shall not have any of the rights or privileges of
shareholders of the Company in respect of any Shares purchasable upon the exercise of any
part of an Option, nor shall they be deemed to be a class of shareholders or creditors of the
Company for purpose of the operation of section 233 of the Companies Ordinance or any
successor to such section, until registration of the Optionee as holder of such Shares in the
Company’s register of members upon exercise of the Option in accordance with the provisions of
the ISOP
	 
	 	9.8	 	Any form of Option Agreement authorized by the ISOP may contain such other provisions as the
Committee may, from time to time, deem advisable.

 

8

	 	 	 
	9A.

	 	Restriction on Sale.

       Notwithstanding anything to the the contrary herein, prior to an IPO, an Optionee may
not sell, pledge or otherwise transfer any shares issued under this Plan, or any interest in such
Shares, prior to the elapse of six (6) months from the date of issuance of such shares. Any sale,
pledge or transfer of Shares after such six (6) month period shall be subject to the right of
first refusal set forth below and any such relevant terms and restrictions as may be contained in
the Company’s Articles of Association.

	10.	 	SHARES SUBJECT TO RIGHT OF FIRST REFUSAL

	 	10.1	 	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.
	 
	 	10.2	 	Sale of Shares by the Optionees shall be subject to the right of first
refusal of other shareholders as set forth in the Articles of Association of the
Company. In the event that the Articles of Association of the Company shall not
contain any provision regarding rights of first refusal, then, unless otherwise
provided by the Committee, until such time as the Company shall effectuate an IPO, the
sale of Shares issuable upon exercise of an Option, shall be subject to a right of
first refusal on the part of the Repurchaser(s). Repurchaser(s) means (i) the Company,
if permitted by applicable laws; (ii) if the Company is not permitted by applicable
laws, then any affiliate or Subsidiary of the Company designated by a unanimous
decision is reached by the Board of Directors; or (iii) if no unanimous decision is
reached by the Board of Directors, then the Company’s existing shareholders (save, for
avoidance of doubt, for other Optionees who already exercised their Options),
pro rata in accordance with their shareholding. The Optionee shall give a
notice of sale (the “Notice”) to the Company in order to offer the Shares to the
Repurchaser(s).
	 
	 	 	 	The notice shall specify the name of each proposed purchaser or other Transferee (
“Proposed Transferee”), the Number of Shares offered for sale, the price per Share
and the payment terms. The Repurchaser(s) will be entitled for 30 days from the day
of receipt of the Notice (the “30 Days Period”), to
purchase all or part of the offered Shares. If by the end of the 30 Days Period not
all of the offered Shares have been purchased by the Repurchaser(s), the Optionee
will be entitled to sell such Shares at any time during the 90 days following the
end of the 30 Days 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.

	11.	 	DIVIDENDS
	 
	 	 	With respect to all Shares (in contrary to unexercised Options) issued upon the exercise of
Options purchased by the Optionee and held by the Trustee, the Optionee shall be entitled
to receive dividends in accordance with the quantity of such Shares, and subject to any
applicable taxation on distribution of dividends. During the period

 

9

	 	 	in which Shares issued to the Trustee on behalf of a Optionee are held by the Trustee, the
cash dividends paid with respect thereto shall be paid directly to the Optionee.
	 
	12.	 	ASSIGNABILITY AND SALE OF OPTIONS
	 
	 	 	No Option, purchasable hereunder, whether fully paid or not, shall be assignable,
transferable or given as collateral or any right with respect to them given to any third
party whatsoever, and during the lifetime of the Optionee each and all of such Optionee’s
rights to purchase Shares hereunder shall be exercisable only by the Optionee.
	 
	 	 	As long as the Shares are held by the Trustee in favor of the Optionee, than all rights the
last possesses over the Shares are personal, can not be transferred, assigned, pledged or
mortgaged, other than by will or laws of descent and distribution.
	 
	13.	 	TERM 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 10 (ten) years from such day of adoption.
	 
	14.	 	AMENDMENTS OR TERMINATION
	 
	 	 	The Committee may at any time 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 Committee, which agreement
must be in writing and signed by the Optionee and the Company. Termination of the ISOP
shall not affect the Committee’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.
	 
	15.	 	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, whether of the State of Israel or of the United States or any
other State having jurisdiction over the Company and the Optionee, including the
registration of the Shares under the United States Securities Act of 1933, and to such
approvals by any governmental agencies or national securities exchanges as may be required.
Nothing herein shall be deemed to require the Company to register the Shares under the
securities law of any jurisdiction.
	 
	16.	 	CONTINUANCE OF EMPLOYMENT
	 
	 	 	Neither the ISOP nor the Option Agreement with the Optionee shall impose any obligation on
the Company or a Subsidiary 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 the service of the Company or a Subsidiary
thereof or restrict the right of the Company or a Subsidiary thereof to terminate such
employment or service at any time.
	 
	17.	 	GOVERNING LAW & JURISDICTION

 

10

	 	 	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.
	 
	18.	 	TAX CONSEQUENCES
	 
	 	 	Any tax consequences arising from the grant or exercise of any Option, from the
payment for Shares covered thereby or from any other event or act (of the Company, the
Trustee or the Optionee), hereunder, shall be borne solely by the Optionee. The Company
and/or the Trustee shall withhold taxes according to the requirements under the applicable
laws, rules, and regulations, including withholding taxes at source. Furthermore, the
Optionee shall agree to indemnify the Company and the Trustee and hold them harmless
against and from any and all liability for any such tax or interest or penalty thereon,
including without limitation, liabilities relating to the necessity to withhold, or to have
withheld, any such tax from any payment made to the Optionee.
	 
	 	 	The Committee and/or the Trustee shall not be required to release any Share certificate to
an Optionee until all required payments have been fully made.
	 
	19.	 	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 stock Options otherwise then
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.
	 
	20.	 	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 Committee 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.

 

 

MELLANOX TECHNOLOGIES LTD.

OPTION AGREEMENT

Made as of the            day of           200_

	 	 	 	 	 	 	 
	BETWEEN:	 	MELLANOX TECHNOLOGIES LTD.
	 
	 	 	 	 	 	 
	 	 	(hereinafter the “Company”)	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	on the one part
	 
	 	 	 	 	 	 
	AND:

	 	Name	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	I.D. No.	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	(hereinafter the “Optionee”)	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	on the other part

 

 

	 	 	 
	Whereas

	 	On June 1999, the Company adopted the Mellanox 1999 Israeli Share Option
Plan, a copy of which is attached as Exhibit A hereto, forming an integral
part hereof (the “ISOP”); and -
	 
	 	 
	Whereas

	 	The Company has determined that the Optionee be granted an Option under the ISOP to
purchase shares of the Company, and the Optionee has agreed to such grant, all on the terms
and subject to the conditions hereinafter provided.

NOW, THEREFORE, it is agreed as follows:

	1.	 	PREAMBLE AND DEFINITIONS

	 	1.1	 	The Preamble and exhibits to this Agreement constitute an integral part hereof.
	 
	 	1.2	 	Unless otherwise defined herein, capitalized terms used herein shall have the
meaning ascribed to them in the ISOP.

	2.	 	GRANT OF OPTION

	 	2.1	 	The Company hereby grants to the Optionee the number of Options set forth in
Section 1 of Exhibit B hereto, each Option exercisable for one Ordinary Share
of NIS 0.01, taken from the total number of shares reserved for the purpose of the
ISOP in the Company’s authorized capital, , to purchase shares at the Purchase Price
set forth in Section 2 of Exhibit B, on the terms and subject to the conditions
hereinafter provided. As used in this Option Agreement, “Shares” shall mean the
ordinary shares which Optionee may purchase by exercising his or her Options.
	 
	 	 	 	The Purchase Price will be paid in NIS in accordance with the representative rate
of exchange of the U.S. dollar, published by the Bank of Israel and known on the
date of giving the Exercise Notice (as set forth in Section 5.1 hereinafter).
	 
	 	2.2	 	The Optionee is aware that the Company intends to issue additional shares and
to grant additional options in the future to various entities and individuals, as the
Company in its sole discretion shall determine.

	3.	 	PERIOD OF OPTION AND CONDITIONS OF EXERCISE

	 	3.1	 	The terms of this Option Agreement shall commence on the date hereof (the
“Date Of Grant”) and terminate at the Expiration Date (as defined in Section 6 below),
or at the time at which the Option expires pursuant to the terms of
the ISOP or
pursuant to this Agreement.

2

 

	 	3.2	 	The Options may be exercised by the Optionee in whole at any time or in part from time
to time, as determined by the Board, and to the extent that the Options become vested and
exercisable in accordance with Exhibit B, prior to the Expiration Date, and provided that,
subject to the provisions of Section 3.4 below, the Optionee is an employee, or director or
consultant of the Company or any of its Subsidiaries, at all times during the period
beginning with the granting of the Option and ending upon the date of exercise.
	 
	 	3.3	 	Subject to the provisions of Section 3.4 below, in the event of termination of the Optionee’s
employment or service as a consultant or director with the Company or any of its Subsidiaries,
all Options granted to the Optionee will immediately expire. A notice of termination of
employment by either the Company or the Optionee shall be deemed to constitute termination of
employment.
	 
	 	3.4	 	Notwithstanding anything to the contrary hereinabove, an Option may be exercised after the
date of termination of Optionee’s employment or service as a consultant or director with the
Company or any Subsidiary of the Company during an additional period of time beyond the date
of such termination, but only with respect to the number of Options already vested at the time
of such termination according to the Vesting Dates of the Options (the “Qualified Options”),
if: (i) termination is without Cause, in which event any Qualified Option still in force and
unexpired may be exercised within a period of three months from the date of such
termination, (ii) termination is the result of death or disability of the Optionee, in which
event any Qualified Option still in force and unexpired may be exercised within a period of 18
(eighteen) months from the date of termination in the event of death, and 12 (twelve) months
from the date of termination in the event of disability, or (iii) prior to the date of such
termination, the Committee shall authorize an extension of the terms of all or part of the
Options beyond the date of such termination for a period not to exceed the period during which
the Options by their terms would otherwise have been exercisable.
	 
	 	 	 	The term “Cause” shall mean (i) conviction of any felony involving moral turpitude or
affecting the Company; (ii) any refusal to carry out a reasonable directive of the CEO
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 of 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 of Directors
to be materially detrimental to the Company.
	 
	 	3.5	 	The Options may be exercised only to purchase whole Shares, and in no case may a fraction of
a Share be purchased, if any fractional Shares would be deliverable upon exercise, such
fraction shall be rounded up one-half or less, or otherwise rounded down, to the nearest whole
number.

3

 

	4.	 	VESTING
	 
	 	 	Subject to the requirements as to the number of Shares for which an Option is exercisable,
as set forth in Section 2.1 above, Options shall be vested (i.e., Options shall become
exercisable) at the dates set forth in Section 3 of exhibit B hereto (the “Vesting
Periods”).
	 
	 	 	Notwithstanding the above and subject to any applicable law, the Board or the Committee may
determine with respect to the Optionee (in the event that the Optionee is not employed by
the Company on a full-time basis at the time of grant) that the Vesting Periods shall be
accelerated, but not decelerated, proportionately, in accordance with the Optionee’s scope
of employment in the Company, until such time as the Optionee is employed full-time by the
Company.
	 
	5.	 	METHOD OF EXERCISE

	 	5.1	 	Options shall be exercised by the Optionee by giving a written notice, to the
Company, in such form and method as may be determined by the Company and the Trustee
(the “Exercise Notice”), which exercise shall be effective upon receipt of such notice
by the Company at its principal office, together with receipt by the Company of the
Purchase Price for the number of Shares with respect to which the Option is being
exercised. The notice shall specify the number of Shares with respect to which the
Option is being exercised.
	 
	 	5.2	 	The Shares shall immediately be issued or transferred to the Trustee and be
held by the Trustee in accordance with the provisions of Section 5 of the ISOP, The
Trustee shall not transfer any 3(I) Options to the Optionee prior to exercise of the
Options into Shares. The Trustee will transfer the Shares to the Optionee upon demand,
but in case of Shares received following the exercise of 102 Options, not earlier than
two years (24 months) from Date of Grant. If any law or regulation requires the Company
to take any action with respect to the Shares so demanded before the issuance thereof,
then the date of their issuance shall be extended for the period necessary to take such
action. The Optionee hereby authorizes the Trustee to sign an agreement with the
Company whereby Shares will not be transferred without deduction of taxes at source.
The Optionee hereby undertakes 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 Option or Share granted to him thereunder.

4

 

 

	6.	 	TERMINATION OF OPTION

	 	6.1	 	Except as otherwise stated in this Agreement, the Options, to the extent not
previously exercised, shall terminate forthwith upon the earlier of: (i) the
expiration date set forth in Exhibit B hereto; and - (ii) the expiration of any
extended period in any of the events set forth in Section 3.4 above; (and such earlier
date shall be hereinafter referred to as the “Expiration Date”).
	 
	 	6.2	 	Without derogating from the above, the Committee may, with the prior written
consent of the Optionee, from time to time cancel all or any portion of the Options
then subject to exercise, and the Company’s obligation in respect of such Options may
be discharged by (i) payment to the Optionee of an amount in cash equal to the excess,
if any, of the Fair Market Value of the Shares pertaining to such canceled Options, at
the date of such cancellation, over the aggregate Purchase Price of such Shares, (ii)
the issuance or transfer to the Optionee of Shares of the Company with a Fair Market
Value at the date of such transfer equal to any such excess, or (iii) a combination of
cash and Shares with a combined value equal to any such excess, all determined by the
Committee in its sole discretion.

	7.	 	ADJUSTMENTS

	 	7.1	 	In the event of a merger of the Company with or into another company (the
“Successor Company”), or the sale of all or substantially all of the assets or shares
of the Company (any of the foregoing being hereinafter referred to as the
“Transaction”) while unexercised Options remain outstanding under the ISOP (the
“Unexercised Options”), then each Unexercised Option shall be assumed or there shall be
substituted for the Shares subject to the Unexercised Options an appropriate number of shares of each class of shares or other securities of the Successor Company (or a
parent or subsidiary of the Successor Company) which were distributed to the
shareholders of the Company in respect of such shares, and appropriate adjustments
shall be made in the Purchase Price to reflect such action, and all other terms and
conditions of the Option Agreements, such as the Vesting Dates, shall remain in force,
all as will be determined by the Committee whose determination shall be final.
	 
	 	7.2	 	Notwithstanding the above and subject to any applicable law:

	 	7.2.1	 	If in a case of a Transaction, the Successor Company does not
agree to assume or substitute the Options, the Vesting Dates shall be
accelerated so that any unvested Option shall vest immediately as of the date
ten (10) days prior to the effective date of the Transaction.

5

 

 

	 	7.3	 	For the purposes of Section 7.1, the Option shall be considered assumed or substituted
if, following the Transaction, the Option confers the right to purchase or receive, for
each Share of Optioned Shares immediately prior to the Transaction, the
consideration (whether shares, options, cash, or other securities or property) received in
the Transaction by holders of shares for each share held on the effective date of the
transaction (and if such holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares); provided,
however, that if such consideration received in the 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.
	 
	 	7.4	 	If the Company is liquidated or dissolved while Unexercised Options remain outstanding, then
the Board, in its own discretion, may determine that all such outstanding Options may be
exercised in full by the Optionee as of the effective date of any such liquidation or
dissolution of the Company without regard to the vesting provisions of Exhibit B. In case the
Board determines that the outstanding Options may be exercised, then all such outstanding
Options may be exercised in full by the Optionee giving notice in writing to the Company of
his/her intention to so exercise.
	 
	 	7.5	 	If the outstanding shares of the Company shall at any time be changed or exchanged by
declaration of a stock dividend (bonus shares), stock split, combination or exchange of shares, re-capitalization, or any other like event by or
of the Company, and as often as the same shall occur, then the number, class and kind of
Shares subject to the Options theretofore granted, and the Option Price, shall be
appropriately and. equitably adjusted so as to maintain the proportionate number of Shares
without changing the aggregate Option Price; provided, however, that no adjustment shall
be made by reason of the distribution of subscription rights (rights offering) on
outstanding stock, all as will be determined by the Board whose determination shall be
final.

6

 

 

	 	7.6	 	Bring-Along Right. Anything herein to the contrary notwithstanding, if
prior to the completion of an IPO all or substantially all of the shares of the
Company are to be sold, or upon a merger or reorganization or the like, all or
substantially all of the shares of the Company are to be exchanged for securities of
another Company, then in such event the Optionee shall be obliged to sell or
exchange, as the case may be, the Shares such Optionee purchased hereunder, in
accordance with the instructions then issued by the Board, which will be given
according to the decided upon policy concerning Optionees under the ISOP.

	8.	 	RIGHTS PRIOR TO EXERCISE OF OPTION; LIMITATIONS AFTER PURCHASE OF SHARES

	 	8.1	 	Subject to the provisions of Section 8.2 below, the Optionee shall not have any
of the rights or privileges of shareholders of the Company in respect of any Shares
purchasable upon the exercise of any Options unless and until, following exercise, the
Option is registered as holder of such shares in the company’s register of members but
in case of Options and Shares held by the Trustee, subject always to the provisions of
section 5 of the ISOP, with respect to Options and Shares held by the Trustee.
	 
	 	8.2	 	With respect to all Shares (in contrast to unexercised Options) issued upon the
exercise of Options purchased by the Optionee, the Optionee shall be entitled to
receive dividends in accordance with the quantity of such Shares, and subject to any
applicable taxation on distribution of dividends. During the period in which Shares are
held by the Trustee on behalf of an Optionee (if an), the cash dividends paid with
respect thereto shall be paid directly to the Optionee.
	 
	 	8.3	 	No Option granted 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, and during the lifetime of the Optionee each and all of the
Optionee’s rights to purchase Shares hereunder shall be exercisable only by the
Optionee.
	 
	 	 	 	As long as the Shares are held by the Trustee in favor of the Optionee, then all
rights the last possesses over the Shares are personal, can not be transferred,
assigned, pledged or mortgaged, other than by will or laws of descent and
distribution.
	 
	 	 	 	Any such action made directly or indirectly, for an immediate validation or for a
future one, shall be void.
	 
	 	8.4	 	Optionee acknowledges that if the Company’s shares are registered for trading
in any public market, the Optionee’s right to sell Shares may be subject to some
limitations, as set forth by the Company or its underwriters. In such event, the
Optionee will unconditionally agree to any such limitations.

7

 

 

	 	8.5	 	The Optionee shall not dispose of any Shares in transactions which violate, in
the opinion of the Company, any applicable rules and regulations.
	 
	 	8.6	 	The Optionee agrees that the Company shall have the authority to endorse upon
the certificate or certificates representing the Shares such legends referring to the
foregoing restrictions, and any other applicable restrictions, as it may deem
appropriate (which do not violate the Optionee’s rights according to this
Agreement).

	9.	 	SHARES SUBJECT TO RIGHT OF FIRST REFUSAL

	 	9.1	 	Notwithstanding anything to the contrary in the Articles of Association of the
Company, the Optionee shall not have a right of first refusal in relation to any sale
of shares in the Company.
	 
	 	9.2	 	Any sale of Shares by the Optionee shall be subject to the right of first
refusal of other shareholders as set forth in the Articles of Association of the
Company. In the event that the Articles of Association of the Company do not contain
any provision regarding rights of first refusal, then, unless otherwise provided by the
Board, until such time as the Company shall effectuate an IPO, the sale of Shares
issuable upon exercise of an Option shall be subject to a right of first refusal on the
part of the Repurchaser(s). Repurchaser(s) means (i) the Company, if permitted by
applicable laws; (ii) if the Company is not permitted by applicable laws, then any
affiliate or Subsidiary of the Company designated by a unanimous decision reached by
the Board of Directors; or (iii) if no unanimous decision is reached by the Board of
Directors, then the Company’s existing shareholders (save, for avoidance of doubt, for
other Optionees who already exercised their Options), pro rata in accordance with their
shareholdings. The Optionee shall give a notice of sale (the “Notice”) to the Company
in order to offer the Shares to the Repurchaser(s).
	 
	 	 	 	The Notice shall specify the name of each proposed purchaser or other transferee
(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 30 days from
the clay of receipt of the Notice (the “30 Days Period”), to purchase all or part
of the offered Shares. If by the end of the 30 Days Period not all of the offered
Shares have been purchased by the Repurchaser(s), the Optionee will be entitled to
sell such Shares at any time during the 90 days following the end of the 30 Days
Period on terms not more favorable than those set out in the Notice, provided that
(he 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.

8

 

 

	10.	 	GOVERNMENT REGULATIONS
	 
	 	 	The ISOP, and the granting and exercise of the Option thereunder, and the Company’s
obligation to sell and deliver Shares or cash under the Option, are subject to all
applicable laws, rules and regulations, whether of the State of Israel or of the United
States or any other State having jurisdiction over the Company and the Optionee, including
the registration of the shares under the United States Securities Act of 1933, and to such
approvals by any governmental agencies or national securities exchanges as may be required.
Nothing herein shall be deemed to require the Company to register the shares under the
securities law of any jurisdiction.
	 
	11.	 	CONTINUANCE OF EMPLOYMENT OR HIRED SERVICES
	 
	 	 	Neither this Option Agreement nor the ISOP shall impose any obligation on the Company or a
Subsidiary thereof, to continue the Optionee in its employ or service, and nothing in the
ISOP or in this Option Agreement shall confer upon Optionee any right to continue in the
employ or the sendee of the Company or a Subsidiary thereof or restrict the right of the
Company or a Subsidiary thereof to terminate such employment or service at any time.
	 
	12.	 	GOVERNING LAW & JURISDICTION
	 
	 	 	This Agreement shall be governed by and construed and enforced in accordance with the laws
of the State of Israel applicable to contracts made and to be performed therein, without
giving effect to the principles of conflict of laws. The competent courts of Tel-Aviv,
Israel shall have sole jurisdiction in any matters pertaining to this Agreement.
	 
	13.	 	TAX CONSEQUENCES
	 
	 	 	Any tax consequences arising from the grant or exercise of any Option, from the payment for
Shares covered thereby or from any other event or act (of the Company, the Trustee or the
Optionee), hereunder, shall be borne solely by the Optionee. The Company and/or the Trustee
shall withhold taxes according to the requirements under the applicable laws, rules, and
regulations, including the withholding of taxes at source. Furthermore, the Optionee shall
agree to indemnify the Company and the Trustee and hold them harmless against and from any
and all liability for any such tax or interest or penalty thereon, including without
limitation, liabilities relating to the necessity to withhold, or to have withheld, any
such tax from any payment made to the Optionee.
	 
	 	 	None of the Board, the Committee and/or the Trustee shall be required to release any Share
certificate to an Optionee until all required payments have been fully made.
	 
	 	 	The Optionee hereby undertakes not to transfer Shares issued upon the exercise of 102
Options, nor any other shares received subsequently following any realization of rights
which are subject to Section 102, by a way of a tax - exempt transfer or a transfer under
sections 104(a), 104(b) or 97(a) of the Income Tax Ordinance.

9

 

 

	14.	 	FAILURE TO ENFORCE NOT A WAIVER
	 
	 	 	The failure of any party to enforce at any time any provisions of this Option Agreement
shall in no way be construed to be a waiver of such provision or of any other provision
hereof.
	 
	15.	 	PROVISIONS OF THE ISOP
	 
	 	 	The Options provided for herein are granted pursuant to the ISOP, and said Options and this
Option Agreement are in all respects governed by the ISOP and subject to all of the terms
and provisions whether such terms and provisions are incorporated in this Option Agreement
solely by reference or are expressly cited herein.
	 
	 	 	Any interpretation of this Option Agreement will be made in accordance with the ISOP but in
the event there is any contradiction between the provisions of this Option Agreement and
the ISOP, the provisions of this Option Agreement will prevail.
	 
	16.	 	BINDING EFFECT
	 
	 	 	This Agreement, shall be binding upon the heirs, executors, administrators, and successors
of the parties hereof.
	 
	17.	 	NOTICES
	 
	 	 	Any notice required or permitted under this Option Agreement shall be deemed to have been
duly given if delivered, faxed or mailed, if delivered by certified or registered mail or
return receipt requested, either to the Optionee at his or her address set forth above or
such other address as he or she may designate in writing to the Company, or to the Company
at the address set forth above or such other address as the Company may designate in writing
to the Optionee. Any notice sent in accordance with this Section shall be effective (i) if
mailed, seven (7) business clays after mailing, (ii) if sent by messenger, upon delivery,
and (iii) if sent by facsimile or other electronic medium, upon confirmation of receipt or
(if transmitted on a non business day) on the first business day following transmission and
electronic confirmation of receipt.

10

 

 

	18.	 	ENTIRE AGREEMENT
	 
	 	 	This Agreement exclusively includes all the terms of the grant of Options to the
Optionee under the ISOP, and, subject to the provisions of Section 21 of the ISOP,
annuls and supersedes any other agreement, arrangement or understanding, whether
oral or in writing, relating to the grant of Options to the Optionee. Any change of
any kind to the Agreement will be valid only if made in writing and signed by both
the Optionee and the Company’s authorized signatories and has received the approval
of the Board.

IN WITNESS WHEREOF, the Company executed this Option Agreement in duplicate on the day
and year first above written.

MELLANOX
TECHNOLOGIES, LTD.

Company’s Signature:

Name: Eyal Waldman

Position: Chief Executive Officer

Signature:                                         

Optionee acknowledges receipt of a copy of the ISOP and represents that he or she is familiar
with the terms and provisions thereof, and hereby accepts this Option Agreement subject to all
of the terms and provisions thereof. Optionee has reviewed the ISOP and this Option Agreement
in their entirety, has had an opportunity to obtain the advice of counsel prior to executing
this Option Agreement and fully understands all provisions of the Option Agreement. Optionee
hereby agrees to accept as binding, conclusive and final all decisions or interpretations of
the Committee upon any question arising under the ISOP or this Option Agreement. Optionee
further agrees to notify the Company upon any change in the residence address indicated above.

                                        

Optionee’s Signature

 

 

***Note: Available for grants to Israeli employees until 2003***

Mellanox Technologies Ltd. 

1999 Israeli Share Option Plan

Stock Option Agreement

(3(I) Options)

     Pursuant to your Stock Option Grant Notice (“Grant Notice”) and this Stock Option
Agreement, Mellanox Technologies Ltd. (the “Company”) has granted you an option under its 1999
Israeli Share Option Plan (the “Plan”) to purchase the number of the Company’s Ordinary Shares
indicated in your Grant Notice at the exercise price indicated in your Grant Notice. Defined terms
not explicitly defined in this Stock Option Agreement but defined in the Plan shall have the same
definitions as in the Plan.

     The details of your option are as follows:

     1. Vesting. Subject to the limitations contained herein, your option will
vest as provided in your Grant Notice, provided that vesting will cease upon the termination of
your “Continuous Service” (as hereinafter defined). “Continuous Service” means that your
employment or service with the Company or an affiliate is not interrupted or terminated. Your
Continuous Service shall not be deemed to have terminated merely because of a change in the
capacity in which you render service to the Company or an affiliate or a change in the entity for
which you render such service, provided that there is no interruption or termination of your
Continuous Service. The Company’s Board of Directors or chief executive officer of the Company,
in that party’s sole discretion, may determine whether Continuous Service shall be considered
interrupted in the case of any leave of absence approved by that party, including sick leave,
military leave or any other personal leave.

     2. Number of Shares and Exercise Price. The number of Ordinary Shares
subject to your option and your exercise price per share referenced in your Grant Notice may be
adjusted from time to time for capitalization adjustments, as provided in Section 8 of the Plan.

     3. Method of Payment. Payment of the exercise price is due in full upon
exercise of all or any part of your option. You may elect to make payment of the exercise price in
cash or by check or in any other manner permitted by your Grant Notice, which may include one or
more of the following:

          (a) In the Company’s sole discretion at the time your option is exercised and provided that
at the time of exercise the Ordinary Shares are publicly traded and quoted regularly in The Wall
Street Journal, pursuant to a program that, prior to the issuance of Ordinary Shares, results in
either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to
pay the aggregate exercise price to the Company from the sales proceeds.

1

 

               (b) Provided that at the time of exercise the Ordinary Shares are publicly traded and
quoted regularly in The Wall Street Journal, by delivery of already-owned Ordinary Shares either
that you have held for the period required to avoid a charge to the Company’s reported earnings
(generally six months) or that you did not acquire, directly or indirectly from the Company, that
are owned free and clear of any liens, claims, encumbrances or security interests, and that are
valued at Fair Market Value on the date of exercise. “Delivery” for these purposes, in the sole
discretion of the Company at the time you exercise your option, shall include delivery to the
Company of your attestation of ownership of Ordinary Shares in a form approved by the Company.
Notwithstanding the foregoing, you may not exercise your option by tender to the Company of
Ordinary Shares to the extent such tender would violate the provisions of any law, regulation or
agreement restricting the redemption of the Company’s shares.

     4. Whole Shares. You may exercise your option only for whole Ordinary
Shares.

     5. Securities Law Compliance. Notwithstanding anything to the contrary
contained herein, you may not exercise your option unless the Ordinary Shares issuable upon
such exercise are then registered under the securities law of applicable jurisdictions or,
if such Ordinary Shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the applicable
jurisdictions. The exercise of your option must also comply with other applicable laws and
regulations governing your option, and you may not exercise your option if the Company
determines that such exercise would not be in material compliance with such laws and
regulations.

     6. Term. The term of your option commences on the Date of Grant and expires
upon the earliest of the following:

          (a) three (3) months after the termination of your Continuous Service for any reason other than
your disability or death, provided that if during any part of such three- (3-) month period your
option is not exercisable solely because of the condition set forth in the preceding paragraph
relating to “Securities Law Compliance,” your option shall not expire until the earlier of the
Expiration Date or until it shall have been exercisable for an aggregate period of three (3) months
after the termination of your Continuous Service;

          (b) twelve (12) months after the termination of your Continuous Service due to your disability;

          (c) eighteen (18) months after your death if you die either during your Continuous Service or
within three (3) months after your Continuous Service terminates;

          (d) the Expiration Date indicated in your Grant Notice; or

          (e) the tenth (10th) anniversary of the Date of Grant.

     7. Exercise.

2

 

          (a) You may exercise the vested portion of your option during its term by delivering a
Notice of Exercise (in a form designated by the Company) together with the exercise price to the
Secretary of the Company, or to such other person as the Company may designate, during regular
business hours, together with such additional documents as the Company may then require.

          (b) By exercising your option you agree that, as a condition to any exercise of your option,
the Company may require you to enter into an arrangement providing for the payment by you to the
Company of any tax withholding obligation of the Company arising by reason of (1) the exercise of
your option, or (2) the disposition of Ordinary Shares acquired upon such exercise.

          (c) By exercising your option you agree that the Company (or a representative of the
underwriter(s)) may, in connection with the first underwritten registration of the offering of any
securities of the Company under the securities laws of any jurisdiction, require that you not sell,
dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into
any hedging or similar transaction with the same economic effect as a sale, any Ordinary Shares or
other securities of the Company held by you, for a period of time specified by the underwriter(s)
(not to exceed one hundred eighty (180) days) following the effective date of the registration
statement of the Company filed under the securities laws of any jurisdiction. You further agree to
execute and deliver such other agreements as may be reasonably requested by the Company and/or the
underwriter(s) that are consistent with the foregoing or that are necessary to give further effect
thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to your Ordinary Shares until the end of such period.

     8. Transferability. Your option is not transferable, except by will or by
the laws of descent and distribution, and is exercisable during your life only by you.
Notwithstanding the foregoing, by delivering written notice to the Company, in a form satisfactory
to the Company, you may designate a third party who, in the event of your death, shall thereafter
be entitled to exercise your option.

     9. Right of First Refusal. Ordinary Shares that you acquire upon exercise
of your option are subject to the right of first refusal that is described in the Plan.

     10. Right of Repurchase. To the extent provided in the Company’s Articles
of Association as amended from time to time, the Company shall have the right to repurchase all or
any part of the Ordinary Shares you acquire pursuant to the exercise of your option.

     11. Option not a Service Contract. Your option is not an employment or
service contract, and nothing in your option shall be deemed to create in any way whatsoever any
obligation on your part to continue in the employ of the Company or an affiliate, or of the Company
or an affiliate to continue your employment. In addition, nothing in your option shall obligate the
Company or an affiliate, their respective shareholders, Boards of Directors, officers or employees
to continue any relationship that you might have as a director or consultant for the Company or an
affiliate.

3

 

     12. Withholding Obligations.

          (a) At the time you exercise your option, in whole or in part, or at any time thereafter
as requested by the Company, you hereby authorize withholding from payroll and any other amounts
payable to you, and otherwise agree to make adequate provision for (including by means of a
“cashless exercise” program to the extent permitted by the Company), any sums required to satisfy
any tax withholding obligations of the Company or an affiliate, if any, which arise in connection
with your option.

          (b) Upon your request and subject to approval by the Company, in its sole discretion, and
compliance with any applicable conditions or restrictions of law, the Company may withhold from
fully vested Ordinary Shares otherwise issuable to you upon the exercise of your option a number of
whole Ordinary Shares having a Fair Market Value, determined by the Company as of the date of
exercise, not in excess of the minimum amount of tax required to be withheld by law. Ordinary
Shares shall be withheld solely from fully vested Ordinary Shares determined as of the date of
exercise of your option that are otherwise issuable to you upon such exercise. Any adverse
consequences to you arising in connection with such share withholding procedure shall be your sole
responsibility.

          (c) You may not exercise your option unless the tax withholding obligations of the Company
and/or any affiliate are satisfied. Accordingly, you may not be able to exercise your option when
desired even though your option is vested, and the Company shall have no obligation to issue a
certificate for such Ordinary Shares or release such Ordinary Shares from any escrow provided for
herein.

     13. Lock-Up Period. In connection with any underwritten public offering by the Company of its
equity securities, including any initial public offering, you shall not directly or indirectly
sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other
contract for the purchase of, purchase any option or other contract for the sale of, or otherwise
dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to,
any Options or Shares acquired under this Agreement without the prior written consent of the
Company or its underwriters. Such restriction (the “Market Stand-Off”) shall be in effect for such
period of time following the date of the final prospectus for the offering as may be requested by
the Company or its underwriters. In the event of the declaration of a stock dividend, a spin-off, a
stock split, an adjustment in conversion ratio, a recapitalization or a similar transaction
affecting the Company’s outstanding securities without receipt of consideration, any new,
substituted or additional securities which are by reason of such transaction distributed with
respect to any Shares subject to the Market Stand-Off, or into which such Shares thereby become
convertible, shall immediately be subject to the Market Stand-Off. In order to enforce the Market
Stand-Off, the Company may impose stop-transfer instructions with respect to the Shares acquired
under this Agreement until the end of the applicable stand-off period. The Company’s underwriters
shall be beneficiaries of the agreement set forth in this Section 13.

     14. Notices. Any notices provided for in your option or the Plan shall be given
in writing and shall be deemed effectively given upon receipt or, in the case of notices delivered
by

4

 

mail by the Company to you, five (5) days after deposit in the mail in Israel, postage prepaid,
addressed to you at the last address you provided to the Company.

     15. Governing Plan Document. Your option is subject to all the provisions of the
Plan, the provisions of which are hereby made a part of your option, and is further subject to all
interpretations, amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the provisions of your option
and those of the Plan, the provisions of the Plan shall control.

5

 

NOTICE OF EXERCISE

(Standard Form)

Mellanox Technologies Ltd.

PO Box 586

Yokneam Israel, 20692

Date of Exercise:                     

Ladies and Gentlemen:

     This constitutes notice under my stock option that I elect to purchase the number of shares
for the price set forth below.

     o Check here if your option was granted under Section 102 of the Income Tax Ordinance
(New Version)
1961

	 	 	 	 	 
	Stock Option Number:
	 	 	 	 
	 
	 	 	 	 
	Stock option dated:
	 	 	 	 
	 
	 	 	 	 
	Number of shares as to which option is exercised:
	 	 	 	 
	 
	 	 	 	 
	Certificates to be issued in name of:
	 	 	 	 
	 
	 	 	 	 
	Address:
	 	 	 	 
	 
	 	 	 	 
	Total exercise price:
	 	$	 	 
	 
	 	 	 	 
	Cash payment delivered herewith:
	 	$	 	 

     By this exercise, I agree to provide such additional documents as you may require pursuant
to the terms of the 1999 Israeli Equity Incentive Plan or the 2003 Israeli Equity Incentive Plan
(the “Plan).

     I hereby make the following certifications and representations with respect to the number of
Ordinary Shares of the Company listed above (the “Shares”), which are being acquired by me for my
own account upon exercise of the Option as set forth above:

     I acknowledge that the Shares have not been registered under the Securities Act of 1933, as
amended (the “Securities Act”), and are deemed to constitute “restricted securities” under Rule
701 and “control securities” under Rule 144 promulgated under the Securities Act. I warrant and
represent to the Company that I have no present intention of distributing or selling said Shares,
except as permitted under the Securities Act and any applicable state securities laws.

1

 

     I further acknowledge that I will not be able to resell the Shares for at least ninety (90)
days after the stock of the Company becomes publicly traded (i.e., subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934) under Rule 701 and
that more restrictive conditions apply to affiliates of the Company under Rule 144.

     I further acknowledge that all certificates representing any of the Shares subject to the
provisions of the Option shall have endorsed thereon appropriate legends reflecting the foregoing
limitations, as well as any legends reflecting restrictions pursuant to the Company’s Articles of
Incorporation, Bylaws and/or applicable securities laws.

     I further agree that, if required by the Company (or a representative of the underwriters) in
connection with the first underwritten registration of the offering of any securities of the
Company under the Securities Act, I will not sell, dispose of, transfer, make any short sale of,
grant any option for the purchase of, or enter into any hedging or similar transaction with the
same economic effect as a sale, any Shares or other securities of the Company held by me, for a
period of time specified by the underwriter(s) (not to exceed one hundred eighty (180) days)
following the effective date of the registration statement of the Company filed under the
Securities Act. I further agree to execute and deliver such other agreements as may be reasonably
requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that
are necessary to give further effect thereto. In order to enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect to my Shares until the end of such
period.

     I am not a “U.S. Person” as defined by Rule 902 of Regulation S promulgated under the
Securities Act. At the time of grant and exercise of the Option, I was and am outside the United
States. I am acquiring the Shares for my own account, for investment purposes and not with a view
towards, or for sale in connection with, any distribution of such securities. All subsequent offers
and sales of the Shares will be made (i) outside the United States in compliance with Rule 903 and
Rule 904 of Regulation S, (ii) pursuant to registration of the Shares under the Securities Act, or
(iii) pursuant to an exemption from such registration. I will not engage in hedging transactions
with regard to the Shares prior to the expiration of the distribution compliance period specified
in Rule 903 of Regulation S, unless in compliance with the Securities Act.

     I acknowledge and understand that the tax consequences of exercising this Option and
disposing of the Shares underlying this Option are complex, and that I have been advised by the
Company to consult with my personal tax advisor before exercising this Option or disposing of the
shares underlying this Option.

     Any tax consequences arising from the grant or exercise of this Option, from the payment for
Shares or from any other event or act under the Plan, my option agreement or this Notice of
Exercise, shall be borne solely by me. I agree to indemnify the Company and/or its subsidiaries
and hold them harmless against and from any and all liability for any such tax or interest or
penalty thereof, including without limitation, liabilities relating to the necessity to withhold,
or to have withheld, any such tax from any payment made to me.

     Section 102. If my Options were granted pursuant to Section 102 of the Israel Income Tax
Ordinance (New Version) 1961, I acknowledge that the Shares issued on exercise of the Options may
be held in trust for my benefit by the Trustee pursuant to Section 102 under the terms of a trust
agreement between the Company and the Trustee.

      I 

	 	 	 
	 

	 	Very truly yours,
	 
	 	 
	 

	 	 

2exv10w3

 

Exhibit 10.3

MELLANOX
TECHNOLOGIES LTD.

THE 2003

ISRAELI SHARE OPTION PLAN

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

As amended effective as of September 3, 2004

 

2

TABLE OF CONTENTS

	 
	1. NAME

	 

	2. PURPOSE OF THE ISOP

	 

	3. DEFINITIONS

	 

	4. ADMINISTRATION OF THE ISOP

	 

	5. DESIGNATION OF PARTICIPANTS

	 

	6. DESIGNATION OF OPTIONS PURSUANT TO SECTION 102

	 

	7. TRUSTEE

	 

	8. SHARES RESERVED FOR THE ISOP; RESTRICTION THEREON

	 

	9. PURCHASE PRICE

	 

	10. ADJUSTMENTS

	 

	11. TERM AND EXERCISE OF OPTIONS

	 

	12. SHARES SUBJECT TO RIGHT OF FIRST REFUSAL

	 

	13. VESTING OF OPTIONS

	 

	14. PURCHASE FOR INVESTMENT

	 

	15. DIVIDENDS

	 

	16. ASSIGNABILITY AND SALE OF OPTIONS

	 

	17. TERM OF THE ISOP

	 

	18. AMENDMENTS OR TERMINATION

	 

	19. GOVERNMENT REGULATIONS

	 

	20. CONTINUANCE OF EMPLOYMENT OR HIRED SERVICES

	 

	21. GOVERNING LAW & JURISDICTION

	 

	22. TAX CONSEQUENCES

	 

	23. NON-EXCLUSIVITY OF THE ISOP

	 

	24. MULTIPLE AGREEMENTS

 

3

	1.	 	NAME
	 
	 	 	This Plan, as amended from time to time, shall be known as the Mellanox Technologies Ltd.
2003 Israeli Share Option Plan (the “ISOP”).
	 
	2.	 	PURPOSE OF THE ISOP
	 
	 	 	The ISOP is intended as an incentive to retain, in the employ of Mellanox Technologies Ltd.
(the “Company”) and its Affiliates (as defined below), persons of training, experience, and
ability, to attract new employees, directors or consultants, whose services are considered
valuable, 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
approved by the board of directors of the Company. The ISOP is effective with respect to
Options granted as of January 1, 2003 and shall comply with Amendment no. 132 of the
Israeli Tax Ordinance.
	 
	3.	 	DEFINITIONS

For purposes of the ISOP and related documents, including the Option Agreement (as defined below),
the following definitions shall apply:

	3.1	 	“Affiliate” means any “employing company” within the meaning of Section 102(a) of
the Ordinance.
	 
	3.2	 	“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.
	 
	3.3	 	“Board” means the Board of Directors of the Company.
	 
	3.4	 	“Capital Gain Option (CGO)” as defined in Section 6.4 below.
	 
	3.5	 	“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.
	 
	3.6	 	“Chairman” means the chairman of the Committee.
	 
	3.7	 	“Committee” means a share option compensation committee appointed by the Board.
	 
	3.8	 	“Company” means Mellanox Technologies Ltd, an Israeli company.

 

4

	3.9	 	“Companies Law” means the Israeli Companies Law 5759-1999.
	 
	3.10	 	“Controlling Shareholder” shall have the meaning ascribed to it in Section 32(9) of
the Ordinance.
	 
	3.11	 	“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.
	 
	3.12	 	“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.
	 
	3.13	 	“Expiration date” means the date upon which an Option shall expire, as set forth in
Section 11.3 of the ISOP.
	 
	3.14	 	“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 SmallCap 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.

	3.15	 	“IPO” means the initial public offering of the Company’s shares.
	 
	3.16	 	“ISOP” means this 2003 Israeli Share Option Plan.
	 
	3.17	 	“ITA” means the Israeli Tax Authorities.

 

5

	3.18	 	“Non-Employee” means a consultant, adviser, service provider, Controlling
Shareholder or any other person who is not an Employee.
	 
	3.19	 	“Ordinary Income Option (OIO)” as defined in Section 6.5 below.
	 
	3.20	 	“Option” means an option to purchase one or more Shares of the Company pursuant
to the ISOP.
	 
	3.21	 	“102 Option” means any Option granted to Employees pursuant to Section 102 of the
Ordinance.
	 
	3.22	 	“3(i) Option” means an Option granted pursuant to Section 3(i) of the Ordinance to
any person who is Non- Employee.
	 
	3.23	 	“Optionee” means a person who receives or holds an Option under the ISOP.
	 
	3.24	 	“Option Agreement” means the share option agreement between the Company and
an Optionee that sets out the terms and conditions of an Option.
	 
	3.25	 	“Ordinance” means the Israeli Income Tax Ordinance [New Version] 1961 as now in
effect or as hereafter amended.
	 
	3.26	 	“Purchase Price” means the price for each Share subject to an Option.
	 
	3.27	 	“Section 102” means section 102 of the Ordinance as now in effect or as hereafter
amended.
	 
	3.28	 	“Share” means the ordinary shares, NIS 0.01 par value each, of the Company.
	 
	3.29	 	“Successor Company” means any entity the Company is merged to or is acquired by,
in which the Company is not the surviving entity.
	 
	3.30	 	“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.
	 
	3.31	 	“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.
	 
	3.32	 	“Unapproved 102 Option” means an Option granted pursuant to Section 102(c) of
the Ordinance and not held in trust by a Trustee.
	 
	3.33	 	“Vested Option” means any Option, which has already been vested according to the
Vesting Dates.
	 
	3.34	 	“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,

 

6

	 	 	as set forth in section 13 of the ISOP.
	 
	4.	 	ADMINISTRATION OF THE ISOP
	 
	 	 	The Board shall have the 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.
	 
	 	 	The Committee shall consist of such number of members (not less than two (2) in number) as
may be fixed by the Board. 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.
	 
	 	 	The Committee shall have full power and authority to recommend to the board (i) to designate
participants; (ii) to determine the terms and provisions of respective Option Agreements
(which need not be identical) including, but not limited to, the number of Shares in the
Company to be covered by each Option, provisions concerning the time or times when and the
extent to which the Options may be exercised, any conditions upon which the vesting of the
Options may be accelerated, and the nature and duration of restrictions as to
transferability or restrictions constituting substantial risk of forfeiture; (iii) to
accelerate the right of an Optionee to exercise, in whole or in part, any previously granted
Option; (iv) to interpret the provisions and supervise the administration of the ISOP; (v)
to determine the Fair Market Value of the Shares; (vi) to make an election as to the type
of Approved 102 Option; (vii) to designate the type of Options and (viii) to determine any
other matter which is necessary or desirable for, or incidental to administration of the
ISOP.
	 
	 	 	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 hereof all in accordance with section 112(a)(5) of the
Companies Law.
	 
	 	 	All decisions and selections made by the Board or the Committee pursuant to the provisions
of the ISOP shall be made by a majority of its members except that no member of the Board
or the Committee shall vote on, or be counted for quorum purposes, with respect to any
proposed action of the Board or the Committee relating to any Option to be granted to that
member. Any decision reduced to writing and signed by a majority of the members who are
authorized to make such decision shall be fully effective as if it had been made by a
majority at a meeting duly held.

 

7

	 	 	The interpretation and construction by the Committee of any provision of the ISOP or
of any Option thereunder shall be final and conclusive unless otherwise determined by the
Board.
	 
	 	 	Subject to 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.
	 
	5.	 	DESIGNATION OF PARTICIPANTS
	 
	 	 	The persons eligible for participation in the ISOP as Optionees shall include any
Employees and/or Non-Employees of the Company or of any Affiliates of the Company;
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.
	 
	 	 	The grant of an Option hereunder shall neither entitle the recipient thereof to participate
nor disqualify the recipient from participating in, any other grant of Options pursuant to
the ISOP or any other option or stock plan of the Company or any of its Affiliates.
	 
	 	 	Anything in the ISOP to the contrary notwithstanding, all grants of Options to directors
and office holders (“Nosei Misra” — as such term is defined in the Companies Law) 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.
	 
	6.	 	DESIGNATION OF OPTIONS PURSUANT TO SECTION 102
	 
	6.1	 	The Company may designate Options granted to Employees pursuant to Section 102
as Unapproved 102 Options or Approved 102 Options.
	 
	6.2	 	The grant of Approved 102 Options shall be made under this ISOP adopted by the
Board as described in Section 17 below, and shall be conditioned upon the approval
of this ISOP by the ITA.
	 
	6.3	 	Approved 102 Option may either be classified as Capital Gain Option (“CGO”) or
Ordinary Income Option (“OIO”).
	 
	6.4	 	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.
	 
	6.5	 	Approved 102 Option elected and designated by the Company to qualify under the

 

8

	 	 	 ordinary income tax treatment in accordance with the provisions of Section 102(b)(l)
shall be referred to herein as OIO.
	 
	6.6	 	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.
	 
	6.7	 	All Approved 102 Options must be held in trust by a Trustee, as described in Section
7 below.
	 
	6.8	 	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.
	 
	6.9	 	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.
	 
	7.	 	TRUSTEE
	 
	 	 	Approved 102 Options which shall be granted under the ISOP and/or any Shares 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 issued to a
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”). If 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.
	 
	 	 	Anything to the contrary notwithstanding, the Trustee shall not release any Options which
were not already exercised into Shares by the Optionee or release any Shares 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 the Optionee and/or any Shares
issued upon exercise of such Options.

 

9

	 	 	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 by such Optionee.
	 
	 	 	Upon receipt of the Option, the Optionee will sign an undertaking to release the Trustee
from any liability in respect of any action or decision duly taken and bona fide executed
in relation with the ISOP, or any Approved 102 Option or Share granted to the Optionee
thereunder.
	 
	8.	 	SHARES RESERVED FOR THE ISOP; RESTRICTION THEREON

	 	8.1	 	The Company shall reserve Two Million Two Hundred and Seventy Thousand
(2,270,000) authorized but unissued Shares for purposes of the ISOP and for the
purposes of the Mellanox Technologies Ltd 2000 United States Equity Incentive Plan,
subject to adjustment as set forth in paragraph 8 below. Any of such Shares which may
remain unissued and which are not subject to 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 relinquishment in full, the Shares therefore subject to such
Option may again be subjected to an Option under the ISOP or under the Mellanox
Technologies Ltd. 2000.
	 
	 	8.2	 	(deleted)
	 
	 	8.3	 	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 Committee shall
from time to time approve. Each Option Agreement shall state, inter- alia, a number of
the Shares to which the Option relates and the type of Option granted thereunder
(whether a CGO, OIO, Unapproved 102 Option or a 3(I) Option).

	9.	 	PURCHASE PRICE

	 	9.1	 	The Purchase Price of each Share subject to an Option or any portion thereof
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.
	 
	 	9.2	 	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 cheque.

	10.	 	ADJUSTMENTS

 

10

	 	 	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:

	 	10.1	 	In the event of a Transaction the unexercised Options then outstanding under the ISOP, shall
be assumed or substituted for the Shares subject to the unexercised portions of such
outstanding Options for an appropriate number of shares of each class of shares or other
securities of the Successor Company (or a parent or subsidiary of the Successor Company) 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, all as will
be determined by the Committee whose determination shall be final.
	 
	 	10.2	 	Notwithstanding the above and subject to any applicable law, the Board or the Committee may
determine with respect to certain Option Agreements that, (a) there shall be a clause
instructing that, if in any such Transaction as described in section 10.1 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
shall be immediately vested in full as of the date ten (10) days prior to the effective date
of such Transaction.
	 
	 	10.3	 	For the purposes of section 10.1 above, the 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 for each Share held on the effective date of the Transaction (and if such holders
were offered a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares); provided, however, that if such consideration received in
the 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.
	 
	 	10.4	 	If the Company is liquidated or dissolved while unexercised Options remain outstanding under
the ISOP, then 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-days period, all remaining outstanding Options will
terminate immediately.

 

11

	 	10.5	 	If the outstanding shares of the Company shall at any time be changed or
exchanged by declaration of a stock dividend (bonus shares), stock 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 number, class and
kind of 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 paragraph 6 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.
	 
	 	10.6	 	Anything herein to the contrary notwithstanding, if prior to the completion
of an 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.
	 
	 	10.7	 	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 any such limitations.

	11.	 	TERM AND EXERCISE OF OPTIONS

	 	11.1	 	Options shall be exercised by the Optionee by giving written notice to the
Company, in such form and method as may be determined by the Company and the Trustee
and when applicable, in accordance with the requirements of Section 102, which
exercise shall be effective upon receipt of such notice and the Purchase Price by the
Company at its principal office. The notice shall specify the number of Shares with
respect to which the Option is being exercised.
	 
	 	11.2	 	Each Option granted under the ISOP shall be exercisable following the Vesting
Dates and for the number of Shares as shall be provided in Exhibit B to the Option
Agreement. However no Option shall be exercisable after the Expiration Date.
	 
	 	11.3	 	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 11.6
below.
	 
	 	11.4	 	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

 

12

	 	 	 	excercisable, prior to the Expiration Date, and provided that, subject to the provisions
of Section 11.6 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.
	 
	 	11.5	 	Subject to the provisions of Section 11.6 below, in the event of termination of Optionee’s
employment or service with the Company or any of its Affiliates, all Options granted to him
will immediately be expired. A notice of termination of employment or service shall be
deemed to constitute termination of employment. 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.
	 
	 	11.6	 	Notwithstanding anything to the contrary hereinabove, an Option may be exercised after the
date of termination of Optionee’s employment or service with the Company or any Affiliate of
the Company during an additional period of time beyond the date of such termination, but only
with respect to the number of Options already vested at the time of such termination according
to the Vesting Dates, if: (i) termination is without Cause, in which event any Options still
in force and unexpired may be exercised within a period of three (3) months from the date of
such termination, (ii) termination is the result of death or disability of the Optionee, in
which event any Options still in force and unexpired may be exercised within a period of 18
(eighteen) months from the date of termination in the event of death and 12 (twelve) months
from the date of termination in the event of disability, or (iii) prior to the date of such
termination, the Committee shall authorize an extension of the terms of all or part of the
Options beyond the date of such termination for a period not to exceed the period during which
the Options by their terms would otherwise have been exercisable.
	 
	 	 	 	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.
	 
	 	11.7	 	To avoid doubt, the holders of Options shall not have any of the rights or privileges of
shareholders of the Company in respect of any Shares purchasable upon the exercise of any
part of an Option, 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.
	 
	 	11.8	 	Any form of Option Agreement authorized by the ISOP may contain such other provisions as the
Committee may, from time to time, deem advisable.
	 
	 	11.9	 	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

 

13

	 	 	 	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.

	12.	 	SHARES SUBJECT TO RIGHT OF FIRST REFUSAL

	 	12.1	 	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.
	 
	 	12.2	 	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. The sale of Shares by the Optionees shall be
subject to the right of first refusal of other shareholders as set forth in the
Articles of Association of the Company. In the event that the Articles of Association
of the Company shall not contain any provision regarding rights of first refusal,
then, unless otherwise provided by the Board, until such time as the Company shall
effectuate an IPO, the sale of Shares issuable upon exercise of an Option, shall be
subject to a right of first refusal on the part of the Repurchaser(s).
	 
	 	 	 	Repurchaser(s) means (i) the Company, if permitted by applicable laws; (ii) if the
Company is not permitted by applicable laws, then any Affiliate of the Company
designated by a unanimous decision is reached by the Board; or (iii) if no
unanimous decision is reached by the Board, then the Company’s existing
shareholders (save, for avoidance of doubt, for other Optionees who already
exercised their Options), pro rata in accordance with their shareholding. The
Optionee shall give a notice of sale (the “Notice”) to the Company in order to
offer the Shares to the Repurchaser(s).
	 
	 	 	 	The Notice shall specify the name of each proposed purchaser or other Transferee
(“Proposed Transferee”), the number of Shares offered for sale, the price per Share
and the payment terms. The Repurchase(s) will be entitled for 30 days from the day
of receipt of the Notice (the “30 Days Period”), to purchase all or part of the
offered Shares. If by the end of the 30 Days Period not all of the offered Shares
have been purchased by the Repurchaser(s), the Optionee will be entitled to sell
such Shares at any time during the 90 days following the end of the 30 Days 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.

 

14

	13.	 	VESTING OF OPTIONS
	 
	 	 	Subject to the provisions of the ISOP, Options shall vest (i.e., Options shall become
exercisable) following the Vesting Dates and for the number of Shares as shall be provided
in the Option Agreement which shall be signed between the Company and each of the Optionees.
However, no Option shall be exercisable after the Expiration Date.
	 
	 	 	An Option may be subject to such other terms and conditions on the time or times when it
may be exercised as the Board may deem appropriate. The vesting provisions of individual
Options may vary.
	 
	14.	 	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. 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.

 

15

	15.	 	DIVIDENDS
	 
	 	 	With respect to all Shares (in contrary to unexercised Options) 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, 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.
	 
	16.	 	ASSIGNABILITY AND SALE OF OPTIONS
	 
	 	 	No Option, purchasable hereunder, whether fully paid or not, shall be assignable,
transferable or given as collateral or any right with respect to them given to any third
party whatsoever, and during the lifetime of the Optionee each and all of such Optionee’s
rights to purchase Shares hereunder shall be exercisable only by the Optionee.
	 
	 	 	As long as the Shares are held by the Trustee in favor of the Optionee, then all rights the
last possesses over the Shares are personal, can not be transferred, assigned, pledged or
mortgaged, other than by will or laws of descent and distribution.
	 
	17.	 	TERM 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 10 (ten) years from such day of adoption.
	 
	18.	 	AMENDMENTS OR TERMINATION
	 
	 	 	The Board may at any time, but 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 Committee, which agreement must be in writing and signed by the Optionee
and the Company. Termination of the ISOP shall not affect the Committee’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.
	 
	19.	 	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, whether of the State of Israel or of the United States or any
other State having jurisdiction over the Company and the Optionee, including the
registration of the Shares under the United States Securities Act of 1933, and to such
approvals by any governmental agencies or national securities exchanges as may be required.
Nothing herein shall be deemed to require the Company to register the Shares under the
securities law of any jurisdiction.
	 
	20.	 	CONTINUANCE OF EMPLOYMENT OR HIRED SERVICES
	 
	 	 	Neither the ISOP nor the Option Agreement with the Optionee shall impose any obligation on
the Company or a Affiliate thereof, to continue any Optionee in its

 

16

	 	 	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 the service of the Company
or a Affiliate thereof or restrict the right of the Company or a Affiliate thereof to
terminate such employment or service at any time.
	 
	21.	 	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.
	 
	22.	 	TAX CONSEQUENCES
	 
	 	 	Any tax consequences arising from the grant or exercise of any Option, from the payment for
Shares covered thereby or from any other event or act (of the Company 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 the Trustee
and hold them harmless against and from any and all liability for any such tax or interest
or penalty thereon, including without limitation, liabilities relating to the necessity to
withhold, or to have withheld, any such tax from any payment made to the Optionee.
	 
	 	 	The Company and/or the Trustee shall not be required to release any Share certificate to an
Optionee until all required payments have been fully made.
	 
	23.	 	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 stock Options otherwise then 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.
	 
	24.	 	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 Committee 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.

 

 

MELLANOX
TECHNOLOGIES LTD.

OPTION AGREEMENT

Made as of the ___day of                      200_

	 	 	 	 	 
	BETWEEN:

	 	MELLANOX TECHNOLOGIES LTD.	 	 
	 

	 	(hereinafter the “Company”)	 	 
	 
	 	 	 	 
	 

	 	 	 	on the one part
	AND:

	 	Name                     	 	 
	 

	 	I.D. No.                     	 	 
	 

	 	Address:                     	 	 
	 

	 	(hereinafter the “Optionee”)	 	 
	 
	 	 	 	 
	 

	 	 	 	on the other part

	 	 	 
	WHEREAS

	 	On November 18, 2003, the Company duly adopted and the Board approved the Mellanox
Technologies Ltd. 2003 Israeli Share Option Plan, which plan was duly amended on September 3,
2004, and a copy of which is attached as Exhibit A hereto, forming an integral part hereof
(the “ISOP”); and -
	 
	 	 
	WHEREAS

	 	Pursuant to the ISOP, the Company has decided to grant Options to purchase Shares of the
Company to the Optionee, and the Optionee has agreed to such grant, subject to all the terms
and conditions as set forth in the ISOP and as provided herein;

NOW, THEREFORE, it is agreed as follows:

1. Preamble and Definitions

	 	1.1	 	The preamble to this agreement constitutes an integral part hereof.
	 
	 	1.2	 	Unless otherwise defined herein, capitalized terms used herein shall have the
meaning ascribed to them in the ISOP.

2. Grant of Options

	 	2.1	 	The Company hereby grants to the Optionee the number of Options as set forth in
Exhibit B hereto, each Option shall be exercisable for one Share, upon payment of the
Purchase Price as set forth in Exhibit B, subject to the terms and the conditions as set
forth in the ISOP and as provided herein.
	 
	 	2.2	 	The Purchase Price will be paid in NIS in accordance with the representative rate
of exchange of the U.S. dollar, published by the Bank of Israel and known on the date of
giving a notice of exercise.

 

 

	 	2.3	 	The Optionee is aware that the Company intends in the future to issue
additional shares and to grant additional options to various entities and
individuals, as the Company in its sole discretion shall determine.

3. Period of Option and Conditions of Exercise

	 	3.1	 	The terms of this Option Agreement shall commence on the Date of Grant and
terminate at the Expiration Date, or at the time at which the Option expires pursuant to
the terms of the ISOP or pursuant to this Option Agreement.
	 
	 	3.2	 	Options may be exercised only to purchase whole Shares, and in no case may a
fraction of a Share be purchased. If any fractional Share would be deliverable upon
exercise, such fraction shall be rounded up one-half or less, or otherwise rounded down,
to the nearest whole number.

4. Adjustments

Notwithstanding anything to the contrary in Section 10.1 of the ISOP and in addition thereto,
if in any such Transaction as described in Section 10.1 of the ISOP, 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 shall be
immediately vested in full as of the date which is ten (10) days prior to the effective date of
the Transaction, and the Committee shall notify the Optionee that the unexercised Options are
fully exercisable for a period often (10) days from the date of such notice, and that any
unexercised Options shall terminate upon the expiration of such period.

5. Vesting; Period of Exercise

Subject to the provisions of the ISOP, Options shall vest and become exercisable according to
the Vesting Dates set forth in Exhibit B hereto, provided that the Optionee is an Employee of
or providing services to the Company and /or its Affiliates on the applicable Vesting Date.

All unexercised Options granted to the Optionee shall terminate and shall no longer be
exercisable on the Expiration Date, as described in Section 3.13 of the ISOP.

6. Exercise of Options

	 	6.1	 	Options may be exercised in accordance with the provisions of Section 11.1 of the
ISOP.
	 
	 	6.2	 	In order for the Company to issue Shares upon the exercise of any of the Options,
the Optionee hereby agrees to sign any and all documents required by any applicable law
and/or by the Company’s Articles of Association.
	 
	 	6.3	 	(deleted)
	 
	 	6.4	 	The Company shall not be obligated to issue any Shares upon the exercise of an
Option if such issuance, in the opinion of the Company, might constitute a violation by
the Company of any provision of law.

7. Restrictions on Transfer of Options and Shares

 

 

	 	7.1	 	The transfer of Options and the transfer of Shares to be issued upon exercise of
the Options shall be subject to the limitations set forth in the ISOP and in the
Company’s Articles of Association and any shareholders’ agreement to which the
holders of ordinary shares of the Company are bound.
	 
	 	7.2	 	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 by such Optionee.
	 
	 	7.3	 	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.
	 
	 	7.4	 	By exercising your option you agree that the Company (or a representative of
the underwriter(s)) may, in connection with the first underwritten registration of the
offering of any securities of the Company under the Securities Act, require that you
not sell, dispose of, transfer, make any short sale of, grant any option for the
purchase of, or enter into any hedging or similar transaction with the same economic
effect as a sale, any Ordinary Shares or other securities of the Company held by you,
for a period of time specified by the underwriter(s) (not to exceed one hundred eighty
(180) days) following the effective date of the registration statement of the Company
filed under the Securities Act. You further agree to execute and deliver such other
agreements as may be reasonably requested by the Company and/or the underwriter(s) that
are consistent with the foregoing or that are necessary to give further effect thereto.
In order to enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to your Ordinary Shares until the end of such period.
	 
	 	7.5	 	The Optionee shall not dispose of any Shares in transactions which violate, in
the opinion of the Company, any applicable laws, rules and regulations.
	 
	 	7.6	 	The Optionee agrees that the Company shall have the authority to endorse upon
the certificate or certificates representing the Shares such legends referring to the
foregoing restrictions, and any other applicable restrictions as it may deem
appropriate (which do not violate the Optionee’s rights according to this Option
Agreement).

8. Taxes; Indemnification

	 	8.1	 	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 hereby agrees 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.
	 
	 	8.2	 	The Optionee will not be entitled to receive from the Company and/or
the Trustee any Shares allocated or issued upon the exercise of Options prior to
the full payments of the Optionee’s tax liabilities arising from Options which were
granted to him and/or Shares issued upon the exercise of Options. For the avoidance
of doubt, neither the Company nor the Trustee shall be required to release any
share certificate to the Optionee until all payments required to be made by the
Optionee have been fully satisfied.
	 
	 	8.3	 	The receipt of the Options and the acquisition of the Shares to be
issued upon the exercise of the Options may result in tax consequences. THE
OPTIONEE IS ADVISED TO CONSULT A TAX ADVISER WITH RESPECT TO THE TAX CONSEQUENCES
OF RECEIVING OR EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
	 
	 	8.4	 	With respect to Approved 102 Options, the Optionee hereby acknowledges
that he is familiar with the provisions of Section 102 and the regulations and
rules promulgated thereunder, including without limitations the type of Option
granted hereunder and the tax implications applicable to such grant. The Optionee
accepts the provisions of the trust agreement signed between the Company and the
Trustee, a copy of which is attached as Exhibit C hereto or will be separately
provided to the Optionee, and agrees to be bound by its terms.

9. Miscellaneous

	 	9.1	 	No Obligation to Exercise Options. The grant and acceptance of these Options
imposes no obligation on the Optionee to exercise it.
	 
	 	9.2	 	Confidentiality. The Optionee shall regard the information in this Option
Agreement and its exhibits attached hereto as confidential information and the Optionee
shall not reveal its contents to anyone except when required by law or for the purpose of
gaining legal or tax advice.
	 
	 	9.3	 	Continuation of Employment or Service. Neither the ISOP nor this Option
Agreement shall impose any obligation on the Company or an Affiliate to continue the
Optionee’s employment or service and nothing in the ISOP or in this Option Agreement shall
confer upon the Optionee any right to continue in the employ or service of the Company
and/or an Affiliate or restrict the right of the Company or an Affiliate to terminate such
employment or service at any time.
	 
	 	9.4	 	Entire Agreement. Subject to the provisions of the ISOP, to which this Option
Agreement is subject, this Option Agreement, together with the exhibits hereto, constitute
the entire agreement between the Optionee and the Company with respect to

 

 

	 	 	 	Options granted hereunder, and supersedes all prior agreements, understandings and
arrangements, oral or written, between the Optionee and the Company with respect to the
subject matter hereof.

	 	9.5	 	Failure to Enforce — Not a Waiver. The failure of any party to enforce at any time
any provisions of this Option Agreement or the ISOP shall in no way be construed to be a
waiver of such provision or of any other provision hereof.
	 
	 	9.6	 	Provisions of the ISOP. The Options provided for herein are granted pursuant to the
ISOP and said Options and this Option Agreement are in all respects governed by the ISOP and
subject to all of the terms and provisions of the ISOP.
	 
	 	 	 	Any interpretation of this Option Agreement will be made in accordance with the ISOP but in
the event there is any contradiction between the provisions of this Option Agreement and
the ISOP, the provisions of the Option Agreement will prevail.
	 
	 	9.7	 	Binding Effect. The ISOP and this Option Agreement shall be binding upon the heirs,
executors, administrators and successors of the parties hereof.
	 
	 	9.8	 	Notices. All notices or other communications given or made hereunder shall be in
writing and shall be delivered or mailed by registered mail or delivered by email or facsimile
with written confirmation of receipt to the Optionee and/or to the Company at the addresses
shown on the letterhead above, or at such other place as the Company may

 

 

designate by written notice to the Optionee. The Optionee is responsible for
notifying the Company in writing of any change in the Optionee’s address, and the
Company shall be deemed to have complied with any obligation to provide the Optionee
with notice by sending such notice to the address indicated below.

Company’s Signature:

Name: Michael Gray

Position: Chief Financial Officer

Signature:                     

I, the undersigned, hereby acknowledge receipt of a copy of the ISOP and accept the Options subject
to all of the terms and provisions thereof. I have reviewed the ISOP and this Option Agreement in
its entirety, have had an opportunity to obtain the advice of counsel prior to executing this
Option Agreement, and fully understand all provisions of this Option Agreement. I agree to notify
the Company upon any change in the residence address indicated above.

 

Optionee’s Signature

Exhibit A: Mellanox Technologies Ltd. 2003 Israeli Share Option Plan

Exhibit B: Terms of the Option (including Notice of Grant)

Exhibit C: Trust Agreement

 

 

EXHIBIT A

See Mellanox Technologies, Ltd. 2003

Israel: Share Option Plan

 

 

EXHIBIT B

 

 

Mellanox Technologies Ltd.

Stock Option Grant Notice

(2003 Israeli Equity Incentive Plan)

Mellanox Technologies Ltd. (the “Company”), pursuant to its 2003 Israeli Equity Incentive Plan (the
“Plan”), hereby grants to Optionholder an option to purchase the number of the Company’s Ordinary
Shares set forth below. This option is subject to all of the terms and conditions as set forth
herein and in the Stock Option Agreement, the Plan and the Notice of Exercise, all of which are
attached hereto and incorporated herein in their entirety.

	 	 	 
	Optionholder:
	 	 
	 

	 	 
	Date of Grant:
	 	 
	 

	 	 
	Vesting Commencement Date:
	 	 
	 

	 	 
	Number of Shares Subject to Option:
	 	 
	 

	 	 
	Exercise Price (Per Share):
	 	 
	 

	 	 
	Total Exercise Price:
	 	 
	 

	 	 
	Expiration Date:
	 	 
	 

	 	 

	 	 	 
	Type of Grant:

	 	102 Capital Gains Track Options
	 
	 	 
	Vesting Schedule:

	 	1/4th of the shares vest one year after the Vesting
Commencement Date.

	 
	 	 
	 

	 	l/48th of the shares vest monthly thereafter over the
next three years.
	 
	 	 
	 

	 	If, in the event of a “Change of Control”, and within twelve (12) months
thereafter, the Company terminates Optionholder’s employment without “Cause”
or if Optionholder resigns for “Good Reason,” fifty percent (50%) of the
shares subject to this option to purchase Ordinary Shares of the Company that
are unvested on the date of such termination or resignation shall vest
immediately upon such termination or resignation.
	 
	 	 
	 

	 	A “Change of Control” shall mean (i) a merger or consolidation of the Company,
whether or not approved by the Board of Directors, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or (ii) a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s
assets, approved by the shareholders of the Company.
	 
	 	 
	 

	 	“Cause” shall mean (1) Optionholder’s willful refusal or willful failure to
comply with a lawful instruction of the Board, or (2) Optionholder’s conviction
of any felony involving an act of moral turpitude. The Company may not
terminate Optionholder for Cause unless the Company gives Optionholder written
notice of its intent to terminate Optionholder for Cause with an explicit
written explanation for all reasons for the for-Cause termination, and the
Company, in good faith, permits Optionholder thirty (30) days to cure the
alleged wrongs. If Optionholder cures the alleged wrongs, within thirty (30)
days of such notice, Optionholder cannot be terminated for Cause.
	 
	 	 
	 

	 	“Good Reason” shall mean any of the following events which is not cured by the
Company within 15 days after Optionholder gives written notice thereof to the
Company: (i) any reduction of or failure to pay Optionholder’s base salary in
effect immediately prior to the Change of Control; (ii) any other material
breach by the Company of any material term of Optionholder’s employment with
the Company; (iii) any material adverse change in Optionholder’s job titles,
duties, responsibilities, status, reporting responsibilities or perquisites
granted hereunder, without Optionholder’s consent; or (iv) any change in
Optionholder’s principal work location which increases Optionholder’s one-way
commute from home to the office by more than 50 miles. “Good Reason” shall
cease to exist for an

 

 

	 	 	 
	 

	 	event on the 30th day following the later of its occurrence or Optionholder’s
knowledge thereof, unless Optionholder has given the Company notice thereof
prior to such date.
	 
	 	 
	Payment:

	 	By one or a combination of the following items (described in the Stock Option Agreement):

By cash or check

Additional Terms/Acknowledgements: The undersigned Optionholder acknowledges receipt of, and
understands and agrees to, this Stock Option Grant Notice, the Stock Option Agreement and the Plan.
The undersigned Optionholder further acknowledges acceptance of the terms of Section 102 of the
Israeli Income Tax Ordinance and the rules promulgated thereunder. Optionholder further
acknowledges that as of the Date of Grant, this Grant Notice, the Stock Option Agreement and the
Plan set forth the entire understanding between Optionholder and the Company regarding the
acquisition of stock in the Company and supersede all prior oral and written agreements on that
subject with the exception of (i) options previously granted and delivered to Optionholder under
the Plan, and (ii) the following agreements only:

	 	 	 	 	 
	 

	 	Other Agreements:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

	 	 	 	 	 	 	 
	Mellanox
Technologies Ltd.	 	Optionholder:
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Signature	 	Signature
	 
	 	 	 	 	 	 
	Title:

	 	 	 	Date:	 	 
	 

	 	 
	 	 	 	 
	 
	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 
	 

	 	 	 	 	 	 

Attachments: Stock Option Agreement, 2003 Israeli Equity Incentive Plan and Notice of Exercise

 

 

NOTICE OF EXERCISE

(Standard Form)

Mellanox Technologies Ltd.

PO Box 586

Yokneam Israel, 20692

Date of Exercise:                     

Ladies and Gentlemen:

     This constitutes notice under my stock option that I elect to purchase the number of shares
for the price set forth below.

     o Check here if your option was granted under Section 102 of the Income Tax Ordinance
(New Version) 1961

	 	 	 	 	 
	Stock Option Number:
	 	 	 	 
	 
	 	 	 	 
	Stock option dated:
	 	 	 	 
	 
	 	 	 	 
	Number of shares as to which option is exercised:
	 	 	 	 
	 
	 	 	 	 
	Certificates to be issued in name of:
	 	 	 	 
	 
	 	 	 	 
	Address:
	 	 	 	 
	 
	 	 	 	 
	Total exercise price:
	 	$	 	 
	 
	 	 	 	 
	Cash payment delivered herewith:
	 	$	 	 

     By this exercise, I agree to provide such additional documents as you may require pursuant to
the terms of the 1999 Israeli Equity Incentive Plan or the 2003 Israeli Equity Incentive Plan (the
“Plan).

     I hereby make the following certifications and representations with respect to the number of
Ordinary Shares of the Company listed above (the “Shares”), which are being acquired by me for my
own account upon exercise of the Option as set forth above:

     I acknowledge that the Shares have not been registered under the Securities Act of 1933, as
amended (the “Securities Act”), and are deemed to constitute “restricted securities” under Rule
701 and “control securities” under Rule 144 promulgated under the Securities Act. I warrant and
represent to the Company that I have no present intention of distributing or selling said Shares,
except as permitted under the Securities Act and any applicable state securities laws.

1

 

     I further acknowledge that I will not be able to resell the Shares for at least ninety (90)
days after the stock of the Company becomes publicly traded
(i.e., subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934) under Rule 701 and
that more restrictive conditions apply to affiliates of the Company under Rule 144.

     I further acknowledge that all certificates representing any of the Shares subject to the
provisions of the Option shall have endorsed thereon appropriate legends reflecting the foregoing
limitations, as well as any legends reflecting restrictions pursuant to the Company’s Articles of
Incorporation, Bylaws and/or applicable securities laws.

     I further agree that, if required by the Company (or a representative of the underwriters) in
connection with the first underwritten registration of the offering of any securities of the
Company under the Securities Act, I will not sell, dispose of, transfer, make any short sale of,
grant any option for the purchase of, or enter into any hedging or similar transaction with the
same economic effect as a sale, any Shares or other securities of the Company held by me, for a
period of time specified by the underwriter(s) (not to exceed one hundred eighty (180) days)
following the effective date of the registration statement of the Company filed under the
Securities Act. I further agree to execute and deliver such other agreements as may be reasonably
requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that
are necessary to give further effect thereto. In order to enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect to my Shares until the end of such
period.

     I am not a “U.S. Person” as defined by Rule 902 of Regulation S promulgated under the
Securities Act. At the time of grant and exercise of the Option, I was and am outside the United
States. I am acquiring the Shares for my own account, for investment purposes and not with a view
towards, or for sale in connection with, any distribution of such securities. All subsequent offers
and sales of the Shares will be made (i) outside the United States in compliance with Rule 903 and
Rule 904 of Regulation S, (ii) pursuant to registration of the Shares under the Securities Act, or
(iii) pursuant to an exemption from such registration. I will not engage in hedging transactions
with regard to the Shares prior to the expiration of the distribution compliance period specified
in Rule 903 of Regulation S, unless in compliance with the Securities Act.

     I acknowledge and understand that the tax consequences of exercising this Option and
disposing of the Shares underlying this Option are complex, and that I have been advised by the
Company to consult with my personal tax advisor before exercising this Option or disposing of the
shares underlying this Option.

     Any tax consequences arising from the grant or exercise of this Option, from the payment for
Shares or from any other event or act under the Plan, my option agreement or this Notice of
Exercise, shall be borne solely by me. I agree to indemnify the Company and/or its subsidiaries
and hold them harmless against and from any and all liability for any such tax or interest or
penalty thereof, including without limitation, liabilities relating to the necessity to withhold,
or to have withheld, any such tax from any payment made to me.

     Section 102.
If my Options were granted pursuant to Section 102 of the Israel
Income Tax Ordinance (New Version) 1961, I acknowledge that the Shares issued on
exercise of the Options may be held in trust for my benefit by the Trustee pursuant to Section 102
under the terms of a trust agreement between the Company and the Trustee.

     I

	 	 	 
	 

	 	Very truly yours,
	 
	 	 
	 

	 	 

2

 

EXHIBIT C

Addendum B

(Section 2(A))

Deed of Trust (between Trustee and allocating company)

Signed in                                         

     Between:                (hereinafter — the Trustee).

As the first party

     And between:      Mellanox Technologies Ltd. (hereinafter — the Allocating Company)

As the second party

Whereas:

     On November 18, 2003, the Company adopted an employee share allocation plan, as
defined in Section 102 of the Ordinance (hereinafter — the Plan);

And whereas:

     According to the Plan, the Company will allocate from time to time shares or
rights to shares to employees under a share allocation by way of a Trustee;

And whereas:

     According to the Plan, all the shares shall be allocated under an allocation to a
Trustee so that he may hold them in trust until the end of the period, as set out in the
Ordinance, in the Income Tax Rules (Tax Relief for Share Allocations to Employee), 5763 —
2003 (hereinafter — the Rules), and in the Plan and in this deed of trust;

And whereas:

     The
Company has appointed                            to serve as a Trustee for the
purpose of said employee share allocation plan and he has expressed his consent to serve as
Trustee for all the employing companies and their employees.

Therefore it is agreed between the parties as follows:

	 	1.	 	The preamble to this deed of trust constitutes an integral part thereof.
	 
	 	2.	 	According to the Plan, shares shall not be allocated to the Company’s employees
unless allocated on the Trustee’s name and held by him until the end of the Period, as defined in
Section 102 of the Ordinance.
	 
	 	3.	 	Prior to payment of the applicable tax as set out in Section 7 of the Rules, the shares will not be transferred, assigned, pledged, confiscated, or otherwise willingly mortgaged,
and no power of attorney or deed of transfer regarding them will be given, whether the
validity of any of the same is immediate or future, save for a transfer under a will or operation
of law; if shares are transferred under said will or operation of law, the provisions of
Section 102 and of the Rules shall apply to the heirs or transferees of that same employee.

 

 

	 	4.	 	After the end of the period, each employee shall be entitled at any time to request that the
Trustee transfer to his name the shares to which he is entitled, provided that the Trustee
shall not transfer said shares until after the applicable tax under Section 102 of the
Ordinance and these Rules (hereinafter — the Applicable Tax) has been paid and the Trustee
is in possession of an approval of such from the assessing officer.

	 	5.	 	If according to the conditions of the plan, the employee is granted rights to purchase shares, or bonus shares are allocated to him for the shares, the rights or bonus shares shall be
allocated on the Trustee’s name. The employee shall be entitled to instruct the Trustee to
realize the rights or the bonus shares after the end of the period as determined in the Plan.
The shares bearing the rights shall be allocated to the Trustee in accordance with that set
out in Section 2 of the Rules and the provisions of the plan shall apply thereunto, including
the choice of the tax track and the provisions of this Deed of Trust, however, the period of
time until the end of the period shall be counted from the date of allocation of the shares
for which the rights or bonus shares were allocated.

	 	6.	 	The Company undertakes to the Trustee that it will not allocate shares to an employee in
the framework of the allocation plan, if the employee has not declared that he is aware of
the provisions of Section 102 of the Ordinance and the tax track that applies to him, and of
his written consent to that set out in this Deed of Trust and his undertaking not to realize
the shares prior to the end of the Period, as defined in Section 102 of the Ordinance.

In witness whereof we affix out signatures hereto:

	 	 	 	 	 
	 
	 	 	 	 
	     [signed]

	 	 	 	     [signed]
	 
	 	 	 	 
	 

	 	 	 	     [Mellanox Stamp]
	 
	 	 	 	 
	 

	 	 	 	 
	The Trustee

	 	 	 	The Company

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}]]