Document:

Unassociated Document

GuruNet
Corporation 1999 Stock Option Plan

 

Notice
of Stock Option Grant

 

You have
been granted the following option to purchase shares of the Common Stock of
GuruNet Corporation (the “Company”):

 

	 	Name of Optionee: 	 	 «Name» 
	 	 	 	 
	 	Total Number of Shares: 	 	«TotalShares» 
	 	 	 	 
	 	Type of Option: 	 	«ISO» Incentive
      Stock Option 
	 	 	 	 
	 	 	 	«NSO» Nonstatutory
      Stock Option 
	 	 	 	 
	 	 	 	
      «3(i)»
      Section 3(i)
      Option (Israeli Income Tax Ordinance)

	 	 	 	 
	 	Exercise Price Per Share: 	 	$«PricePerShare» 
	 	 	 	 
	 	Date of Grant: 	 	«DateGrant» 
	 	 	 	 
	 	
      Date
      Exercisable: 
	 	
      This
      option may be exercised at any time after the Date of Grant for all or any
      part of the Shares subject to this option. 

	 	 	 	 
	 	Vesting Commencement Date: 	 	«VestComDate» 
	 	 	 	 
	 	
      Vesting
      Schedule: 
	 	
      The
      Right of Repurchase shall lapse with respect to the first 25% of the
      Shares subject to this option when the Optionee completes 12 months of
      continuous Service after the Vesting Com-mencement Date. The Right of
      Repurchase shall lapse with respect to an additional 2.08333% of the
      Shares subject to this option when the Optionee completes each month of
      continuous Service thereafter. 

	 	 	 	 
	 	Expiration Date: 	 	«ExpDate»

 

By your
signature and the signature of the Company’s representative below, you and the
Company agree that this option is granted under and governed by the terms and
conditions of the 1999 Stock Option Plan and the Stock Option Agreement, both of
which are attached to and made a part of this document.

 

	Optionee: 	 	 	GuruNet Corporation 
	 	 	 	 
	                                                                   
       	 	 	By:                                                                   
      
	 	 	 	Title:                                                                 
      

  

 

 

THE
OPTION GRANTED PURSUANT TO THIS AGREEMENT AND THE SHARES ISSUABLE UPON THE
EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.

 

GuruNet
Corporation 1999 Stock Option Plan:

Stock
Option Agreement

 

SECTION
1.  
GRANT OF OPTION.

 

(a)  Option. On the
terms and conditions set forth in the Notice of Stock Option Grant and this
Agreement, the Company grants to the Optionee on the Date of Grant the option to
purchase at the Exercise Price the number of Shares set forth in the Notice of
Stock Option Grant. The Exercise Price is agreed to be at least 100% of the Fair
Market Value per Share on the Date of Grant (110% of Fair Market Value if
Section 3(b) of the Plan applies). This option is intended to be an ISO, a
Nonstatutory Option, or a Nonstatutory Option described in Section 14, as
provided in the Notice of Stock Option Grant.

 

(b)  Stock
Plan and Defined Terms. This
option is granted pursuant to the Plan, a copy of which the Optionee
acknowledges having received. The provisions of the Plan are incorporated into
this Agreement by this reference. Capitalized terms are defined in
Section 15 of this Agreement.

 

SECTION
2.  
RIGHT TO EXERCISE.

 

(a)  Exercisability. Subject
to Subsections (b) and (c) below and the other conditions set forth in this
Agreement, all or part of this option may be exercised prior to its expiration
at the time or times set forth in the Notice of Stock Option Grant. Shares
purchased by exercising this option may be subject to the Right of Repurchase
under Section 7.

 

(b)  $100,000
Limitation. If this
option is designated as an ISO in the Notice of Stock Option Grant, then the
Optionee’s right to exercise this option shall be deferred to the extent (and
only to the extent) that this option otherwise would not be treated as an ISO by
reason of the $100,000 annual limitation under Section 422(d) of the Code,
except that:

 

(i)  The
Optionee’s right to exercise this option shall in any event become exercisable
at least as rapidly as 20% per year over the five-year period commencing on the
Date of Grant, unless the Optionee is an officer of the Company, an Outside
Director or a Consultant; and

 

 

(ii)  The
Optionee’s right to exercise this option shall no longer be deferred if
(A) the Company is subject to a Change in Control before the Optionee’s
Service terminates, (B) this option does not remain outstanding,
(C) this option is not assumed by the surviving corporation or its parent
and (D) the surviving corporation or its parent does not substitute an
option with substantially the same terms for this option.

 

(c)  Stockholder
Approval. Any
other provision of this Agreement notwithstanding, no portion of this option
shall be exercisable at any time prior to the approval of the Plan by the
Company’s stockholders.

 

SECTION
3.  
NO TRANSFER OR ASSIGNMENT OF OPTION.

 

Except as
otherwise provided in this Agreement, this option and the rights and privileges
conferred hereby shall not be sold, pledged or otherwise transferred (whether by
operation of law or otherwise) and shall not be subject to sale under execution,
attachment, levy or similar process.

 

SECTION
4.  
EXERCISE PROCEDURES.

 

(a)  Notice
of Exercise. The
Optionee or the Optionee’s representative may exercise this option by giving
written notice to the Company pursuant to Section 13(c). The notice shall
specify the election to exercise this option, the number of Shares for which it
is being exercised and the form of payment. The person exercising this option
shall sign the notice. In the event that this option is being exercised by the
representative of the Optionee, the notice shall be accompanied by proof
(satisfactory to the Company) of the representative’s right to exercise this
option. The Optionee or the Optionee’s representative shall deliver to the
Company, at the time of giving the notice, payment in a form permissible under
Section 5 for the full amount of the Purchase Price.

 

(b)  Issuance
of Shares. After
receiving a proper notice of exercise, the Company shall cause to be issued a
certificate or certificates for the Shares as to which this option has been
exercised, registered in the name of the person exercising this option (or in
the names of such person and his or her spouse as community property or as joint
tenants with right of survivorship). The Company shall cause such certificate or
certificates to be deposited in escrow or delivered to or upon the order of the
person exercising this option.

 

(c)  Withholding
Taxes. In the
event that the Company determines that it is required to withhold any tax as a
result of the exercise of this option, the Optionee, as a condition to the
exercise of this option, shall make arrangements satisfactory to the Company to
enable it to satisfy all withholding requirements. The Optionee shall also make
arrangements satisfactory to the Company to enable it to satisfy any withholding
requirements that may arise in connection with the vesting or disposition of
Shares purchased by exercising this option.

 

SECTION
5.  
Payment For Stock.

 

(a)  Cash. All or
part of the Purchase Price may be paid in cash or cash equivalents.

 

2

 

(b)  Surrender
of Stock. All or
any part of the Purchase Price may be paid by surrendering, or attesting to the
ownership of, Shares that are already owned by the Optionee. Such Shares shall
be surrendered to the Company in good form for transfer and shall be valued at
their Fair Market Value on the date when this option is exercised. The Optionee
shall not surrender, or attest to the ownership of, Shares in payment of the
Purchase Price if such action would cause the Company to recognize compensation
expense (or additional compensation expense) with respect to this option for
financial reporting purposes.

 

(c)  Exercise/Sale. If
Stock is publicly traded, all or part of the Purchase Price and any withholding
taxes may be paid by the delivery (on a form prescribed by the Company) of an
irrevocable direction to a securities broker approved by the Company to sell
Shares and to deliver all or part of the sales proceeds to the
Company.

 

(d)  Exercise/Pledge. If
Stock is publicly traded, all or part of the Purchase Price and any withholding
taxes may be paid by the delivery (on a form prescribed by the Company) of an
irrevocable direction to pledge Shares to a securities broker or lender approved
by the Company, as security for a loan, and to deliver all or part of the loan
proceeds to the Company.

 

SECTION
6.  
Term And Expiration.

 

(a)  Basic
Term. This
option shall in any event expire on the expiration date set forth in the Notice
of Stock Option Grant, which date is 10 years after the Date of Grant (five
years after the Date of Grant if this option is designated as an ISO in the
Notice of Stock Option Grant and Section 3(b) of the Plan
applies).

 

(b)  Termination
of Service (Except by Death). If the
Optionee’s Service terminates for any reason other than death, then this option
shall expire on the earliest of the following occasions:

 

(i)  The
expiration date determined pursuant to Subsection (a) above;

 

(ii)  The date
three months after the termination of the Optionee’s Service for any reason
other than Disability; or

 

(iii)  The date
six months after the termination of the Optionee’s Service by reason of
Disability.

 

The
Optionee may exercise all or part of this option at any time before its
expiration under the preceding sentence, but only to the extent that this option
had become exercisable for vested shares before the Optionee’s Service
terminated. When the Optionee’s Service terminates, this option shall expire
immediately with respect to the number of Shares for which this option is not
yet exercisable and with respect to any Restricted Shares. In the event that the
Optionee dies after termination of Service but before the expiration of this
option, all or part of this option may be exercised (prior to expiration) by the
executors or administrators of the Optionee’s estate or by any person who has
acquired this option directly from the Optionee by beneficiary designation,
bequest or inheritance, but only to the extent that this option had become
exercisable before the Optionee’s Service terminated.

 

3

 

(c)  Death
of the Optionee. If the
Optionee dies while in Service, then this option shall expire on the earlier of
the following dates:

 

(i)  The
expiration date determined pursuant to Subsection (a) above;
or

 

(ii)  The date
12 months after the Optionee’s death.

 

All or
part of this option may be exercised at any time before its expiration under the
preceding sentence by the executors or administrators of the Optionee’s estate
or by any person who has acquired this option directly from the Optionee by
beneficiary designation, bequest or inheritance, but only to the extent that
this option had become exercisable before the Optionee’s death. When the
Optionee dies, this option shall expire immediately with respect to the number
of Shares for which this option is not yet exercisable and with respect to any
Restricted Shares.

 

(d)  Leaves
of Absence. For any
purpose under this Agreement, Service shall be deemed to continue while the
Optionee is on a bona fide leave of absence, if such leave was approved by the
Company in writing and if continued crediting of Service for such purpose is
expressly required by the terms of such leave or by applicable law (as
determined by the Company).

 

(e)  Notice
Concerning ISO Treatment. If this
option is designated as an ISO in the Notice of Stock Option Grant, it ceases to
qualify for favorable tax treatment as an ISO to the extent it is exercised
(i) more than three months after the date the Optionee ceases to be an
Employee for any reason other than death or permanent and total disability (as
defined in Section 22(e)(3) of the Code), (ii) more than 12 months
after the date the Optionee ceases to be an Employee by reason of such permanent
and total disability or (iii) after the Optionee has been on a leave of
absence for more than 90 days, unless the Optionee’s reemployment rights are
guaranteed by statute or by contract.

 

SECTION
7.  
RIGHT OF REPURCHASE.

 

(a)  Scope
of Repurchase Right. Unless
they have become vested in accordance with the Notice of Stock Option Grant and
Subsection (c) below, the Shares acquired under this Agreement initially
shall be Restricted Shares and shall be subject to a right (but not an
obligation) of repurchase by the Company. The Optionee shall not transfer,
assign, encumber or otherwise dispose of any Restricted Shares without the
Company’s written consent, except as provided in the following sentence. The
Optionee may transfer Restricted Shares (i) by beneficiary designation,
will or intestate succession or (ii) to the Optionee’s spouse, children or
grandchildren or to a trust established by the Optionee for the benefit of the
Optionee or the Optionee’s spouse, children or grandchildren, provided in either
case that the Transferee agrees in writing on a form prescribed by the Company
to be bound by all provisions of this Agreement. If the Optionee transfers any
Restricted Shares, then this Section 7 shall apply to the Transferee to the
same extent as to the Optionee.

 

4

 

(b)  Condition
Precedent to Exercise. The
Right of Repurchase shall be exercisable with respect to any Restricted Shares
only during the 60-day period next following the later of:

 

(i)  The date
when the Optionee’s Service terminates for any reason, with or without cause,
including (without limitation) death or disability; or

 

(ii)  The date
when such Restricted Shares were purchased by the Optionee, the executors or
administrators of the Optionee’s estate or any person who has acquired this
option directly from the Optionee by bequest, inheritance or beneficiary
designation.

 

(c)  Lapse
of Repurchase Right. The
Right of Repurchase shall lapse with respect to the Shares subject to this
option in accordance with the vesting schedule set forth in the Notice of Stock
Option Grant. In addition, the following rules shall apply if the Company is
subject to a Change in Control before the Optionee’s Service
terminates:

 

(i)  If the
Right of Repurchase is not assigned to the entity that employs the Optionee
immediately after the Change in Control or to its parent or subsidiary, then the
Right of Repurchase shall lapse and all of the remaining Restricted Shares shall
become vested.

 

(ii)  If the
Right of Repurchase is assigned to the entity that employs the Optionee
immediately after the Change in Control or to its parent or subsidiary, and if
the Optionee is subject to an Involuntary Termination within 12 months after the
Change in Control, then the vested portion of the Restricted Shares shall be
determined by adding 12 months to the Optionee’s actual Service.

 

(d)  Repurchase
Cost. If the
Company exercises the Right of Repurchase, it shall pay the Optionee an amount
equal to the Exercise Price for each of the Restricted Shares being
repurchased.

 

(e)  Exercise
of Repurchase Right. The
Right of Repurchase shall be exercisable only by written notice delivered to the
Optionee prior to the expiration of the 60-day period specified in
Subsection (b) above. The notice shall set forth the date on which the
repurchase is to be effected. Such date shall not be more than 30 days after the
date of the notice. The certificate(s) representing the Restricted Shares to be
repurchased shall, prior to the close of business on the date specified for the
repurchase, be delivered to the Company properly endorsed for transfer. The
Company shall, concurrently with the receipt of such certificate(s), pay to the
Optionee the purchase price determined according to Subsection (d) above.
Payment shall be made in cash or cash equivalents or by canceling indebtedness
to the Company incurred by the Optionee in the purchase of the Restricted
Shares. The Right of Repurchase shall terminate with respect to any Restricted
Shares for which it has not been timely exercised pursuant to this
Subsection (e).

 

(f)  Additional
Shares or Substituted Securities. In the
event of the declaration of a stock dividend, the declaration of an
extraordinary dividend payable in a form other than stock, 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 or other property
(including money paid other than as an ordinary cash dividend) which are by
reason of such transaction distributed with respect to any Restricted Shares or
into which such Restricted Shares thereby become convertible shall immediately
be subject to the Right of Repurchase. Appropriate adjustments to reflect the
distribution of such securities or property shall be made to the number and/or
class of the Restricted Shares. Appropriate adjustments shall also, after each
such transaction, be made to the price per share to be paid upon the exercise of
the Right of Repurchase in order to reflect any change in the Company’s
outstanding securities effected without receipt of consideration therefor;
provided, however, that the aggregate purchase price payable for the Restricted
Shares shall remain the same.

 

5

 

(g)  Termination
of Rights as Stockholder. If the
Company makes available, at the time and place and in the amount and form
provided in this Agreement, the consideration for the Restricted Shares to be
repurchased in accordance with this Section 7, then after such time the
person from whom such Restricted Shares are to be repurchased shall no longer
have any rights as a holder of such Restricted Shares (other than the right to
receive payment of such consideration in accordance with this Agreement). Such
Restricted Shares shall be deemed to have been repurchased in accordance with
the applicable provisions hereof, whether or not the certificate(s) therefor
have been delivered as required by this Agreement.

 

(h)  Escrow. Upon
issuance, the certificates for Restricted Shares shall be deposited in escrow
with the Company to be held in accordance with the provisions of this Agreement.
Any new, substituted or additional securities or other property described in
Subsection (f) above shall immediately be delivered to the Company to be
held in escrow, but only to the extent the Shares are at the time Restricted
Shares. All regular cash dividends on Restricted Shares (or other securities at
the time held in escrow) shall be paid directly to the Optionee and shall not be
held in escrow. Restricted Shares, together with any other assets or securities
held in escrow hereunder, shall be (i) surrendered to the Company for
repurchase and cancellation upon the Company’s exercise of its Right of
Repurchase or Right of First Refusal or (ii) released to the Optionee upon
the Optionee’s request to the extent the Shares are no longer Restricted Shares
(but not more frequently than once every six months). In any event, all Shares
which have vested (and any other vested assets and securities attributable
thereto) shall be released within 60 days after the earlier of (i) the
Optionee's cessation of Service or (ii) the lapse of the Right of First
Refusal.

 

SECTION
8.  
RIGHT OF FIRST REFUSAL.

 

(a)  Right
of First Refusal. In the
event that the Optionee proposes to sell, pledge or otherwise transfer to a
third party any Shares acquired under this Agreement, or any interest in such
Shares, the Company shall have the Right of First Refusal with respect to all
(and not less than all) of such Shares. If the Optionee desires to transfer
Shares acquired under this Agreement, the Optionee shall give a written Transfer
Notice to the Company describing fully the proposed transfer, including the
number of Shares proposed to be transferred, the proposed transfer price, the
name and address of the proposed Transferee and proof satisfactory to the
Company that the proposed sale or transfer will not violate any applicable
federal or state securities laws. The Transfer Notice shall be signed both by
the Optionee and by the proposed Transferee and must constitute a binding
commitment of both parties to the transfer of the Shares. The Company shall have
the right to purchase all, and not less than all, of the Shares on the terms of
the proposal described in the Transfer Notice (subject, however, to any change
in such terms permitted under Subsection (b) below) by delivery of a notice
of exercise of the Right of First Refusal within 30 days after the date when the
Transfer Notice was received by the Company. The Company’s rights under this
Subsection (a) shall be freely assignable, in whole or in
part.

 

6

 

(b)  Transfer
of Shares. If the
Company fails to exercise its Right of First Refusal within 30 days after
the date when it received the Transfer Notice, the Optionee may, not later than
90 days following receipt of the Transfer Notice by the Company, conclude a
transfer of the Shares subject to the Transfer Notice on the terms and
conditions described in the Transfer Notice, provided that any such sale is made
in compliance with applicable federal and state securities laws and not in
violation of any other contractual restrictions to which the Optionee is bound.
Any proposed transfer on terms and conditions different from those described in
the Transfer Notice, as well as any subsequent proposed transfer by the
Optionee, shall again be subject to the Right of First Refusal and shall require
compliance with the procedure described in Subsection (a) above. If the
Company exercises its Right of First Refusal, the parties shall consummate the
sale of the Shares on the terms set forth in the Transfer Notice within
60 days after the date when the Company received the Transfer Notice (or
within such longer period as may have been specified in the Transfer Notice);
provided, however, that in the event the Transfer Notice provided that payment
for the Shares was to be made in a form other than cash or cash equivalents paid
at the time of transfer, the Company shall have the option of paying for the
Shares with cash or cash equivalents equal to the present value of the
consideration described in the Transfer Notice.

 

(c)  Additional
Shares or Substituted Securities. In the
event of the declaration of a stock dividend, the declaration of an
extraordinary dividend payable in a form other than stock, 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 or other property
(including money paid other than as an ordinary cash dividend) which are by
reason of such transaction distributed with respect to any Shares subject to
this Section 8 or into which such Shares thereby become convertible shall
immediately be subject to this Section 8. Appropriate adjustments to
reflect the distribution of such securities or property shall be made to the
number and/or class of the Shares subject to this Section 8.

 

(d)  Termination
of Right of First Refusal. Any
other provision of this Section 8 notwithstanding, in the event that the
Stock is readily tradable on an established securities market when the Optionee
desires to transfer Shares, the Company shall have no Right of First Refusal,
and the Optionee shall have no obligation to comply with the procedures
prescribed by Subsections (a) and (b) above.

 

(e)  Permitted
Transfers. This
Section 8 shall not apply to (i) a transfer by beneficiary
designation, will or intestate succession or (ii) a transfer to the
Optionee’s spouse, children or grandchildren or to a trust established by the
Optionee for the benefit of the Optionee or the Optionee’s spouse, children or
grandchildren, provided in either case that the Transferee agrees in writing on
a form prescribed by the Company to be bound by all provisions of this
Agreement. If the Optionee transfers any Shares acquired under this Agreement,
either under this Subsection (e) or after the Company has failed to
exercise the Right of First Refusal, then this Section 8 shall apply to the
Transferee to the same extent as to the Optionee.

 

7

 

(f)  Termination
of Rights as Stockholder. If the
Company makes available, at the time and place and in the amount and form
provided in this Agreement, the consideration for the Shares to be purchased in
accordance with this Section 8, then after such time the person from whom
such Shares are to be purchased shall no longer have any rights as a holder of
such Shares (other than the right to receive payment of such consideration in
accordance with this Agreement). Such Shares shall be deemed to have been
purchased in accordance with the applicable provisions hereof, whether or not
the certificate(s) therefor have been delivered as required by this
Agreement.

 

SECTION
9.  
LEGALITY OF INITIAL ISSUANCE.

 

No Shares
shall be issued upon the exercise of this option unless and until the Company
has determined that:

 

(a)  It and
the Optionee have taken any actions required to register the Shares under the
Securities Act or to perfect an exemption from the registration requirements
thereof;

 

(b)  Any
applicable listing requirement of any stock exchange or other securities market
on which Stock is listed has been satisfied; and

 

(c)  Any other
applicable provision of state or federal law has been satisfied. 

 

SECTION
10.  
NO REGISTRATION RIGHTS.

 

The
Company may, but shall not be obligated to, register or qualify the sale of
Shares under the Securities Act or any other applicable law. The Company shall
not be obligated to take any affirmative action in order to cause the sale of
Shares under this Agreement to comply with any law.

 

SECTION
11.  
RESTRICTIONS ON TRANSFER.

 

(a)  Securities
Law Restrictions.
Regardless of whether the offering and sale of Shares under the Plan have been
registered under the Securities Act or have been registered or qualified under
the securities laws of any state, the Company at its discretion may impose
restrictions upon the sale, pledge or other transfer of such Shares (including
the placement of appropriate legends on stock certificates or the imposition of
stop-transfer instructions) if, in the judgment of the Company, such
restrictions are necessary or desirable in order to achieve compliance with the
Securities Act, the securities laws of any state or any other law.

 

(b)  Market
Stand-Off. In
connection with any underwritten public offering by the Company of its equity
securities pursuant to an effective registration statement filed under the
Securities Act, including the Company’s initial public offering, the Optionee
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 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 such underwriters. In no event, however, shall such period exceed 180 days.
The Market Stand-Off shall in any event terminate two years after the date of
the Company’s initial public offering. 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 Subsection (b). This
Subsection (b) shall not apply to Shares registered in the public offering
under the Securities Act, and the Optionee shall be subject to this Subsection
(b) only if the directors and officers of the Company are subject to similar
arrangements.

 

8

 

(c)  Investment
Intent at Grant. The
Optionee represents and agrees that the Shares to be acquired upon exercising
this option will be acquired for investment, and not with a view to the sale or
distribution thereof.

 

(d)  Investment
Intent at Exercise. In the
event that the sale of Shares under the Plan is not registered under the
Securities Act but an exemption is available which requires an investment
representation or other representation, the Optionee shall represent and agree
at the time of exercise that the Shares being acquired upon exercising this
option are being acquired for investment, and not with a view to the sale or
distribution thereof, and shall make such other representations as are deemed
necessary or appropriate by the Company and its counsel.

 

(e)  Legends. All
certificates evidencing Shares purchased under this Agreement shall bear the
following legend:

 

“THE
SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, ENCUMBERED OR
IN ANY MANNER DISPOSED OF, EXCEPT IN COMPLIANCE WITH THE TERMS OF A WRITTEN
AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER OF THE SHARES (OR THE
PREDECESSOR IN INTEREST TO THE SHARES). SUCH AGREEMENT GRANTS TO THE COMPANY
CERTAIN RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE SHARES AND
CERTAIN REPURCHASE RIGHTS UPON TERMINATION OF SERVICE WITH THE COMPANY. THE
SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF SUCH
AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE.”

 

9

 

All
certificates evidencing Shares purchased under this Agreement in an unregistered
transaction shall bear the following legend (and such other restrictive legends
as are required or deemed advisable under the provisions of any applicable law):

 

“THE
SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT
AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.”

 

(f)  Removal
of Legends. If, in
the opinion of the Company and its counsel, any legend placed on a stock
certificate representing Shares sold under this Agreement is no longer required,
the holder of such certificate shall be entitled to exchange such certificate
for a certificate representing the same number of Shares but without such
legend.

 

(g)  Administration. Any
determination by the Company and its counsel in connection with any of the
matters set forth in this Section 11 shall be conclusive and binding on the
Optionee and all other persons.

 

SECTION
12.  
ADJUSTMENT OF SHARES.

 

In the
event of any transaction described in Section 8(a) of the Plan, the terms
of this option (including, without limitation, the number and kind of Shares
subject to this option and the Exercise Price) shall be adjusted as set forth in
Section 8(a) of the Plan. In the event that the Company is a party to a
merger or consolidation, this option shall be subject to the agreement of merger
or consolidation, as provided in Section 8(b) of the Plan.

 

SECTION
13.  
MISCELLANEOUS PROVISIONS.

 

(a)  Rights
as a Stockholder. Neither
the Optionee nor the Optionee’s representative shall have any rights as a
stockholder with respect to any Shares subject to this option until the Optionee
or the Optionee’s representative becomes entitled to receive such Shares by
filing a notice of exercise and paying the Purchase Price pursuant to
Sections 4 and 5.

 

(b)  No
Retention Rights. Nothing
in this option or in the Plan shall confer upon the Optionee any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Company (or any Parent or
Subsidiary employing or retaining the Optionee) or of the Optionee, which rights
are hereby expressly reserved by each, to terminate his or her Service at any
time and for any reason, with or without cause.

 

(c)  Notice. Any
notice required by the terms of this Agreement shall be given in writing and
shall be deemed effective upon personal delivery or upon deposit with the United
States Postal Service, by registered or certified mail, with postage and fees
prepaid. Notice shall be addressed to the Company at its principal executive
office and to the Optionee at the address that he or she most recently provided
to the Company.

 

10

 

(d)  Entire
Agreement. The
Notice of Stock Option Grant, this Agreement and the Plan constitute the entire
contract between the parties hereto with regard to the subject matter hereof.
They supersede any other agreements, representations or understandings (whether
oral or written and whether express or implied) which relate to the subject
matter hereof.

 

(e)  Choice
of Law. This
Agreement shall be governed by, and construed in accordance with, the laws of
the State of California, as such laws are applied to contracts entered into and
performed in such State.

 

SECTION
14.  
SPECIAL PROVISIONS FOR RESIDENTS OF ISRAEL.

 

(a)  Scope. This
Section 14 shall apply only if the Optionee is an Israeli resident
(“Israeli Optionee”) and shall be governed by, and interpreted in accordance
with, the laws of the State of Israel.

 

(b)  Applicable
Tax Law. The
provisions of the Plan and this Agreement shall not apply to an Israeli Optionee
to the extent that they address (i) the Code or other laws of the United
States or any State thereof, (ii) the tax consequences of this option under
the laws of the United States, (iii) the qualification of this option as an
ISO or Nonstatutory Option or (iv) eligibility to receive each type of
option. All options granted to an Israeli Optionee shall be granted pursuant to
Section 3(i) of the Israeli Income Tax Ordinance.

 

(c)  Trustee. If
designated in the Notice of Stock Option Grant as a “Section 3(i) Option,”
then this Agreement may be deposited with a trustee (the “Trustee”) selected by
the Board of Directors. If the Board of Directors chooses to deposit this option
with the Trustee, then (i) this option shall be exercised in accordance
with the procedures agreed upon by the Company and the Trustee in a trust
agreement executed between them and, if applicable, a Subsidiary (the “Trust
Agreement”), (ii) the Trustee shall hold this option in trust pursuant to
the Company’s instructions until exercised by the Optionee, (iii) if
determined by the Board of Directors, the Trustee shall be responsible for
withholding any taxes to which the Optionee may become liable upon the exercise
of this option, and the Trust Agreement shall govern such withholding
requirement, and (iv) grants of options shall be made pursuant to the Trust
Agreement, in addition to being made pursuant to the provisions of the Plan and
the Stock Option Agreement.

 

11

 

SECTION
15.  
DEFINITIONS.

 

(a)  “Agreement” shall
mean this Stock Option Agreement.

 

(b)  “Board
of Directors” shall
mean the Board of Directors of the Company, as constituted from time to time or,
if a Committee has been appointed, such Committee.

 

(c)  “Cause” shall
mean (i) the Optionee’s theft, dishonesty, or falsification of any Company
documents or records, (ii) the Optionee’s improper use or disclosure of the
Company’s confidential or proprietary information, (iii) any action by the
optionee that has a detrimental effect on the Company’s reputation or business,
(iv) the Optionee’s failure or inability to perform any reasonable assigned
duties after written notice from the Company of, and a reasonable opportunity to
cure, such failure or inability, (v) any material breach by the Optionee of
any employment agreement between the Optionee and the Company, which breach is
not cured pursuant to the terms of such agreement, or (vi) the Optionee’s
conviction (including any plea of guilty or nolo
contendere) of any
criminal act that impairs the Optionee’s ability to perform his or her duties
with the Company.

 

(d)  “Change
in Control” shall
mean:

 

(i)  The
consummation of a merger or consolidation of the Company with or into another
entity or any other corporate reorganization, if persons who were not
stockholders of the Company immediately prior to such merger, consolidation or
other reorganization own immediately after such merger, consolidation or other
reorganization 50% or more of the voting power of the outstanding securities of
each of (A) the continuing or surviving entity and (B) any direct or
indirect parent corporation of such continuing or surviving entity;
or

 

(ii)  The sale,
transfer or other disposition of all or substantially all of the Company’s
assets.

 

A
transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company’s incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company’s securities immediately before such transaction.

 

(e)  “Code” shall
mean the Internal Revenue Code of 1986, as amended.

 

(f)  “Committee” shall
mean a committee of the Board of Directors, as described in Section 2 of
the Plan.

 

(g)  “Company” shall
mean GuruNet Corporation, a Delaware corporation.

 

(h)  “Consultant” shall
mean a person who performs bona fide services for the Company, a Parent or a
Subsidiary as a consultant or advisor, excluding Employees and Outside
Directors.

 

(i)  “Date
of Grant” shall
mean the date specified in the Notice of Stock Option Grant, which date shall be
the later of (i) the date on which the Board of Directors resolved to grant this
option or (ii) the first day of the Optionee’s Service. 

 

12

 

(j)  “Disability” shall
mean that the Optionee is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental
impairment.

 

(k)  “Employee” shall
mean any individual who is a common-law employee of the Company, a Parent or a
Subsidiary.

 

(l)  “Exercise
Price” shall
mean the amount for which one Share may be purchased upon exercise of this
option, as specified in the Notice of Stock Option Grant.

 

(m)  “Fair
Market Value” shall
mean the fair market value of a Share, as determined by the Board of Directors
in good faith. Such determination shall be conclusive and binding on all
persons.

 

(n)  “Involuntary
Termination” shall
mean the termination of the Optionee’s Service by reason of:

 

(i)  The
involuntary discharge of the Optionee by the Company (or the Parent or
Subsidiary employing him or her) for reasons other than Cause; or

 

(ii)  The
resignation of the Optionee following (A) a change in his or her position
with the Company (or the Parent or Subsidiary employing him or her) that
materially reduces his or her level of authority or responsibility, (B) a
reduction in his or her aggregate compensation (including base salary, fringe
benefits and participation in bonus or other incentive programs based on
corporate performance) or (C) receipt of notice that his or her principal
workplace will be relocated more than 30 miles.

 

(o)  “ISO” shall
mean an employee incentive stock option described in Section 422(b) of the
Code.

 

(p)  “Nonstatutory
Option” shall
mean a stock option not described in Sections 422(b) or 423(b) of the Code
(including a stock option described in Section 14).

 

(q)  “Notice
of Stock Option Grant” shall
mean the document so entitled to which this Agreement is attached.

 

(r)  “Optionee” shall
mean the person named in the Notice of Stock Option Grant.

 

(s)  “Outside
Director” shall
mean a member of the Board of Directors who is not an Employee.

 

(t)  “Parent” shall
mean any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, if each of the corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such
chain.

 

(u)  “Plan” shall
mean the GuruNet Corporation 1999 Stock Option Plan, as in effect on the Date of
Grant.

 

(v)  “Purchase
Price” shall
mean the Exercise Price multiplied by the number of Shares with respect to which
this option is being exercised.

 

(w)  “Restricted
Share” shall
mean a Share that is subject to the Right of Repurchase.

 

13

 

(x)  “Right
of First Refusal” shall
mean the Company’s right of first refusal described in
Section 8.

 

(y)  “Right
of Repurchase” shall
mean the Company’s right of repurchase described in Section 7.

 

(z)  “Securities
Act” shall
mean the Securities Act of 1933, as amended.

 

(aa)  “Service” shall
mean service as an Employee, Outside Director or Consultant.

 

(bb)  “Share” shall
mean one share of Stock, as adjusted in accordance with Section 8 of the
Plan (if applicable).

 

(cc)  “Stock” shall
mean the Common Stock of the Company, with a par value of $0.001 per
Share.

 

(dd)  “Subsidiary” shall
mean any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company, if each of the corporations other than
the last corporation in the unbroken chain owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.

 

(ee)  “Transferee” shall
mean any person to whom the Optionee has directly or indirectly transferred any
Share acquired under this Agreement.

 

(ff)  “Transfer
Notice” shall
mean the notice of a proposed transfer of Shares described in
Section 8.

 

14Unassociated Document

GURUNET
CORPORATION

1999
STOCK OPTION PLAN

As
Amended, as of February 25, 2000

1. Purposes
of the Plan. The
purposes of this Stock Plan are to attract and retain the best available
personnel for positions of substantial responsibility, to provide additional
incentive to Employees, Directors and Consultants and to promote the success of
the Company's business. Options granted under the Plan may be Incentive Stock
Options or Nonstatutory Stock Options, as determined by the Administrator at the
time of grant, Stock Purchase Rights may also be granted under the
Plan.

2. Definitions. As used
herein, the following definitions shall apply:

(a) "Administrator" means
the Board or any of its Committees as shall be administering the Plan in
accordance with Section 4 hereof.

(b)
 "Applicable
Laws" means
the requirements relating to the administration of stock option plans under U.S.
state corporate laws, U.S. federal and state securities laws, the Code, any
stock exchange or quotation system on which the Common Stock is listed or quoted
and the applicable laws of any other country or jurisdiction where Options or
Stock Purchase Rights are granted under the Plan.

(c) "Board" means
the Board of Directors of the Company.

(d) "Code" means
the Internal Revenue Code of 1986, as amended.

(e) "Committee" means a
committee of Directors appointed by the Board in accordance with Section 4
hereof.

(f)
"Common
Stock” means
the Common Stock of the Company.

(g) "Company" means
Guru International, Inc., a Delaware corporation together with any Subsidiary
that may be formed by the Company from time to time.

(h) "Consultant" means
any person who is engaged by the Company or any Parent or Subsidiary to render
consulting or advisory services to such entity.

(i) "Director" means a
member of the Board of Directors of the Company, or any Subsidiary.

(j) "Disability" means
total and permanent disability as defined in Section 22(e)(3) of the
Code.

 

(k) "Employee" means
any person, including Officers and Directors, employed by the Company or any
Parent or Subsidiary of the Company. A Service Provider shall not cease to be an
Employee in the case of (i) any leave of absence approved by the Company or (ii)
transfers between locations of the Company or between the Company, its Parent,
any Subsidiary or any successor. For purposes of Incentive Stock Options, no
such leave may exceed ninety days unless reemployment upon expiration of such
leave is guaranteed by statute or contract. If reemployment upon expiration of a
leave of absence approved by the Company is not so guaranteed, on the 181st day
of such leave any Incentive Stock Option held by the Optionee shall cease to be
treated as an Incentive Stock Option and shall be treated for tax purposes as a
Nonstatutory Stock Option. Neither service as a Director nor payment of a
director's fee by the Company shall be sufficient to constitute "employment" by
the Company.

(l) "Exchange
Act" means
the Securities Exchange Act of 1934, as amended.

(m)
 "Fair-Market
Value" means,
as of any date, the value of Common Stock determined as follows:

  
 
 (i)
 If the
Common Stock is listed on any established stock exchange or a national market
system, including without limitation the Nasdaq National Market or The Nasdaq
SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or system for the last market trading day
prior to the time of determination, as reported in The
Wall Street Journal or such
other source as the Administrator deems reliable;

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

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

(n) "Incentive
Stock Option" means
an Option intended to qualify as an incentive stock option within the meaning of
Section 422 of the Code.

(o) "Nonstatutory
Stock Option" means
an Option not intended to qualify as an Incentive Stock Option.

(p)
 "Officer" means a
person who is an officer of the Company within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated
thereunder.
 

              
(q) "Option" means a
stock option granted pursuant to the Plan.

-2-

 

(r)
 "Option
Agreement" means a
written or electronic agreement between the Company and an Optionee evidencing
the terms and conditions of an individual Option grant. The Option Agreement is
subject to the terms and conditions of the Plan.

(s) "Option
Exchange Program" means a
program whereby outstanding Options are exchanged for Options with a lower
exercise price.

(t) "Optioned
Stock" means
the Common Stock subject to an Option or a Stock Purchase Right.

(u) "Optionee" means
the holder of an outstanding Option or Stock Purchase Right granted under the
Plan.

(v)
"Parent" means a
"parent corporation," whether now or hereafter existing, as defined in Section
424(f) of the Code.

(w) "Plan" means
this 1999 Stock Plan.

(x) "Restricted
Stock" means
shares of Common Stock acquired pursuant to a grant of a Stock Purchase Right
under Section 11 below.

(y) "Section
16(b)" means
Section 16(b) of the Securities Exchange Act of 1934 as amended.

(z) "Service
Provider" means
an Employee, Director or Consultant.

(aa) 
"Share" means a
share of the Common Stock, as adjusted in accordance with Section 12
below.

(bb)
 "Stock
Purchase Right" means a
right to purchase Common Stock pursuant to Section 11 below.

(cc)
 "Subsidiary" means a
"subsidiary corporation," whether now or hereafter existing, as defined in
Section 424(t) of the Code.

3.
 Stock
Subiect to the Plan. Subject
to the provisions of Section 12 of the Plan, the maximum aggregate number of
Shares which may be subject to option and sold under the Plan is ten million
four hundred fifty five thousand one hundred eleven (10,455,111) Shares. The
Shares may be authorized but unissued, or reacquired Common Stock.

If an
Option or Stock Purchase Right expires or becomes unexercisable without having
been exercised in full, or is surrendered pursuant to an Option Exchange
Program, the unpurchased Shares which were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated). However, Shares that have actually been issued under the Plan, upon
exercise of either an Option or Stock Purchase Right, shall not be returned to
the Plan and shall not become available for future distribution under the Plan,
except that if Shares of Restricted Stock are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan.

-3-

 

4. Administration
of the Plan.

(a) Administrator. The
Plan shall be administered by the Board or a Committee appointed by the Board,
which Committee shall be constituted to comply with Applicable
Laws.

(b)
 Powers
of the Administrator. Subject
to the provisions of the Plan and, in the case of a Committee, the specific
duties delegated by the Board to such Committee, and subject to the approval of
any relevant authorities, the Administrator shall have the authority in its
discretion:

 

                    (i) to determine the
Fair Market Value;   

 

(ii) to select
the Service Providers to whom Options and Stock Purchase Rights may from time to
time be granted hereunder;  

 

(iii)
 to
determine the number of Shares to be covered by each such award granted
hereunder;

 

(iv)
 to
approve forms of agreement for use under the Plan;

 

(v)
 to
determine the terms and conditions, of any Option or Stock Purchase Right
granted hereunder. Such terms and conditions include, but are not limited to,
the exercise price, the time or times when Options or Stock Purchase Rights may
be exercised (which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Option or Stock Purchase Right or the Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;

 

 (vi)
 to
determine whether and under what circumstances an Option may be settled in cash
under subsection 9(e) instead of Common Stock;

 

(vii)
 to reduce
the exercise price of any Option to the then current Fair Market Value if the
Fair Market Value of the Common Stock covered by such Option has declined since
the date the Option was granted; 

 

 (viii)
 to
initiate an Option Exchange Program;

 

(ix)
 to
prescribe, amend and rescind rules and regulations relating to the Plan,
including rules and regulations relating to sub-plans established for the
purpose of qualifying for preferred tax treatment under foreign tax
laws;

 

(x)
 to allow
Optionees to satisfy withholding tax obligations by electing to have the Company
withhold from the Shares to be issued upon exercise of an Option or Stock
Purchase Right that number of Shares having a Fair Market Value equal to the
amount required to be withheld, The Fair Market Value of the Shares to be
withheld shall be determined on the date that the amount of tax to be withheld
is to be determined. All elections by Optionees to have Shares withheld for this
purpose shall be made in such form and under such conditions as the
Administrator may deem necessary or advisable: and

-4-

 

                    (xi) to
construe and interpret the terms of the Plan and awards granted pursuant to the
Plan.

 

                    (xii) to alter,
revise or otherwise adjust the terms of the Plan and the Option Agreement, as
may be required pursuant to any applicable laws of local or foreign
jurisdictions.

      
(c) Effect
of Administrator's Decision. All
decisions, determinations, and interpretations of the Administrator shall be
final and binding on all Optionees.

5. Eligibility.

      
(a) Nonstatutory
Stock Options and Stock Purchase Rights may be granted to Service Providers.
Incentive Stock Options may be granted only to Employees.

       (b)
 Each
Option shall be designated in the Option Agreement as either an Incentive Stock
Option or a Nonstatutory Stock Option. However, notwithstanding such
designation, to the extent that the aggregate Fair Market Value of the Shares
with respect to which Incentive Stock Options are exercisable for the first time
by the Optionee during any calendar year (under all plans of the Company and any
Parent or Subsidiary) exceeds $100,000, such Options shall be treated as
Nonstatutory Stock Options. For purposes of this Section 5(b), Incentive Stock
Options shall be taken into account in the order in which they were granted. The
Fair Market Value of the Shares shall be determined as of the time the Option
with respect to such Shares is granted.

       (c)
Neither the Plan nor any Option or Stock Purchase Right shall confer upon any
Optionee any right with respect to continuing the Optionee's relationship as a
Service Provider with the Company, nor shall it interfere in any way with his or
her right or the Company's right to terminate such relationship at any time,
with or without cause.

6.
 Term
of Plan. The
Plan shall become effective upon its adoption by the Board. It shall continue in
effect for a term of ten (10) years unless sooner terminated under Section 14 of
the Plan.

7.
 Term
of Option. The
term of each Option shall be stated in the Option Agreement; provided, however,
that the term shall be no more than ten (10) years from the date of grant
thereof. In the case of an Incentive Stock Option granted to an Optionee who, at
the time the Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the term of the Option shall be five (5) years from the date of
grant or such shorter term as may be provided in the Option
Agreement.

-5-

 

8. Option
Exercise Price and Consideration.

       (a)
 The per
share exercise price for the Shares to be issued upon exercise of an Option
shall be such price as is determined by the Administrator, but shall be subject
to the following:

(i) In the
case of an Incentive Stock Option 

(1)
granted to an Employee who, at the time of grant of such Option, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the exercise price shall be no
less than 110% of the Fair Market Value per Share on the date of
grant.

(2) granted
to any other Employee, the per Share exercise price shall be no less than 100%
of the Fair Market Value per Share on the date of grant.

             (ii)
 In the
case of a Nonstatutory Stock Option

                   (1)
 granted
to a Service Provider who, at the time of grant of such Option, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or any Parent or Subsidiary, the exercise price shall be no
less than 110% of the Fair Market Value per Share on the date of the
grant.

                  
(2) granted
to any other Service Provider, the per Share exercise price shall be no less
than 85% of the Fair Market Value per Share on the date of grant.

             (iii)
 Notwithstanding
the foregoing, Options may be granted with a per Share exercise price other than
as required above pursuant to a merger or other corporate
transaction.

       (b)
 The
consideration to be paid for the Shares to be issued upon exercise of an Option,
including the method of payment, shall be determined by the Administrator (and,
in the case of an Incentive Stock Option, shall be determined at the time of
grant). Such consideration may consist of (1) cash, (2) check, (3) promissory
note, (4) other Shares which (x) in the case of Shares acquired upon exercise of
an Option, have been owned by the Optionee for more than six months on the date
of surrender, and (y) have a Fair Market Value on the date of surrender equal to
the aggregate exercise price of the Shares as to which such Option shall be
exercised, (5) consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan, or (6) any
combination of the foregoing methods of payment. In making is determination as
to the type of consideration to accept, the Administrator shall consider if
acceptance of such consideration may be reasonably expected to benefit the
Company.

9. Exercise
of Option.

       (a)
 Procedure
or Exercise: Rights as a Stockholder. Any
Option granted hereunder shall be exercisable according to the terms hereof at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Except in the case of Options granted to
Officers, Directors and Consultants, Options shall become exercisable at a rate
of no less than 20% per year over five (5) years from the date the Options are
granted. Unless the Administrator provides otherwise, vesting of Options granted
hereunder shall be tolled during any unpaid leave of absence. An Option may not
be exercised for a fraction of a Share.

-6-

 

An Option
shall be deemed exercised when the Company receives: (i) written or electronic
notice of exercise (in accordance with the Option Agreement) from the person
entitled to exercise the Option, and (ii) full payment for the Shares with
respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse. Until the Shares
are issued (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the
Shares, notwithstanding the exercise of the Option. The Company shall issue (or
cause to be issued) such Shares promptly after the Option is exercised. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the Shares are issued, except as provided in Section 12 of
the Plan.

Exercise
of an Option in any manner shall result in a decrease in the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is
exercised.

       (b)
 Termination
of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, such Optionee may exercise his or her
Option within such period of time as is specified in the Option Agreement (of at
least thirty, (30) days) to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of the Option
as set forth in the Option Agreement). In the absence of a specified time in the
Option Agreement, the Option shall remain exercisable for three (3) months
following the Optionee's termination. If, on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination,
the Optionee does not exercise his or her Option within the time specified by
the Administrator, the Option shall terminate, and the Shares covered by such
Option shall revert to the plan.

       (c)
 Disability
of Optionee. If an
Optionee ceases to be a Service Provider as a result of the Optionee's
Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement (of at least six (6) months) to the
extent the Option is vested on the date of termination (but in no event later
than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the
Plan.

-7-

 

     (d)
 Death
of Optionee. If an
Optionee dies while a Service Provider, the Option may be exercised within such
period of time as is specified in the Option Agreement (of at least six (6)
months) to the extent that the Option is vested on the date of death (but in no
event later than the expiration of the term of such Option as set forth in the
Option Agreement) by the Optionee's estate or by a person who acquires the right
to exercise the Option by bequest or inheritance. In the absence of a specified
time in the Option Agreement, the Option shall remain exercisable for twelve
(12) months following the Optionee's termination. If, at the time of death, the
Optionee is not vested as to the entire Option, the Shares covered by the
unvested portion of the Option shall immediately revert to the Plan. If the
Option is not so exercised within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the
Plan.

       (e)
 Buyout
Provisions. The
Administrator may at any time offer to buy out for a payment in cash or Shares,
an Option previously granted, based on such terms and conditions as the
Administrator shall establish and communicate to the Optionee at the time that
such offer is made. No such offer shall obligate Optionee to relinquish his or
her Option.

10.
 Non-Transferability
of Options and Stock Purchase Rights. Options
and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.

11. Stock
Purchase Rights.

(a)
 Rights
to Purchase. Stock
Purchase Rights may be issued either alone, in addition to, or in tandem with
other awards granted under the Plan and/or cash awards made outside of the Plan.
After the Administrator determines that it will offer Stock Purchase Rights
under the Plan, it shall advise the offeree in writing or electronically of the
terms, conditions and restrictions related to the offer, including the number of
Shares that such person shall be entitled to purchase, the price to be paid, and
the time within which such person must accept such offer. The terms of the offer
shall comply in all respects with Section 260.140.42 of Title 10 of the
California Code of Regulations. The offer shall be accepted by execution of a
Restricted Stock purchase agreement in the form determined by the
Administrator.

       (b)
 Repurchase
Option. Unless
the Administrator determines otherwise, the Restricted Stock purchase agreement
shall grant the Company a repurchase option exercisable upon the voluntary or
involuntary termination of the purchaser's service with the Company for any
reason (including death or disability). The purchase price for Shares
repurchased pursuant to the Restricted Stock purchase agreement shall be the
original price paid by the purchaser and may be paid by cancellation of any
indebtedness of the purchaser to the Company. The repurchase option shall lapse
at such rate as the Administrator may determine. Except with respect to Shares
purchased by Officers, Directors and Consultants, the repurchase option shall in
no case lapse at a rate of less than 20% per year over five years from the date
of purchase.

-8-

 

       (c)
 Other
Provisions. The
Restricted Stock purchase agreement shall contain such other terms, provisions
and conditions not inconsistent with the Plan as may be determined by the
Administrator in its sole discretion.

     (d)
 Rights
as a Stockholder. Once
the Stock Purchase Right is exercised, the purchaser shall have rights
equivalent to those of a stockholder and shall be a stockholder when his or her
purchase is entered upon the records of the duly authorized transfer agent of
the Company. No adjustment shall be made for a dividend or other right for which
the record date is prior to the date the Stock Purchase Right is exercised,
except as provided in Section 12 of the Plan.

12. Adjustments
Upon Changes in Capitalization. Merger or Asset Sale.

       (a)
 Changes
in Capitalization. Subject
to any required action by the stockholders of the Company, the number of shares
of Common Stock covered, by each outstanding Option or Stock Purchase Right; and
the number of shares of Common Stock which have been authorized for issuance
under the Plan but as to which no Options or Stock Purchase Rights have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Option or Stock Purchase Right, as well as the price per share of Common
Stock covered by each such outstanding Option or Stock Purchase Right, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued shares of Common Stock effected
without receipt of consideration by the Company. The conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Right.

        (b)
 Merger,
Acquisition, or Asset Sale. (i) In
the event of a merger of the Company with or into another corporation, an
acquisition of all or substantially all of the shares of the Company, or the
sale of substantially all of the assets of the Company (each such event, a
"Transaction"), each outstanding Option and Stock Purchase Right shall be
assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. If an
Optionee's employment is terminated by the Company without Cause (as defined
below) within one (1) year following the date of the Transaction, the option
shall become immediately vested as to the number of Shares that would otherwise
have vested within one year following the date of termination in addition to the
number of Shares otherwise exercisable on the date of such termination (but, in
no event, shall the option become bested and exercisable for more than one
hundred percent (100%) of the shares subject to such option). In the event that
the successor corporation refuses to assume or substitute for the Option or
Stock Purchase Right, the Optionee shall fully vest in and have the right to
exercise the Option or Stock Purchase Right as to all of the Optioned Stock,
including Shares as to which it would not otherwise be vested or exercisable. If
an Option or Stock Purchase Right becomes fully vested and exercisable in lieu
of assumption or substitution in the event of a Transaction, the Administrator
shall notify the Optionee in writing or electronically that the Option or Stock
Purchase Right shall• be fully exercisable for a period of fifteen (15) days
from the date of such notice, and the Option or Stock Purchase Right, shall
terminate upon the expiration of such period. For the purposes of this
paragraph, the Option or Stock Purchase Right shall be considered assumed if,
following a Transaction the option or right confers the right to purchase or
receive, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right immediately prior to the Transaction, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the Transaction (and if 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 common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of the Option or Stock
Purchase Right, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right, to be solely common stock of the successor corporation or its
Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.

-9-

      
(c) Cause. Cause
shall mean any of the following: (i) the Optionee's theft dishonesty, or
falsification of any Company documents or records; (ii) the Optionee's improper
use or disclosure of the Company's confidential or proprietary information;
(iii) any action by the Optionee which has a detrimental effect on the Company's
reputation or business; (iv) the Optionee's failure or inability to perform any
reasonable assigned duties after written notice from the Company of and a
reasonable opportunity to cure, such failure or inability; (v) any material
breach of the Optionee of any employment agreement between the Option and the
Company, which breach is not cured pursuant to the terms of such agreement; or
(vi) the Optionee's conviction (including any plea of guilty or nolo contendere)
of any criminal act which impairs the Optionee's ability to perform his or her
duties with the Company.

13.
 Time
of Granting Options and Stock Purchase Rights. The
date of grant of an Option or Stock Purchase Right shall, for all purposes, be
the date on which the Administrator makes the determination granting such Option
or Stock Purchase Right, or such other date as is determined by the
Administrator. Notice of the determination shall be given to each Employee or
Consultant to whom an Option or Stock Purchase Right is so granted within a
reasonable time after the date of such grant.

14. Amendment
and Termination of the Plan.

      
(a) Amendment
and Termination. The
Board may at any time amend, alter, suspend or terminate the Plan.

      
(b) Stockholder
Approval. The
Board shall obtain stockholder approval of any Plan amendment to the extent
necessary and desirable to comply with the Applicable Laws.

-10

 

       (c)
 Effect
of Amendment or Termination. No
amendment, alteration, suspension or termination of the Plan shall impair the
rights of any Optionee, unless mutually agreed otherwise between the Optionee
and the Administrator, which agreement must be in writing and signed by the
Optionee and the Company. Termination of the Plan shall not affect the
Administrator's ability to exercise the powers granted to it hereunder with
respect to Options granted under the Plan prior to the date of such
termination.

15.
 Conditions
Upon Issuance of Shares.

       (a)
Legal
Compliance. Shares
shall not be issued pursuant to the exercise of an Option unless the exercise of
such Option and the issuance and delivery of such Shares shall comply with
Applicable Laws and shall be further subject to the approval of counsel for the
Company with respect to such compliance.

       (b)
 Investment
Representations. As a
condition to the exercise of an Option, the Administrator may require the person
exercising such Option to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required.

        16.
Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

17.
 Reservation
of Shares. The
Company, during the term of this Plan, shall at all times reserve and keep
available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.

18.
 Stockholder
Approval. The
Plan shall be subject to approval by the stockholders of the Company within
twelve (12) months after the date the Plan is adopted. Such stockholder approval
shall be obtained in the degree and manner required under Applicable
Laws.

19.
 Information
to Optionees and Purchasers. The
Company shall provide to each Optionee and to each individual who acquires
Shares pursuant to the Plan, not less frequently than annually during the period
such Optionee or purchaser has one or more Options or Stock Purchase Rights
outstanding, and, in the case of an individual who acquires Shares pursuant to
the Plan, during the period such individual owns such Shares, copies of annual
financial statements. The Company shall not be required to provide such
statements to key employees whose duties in connection with the Company assure
their access to equivalent information.

-11-

 

20. Special
Provisions for Plan Participants who are Israeli Residents.

      
(a) This
Section 20 shall apply only to Optionees who are residents of the State of
Israel.

      
(b) Notwithstanding
anything to the contrary herein, the Plan may also be administered pursuant to
the provisions of Section 102 ("Section 102") or Section 3(i) ("Section 3 Tet")
of the Israeli Income Tax Ordinance (New Version), 1961, the rules promulgated
thereunder and the Israeli Companies Ordinance (New Version), 1983, with respect
to employees who are Israeli residents. Details regarding the terms and
conditions of Options and Stock Purchase Rights granted pursuant to the
provisions of Section 102 in addition to those set forth herein will be
delivered to the participants who are Israeli residents along with the remaining
terms and conditions.

      
(c) Notwithstanding
anything herein to the contrary, in the event that the Plan is administered
pursuant to the provisions of Section 102, each Option and Stock Purchase Right.
and each Share with respect to which an Option or Stock Purchase Right has been
exercised by an Optionee who is an Israeli resident, may be issued by the
Company to, and held in trust (the "Trust") for the benefit of such Optionee by
a trustee (the "Trustee") designated by the Board of Directors of the Company or
its Subsidiaries, as appropriate, pursuant to Section 102. All certificates
representing Shares issued to the trustee under the Plan shall be deposited with
the Trustee, and shall be held by the Trustee until such time that such Shares
are released from the Trust as herein provided. The Trustee shall hold the same
pursuant to the instructions of the Directors, from time to time. The Trustee
shall not use the voting rights vested in such Shares and shall not exercise
such rights in any way whatsoever, except in cases when at its discretion and
after consulting with the Board of Directors of the Company or its Subsidiaries,
as appropriate, the Trustee believes that the said rights should be exercised
for the protection of the Optionees as a minority among the Company's
shareholders.

      
(d) Notwithstanding
anything herein to the contrary, no Options or Stock Purchase Rights granted, or
Shares purchased pursuant to Section 102 shall be released from the Trust prior
to two years after the grant of the Options or Stock Purchase Rights to the
Trustee on behalf of the Optionee (the "Release Date"), or two years from the
date of approval of the Plan by the Israeli Income Tax authorities, whichever is
later. Subject to the terms hereof, at any time after the Release Date with
respect to any Options, Stock Purchase Rights or shares, each Optionee may
require (but shall not be obligated to require) the Trustee to release such
Options, Stock Purchase Rights or Shares, provided that no securities shall be
released from the Trust to the Optionee unless and until such Optionee shall
have deposited with the Trustee an amount of money which, in the Trustee's
opinion, is sufficient and necessary for the discharge of such Optionee's tax
obligations with respect to such Shares.

      
(e) Upon sale
by an Optionee of any securities held in Trust, the Company shall (or shall
cause the Trustee to) withhold from the proceeds of such sale all applicable
taxes, shall remit the amount withheld to the appropriate Israeli tax
authorities, shall pay the balance thereof directly to such Optionee, and shall
report to such Optionee the amount so withheld and paid to said tax
authorities.

-12-

 

      
(f) All
Shares issued upon the exercise of Options or Stock Purchase Rights granted
under the Plan shall entitle the Optionee to receive dividends with respect
thereto, and to vote the same at any meeting of the shareholders of the Company.
For as long as shares issued to the Trustee on behalf of the Optionee are held
in the Trust, the cash dividends paid with respect thereto shall be remitted to
the Trustee for the benefit of such Optionee and the Trustee shall vote all such
Shares in accordance with the instructions of such Optionee.

    

      
(g) At the
Administrator's discretion, for purposes of simplicity and in order to ensure
compliance with Israel's tax regulations, the exercise of the Options and the
purchases and sales of Shares issued upon the exercise of Stock Purchase Rights
made under the Plan shall be executed by the Company or its Subsidiaries, as
appropriate.

      
(h) With
respect to the Plan participants who are Israeli residents, the Plan and all
instruments issued thereunder or in connection therewith shall be governed by,
and interpreted in accordance with, the laws of the State of
Israel.

      
(i) Any tax
consequences arising from the grant or exercise of any Options or Stock Purchase
Rights, from the payment for Shares covered thereby or from any other event or
act (whether of the Optionee or of the Company or its Subsidiaries) hereunder,
shall be borne solely by the Optionee. Furthermore, such Optionee shall agree to
indemnify the Company or Subsidiary that employs the Optionee 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.

 

-13-

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