99.1
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Press Release, dated July 6, 2015: Check-Cap Announces Extraordinary General Meeting of Shareholders to be held on August 13, 2015
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99.2
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Letter to Shareholders dated July 6, 2015
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99.3
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Notice and Proxy Statement for the Extraordinary General Meeting of Shareholders to be held on August 13, 2015
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99.4
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Form of Proxy Card
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Date: July 6, 2015
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CHECK-CAP LTD.
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By:
/s/ Guy Neev
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Name: Guy Neev
Title: Chief Executive Officer
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1.
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To approve the adoption of the Check-Cap Ltd. Compensation Policy for Executive Officers and Directors;
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2.
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To approve the adoption of the Check-Cap Ltd. 2015 Equity Incentive Plan and the Check-Cap Ltd. 2015 United States Sub-Plan to the 2015 Equity Incentive Plan for U.S. tax purposes; and
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3.
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To approve the terms of engagement of Mr. William Densel, as Chief Executive Officer.
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Sincerely,
Tomer Kariv
Chairman of the Board of Directors
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1.
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To approve the adoption of the Check-Cap Ltd. Compensation Policy for Executive Officers and Directors;
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2.
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To approve the adoption of the Check-Cap Ltd. 2015 Equity Incentive Plan and the Check-Cap Ltd. 2015 United States Sub-Plan to the 2015 Equity Incentive Plan for U.S. tax purposes; and
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3.
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To approve the terms of engagement of Mr. William Densel, as Chief Executive Officer.
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Sincerely,
Tomer Kariv
Chairman of the Board of Directors
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·
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Voting in Person
. If you are a shareholder of record, i.e., your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company LLC, you may attend and vote in person at the Meeting. If you are a beneficial owner of shares registered in the name of your broker, bank, trustee or nominee (i.e., your shares are held in “street name”), you are also invited to attend the Meeting; however, to vote in person at the Meeting as a beneficial owner, you must first obtain a “legal proxy” from your broker, bank, trustee or nominee that holds your shares giving you the right to vote the shares at the Meeting.
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·
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Voting by Proxy
. If you are a shareholder of record, these proxy materials are being sent directly to you by our transfer agent. You may submit your proxy by completing, signing and mailing the enclosed proxy card that was mailed to you in the enclosed, postage-paid envelope. If your ordinary shares are held in “street name,” these proxy materials are being forwarded to you by the broker, trustee or nominee or an agent hired by the broker, trustee or nominee. Please follow the voting instructions provided to you by your broker, trustee or nominee. We will generally not be able to include your vote in the tally of ordinary shares voted at the Meeting unless your proxy is received by our transfer agent or at our registered office in Israel at least 48 hours prior to the designated time for the Meeting.
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Ordinary Shares
Beneficially Owned
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||||||||
Name
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Number
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Percent
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||||||
5% or Greater Shareholders
(other than directors and executive officers)
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||||||||
Pontifax Funds
(1)
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2,374,335.5 | 20.16 | % | |||||
Shanghai Fosun Pharmaceutical Group Co. Ltd.
(2)
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1,886,152.5 | 15.71 | % | |||||
Quant Global Capital Advisors, LLC
(3)
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1,249,999.5 | 11.15 | % | |||||
Yoav and Sigalit Kimchy
(4)
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746,490 | 6.85 | % | |||||
Docor International B.V.
(5)
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658,139.5 | 6.00 | % | |||||
Directors
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||||||||
Tomer Kariv
(1)
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2,374,335.5 | 20.16 | % | |||||
Alon Dumanis
(5)
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668,221.5 | 6.09 | % | |||||
Mary Jo Gorman
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* | * | ||||||
Steven Hanley
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* | * | ||||||
Yoav Kimchy
(4)
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746,490 | 6.85 | % | |||||
XiangQian (XQ) Lin
(6)
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260,082.5 | 2.39 | % | |||||
Guy Neev
(7)
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663,936 | 5.93 | % | |||||
Walter L. Robb
(8)
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395,350 | 3.65 | % | |||||
Richard Stone
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* | * | ||||||
Yuval Yanai
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* | * | ||||||
Directors and executive officers as a group (13 persons)
(9)
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5,405,719.5 | 47.81 | % |
(1)
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Includes ordinary shares directly held by Pontifax (Cayman) II, L.P., Pontifax (Israel) II, L.P. and Pontifax (Israel) II—Individual Investors, L.P (collectively, the “Pontifax Funds”). Pontifax Management II L.P. is the general partner of the Pontifax Funds and Pontifax Management 2 G.P. (2007) Ltd. is the general partner of Pontifax Management II L.P. Tomer Kariv and Ran Nussbaum are Managing Partners of each of the Pontifax Funds and Pontifax Management II L.P. and are directors of Pontifax Management 2 G.P. (2007) Ltd. and share voting and dispositive power with respect to the shares. The principal business office of each of the foregoing entities and persons is 8 Hamanofim Street, Beit Ofek, Herzliya Pituach, Israel. Includes (i) 1,385,610 outstanding ordinary shares; (ii) 749,334 ordinary shares subject to warrants that are currently exercisable; and (iii) 239,391.5 ordinary shares issuable upon exercise of the Series A Warrants, which are exercisable within 60 days of this table.
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(2)
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Based solely on information contained in a Schedule 13G/A filed by Shanghai Fosun Pharmaceutical Group Co. Ltd. with the SEC on May 15, 2015. Includes: (i) 666,667 outstanding ordinary shares; (ii) 886,152 ordinary shares subject to warrants that are currently exercisable; and (iii) 333,333.5 ordinary shares issuable upon exercise of the Series A Warrants, which are exercisable within 60 days of this table.
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(3)
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Based solely on information contained in a Schedule 13G filed by Quant Global Capital Advisors, LLC with the SEC on March 6, 2015. Includes: (i) 833,333 outstanding ordinary shares; and (ii) 416,666.5 ordinary shares issuable upon exercise of the Series A Warrants, which are exercisable within 60 days of this table.
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(4)
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Includes: (i) 319,553 ordinary shares are directly held by Yoav Kimchy; (ii) 107,384 ordinary shares subject to options held by Yoav Kimchy that are currently exercisable; and (iii) 319,553 ordinary shares are directly held by Sigalit Kimchy. Yoav Kimchy, our chief technology officer and a director, and Sigalit Kimchy are husband and wife.
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(5)
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Includes: (i) 484,871 outstanding ordinary shares directly held by Docor International B.V. (“Docor”); (ii) 110,769 ordinary shares subject to warrants that are currently exercisable directly held by Docor; and (iii) 62,499.5 ordinary shares issuable upon exercise of the Series A Warrants, which are exercisable within 60 days of this table, directly held by Docor. Docor is a wholly-owned subsidiary of Crecor B.V. Each of Crecor B.V. and Alon Dumanis may be deemed to be the beneficial owner of the aggregate ordinary shares beneficially owned by Docor. Alon Dumanis disclaims beneficial ownership of the ordinary shares. In addition, Alon Dumanis directly holds options to purchase 10,082 ordinary shares that are exercisable within 60 days of this table.
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(6)
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Includes: (i) 166,667 outstanding ordinary shares held by Esco Ventures Pte Ltd.; (ii) 83,333.5 ordinary shares issuable upon exercise of the Series A Warrants, which are exercisable within 60 days of this table, held by Esco Ventures Pte Ltd.; and (iii) 10,082 ordinary shares subject to options that are exercisable within 60 days of this table, held directly by XiangQian (XQ) Lin. Mr. Lin has advised us that Esco Ventures Pte Ltd. is wholly-owned by him and that he possesses the ultimate voting and investment power over the shares beneficially owned by Esco Ventures Pte Ltd.
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(7)
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Includes: (i) 265,928 outstanding ordinary shares; and (ii) 398,008 ordinary shares subject to options that are currently exercisable.
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(8)
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Includes: (i) 356,075 outstanding ordinary shares held by Counterpoint Ventures Fund LP and Counterpoint Ventures Fund II LP (together, the “Counterpoint Funds”); (ii) 21,250 ordinary shares issuable upon exercise of the Series A Warrants, which are exercisable within 60 days of this table, held by the Counterpoint Funds; and (iii) 18,025 ordinary shares subject to options that are currently exercisable or exercisable within 60 days of this table, held directly by Mr. Robb. Mr. Robb has advised us that the general partner of each of the Counterpoint Funds is Lion Development LLC, which is 99% controlled by Mr. Walter Robb, and as such, Walter Robb possesses the ultimate voting and investment power over the shares beneficially owned by the Counterpoint Ventures entities.
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(9)
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See footnotes (1)-(8) for certain information regarding beneficial ownership.
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·
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the knowledge, skills, expertise, professional experience and accomplishments of the relevant office holder;
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·
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the office holder’s roles and responsibilities and prior compensation agreements with him or her;
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·
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the ratio of the cost of the offered terms to the cost of compensation of the other employees of the company (including any employees employed through manpower companies), specifically to the cost of the average and median salaries of such employees and the impact of the disparities between them upon work relationships in the company;
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·
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with respect to variable compensation - the possibility of reducing variable compensation at the discretion of the board of directors, and the possibility of setting a limit on the exercise value of non-cash variable equity-based compensation; and
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·
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with respect to severance compensation, the period of employment or service of the office holder, the terms of his or her compensation during such period, the company’s performance during such period, the person’s contribution towards the company’s achievement of its goals and the maximization of its profits, and the circumstances under which the person is leaving the company.
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·
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the link between variable compensation (e.g., bonuses) and long-term performance and measurable criteria (i.e., variable compensation must be determined based on long-term performance and measurable criteria). Only “non-material” portion of variable compensation may be determined based on criteria that is not measurable, taking into account office holders contribution to the company;
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·
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the ratio of variable to fixed compensation, and the ceiling for the value of variable compensation, which is determined at the time of payment, except that the ceiling for equity-based compensation is determined at the time of grant;
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·
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the conditions under which an office holder would be required to repay compensation paid to him or her if it was later shown that the data upon which such compensation was based was inaccurate and was required to be restated in the company’s financial statements;
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·
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the minimum holding or vesting period for variable, equity-based compensation, while taking into account long-term objectives; and
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·
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maximum limits for severance compensation.
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·
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To determine whether and to what extent awards are to be granted to participants under the 2015 Plan and to select the eligible recipients of awards under the 2015 Plan;
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·
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To approve forms of agreement for use under the 2015 Plan;
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·
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To determine the terms and conditions of any award under the 2015 Plan, including the exercise price, the time or times and the extent to which the awards 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 award or the ordinary shares relating thereto, based in each case on such factors as the Administrator, at its sole discretion, shall determine;
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·
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To determine the fair market value of the shares covered by each award;
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·
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To make an election as to the type of Section 102 Option;
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·
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To prescribe, amend and rescind rules and regulations relating to the 2015 Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws;
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·
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To authorize conversion or substitution under the 2015 Plan of any or all awards and to cancel or suspend awards, as necessary, provided the material interests of the participants are not harmed;
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·
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To construe and interpret the terms of the Plan and awards granted pursuant to the 2015 Plan; and
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·
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To alter, revise or otherwise adjust the terms of the 2015 Plan and the award agreement, as may be required pursuant to any applicable laws of local or foreign jurisdictions.
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·
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an annual base salary of US$350,000, paid in monthly installments of US$29,167 each;
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·
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an annual bonus of up to 50% of the annual base salary. The bonus shall be subject to the achievement of certain criteria for each 12 month-period (or such shorter or longer period determined by our Compensation Committee and Board of Directors ), as shall be determined by our Compensation Committee and Board of Directors, in accordance with our compensation policy, as in effect from time to time. The Board of Directors and Compensation Committee may determine that Mr. Densel shall be entitled to certain portion(s) of the bonus upon partial achievement of the criteria and that the bonus shall be conditioned upon the achievement of a minimum threshold of the criteria. The Board of Directors and Compensation Committee may further determine that in the event that Mr. Densel’s employment terminates prior to the end of a full 12-month period, he shall be entitled to the relative portion of the bonus, based on the actual employment term during the 12-month period. In the event of termination for “cause” (as such term is defined in Mr. Densel’s employment agreement), he shall not be entitled to any bonus for the 12-month period during which his employment was terminated. Mr. Densel shall be required to repay any amounts paid to him as a bonus, if subsequently it transpires that such amounts were paid on the basis of figures that were incorrect and were restated in the U.S. Subsidiary’s or our financial statements, all in accordance with applicable law and the U.S. Subsidiary’s or our compensation policy;
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·
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the following additional options to purchase our ordinary shares, at an exercise price equal to the higher of: (i) the average closing price of our ordinary shares over the 30 trading days immediately prior to the date of grant; and (ii) the closing price of our ordinary shares on the trading day immediately prior to the date of grant. These options would be subject to the terms and conditions of the 2015 Plan and the option agreement to be entered into with Mr. Densel. To the extent that any of these additional options have not vested upon a Transaction (as such term is defined in the 2015 Plan), then subject to Mr. Densel’s continuing employment through the effective date of such Transaction, the unvested additional options shall automatically vest and become exercisable:
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(i)
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options to purchase up to 324,750 ordinary shares. The options shall vest over a period of four years commencing on the date of grant, such that 25% of the options (i.e., options to purchase 81,187 ordinary shares) shall vest on the first anniversary of the date of grant and thereafter, the remaining options will vest in monthly installments, such that options to purchase 6,753 ordinary shares shall vest on the 13-month anniversary of the date of grant and additional options to purchase 6,766 ordinary shares shall vest at the end of each subsequent month thereafter for the remaining 35 months, subject to Mr. Densel’s continuing employment as our Chief Executive Officer on each applicable vesting date; and
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(ii)
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options to purchase up to 425,000 ordinary shares. The options shall vest over a period of four years commencing on the date of grant, such that on each of the four anniversaries after the date of grant a number of options will vest and become exercisable calculated as follows: (a) 425,000
multiplied
by a quotient equal to the aggregate number of our Series A Warrants and Long Term Incentive Warrants that have been exercised prior to the applicable anniversary measurement date (to be adjusted to reflect any stock splits, reverse splits, bonus shares and the like) divided by 8,500,000,
less
(b) the aggregate number of such options that vested prior to such vesting measurement date, provided that in no event shall more than 106,250 of such options vest during any 12-month period of his employment (to be accumulated on a `carry-forward` basis). Furthermore, no portion of these options shall vest if Mr. Densel’s employment is terminated for any reason prior to the first anniversary of the date of grant of such options and no portion of these options shall vest unless all criteria set by our Compensation Committee and Board of Directors for the applicable 12-month period have been fully achieved. In the event that Mr. Densel’s employment is terminated prior to the lapse of four years from the date of grant of these options (but following the initial anniversary thereof), then the number of these options that shall vest since the last anniversary measurement shall be calculated, using the above formula (
mutatis mutandis
), on the effective date of such termination. In the event that Mr. Densel’s employment continues following the lapse of four years from the date of grant of these options, then to the extent that these options have not then vested in their entirety, these options will continue to vest in accordance with the formula described above.
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·
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health insurance and other benefits. Mr. Densel will be entitled to participate in health insurance, dental insurance, retirement plans (including, without limitation, 401(k) retirement plan and life and disability insurance) and any other benefit plan established by us or the U.S. Subsidiary for senior management in the United States, on a basis consistent with the terms, conditions and overall administration of such insurance and benefit plans. To the extent such plans are not established by us or the U.S. Subsidiary, Mr. Densel shall be entitled to reimbursement of his expenses for the procurement of such plans in an amount equal to the lower of: (i) 100% of the annual payment for such insurance and benefit plans; and (ii) US$25,000 per year, subject to and against receipt of proper invoices;
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·
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annual vacation of 20 working days (in addition to up to 10 days for public holidays). Mr. Densel shall be entitled to transfer unused vacation days from one 12-month period to the subsequent 12-month period, provided that: (i) the number of unused vacation days so transferred to any subsequent 12-month period shall not exceed 40 unused vacation days; and (b) the aggregate number of unused vacation days at any specific time shall not exceed 60 days; and
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·
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if Mr. Densel’s employment is terminated by the U.S. Subsidiary without “cause” (as such term is defined in Mr. Densel’s employment agreement), other than due to death or disability, he shall be entitled to receive, during the six month period following the termination date, the base salary, payable monthly, any pro-rata portion of his bonus and health insurance (as described above), subject to Mr. Densel executing a waiver and release of any claims in connection with his employment and the termination thereof.
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By Order of the Board of Directors,
Tomer Kariv
Chairman of the Board of Directors
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1.
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Purpose
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2.
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Definitions; Construction
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2.1.
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“
Affiliate
” of any Person, shall mean any other Person that, directly or indirectly through one or more intermediaries, is controlled by such Person, and the term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities, by contract or otherwise.
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2.2.
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“
Applicable Law
” shall mean any applicable law, rule, regulation, statute, extension order, judgment, order or decree of any federal, state or local governmental, regulatory or adjudicative authority or agency, of any jurisdiction, and the rules and regulations of any stock exchange or trading or quotation system on which the securities of the Company are then traded, listed or quoted.
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2.3.
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“
Board
” means the Board of Directors of the Company.
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2.4.
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“
CEO
” means the Chief Executive Officer of the Company
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2.5.
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“
Committee
” means the Compensation Committee of the Board, within the meaning of the Companies Law.
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2.6.
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“
Companies Law
” means the Israeli Companies Law, 5759-1999 together with the regulations promulgated thereunder, all as amended from time to time.
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2.7.
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“
Director
” means any member of the Board of Directors of the Company.
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2.8.
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“
Executive
” means any Office Holder who does not serve solely as a director.
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2.9.
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“
Office Holders
” means as set forth in the Companies Law, regardless of whether such Office Holder is employed by the Company or an Affiliate thereof.
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2.10.
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“
Person
” means (whether or not a capitalized term) any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint-stock company, trust, estate, unincorporated organization or other entity.
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2.11.
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“
Terms of Office and Engagement
” means as defined in the Companies Law.
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2.12.
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Terms not otherwise defined herein shall have the meaning ascribed to them in the Companies Law, unless the context dictates otherwise. To the extent any provision herein conflicts with the conditions of any Applicable Law, the provisions of the Applicable Law shall prevail over this Policy and the Board is empowered hereunder to interpret and enforce such prevailing provisions. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. References to any law or regulation, rule or ordinance, including any section or other part thereof, shall refer to that as amended from time to time and shall include any successor law. The use of captions and titles in this Policy is for the convenience of reference only and shall not affect the meaning of any provision of this Plan.
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2.13.
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Nothing in this Policy shall confer upon any person, including, any Office Holder, any rights, entitlements, benefits or remedies whatsoever, including any right or entitlement to any compensation, remuneration or benefits of any kind or nature or to interfere with or limit in any way the right and authority of the Company or any its Affiliates to determine any compensation, remuneration or benefits or to terminate the service or employment of any Office Holder. The Terms of Office and Engagement of an Office Holder shall only be as set in an agreement between such Office Holder and the Company or its Affiliates or in a written undertaking of the Company or its Affiliates or in a resolution of the relevant organ of the Company or such Affiliate setting forth the Terms of Office and Engagement and their applicability to the relevant Office Holder, and, in each case, as prescribed by Applicable Law. No representation or warranty is made by the Company in adopting this Policy, and no custom or practice shall be inferred from this Policy or the implementation thereof, which is specific and applied on a case-by-case basis.
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2.14.
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To the extent that an Office Holder’s engagement or service is effected pursuant to an agreement between the Company or any Affiliate thereof, on the one hand, and an Affiliate of the Office Holder, on the other hand, then this Policy shall apply,
mutatis mutandis
, to the same extent as if the service or engagement would have been made pursuant to an agreement with the Office Holder personally. To the extent that an Office Holder’s engagement or service (including, a Director in his capacity as such or in other capacities) is not through employment relations with the Company or any Affiliate thereof then this Policy shall apply,
mutatis mutandis
.
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2.15.
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This Policy shall not apply, and shall have no effect with respect to or derogate from, any Terms of Office and Engagement of any Office Holder which are in effect prior to the date of adoption of this Policy.
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2.16.
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To the extent that after the date on which this Policy is approved in accordance with the Companies Law relief is granted as to the mandatory or minimum requirements prescribed by Applicable Law to be included in a Compensation Policy as of the date hereof, or any limitation contained in this Policy is more stringent than that required by Applicable Law, than such relief or less stringent limitation shall be deemed incorporated by reference into this Policy notwithstanding anything else to the contrary, unless otherwise determined by the Board.
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3.
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Administration
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3.1.
|
To the extent permitted under the Companies Law, this Policy shall be administered by the Board, unless and to the extent an action necessary for the administration of this Policy is required under the Companies Law to be taken by the Committee (and in any such event, all references herein to the Board shall be construed as references to the Committee).
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3.2.
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Subject to the terms and conditions of this Policy and any mandatory provisions of Applicable Law, and in addition to the Board’s powers provided elsewhere in this Policy and by the Companies Law, the Board shall have full authority in its discretion, from time to time and at any time, to determine any of the following:
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(a)
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to interpret the Policy;
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(b)
|
prescribe, amend and rescind rules and regulations relating to and for carrying out the Policy, as it may deem appropriate; and
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(c)
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any other matter which is necessary or desirable for, or incidental to, the administration of the Policy and any determination made pursuant thereto.
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4.
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General Considerations
|
4.1.
|
This Policy is made, and the Terms of Office and Engagement determined pursuant hereto shall be determined, on the basis of various considerations, including those listed below.
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4.1.1.
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The Compensation Policy was designed, among other things, to ensure the Company’s ability to recruit and retain the highly talented management personnel that have appropriate qualifications is one of the key elements to the Company. The Company believes that in order to attract and retain competent and skilled Office Holders that would support the efforts to create shareholder value, the levels of Terms of Office and Engagement should generally be within a range of between average and above average levels in comparable companies. In certain circumstances, in order to attract unique talents that are considered by the Company as such, the Terms of Office and Engagement may exceed the above levels.
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4.1.2.
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Promoting the Company’s objectives, its business plan and its long-term strategy. The Company believes that attracting and retaining Office Holders that have appropriate qualifications is one of the key elements to the Company's success. In order to attract and retain Office Holders that possess skills, experience, professional capabilities and motivation that would support the Company’s efforts to increase shareholder value, the Terms of Office and Engagement under which such Office Holders are retained should be competitive, should reflect the anticipated contribution of such Office Holders to the Company and its business, should reflect the scope of authority and responsibilities of the Office Holder and should create adequate incentives for such Office Holders to dedicate their full attention, skills and efforts to the success and growth of the Company.
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4.1.3.
|
Creating appropriate incentives to the Company’s Office Holders, considering, among other factors, the Company’s risk management policy. In this respect, the Company will strive to create balanced compensation arrangements under which an Office Holder will be motivated to contribute to the achievement of corporate targets by creating a link between performance and compensation. On the other hand, attention will be given to the need to allocate an appropriate portion to compensation that is not based on performance with a view to maintaining caution as to the tolerance of risk management. In addition, the Company believes that the Terms of Office and Engagement should reflect a balance between short-term and long-term achievements, between personal performance of an Office Holder and performance of the Company or specific divisions or regions of the Company, between past performance and future performance and taking into account various other considerations that are appropriate in each individual case. Moreover, the Company believes that the Terms of Office and Engagement of each Office Holder are both a reflection of the Company’s general policies and the individual circumstances relating to the retention of such Office Holder, and therefore, there may be variations between the Terms of Office and Engagement of different Office Holders.
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4.1.4.
|
The size of the Company and the nature of its operations. The Company is a clinical stage medical diagnostics company engaged in the development of an ingestible imaging capsule that utilizes low-dose X-rays for the screening for colorectal cancer. In addition, the Company operates in an environment and markets that are dynamic and are continuously in flux offering multiple and different challenges. Accordingly, in connection with the determination of the Terms of Office and Engagement of each Office Holder, appropriate attention should be given to the particular circumstances and challenges of such Office Holder.
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4.1.5.
|
The Terms of Office and Engagement of an Office Holder should generally be determined after consideration is given to the terms offered to comparable Office Holders in comparable companies, to the extent such information is readily available, with a view to the Company’s ability to offer competitive terms and retain competent and capable Office Holders.
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4.2.
|
The Terms of Office and Engagement of an Office Holder may include a combination of various components, such as: salary and auxiliary payments and benefits, bonuses, equity or equity-linked awards, expense reimbursement, insurance, exculpation and indemnification, and compensation and benefits mandated by Applicable Law. In each instance, the appropriate components should be considered, and not necessarily all of the above mentioned components need be included.
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5.
|
Specific Considerations in the determination of Terms of Office and Engagement
With a view to achieving the general purpose and intent of the considerations as set forth in Section
4, the Terms of Office and Engagement of an Office Holder shall be predominantly based on the following considerations:
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5.1.
|
The education, qualification, skills, expertise, professional experience, accomplishments, references, reputation and achievements of the Office Holder;
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5.2.
|
If applicable, the experience, references, reviews, achievements and sustained performance of the Office Holder overtime with the Company and its Affiliates;
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5.3.
|
The seniority, tenure and duration of employment with or service to the Company or its Affiliates;
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5.4.
|
The job function, organizational level, position and areas of and scope of responsibility and authority of the Office Holder;
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5.5.
|
The obligations, responsibilities, roles and objectives imposed on such Office Holder under Applicable Law;
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5.6.
|
The need to retain Office Holders who have relevant skills, know-how or unique expertise;
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5.7.
|
Prior Terms of Office and Engagement with the Company and its Affiliates or previous employers;
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5.8.
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The then current and prospective condition of the Company’s business, affairs, budget, operations, activities, liabilities, financial results, plans and strategy;
|
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5.9.
|
Geographical location and region of activity, and the then common employment or compensation practices in the industry and/or the relevant geographical location, region of activity or jurisdiction;
|
5.10.
|
The terms of compensation of other groups of employees of the Company and its Affiliates that are determined to be relevant;
|
5.11.
|
The employment or compensation practices of comparable companies. The extent to which reference to comparable companies shall be required, as well as the parameters for determination of the identity of the companies which are comparable, shall be examined in each instance. Such parameters may include: the field of operation or industry, public or privately held companies, size, local or global operations, business condition, numbers of years of operations and jurisdiction of incorporation or of the executive headquarters;
|
5.12.
|
Intra-organizational implications, including impact on other relevant employees of the Company and its Affiliates;
|
5.13.
|
The ratio between the cost of the Terms of Office and Engagement of the Office Holder and the total cost of salary (as such term is defined in the Companies Law) of other employees of the Company, and specifically the average and median total cost of salary (as such term is defined in the Companies Law) of other employees of the Company, including for purposes of this section those engaged through manpower companies, and the effect of such differences on the employment environment in the Company;
|
5.14.
|
If the Terms of Office and Engagement include variable components, inclusion of provisions reducing variable components, and setting a limit on the exercise value of an equity variable component, all at the Board’s discretion;
|
5.15.
|
If the Terms of Office and Engagement include termination benefits, the period of employment or service of the Office Holder, the Office Holder’s Terms of Office and Engagement during such period, the performance of the Company (or the applicable Affiliate or division) during such period, the Office Holder’s contribution towards the Company’s achievement of its goals and maximizing its profits, and the circumstances of termination;
|
5.16.
|
If the Terms of Office and Engagement include equity or equity-linked components, the value thereof and the anticipated incentive associated with such components;
|
5.17.
|
Any requirements prescribed by the Companies Law, U.S. securities laws and NASDAQ rules, and any other Applicable Law, from time to time;
|
5.18.
|
General goals and objectives of the Company (or if applicable, the relevant Affiliate or division) and incentivizing the Office Holder to reach and achieve these goals;
|
5.19.
|
The specific goals or targets defined for the Executive or for which such Executive is recruited or retained and incentivizing the Office Holder to reach and achieve these goals; and
|
5.20.
|
Such other considerations as are deemed relevant or applicable in the circumstances.
|
6.
|
Components of Terms of Office and Engagement of an Executive
|
6.1.
|
Fixed Compensation
|
6.1.1.
|
Base Salary
|
6.1.1.1.
|
The base salary of an Executive shall be determined during the course of negotiations for his employment in the Company, conducted by the person who will directly supervise him (for the CEO, the Chairman of the Board, and for the other Executives, the CEO). The base salary will be determined personally for each Executive and shall express the skills of the candidate (including, among other things, his education, expertise, professional experience), his achievements, suitability with the intended position job requirements and the conditions in the relevant market for similar positions in similar companies, on the recruitment date. The annual gross base salary (i.e., excluding any benefits and entitlements) shall not exceed US$450,000 for the CEO and US$330,000 for Executives other than the CEO. The Executives’ salary may be linked to any relevant index.
|
6.1.1.2.
|
In order to retain Executives, the Executives’ base salary shall be reviewed annually, taking into consideration the challenges of the given year and the following year, the complexity of the Executives’ roles, their scope and importance to the Company’s performance, all based upon the general considerations specified above.
|
|
6.1.2.
|
Additional Benefits and Terms
:
The Terms of Office and Engagement of an Executive may include the following additional benefits and terms:
|
(a)
|
Pension
|
(b)
|
Further education fund
|
(c)
|
Severance pay
|
(d)
|
Managers insurance
|
(e)
|
Medical insurance (including vision and dental) and life insurance, including with respect to immediate family members
|
(f)
|
401(K) retirement plan
|
(g)
|
Disability insurance
|
(h)
|
Periodic medical examination
|
(i)
|
Leased car or company car (as well as bearing the cost of related expenses or reimbursement thereof), or the value of the use thereof, or transportation allowance
|
(j)
|
Telecommunication and electronic devices and communication expenses, including (without limitation) cellular telephone and other devices, personal computer/laptop, Internet, or the value of the use thereof
|
(k)
|
Paid vacation and the number of vacation days that may be accrued, including, if applicable, the redemption thereof
|
(l)
|
Sick days
|
(m)
|
Holiday and special occasion gifts
|
(n)
|
Recuperation pay
|
(o)
|
Expense reimbursement (including domestic and international travel expenses and per diem payments)
|
(p)
|
Payments or participation in relocation and related costs and expenses
|
(q)
|
Clothing allowance
|
(r)
|
Loans or advances (subject to Applicable Law)
|
(s)
|
Professional or academic courses or studies
|
(t)
|
Newspaper or online subscriptions
|
(u)
|
Professional literature
|
(v)
|
Professional membership dues or subscription fees
|
(w)
|
Professional advice or analysis (such as pension, insurance and tax)
|
(x)
|
Exculpation and indemnification
|
(y)
|
General directors’ and officers’ liability insurance covering persons serving at present or in the future, from time to time, as directors and officers of the Company and its subsidiaries (including those who also serve as officers, directors or employees of a controlling shareholder), including renewals thereof, with coverage substantially similar to the coverage in effect on the date of approval of this Policy, or as may be increased from time to time to reflect the circumstances at the time (including the Company’s activities, size and status, markets at which its shares are traded etc.) and at premiums that are substantially similar to the premiums in effect on the date of approval of this Policy, or as may be increased from time to time, subject to receipt of and in accordance with corporate approvals
|
(z)
|
Directors’ and officers' liability insurance with respect to specific events, such as public offerings, or with respect to periods to time following which the then existing insurance coverage ceases to apply, such as “run-off” coverage in connection with a change in control
|
(aa)
|
Non-solicitation and/or non-compete undertakings for a period of time after termination, and payment in consideration for such undertaking not exceeding the total amount of compensation (including benefits) that would have been payable to the Executive had he or she continued to be employed during the non-solicitation or non-compete period
|
(bb)
|
Other benefits generally provided to Company employees (or any applicable Affiliate or division)
|
(cc)
|
Other benefits or entitlements mandated by Applicable Law
|
(dd)
|
Other benefits and entitlements that are part of compensation practices in the industry, relevant geographical location, region of activity or jurisdiction
|
|
Any of the above benefits may include gross up of taxes and mandatory payments required to be made by Applicable Law.
|
|
6.1.3.
|
Termination Conditions
|
|
6.1.3.1.
|
Advance Notice
. Advance notice of termination, not exceeding the higher of the period required by Applicable Law or three (3) months.
|
|
6.1.3.2.
|
Termination and Severance Payments
The Terms of Office and Engagement of an Executive may include the following termination payment (in addition to any mandatory severance payments under Applicable Law) in an amount that shall not exceed:
|
|
·
|
For the CEO – up to nine (9) monthly (gross) base salaries;
|
|
·
|
For an Executive other than the CEO – if the termination is within the first three years of employment or service – up to three (3) monthly (gross) base salaries; and if the termination is after the first three years of employment or service – up to nine (9) monthly (gross) base salaries.
|
|
6.1.4.
|
Change-of-Control
. The Terms of Office and Engagement of an Executive may include a one-time payment of up to 100% of the Executive’s annual cash compensation (i.e., annual (gross) base salary and target annual bonus) in connection with a Transaction, as defined in the Equity Plan (as such term is defined below), subject to such other terms and conditions as the Committee and Board may determine.
|
6.2.
|
Variable Compensation
|
6.2.1.
|
The Company believes that the Terms of Office and Engagement should reflect a balance between short-term and long-term achievements, between personal performance of an Office Holder and performance of the Company or specific divisions or regions of the Company, between past performance and future performance and taking into account various other considerations that are appropriate in each individual case. Therefore, the Company believes that annual variable compensation (which may include plan-based annual bonuses and the value of equity, as set forth in Sections
6.2.2.16 and
6.3 hereof, but excluding special bonuses and sign-on bonus) may constitute up to 85% and 75% of the overall (combined fixed and variable) annual compensation, for the CEO and for other Executives, respectively.
|
6.2.2.
|
Bonuses
. Bonuses may include plan-based annual bonuses and other bonuses:
|
6.2.2.1.
|
Annual Bonus
|
|
(a)
|
With respect to each year, an Executive Management Bonus Plan (the “
Bonus Plan
”) shall be prepared, containing a set of objectives for all or any part of the Executives pursuant to measurable criteria, as described in clause
(b) below. The Bonus Plan may, but shall not be required to, be set out in individual agreements with the applicable Executives. To the extent applicable, the Bonus Plan may be revisited during the annual period, including in order to account for significant changes in the Company’s business or operations or material changes in the market(s) in which the Company operates during such year.
|
|
(b)
|
The criteria for the Bonus Plan will be categorized in three types, as follows:
|
|
·
|
Company Performance Criteria
: Overall Company performance criteria (may be determined on a Company-wide or divisional basis), which are based on actual financial (whether GAAP or non-GAAP) and operational results, such as (without limitation) achievement of clinical and/or R&D milestones, regulatory approvals, legal targets and quality objectives, success in raising capital, meeting the Company’s budget, business development goals, economic or strategic measures, execution of projects, compliance with corporate governance goals, attainment of other milestones and, once the Company commences product sales, net revenues, sales, operating profit, earnings per share (EPS) and cash flow. Company criteria shall be the same for all Executives and the extent of meeting Company performance criteria shall determine 80%-100% of the annual bonus for the CEO and 30%-50% of the annual bonus for an Executive other than the CEO.
|
|
·
|
Individual Performance Criteria
:
Quantitative individual performance criteria, which are based on the achievement of specific pre-defined goals determined for each individual Executive, in accordance with his or her position. The extent of meeting individual performance criteria shall determine 30%-50% of the annual bonus for an Executive other than the CEO. No individual performance criteria shall be determined for the CEO.
|
|
·
|
Managerial Appraisal
: Qualitative individual performance criteria, which may be based on specific pre-defined competencies and behaviors for each individual Executive. The evaluation of the performance of the CEO shall be performed by the Board and the evaluation of the performance of other Executives shall be performed by the CEO, considering the contribution of the Executive to the Company and its Affiliates and other considerations such as (without limitation) the need to retain an Executive with skills, know-how or unique expertise; the responsibilities imposed on an Executive; changes that occurred in the responsibilities imposed on an Executive during the year; performance satisfaction, including assessing the degree of involvement of an Executive and devotion of efforts in the performance of the Executive’s duties; assessment of an Executive’s ability to work in coordination and cooperation with other employees; and Executive’s contribution to an appropriate control environment and ethical environment. The managerial appraisal shall determine up to 20% of the Executive’s annual bonus.
|
|
(c)
|
The criteria and the method of measuring the criteria underlying the bonuses may differ from period to period and from one Executive to another.
|
|
(d)
|
The Bonus Plan shall include a minimum percentage of achievement of the performance criteria(s) for a given year that shall be required in order to pay any annual cash bonus to any Executive under the Bonus Plan for such calendar year, less than which threshold(s) will prevent any Executive from qualifying for an annual cash bonus in such calendar year. Once the minimum threshold(s) are achieved, the formula for calculating the annual cash bonus payout at the end of the year for an Executive may result in a partial bonus payout in the event that an Executive achieves less than 100% of his or her performance criteria.
|
|
(e)
|
The maximum bonus amount per year under the Bonus Plan that an Executive will be entitled to receive for any given calendar year may not exceed 150% of the annual (gross) base salary for the CEO and up to 75% of the annual (gross) base salary of an Executive other than the CEO.
|
|
(f)
|
The Committee and the Board shall be entitled to reduce or cancel an Executive’s annual bonus at their discretion.
|
|
(g)
|
An Executive whose employment shall commence during a bonus year will be entitled to a pro-rated bonus, provided that the Executive has been employed for at least six months during the bonus year; provided, however, that under special circumstances, the Committee and Board may determine (at the CEO’s recommendation in the case of an Executive that is not the CEO) that an Executive whose employment commenced more than six month into the bonus year shall be entitled to a pro-rated bonus. An Executive whose employment terminated during a bonus year (including upon a change of control event) will be entitled to a pro-rated bonus for that year, other than if the employment was terminated for Cause (as such term shall be defined in the Executive’s individual agreement and in the absence thereof, as defined in the Equity Plan), in which case an Executive shall not be entitled to an annual bonus.
|
6.2.2.2.
|
Special Bonuses
|
|
(a)
|
The Terms of Office and Engagement of an Executive may include other bonuses (cash bonus or equity award) payable under special and exceptional circumstances (“
Special Bonuses
”). Special Bonuses shall be based on the achievement by the Company (or the applicable Affiliate or division) or the Executive of specific goals or the occurrence of specific events (such as, without limitation, execution of projects not within the scope of the annual work plan, exceptional and extraordinary efforts to execute a project within the scope of the annual work plan and exceptional contribution to the Company’s success and promotion of its goals).
|
|
(b)
|
The Special Bonus payable to an Executive may be up to three (3) times the monthly gross base salary (in addition to any annual bonus or Sign-on Bonus (as defined below) (if any)).
|
6.2.2.3.
|
Sign-on Bonus
|
|
(a)
|
The Terms of Office and Engagement of a newly hired Executive may include a signing bonus (the “
Sign-on Bonus
”). Sign-on Bonuses shall be determined taking into consideration market considerations and the specific circumstances of the newly hired Executive.
|
|
(b)
|
The Sign-on Bonus payable to a newly hired Executive may be up to 30% of such Executive’s annual base salary for the first year of employment (in addition to any annual bonus or Special Bonus (if any)).
|
|
6.3.
|
Equity-Based Compensation
|
|
6.3.1.
|
Equity awards will be made in the manner prescribed by the Company’s 2015 Equity Incentive Plan (including the United States Sub-Plan thereto), as amended, and under such other equity plans for employees of the Company or its Affiliates that the Company may adopt from time to time (the “
Equity Plans
”). These may include: options to purchase shares of the Company, share appreciation rights, restricted share units, restricted share awards, performance based awards and any other type of equity compensation that is based on the Company’s securities and may be granted under applicable tax regimes.
|
|
6.3.2.
|
The maximum value (determined as of the date(s) of grant) of all equity awards, in the aggregate, that are granted to a particular Executive on an annual basis shall not exceed 400% of the annual base salary of that Executive in the case of the CEO and 200% of the annual base salary of that Executive in the case of all other Executives. To determine the maximum annual value of an equity award as of the grant date, the aggregate fair value of the equity award is measured at the grant date and is spread over the vesting period.
|
|
6.3.3.
|
Equity awards will be subject to an overall vesting period or reverse-vesting, as applicable (being measured by the last vesting date from the date of commencement of vesting) of no less than three (3) years (including periodic vesting dates during such period), with a minimum period of one (1) year prior to the vesting of the first tranche of equity awards granted to Executives. Such minimum vesting or holding period is an appropriate incentive, on a long-term basis. As set forth in the Equity Plans, the Equity Plan administrator shall also have the authority to determine the specific vesting schedule, including partial or full acceleration of vesting of equity awards in certain events, including termination events or change in control, as the Equity Plan administrator deems appropriate, as well as other adjustments, modifications and changes to the terms of the equity awards (which adjustments, modifications and adjustments may be made either at the time of approval of the award or at any time thereafter), as permitted under the terms of the Equity Plans and subject to Applicable Law. The maximum term of any option award (prior to its expiration) shall be ten (10) years from the date of grant.
|
|
6.3.4.
|
With respect to an equity award under the Equity Plan that includes an exercise price – the exercise price shall not be lower than the average closing price of the Company’s ordinary shares on the NASDAQ Stock Market during the 30 trading days prior to the date of grant of the award.
|
|
6.3.5.
|
In the event that equity awards granted to groups of employees of the Company and/or its Affiliates are subject to a re-pricing or other amendment or adjustment of terms that is applied to the entire group of such employees, then such re-pricing or other amendment or adjustment may be applied also to Executives that constitute part of the same group, subject to obtaining all approvals required under Applicable Law.
|
|
6.3.6.
|
The Board and/or the Committee may amend other terms of an Executive’s grant(s) to the extent provided in the applicable Equity Plan.
|
|
6.3.7.
|
The Company may approve to continue the vesting and/or the exercise eligibility of an Executive’s equity awards after termination of such Office Holder’s service or engagement, in accordance with the provisions of the Equity Plans.
|
7.
|
Components of Terms of Office and Engagement of a Director
|
|
7.1.
|
Director Compensation
|
|
7.1.1.
|
Fees and benefits
|
|
7.1.1.1.
|
Periodic fees
. Fees payable with respect to a period of service, typically an annual fee. The terms of the periodic fees may refer to circumstance and the effect of partial service throughout the relevant period of the fee entitlement.
|
|
7.1.1.2.
|
Per meeting fees
. A fee payable for each meeting of the Board and/or any committee thereof, whether participation was in person, through a telephone or through a written consent;
|
|
7.1.1.3.
|
Reimbursement of expenses, including travel, stay and lodging;
|
|
7.1.1.4.
|
Insurance (as set forth in clauses
(y) and
(z) of Section
6.1.2), exculpation and indemnification;
|
|
7.1.1.5.
|
Other compensation, benefits or entitlements mandated by Applicable Law; and
|
|
7.1.1.6.
|
Other benefits and entitlements that are part of directors’ compensation practices in the industry, relevant geographical location, region of activity or jurisdiction.
|
|
7.1.2.
|
Equity Awards
|
|
7.2.
|
Compensation of an Active Chairman of the Board
|
8.
|
Recoupment
|
9.
|
Effectiveness; Term
|
|
9.1.
|
The Policy shall take effect upon its approval in accordance with the Companies Law.
|
|
9.2.
|
The term of this Policy shall not be limited in time, except that it will terminate at the earlier of (i) such time that the Policy is no longer in effect under the Companies Law, or (ii) such time that the Policy is terminated by the Board, to the extent that the Board has the power under the Companies Law to terminate the Policy, or (iii) such time that the determination of Terms of Office and Engagement of Office Holders is not required to be made pursuant to a Compensation Policy under the Companies Law, including, without limitation, in the event that the Company ceases to be a Public Company (as defined in the Companies Law), in which case this Policy shall have no effect with respect to Terms of Office and Engagement of Office Holders with respect to the period after the Company ceases to be a Public Company.
|
10.
|
Non-Exclusivity of this Policy
|
10.1.
|
Neither the adoption of this Policy nor the submission of this Policy to shareholders of the Company for approval (to the extent required under the Companies Law), shall be construed as creating any limitations on the power or authority of the Board or the Committee to adopt such other or additional incentive or other compensation arrangements of whatever nature as they may deem necessary or desirable or preclude or limit the continuation of any other policy, practice or arrangement for the payment of compensation or fringe benefits to employees generally, or to any class or group of employees, which the Company or any Affiliate now has lawfully put into effect, including, without limitation, any retirement, pension, savings and stock purchase plan, insurance, death and disability benefits and executive short-term or long-term incentive plans.
|
10.2.
|
The Terms of Office and Engagement of an Office Holder may contain such other terms and conditions not inconsistent with this Policy (to the extent required by the Companies Law).
|
11.
|
Governing Law
|
12.
|
Severability
|
1.
|
Purposes of the Plan
|
2.
|
Definitions
|
|
2.1.
|
"
Affiliate
" means any "employing company" within the meaning of Section 102(a) of the Ordinance.
|
|
2.2.
|
"
Administrator
" means the Board or any of its Committees as shall be administering the Plan in accordance with Section
4 hereof.
|
|
2.3.
|
"
Applicable
Laws
" means the requirements relating to the administration of stock option plans under Israeli and U.S. state corporate laws, Israeli and U.S. federal and state securities laws, the Code, the Ordinance, any stock exchange or quotation system on which the Shares are listed or quoted and the applicable laws of any other country or jurisdiction that may apply to Awards which are granted under the Plan
.
|
|
2.4.
|
"
Articles
" means the Articles of Association of the Company, as amended or restated from time to time.
|
|
2.5.
|
"
Award
" means any 102 Options, 3(i) Options, SARs, awards of Restricted Stock, awards of Restricted Stock Units, Incentive Stock Options, Nonstatutory Stock Options or any combination of the foregoing, which are granted under the Plan.
|
|
2.6.
|
"
Award Agreement
" means, with respect to each Award, the applicable signed written agreement between the Company and the Participant setting forth the terms and conditions of an individual Award granted under the plan.
|
|
2.7.
|
"
Board
" means the Board of Directors of the Company.
|
|
2.8.
|
"
Code
" means the Internal Revenue Code of 1986, as amended from time to time.
|
|
2.9.
|
"
Cause
" shall have the meaning ascribed to it in the applicable employment or consulting agreement of Participant. In the absence of such definition, "
Cause
" shall mean any of the following: (i) the Participant’s theft, dishonesty, or falsification of any Company documents or records; (ii) the Participant’s improper use or disclosure of the Company’s confidential or proprietary information; (iii) any action by the Participant which has a detrimental effect on the Company’s reputation or business; (iv) the Participant’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 Participant of any employment agreement between the Participant and the Company, which breach is not cured within thirty (30) days pursuant to the terms of such agreement; or (vi) the Participant’s conviction (including any plea of guilty) of any criminal act which impairs the Participant’s ability to perform his or her duties with the Company. For purposes of the definition of Cause, with respect to a Participant employed by or providing services to a Parent or Subsidiary of the Company, the term "Company" shall also include the Parent or Subsidiary employing or engaging the services of the Participant.
|
|
2.10.
|
"Committee
" means a committee of Directors appointed by the Board in accordance with Section
4 hereof.
|
|
2.11.
|
"
Company
" means Check-Cap Ltd., an Israeli company.
|
|
2.12.
|
"
Consultant
" means any person who is engaged by the Company or any Parent or Subsidiary to render consulting or advisory services to such entity, including any employees of such person and including a non-Employee Director of the Company or any Parent or Subsidiary thereof. A Participant shall not cease to be a Consultant in case of any temporary interruption in such person’s availability to provide services to the Company, its Parent, any Subsidiary, or any successor, which has been authorized in writing by the engaging company (or by the Parent or Subsidiary) prior to its commencement.
|
|
2.13.
|
"
Controlling Shareholder
" shall have the meaning ascribed to it in Section 32(i) of the Ordinance.
|
|
2.14.
|
"
Director
" means a member of the Board of Directors of the Company or any Parent or Subsidiary.
|
|
2.15.
|
"
Eligible Recipient
" means an Employee or Consultant.
|
|
2.16.
|
"
Employee
" means any person, including Officers and Directors, employed by the Company, or any Parent or Subsidiary of the Company, with or without payment. Subject to the provisions of any Applicable Law, a Participant shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company (or by the Parent or Subsidiary that employs the person) or (ii) transfers between locations of the Company (or the Parent or Subsidiary that employs the person) or between the Company, its Parent, any Subsidiary, or any successor.
|
|
2.17.
|
"
Exchange Act
" means the Securities Exchange Act of 1934, as amended.
|
|
2.18.
|
"
Employing Company
" shall have the meaning ascribed to it in Section 102(a) of the Ordinance.
|
|
2.19.
|
"
Exercise Price
" means the per share price at which a holder of an Award may purchase Shares issuable upon exercise of the Award.
|
|
2.20.
|
"
Fair Market Value
" means, as of any date, the value of Shares 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 or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its 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 the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable (if the Shares are listed or quoted on more than one established stock exchange or national market system, the Administrator shall determine the appropriate exchange or system);
|
|
(ii)
|
If the Shares are 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 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 Administrator.
|
2.21.
|
"
Incentive Stock Option
" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.
|
|
2.22.
|
"
Israeli Employee
" means a person who is a resident of the state of Israel or who is deemed to be a resident of the state of Israel for tax purposes, and who is an Employee or an Office Holder ("
Nose Missra
") of the Company, or any Parent or Subsidiary of the Company, in each case excluding a person who is a Controlling Shareholder prior to the issuance of the relevant Award or as a result thereof.
|
|
2.23.
|
"
Israeli Non-Employee
" means a person who is a resident of the state of Israel or who is deemed to be a resident of the state of Israel for tax purposes, and who is (i) a Consultant, who is not an Employee, or (ii) a Controlling shareholder (whether or not an employee of the Company or any Parent or Subsidiary thereof) prior to the issuance of the relevant Option or as a result thereof.
|
|
2.24.
|
"
ITA
" means the Israeli Income Tax Authorities.
|
|
2.25.
|
"
Nonstatutory Stock Option
" means an Option not intended to qualify as an Incentive Stock Option.
|
|
2.26.
|
"
Officer
" or "
Office Holder
" shall have the meaning ascribed to it in the Israeli Companies Law, 5759-1999, as amended from time to time.
|
|
2.27.
|
"
Non-Trustee 102 Option
" means an Option granted to an Employee pursuant to Section 102(c) of the Ordinance, which is not required to be held in trust by a Trustee.
|
|
2.28.
|
"
Option
" means a stock option granted pursuant to the Plan (including 102 Options, 3(i) Options, Incentive Stock Options and Nonstatutory Stock Options).
|
|
2.29.
|
"
Option Exchange Program
" means a program whereby outstanding Options are exchanged for Options with a lower Exercise Price.
|
|
2.30.
|
"
Ordinance
" means the Israeli Income Tax Ordinance (New Version), 1961, as amended, the rules promulgated thereunder, or any law or regulations which shall replace the Ordinance or Sections 3(i) or 102 promulgated thereunder.
|
|
2.31.
|
"
Parent
" means a company, whether now or hereafter existing, to which the Company is a Subsidiary.
|
|
2.32.
|
"
Participant
" means any Eligible Recipient selected by the Administrator, pursuant to the Administrator's authority in Section
4 below, to receive grants of Options, SARs, Restricted Stock, Resticted Stock Units
or any combination of the foregoing.
|
|
2.33.
|
"
Plan
" means this 2015 Equity Incentive Plan.
|
|
2.34.
|
"
Restricted Stock
" means Shares subject to certain restrictions granted pursuant to Section
18 below.
|
|
2.35.
|
"
Restricted Stock Unit
" means a right granted under and subject to restrictions pursuant to Section
19 below.
|
|
2.36.
|
"
SAR
" means a stock appreciation right granted under the Plan and described in Section
20 below.
|
|
2.37.
|
"
Share
" means an Ordinary Share of the Company, having a nominal value of NIS 0.20, as may be adjusted in accordance with Section
21 below.
|
|
2.38.
|
"
Section 102
" means section 102 of the Ordinance and any regulations, rules, orders or procedures promulgated thereunder as now in effect or as amended or replaced from time to time.
|
|
2.39.
|
"
Subsidiary
" means any company, whether now or hereafter existing, other than the first company, in an unbroken chain of companies, if each of the companies (other than the last company) in the unbroken chain, owns shares possessing more than fifty percent (50%) of the total combined voting power of all classes of shares in one of the other companies in such chain.
|
|
2.40.
|
"
Successor Company
" means a successor corporation in a Transaction or any parent or Affiliate thereof, as determined by the Administrator in its discretion.
|
|
2.41.
|
"
Transaction
" means: (i) a sale of all or substantially all of the assets of the Company, or a sale (including an exchange) of all or substantially all of the shares of the Company, to any person, or a purchase by a shareholder of the Company or by an Affiliate of such shareholder, of all or substantially all the shares of the Company held by all or substantially all other shareholders or by other shareholders who are not Affiliated with such acquiring party; (ii) a merger (including, a reverse merger and a reverse triangular merger), consolidation, amalgamation or like transaction of the Company with or into another corporation; (iii) a scheme of arrangement for the purpose of effecting such sale, merger, consolidation, amalgamation or other transaction; or (iv) such other transaction or set of circumstances that is determined by the Administrator, in its discretion, to be a transaction subject to the provisions of Section
21.4 below; excluding (a) any of the above transactions in clauses (i) through (iv) with a wholly-owned subsidiary (directly or indirectly) of the Company for the purpose if reincorporating the Company in another jurisdiction, (b) any of the above transactions in clauses (i) through (iii) if the Administrator determines that such transaction should be excluded from the definition hereof and the applicability of Section
21.4 below, (c) any of the above transactions in clauses (i) through (iv) in which shareholders of the Company prior to the transaction will maintain more than fifty percent (50%) of the voting power of the resulting or surviving entity after the transaction (provided, however, that shares of the resulting or surviving entity held by shareholders of the Company acquired by means other than the exchange or conversion of the shares of the Company shall not be used in determining if the shareholders of the Company own more than fifty percent (50%) of the voting power of the resulting or surviving entity (or its parent), but shall be used for determining the total outstanding voting power of the resulting or surviving entity); (d) any of the above transactions in clauses (i) through (iv) in connection with an issuance of securities by the Company as part of a transaction financing.
|
|
2.42.
|
"
Trustee
" means any person or entity appointed by the Company, any of its Parents or any of its Subsidiaries, as applicable, and approved by the ITA, to serve as a trustee, all in accordance with the provisions of Section 102(a) of the Ordinance.
|
|
2.43.
|
"
Trustee 102 Option
" means an Option granted pursuant to the rules set in Section 102(b) of the Ordinance and held in trust by a Trustee for the benefit of the Participant.
|
|
2.44.
|
"
102 Option
" means an Option granted under the rules of Section 102 of the Ordinance, as amended, or any law or regulations, which shall replace Section 102.
|
|
2.45.
|
"
102 Capital Gain Options (102 CGO)
" means a Trustee 102 Option elected and designated by the Employing Company to qualify for capital gain tax treatment in accordance with the provisions of Section 102(b)(2) of the Ordinance.
|
|
2.46.
|
"
102 Ordinary Income Option (102 OIO)
" means a Trustee 102 Option elected and designated by the Employing Company to qualify for ordinary income tax treatment in accordance with the provisions of Section 102(b)(1) of the Ordinance.
|
|
2.47.
|
"
3(i) Option
" means an Option granted under the rules of Section 3(i) of the Ordinance, as amended, or any law or regulations, which shall replace Section 3(i).
|
3.
|
Shares Subject to the Plan
|
4.
|
Administration of the Plan
|
|
4.1.
|
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. 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.
|
|
4.2.
|
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 and compliance with all Applicable Laws, the Administrator shall have the full power and authority at its sole discretion, from time to time and at any time:
|
|
(i)
|
To determine whether and to what extent Awards are to be granted hereunder to Participants;
|
|
(ii)
|
To determine and/or amend the Exercise Price of the Awards;
|
|
(iii)
|
To determine and/or amend the terms of payment for the Shares;
|
|
(iv)
|
To select the Eligible Recipients to whom Awards may from time to time be granted hereunder;
|
|
(v)
|
To determine the number of Shares to be covered by each Award granted hereunder;
|
|
(vi)
|
To approve forms of agreement for use under the Plan;
|
|
(vii)
|
To determine the terms and conditions of any Award granted hereunder. Such terms and conditions shall include, but shall not be limited to, the Exercise Price, the time or times and the extent to which the Awards 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 Award or the Shares relating thereto, based in each case on such factors as the Administrator, at its sole discretion, shall determine;
|
|
(viii)
|
To determine the Fair Market Value of the shares covered by each Award;
|
|
(ix)
|
To make an election as to the type of 102 Option;
|
|
(x)
|
To establish or alter any restrictions or conditions of any Award or Shares subject to any Award;
|
|
(xi)
|
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;
|
|
(xii)
|
To authorize conversion or substitution under the Plan of any or all Awards and to cancel or suspend Awards, as necessary, provided the material interests of the Participants are not harmed;
|
|
(xiii)
|
To construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;
|
|
(xiv)
|
To alter, revise or otherwise adjust the terms of the Plan and the Award Agreement, as may be required pursuant to any applicable laws of local or foreign jurisdictions;
|
|
4.3.
|
In the event of a tie vote with respect to any matter brought before the Administrator, such matter shall be presented to the Board and the decision of the Board shall be final with respect to such matter.
|
|
4.4.
|
Neither the Trustee nor any member of the Board or the Committee shall be liable to the Company or to any Participant, for any action or determination taken or made in good faith as a Committee member in the course of administrating the Plan. Each member of the Board or the Committee shall be indemnified and held harmless by the Company or by any Participant 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 Plan unless arising out of such member's own fraud or bad faith, all 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 charter documents, any agreement, any vote of shareholders or disinterested directors, insurance policy or otherwise.
|
|
4.5.
|
Effect of Administrator’s Decision
. All decisions, determinations and interpretations of the Administrator shall be final and binding on all Participants.
|
5.
|
Term of Plan
|
|
5.1.
|
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
23 below.
|
|
5.2.
|
Termination of the Plan shall not affect the Administrator's ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.
|
6.
|
Eligibility
|
7.
|
Options
to Non Israeli Participants
|
|
7.1.
|
Unless the Administrator determines otherwise at any time and subject to Applicable Laws, Nonstatutory Stock Options may be granted to non-Israeli Employees and non-Israeli Consultants and Incentive Stock Options may be granted only to non-Israeli Employees.
|
|
7.2.
|
Each Option granted to Non Israeli Participants shall be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option, unless the Administrator determines otherwise at any time and subject to Applicable Laws. 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 Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, then unless the Administrator determines otherwise at any time and subject to the requirements of any applicable law, such options shall be treated as Nonstatutory Stock Options. For purposes of this Section, 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.
|
8.
|
Options to Israeli Participants
|
|
8.1.
|
Unless the Administrator determines otherwise at any time and subject to Applicable Laws, Israeli Employees may be granted only 102 Options and Israeli Non-Employees may be granted only 3(i) Options. In each case, such options shall be subject to the terms and conditions of the Ordinance.
|
|
8.2.
|
The Employing Company may designate 102 Options granted to Israeli Employees pursuant to Section 102 as Non-Trustee 102 Options or as Trustee 102 Options.
|
9.
|
Trustee 102 Options
|
|
9.1.
|
Options granted pursuant to this Section
9 are intended to constitute Trustee 102 Options and are subject to the provisions of Section 102 and the general terms and conditions specified in the Plan, except for such provisions of the Plan applying to options under a different tax law or regulation.
|
|
9.2.
|
Unless the Administrator determines otherwise at any time and subject to Applicable Laws, Trustee 102 Options may be granted only to Israeli Employees.
|
|
9.3.
|
Unless the Administrator determines otherwise at any time and subject to Applicable Laws, Trustee 102 Options shall be classified as either 102 CGO or 102 OIO, subject to the terms and conditions of Section 102 and the provisions of the Plan.
|
|
9.4.
|
Unless the Administrator determines otherwise at any time and subject to Applicable Laws, no Trustee 102 Options may be granted under this Plan, unless the Employing Company’s election of the type of Trustee 102 Options granted to Israeli Employees, 102 CGO or 102 OIO (the "
Election
"), is appropriately filed with the ITA.
|
|
9.5.
|
After making an Election, unless the Administrator determines otherwise at any time and subject to Applicable Laws, the Company may grant only the type of Trustee 102 Options it has elected (i.e. 102 CGO or 102 OIO), and the Election shall apply to all grants to Participants of Trustee 102 Options until such Election is changed pursuant to the provisions of Section 102(g) of the Ordinance. Unless the Administrator determines otherwise at any time and subject to Applicable Laws, the Employing Company may change such Election only after the passage of at least one year following the end of the year during which the applicable Employing Company first granted Trustee 102 Options in accordance with the previous Election.
|
|
9.6.
|
For the avoidance of doubt, such Election shall not prevent the Company from granting Non-Trustee 102 Options or 3(i) Options simultaneously with the grant of Trustee 102 Options.
|
|
9.7.
|
The grant of Trustee 102 Options shall be conditioned upon the approval (or the deemed approval pursuant to the provisions of section 102(a) of the Ordinance) of the Plan and the Trustee by the ITA.
|
|
9.8.
|
Unless the Administrator determines otherwise at any time ans subject to Applicable Laws, Trustee 102 Options may be granted only after the passage of thirty (30) days (or a shorter period as and if approved by the ITA) following the delivery by the appropriate Employing Company to the ITA of a request for approval of the Plan and the Trustee according to Section 102, as mentioned in section 9.4 above.
|
|
9.9.
|
Notwithstanding the foregoing paragraph, if within ninety (90) days of delivery of the abovementioned request, the appropriate ITA officer notifies the Employing Company of his or her decision not to approve the Plan or the Trustee, the Options that were intended to be granted as a Trustee 102 Options shall be deemed to be Non-Trustee 102 Options, unless otherwise determined by the ITA officer.
|
|
9.10.
|
Anything herein to the contrary notwithstanding, all Trustee 102 Options granted under this Plan shall be granted or issued to a Trustee. The Trustee shall hold each such Trustee 102 Option, all Shares issued upon exercise thereof, and all other securities received following any exercise or realization of rights, including bonus shares, in trust for the benefit of the Participant in respect of whom such Option was granted. All certificates representing Options or 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 Options or Shares are released from the trust.
|
|
9.11.
|
With respect to 102 CGO and 102 OIO, the Options or Shares issued upon the exercise thereof and all rights related to them, including bonus shares, will be held by the Trustee for such period of time as required under Section 102 (currently, at least 24 months (in case of a 102 CGO) and 12 months (in case of a 102 OIO), from the date on which such Option was issued and deposited with the Trustee) or a shorter period as approved by the ITA (hereinafter, the "
Holding Period
"), under the terms set forth in Section 102.
|
|
9.12.
|
Unless the Administrator determines otherwise at any time and subject to Applicable Laws, in accordance with Section 102, the Participant shall not sell, cause the release from trust, or otherwise dispose of, any Trustee 102 Option, any Share issued upon the exercise thereof, or any rights related to them, including bonus shares, until the end of the applicable Holding Period. Notwithstanding the foregoing but without derogating from the provisions of the Plan and the terms and conditions set forth in the Award Agreement, if any such sale, release, or disposition occurs during the Holding Period, then the provision of Section 102, relating to non-compliance with the Holding Period, will apply and all sanctions under Section 102 shall be borne by the Participant.
|
|
9.13.
|
Anything herein to the contrary notwithstanding, the Trustee shall not release any Options which were not already exercised into Shares by the Participant, nor release any Shares issued upon exercise of the Trustee 102 Options or rights related thereto, including bonus shares, prior to the full payment of the Exercise Price and Participant’s tax liability arising from the Trustee 102 Options which were granted to him or her.
|
|
9.14.
|
In the event that a stock split shall be effected or bonus shares shall be issued on account of the Shares which have been issued for the Participant’s benefit, such new split or bonus shares shall be transferred by the Company to the Trustee to hold for such Participant's benefit.
|
|
9.15.
|
The validity of any order given to the Trustee by a Participant shall be subject to the approval of the Company. The Company shall render its decision regarding orders given by any Participant to the Trustee within a reasonable period of time. The Company shall not be required to approve any order which is incomplete, is not in accordance with the provisions of this Plan and the relevant Award Agreement or which the Company believes should not be executed for any reasonable reason. The Company shall notify the Participant of the reason for not approving his/her order. Approval by the Company of any order given to the Trustee by a Participant shall not constitute proof of the Company’s recognition of any right of such Participant.
|
|
9.16.
|
Without derogating from the aforementioned, the Administrator shall have the authority to determine the specific procedures and conditions of the trusteeship with the Trustee in a separate agreement between the Company and the Trustee.
|
|
9.17.
|
In the event that the requirements for the Trustee 102 Options are not met, then the Trustee 102 Options shall be regarded as Non-Trustee 102 Options.
|
|
9.18.
|
Upon receipt of a Trustee 102 Option, the Participant will sign an Award Agreement under which such Participant will agree to be subject to the trust agreement between the Company and/or its Subsidiaries and the Trustee, stating,
inter alia
, that the Trustee will be released from any liability in respect of any action or decision duly taken and executed in good faith in relation to this Appendix, or any Trustee 102 Option or Share issued to him or her thereunder.
|
10.
|
Fair Market Value For Israeli Tax Purposes
|
11.
|
Integration of Section 102 and Tax Assessing Officer's Permit
|
12.
|
Non-Trustee 102 Options
|
|
12.1.
|
Options granted pursuant to this Section 12 are intended to constitute Non-Trustee 102 Options and are subject to the provisions of Section 102 and the general terms and conditions specified in the Plan, except for such provisions of the Plan applying to Options granted under a different tax law or regulations.
|
|
12.2.
|
Unless the Administrator determines otherwise at any time and subject to Applicable Laws, Non-Trustee 102 Options may be granted only to Israeli Employees.
|
|
12.3.
|
Non-Trustee 102 Options shall be granted pursuant to the Plan may be issued directly to the Israeli Employee or to a trustee appointed by the Administrator in his\its sole discretion. In the event that the Administrator determines that Non-Trustee 102 Options, and Shares issued upon the exercise thereof, shall be deposited with a trustee, the provisions of Sections
9.10,
9.13, and
9.17 hereof shall apply,
mutatis mutandis
.
|
|
12.4.
|
Unless the Administrator determines otherwise at any time and subject to Applicable Laws, in the event that an Israeli Employee who was granted a Non-Trustee 102 Option is an employee of the Company, or any Parent or Subsidiary thereof, such employee will be obligated to provide his employer, upon the termination of his employment for any reason, with a security or guarantee to cover any future tax obligation resulting from the grant, exercise or disposition of the Option or the Shares issuable upon the exercise thereof, in the form satisfactory to such employer in the latter’s sole discretion.
|
13.
|
3(i) Options
|
|
13.1.
|
Options granted pursuant to this Section 13 are intended to constitute 3(i) Options and are subject to the provisions of Section 3(i) of the Ordinance and the general terms and conditions specified in the Plan, except for provisions of the Plan applying to Options granted under a different tax law or regulations.
|
|
13.2.
|
Unless the Administrator determines otherwise at any time and subject to Applicable Laws, 3(i) Options may be granted only to Israeli or foreigners Non-Employees.
|
|
13.3.
|
3(i) Options that shall be granted pursuant to the Plan may be issued directly to the Israeli and foreigners Non-Employee or to a trustee appointed by the Administrator in his\its sole discretion. In the event that the Administrator determines that 3(i) Options, and Shares issued upon the exercise thereof, shall be deposited with a trustee, the provisions of Sections
9.10,
9.13, and
9.17 hereof shall apply,
mutatis mutandis
.
|
14.
|
General Provisions
|
|
14.1.
|
Term of Option
. The expiration date of the term of each Option shall be stated in the Award Agreement (the "
Expiration Date
"); provided, however, that in no event the term of any Option shall be more than ten (10) years from the date of grant thereof. Each unexercised Option shall automatically expire and shall no longer be exercisable immediately upon the earlier of: (i) the Expiration Date of such Option (as set forth in the applicable Award Agreement), or (ii) at the time at which such Option otherwise expires pursuant to the terms of the Plan.
|
|
14.2.
|
Option Exercise Price and Consideration
|
|
(i)
|
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 at any time at its sole and absolute discretion, subject to any Applicable Laws.
|
|
(ii)
|
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 at the time of grant and/or at any time thereafter, subject to any Applicable Law. Such consideration may consist of (1) cash; (2) check; (3) previously acquired Shares based on the Fair Market Value of the Shares on the date the Option is exercised; (4) a cashless exercise method, whereby the Option Exercise Price will not be due in cash and where the number of Shares issued upon such exercise will be equal to: (A) the product of (i) the number of Shares as to which the Option is then being exercised, and (ii) the excess, if any, of (a) the then current Fair Market Value per Share over (b) the Option Exercise Price, divided by (B) the then current Fair Market Value per Share; (5) any combination of the foregoing methods of payment; or (6) any other method as shall be determined by the Adminsitrator at its sole discretion.
|
|
14.3.
|
Manner of Exercising the Option
|
|
(i)
|
Procedure for Exercise; Rights as a Shareholder
. 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 Award Agreement and in accordance with the requirements of Section 102 of the Ordinance, if applicable.
|
|
(ii)
|
In the event of any conflict between the terms and conditions of an Award Agreement and the terms hereof, the terms hereof shall control, unless explicitly provided otherwise in the Award Agreement.
|
|
(iii)
|
Unless the Administrator provides otherwise at any time, vesting of Options granted hereunder shall be ceased during any unpaid leave of absence.
|
|
(iv)
|
Unless the Administrator determines otherwise at any time and subject to Applicable Laws, an Option shall be deemed exercised when the Company receives: (i) written notice of exercise (in accordance with the Award 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 Award Agreement and the Plan. Unless the Administrator determines otherwise at any time and subject to Applicable Laws, Shares issued upon exercise of an Option (excluding Shares underlying a 102 Option, which Shares shall be issued in the name of the Trustee) shall be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse.
|
|
(v)
|
Until the applicable 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 shareholder shall exist with respect to such Shares, notwithstanding the exercise of the Option, nor shall the Participants be deemed to be a class of shareholders or creditors of the Company for the purpose of the operation of sections 350 and 351 of the Israeli Companies Law, 5759-1999 or any successor to such sections.
|
|
(vi)
|
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, including without limitation, in connection with rights offering, for which the record date is prior to the date the Shares are issued, except as provided in Section
21 hereof.
|
|
(vii)
|
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.
|
|
(viii)
|
An Option may not be exercised for fractional shares.
|
15.
|
Non-Transferability
of
Options
|
|
15.1.
|
Unless the Administrator determines otherwise at any time and subject to Applicable Laws, Options 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 Participant, only by the Participant.
|
|
15.2.
|
Without derogating from the foregoing and unless the Administrator determines otherwise at any time and subject to Applicable Laws, for as long as Options or Shares purchased upon the exercise thereof are held by the Trustee on behalf of the Participant, all rights of the Participant with respect to such Options and Shares shall be personal, and may not be transferred, assigned, pledged or mortgaged, other than by will or laws of descent and distribution.
|
|
15.3.
|
Without derogating from the inherent power of the shareholders of the Company to alter or modify the rights of the Company’s shares, the Administrator may impose on any Participant such additional restrictions on the transfer of Shares as the Administrator may determine at the time that Options are granted to the Participant or as may be agreed to by the Administrator and the Participant following purchase of said Shares upon exercise of such Options under this Plan or upon termination of the Participant’s employment or service with the Company. Such additional restrictions shall be included in the Award Agreement entered into between the Company and the Participant, or, upon agreement of the Participants, or in this Plan.
|
16.
|
Rights and Restrictions Attaching to the Shares
|
|
16.1.
|
Equal Rights
. Unless the Administrator determines otherwise at any time and subject to Applicable Laws, the Shares shall have equal rights for all intents and purposes as the rights attached to Shares of the Company according to the Articles, subject also to the provisions of this Plan and the Award Agreement. Any change to Articles which modify rights attaching to the Company’s shares shall also apply to the Awards and the Shares. The provisions of the Plan shall remain applicable, with the necessary modifications arising from any such amendment. The grant of Awards or the issuance of Shares under this Plan shall not entitle any Participant to receive any compensation in the event of any change to the Company's capital.
|
|
16.2.
|
Dividend Rights
. Unless the Administrator determines otherwise at any time and subject to Applicable Laws, all Shares issued upon the exercise of Options granted under the Plan, shall entitle the Participant thereof, or the Trustee for the benefit of Participant, subject to any applicable taxation on distribution of dividends and, when applicable, subject to the provisions of Section 102, to receive dividends with respect thereto in accordance with the Articles, provided, however, that Participant, or the Trustee for the benefit of Participant, shall have no right to dividends or distribution or other right, including without limitation in connection with rights offering, with respect to Shares for which the record date is prior to the date on which the Participant shall have become the holder of record.
|
17.
|
Termination of Relationship as an Employee or as a Consultant
|
|
17.1.
|
Subject to the provisions of Sections
17.4 and
17.5 below, if a Participant ceases to be an Employee or a Consultant, such Participant may exercise his or her Option or SAR within such additional period of time beyond the date of such termination as is specified in the applicable Award Agreement (and with respect to Options, solely to the extent that the Option is vested on the date of such termination), but in no event later than the Expiration Date of such Option or SAR (for the purpose of this Section
17.1 the "
Extended Period
"). In the absence of a specified Extended Period in the Award Agreement and unless the Administrator determines otherwise at any time, the Option (solely to the extent that the Option is vested on the date of such termination) and/or SAR shall remain exercisable for, and the Exetnded Period shall be deemed to be, three (3) months following the Participant’s termination (but in no event later than the Expiration Date of such Option or SAR). If, on the date of termination, the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall automatically revert to the Plan and shall no longer be exercisable. If, after termination of engagement with the Company, the Participant does not exercise the vested portion of his or her Option and/or the SAR within the Extended Period, the Option and/or SAR shall forthwith terminate, and the Shares covered by such Option and/or SAR shall automatically revert to the Plan. For the avoidance of doubt, Awards granted hereunder shall not continue to vest during the Extended Period.
|
|
17.2.
|
At any time, including following the date on which an Award is granted the Administrator, at its sole and absolute discretion and without such act constituting a precedent in respect of any other Participant, shall be entitled to extend the period during which the Participant shall be entitled to exercise his\her vested Options and/or SAR, by a period to be fixed by the Administrator.
|
|
17.3.
|
Anything in this Plan to the contrary notwithstanding, but subject to the provisions of section 102 of the Ordinance and the tax regulations thereto, if a Participant ceases to be an Employee or a Consultant of the Company or any Parent or Subsidiary thereof, but continues to be employed or provide services to the Company or any other Parent or Subsidiary thereof, such Participant will be deemed for the purpose of this Section
17 to have continuously remained an Employee or a Consultant of the Company (as applicable) during such term, and his/her Awards shall vest pursuant to their original terms. Notwithstanding anything to the contrary hereinabove, unless the Administrator determines otherwise at any time and subject to Applicable Laws, if termination of Participant is for Cause, the entire unexercised Option (whether vested or not) and/or SAR shall
ipso facto
terminate and the Shares covered by such Option shall automatically revert to the Plan.
|
|
17.4.
|
Retirement
. If a Participant should retire, he/she may, subject to the approval of the Administrator (at its sole discretion), continue to enjoy such rights, if any, with respect to his/her Awards under the Plan and on such terms and conditions, with such limitations and subject to such requirements as the Administrator, at its sole discretion, may determine at the time of such retirement or at any time theretofore.
|
|
17.5.
|
Death or Disability of Participant
. If Participant engagement with the Company as an Employee or a Consultant is terminated as a result of the Participant’s death or permanent disability ("
Disability
"), the Participant (or, if the Participant died, the Participant’s estate or any person who acquired the right to exercise the Option by bequest or inheritance) may exercise his or her Option and/or SAR within such additional period of time thereafter as is specified in the Award Agreement (which period shall be of at least six (6) months) (and with respect to Options, to the extent the Option is vested on the date of such termination), but in no event later than the Expiration Date of the such Option and/or SAR (for the purpose of this Section
17.5 the "
Extended Period
"). In the absence of a specified Extended Period in the Award Agreement, the Option, to the extent it is vested on the date of such termination, and/or the SAR shall remain exercisable for, and the Exetnded Period shall be deemed to be, twelve (12) months following the Participant’s termination, or any longer period determined by the Administrator (but in no event later than the Expiration Date of such Option and/or SAR). If, on the date of termination, the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall automatically revert to the Plan and shall no longer be exercisable. If, after termination, the the vested portion of the Participant's Option and/or SAR are not exercised within the applicable Extended Period, the Option and/or SAR shall forthwith terminate, and the Shares covered by such Option and/or SAR shall automatically revert to the Plan. For the avoidance of doubt, the Awards granted hereunder shall not continue to vest during the Extended Period.
|
18.
|
Restricted Stock
|
|
18.1.
|
Awards of Restricted Stock may be issued either alone or in addition to other Awards granted under the Plan (including, without limitation, under Section 102). The Administrator shall determine, at its sole discretion, the Eligible Recipients to whom, and the time or times at which, Awards of Restricted Stock shall be made, the number of Shares to be awarded, the Exercise Price, if any, to be paid by the Participant for the acquisition of Restricted Stock, the Restricted Period (as defined in Section
18.3(i) below) and all other conditions of the Awards of Restricted Stock. The Administrator may also condition the grant of the Award of Restricted Stock upon the exercise of Options, or upon such other criteria as the Administrator may determine, at its sole discretion. The provisions of the Awards of Restricted Stock need not be the same with respect to each Participant.
|
|
18.2.
|
Awards and Certificates
|
|
(i)
|
The prospective recipient of Awards of Restricted Stock shall not have any rights with respect to any such Award, unless and until such recipient has executed an Award Agreement evidencing the Award (a "
Restricted Stock Award Agreement
") and delivered a fully executed copy thereof to the Company, within a period of sixty (60) days (or such other period as the Administrator may specify at any time) after the Award date and has otherwise complied with the applicable terms and conitions of such Award.
|
|
(ii)
|
Except as otherwise provided below in Section
(iii), (a) each Participant who is granted an Award of Restricted Stock shall be issued a share certificate in respect of such Shares of Restricted Stock, and (b) such certificate shall be registered in the name of the Participant (or, if so determined by the Administrator or required under any Applicable Law – such certificate shall be registered in the name of the Trustee), and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to any such Award.
|
|
(iii)
|
The Company may require that the share certificates evidencing Restricted Stock granted hereunder be held in the custody of the Company until the restrictions thereon shall have lapsed, and that, as a condition of any Award of Restricted Stock, the Participant shall have delivered a stock power, endorsed in blank, relating to the Shares covered by such Award.
|
|
18.3.
|
Restrictions and Conditions
|
|
(i)
|
Subject to the provisions of the Plan and the Restricted Stock Award Agreement governing any such Award, during such period as may be set by the Administrator commencing on the date of grant (the "
Restricted Period
"), the Participant shall not be permitted to sell, transfer, pledge, assign or otherwise dispose Shares of Restricted Stock awarded under the Plan;
provided
, however, that the Administrator may at any time and at its sole discretion, provide for the lapse of such restrictions in installments and may accelerate or waive such restrictions in whole or in part based on such factors and such circumstances as the Administrator may determine, at its sole discretion, including, but not limited to, the attainment of certain performance related goals, the Participant's termination of employment or service as a director, consultant or advisor to the Company, any Subsidiary or Affiliate, the Participant's death or permanent disability or the occurrence of a Transaction.
|
|
(ii)
|
Once the Participant has been issued a certificate or certificates for Restricted Stock or the Restricted Stock has been issued in the Participant’s name by book-entry registration, the Participant will have, with respect to the Restricted Stock, the right to vote the Shares, but will not have the right to receive any cash distributions or dividends prior to the lapse of the Restriction Period unless otherwise determined by the Adminstrator at any time and subject to Applicable Laws. If any cash distributions or dividends are payable with respect to the Restricted Stock, the Administrator, in its sole discretion, may require the cash distributions or dividends to be subjected to the same Restriction Period as is applicable to the Restricted Stock with respect to which such amounts are paid, or, if the Administrator so determines, to allocate such cash distributions or dividends among all other eligible shareholders, or to reinvest such cash distributions or dividends in additional Restricted Stock to the extent Shares are available under Section
3 of the Plan. If the Administrator determines that cash distributions or dividends shall be payable with respect to the Restricted Stock, such dividends shall be paid or distributed at the end of the Restriction Period and a Participant shall not be entitled to interest with respect to any such dividends or distributions subjected to the Restriction Period. Unless otherwise determined by the Adminstrator at any time subject to Applicable Laws, any distributions or dividends paid in the form of securities with respect to Restricted Stock will be subject to the same terms and conditions as the Restricted Stock with respect to which they were paid, including, without limitation, the same Restriction Period.
|
|
(iii)
|
Subject to the provisions of the applicable Award Agreement or as otherwise determined by the Administrator at any time, if a Participant’s service or employment with the Company, its Subsidiary or Parent terminates prior to the expiration of the applicable Restriction Period, the Participant’s Restricted Stock and any associated dividends, if any, that then remain subject to forfeiture will then be forfeited automatically. Upon forfeiture of Restricted Stock, the Participant shall have no further rights with respect to such Restricked Stock.
|
|
(iv)
|
In the event that Awards of Restricted Stock are granted to Israeli Employees, such grant shall be subject to the provisions of Section 102 and the provisions of Sections
8,
9,
10,
11,
12, and
14 hereof shall apply to such Award,
mutatis mutandis
.
|
19.
|
Restricted Stock Units
|
20.
|
Stock Appreciation Rights
|
|
20.1.
|
Nature of Award
. Unless otherwise determined by the Administrator at any time and subject to Applicable Law, upon the exercise of a SAR, its holder will be entitled to receive an amount equal to the excess (if any) of: (i) the Fair Market Value of the Shares covered by such SAR as of the date such SAR is exercised, over (ii) the Fair Market Value of the Shares covered by such SAR as of the date such SAR was granted. Such amount may be paid in either cash and/or Shares, as determined by the Administrator at any time, in its sole and absolute discretion.
|
|
20.2.
|
Terms and Conditions
. Unless otherwise determined by the Administrator at any time and subject to Applicable Law, the Award Agreement evidencing any SAR will incorporate the following terms and conditions and will contain such additional terms and conditions, as the Administrator deems appropriate in its sole and absolute discretion:
|
|
(i)
|
Term of SAR
. Unless otherwise specified in the applicable Award Agreement, the term of a SAR will be ten (10) years.
|
|
(ii)
|
Exercisability
. SARs will vest and become exercisable at such time or times and subject to such terms and conditions as will be determined by the Adminstrator at the time of grant or at any time thereafter, subject to Applicable Laws.
|
|
(iii)
|
Method of Exercise
. Subject to terms of the applicable Award Agreement, the exercisability provisions of Section
20.2(ii) and the termination provisions of Section
17 above, SARs may be exercised in whole or in part from time to time during their term by delivery of written notice to the Company specifying the portion of the SAR to be exercised.
|
|
(iv)
|
Termination of Service
. Unless otherwise specified in the applicable Award Agreement, SARs will be subject to the terms of Section
17 with respect to exercise upon termination of employment or other service.
|
|
(v)
|
Non-Transferability
. Except as may otherwise be specifically determined by the Administrator at any time with respect to a particular SAR: (A) SARs may not be sold, pledged, assigned, hypothecated, gifted, transferred or disposed of in any manner either voluntarily or involuntarily by operation of law, other than by will or by the laws of descent or distribution, and (B) during the Participant’s lifetime, SARs will be exercisable only by the Participant (or, in the event of the Participant’s Disability, by his personal representative).
|
21.
|
Adjustments
|
|
21.1.
|
Changes in Capitalization
. Subject to any required action by the shareholders of the Company, the number of Shares covered by each outstanding Award, and the number of Shares which have been authorized for issuance under the Plan but as to which no Awards have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Award, as well as the Exercise Price of Shares covered by each such outstanding Award, may be proportionately adjusted upon any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock dividend (if so determined by the Board upon the issuance of such stock dividend), combination or reclassification of the Shares, or any other increase or decrease in the number of issued Shares 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 any class, or securities convertible into shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to an Award.
|
|
21.2.
|
Dissolution or Liquidation
. In the event of the proposed dissolution or liquidation of the Company, any or all outstanding Awards will terminate immediately prior to the consummation of such proposed action. The Administrator may, in the exercise of its sole discretion in such instances, declare that any Award shall terminate as of such other date fixed by the Administrator and give each Participant the right to exercise his\her Award as to all or any part of the Shares, including Shares as to which the Award would not otherwise be exercisable.
|
|
21.3.
|
Changes to Plan
. The Administrator shall be entitled, from time to time, to update and/or change the terms of this Plan, in whole or in part, at its sole discretion, provided that in the Board’s opinion such a change shall not materially derogate from the terms of the Awards or Shares issued under this Plan. The Board shall be entitled to terminate this Plan at any time provided such termination does not materially affect the rights of Participants, to whom Awards have been granted.
|
|
21.4.
|
Transaction
. Without derogating from the Administrator’s general authority and power under this Plan, in the event of a Transaction the following shall occur, without the Participant’s consent and action and without any prior notice requirement:
|
|
21.4.1
|
Unless otherwise determined by the Administrator in its sole and absolute discretion, any Award then outstanding shall be assumed or be substituted by the Company, or by a Successor Company, under terms as determined by the Administrator or the terms of this Plan applied by the Successor Company to such assumed or substituted Awards;
|
|
21.4.2
|
Regardless of whether or not Awards are assumed or substituted, the Administrator may (but shall not be obligated to), in its sole discretion:
|
|
(a)
|
provide for any Participant to have the right to exercise the Award in respect of Shares covered by the Award which would otherwise be exercisable or vested, under such terms and conditions as the Administrator shall determine, and the cancellation of all unexercised and unvested Awards upon or immediately prior to the closing of the Transaction, unless the Administrator provides for the Participant to have the right to exercise the Award; and/or
|
|
(b)
|
provide for the acceleration of vesting of such Award, as to all or part of the Shares covered by the Award which would not otherwise be exercisable or vested, under such terms and conditions as the Administrator shall determine; and/or
|
|
(c)
|
provide for the cancellation of each outstanding Award at or immediately prior to the closing of such Transaction, and payment to the Participant of an amount in cash, shares of the Company, the acquirer or of a corporation or other business entity which is a party to the Transaction or other property, as determined by the Administrator to be fair in the circumstances, and subject to such terms and conditions as determined by the Administrator. The Administrator shall have full authority to select the method for determining the payment (being the Black-Scholes model or any other method). The Administrator’s determination may further provide that payment shall be set to zero if the value of the Shares is determined to be less than the Exercise Price or in respect of Shares covered by the Award which would not otherwise be exercisable or vested, or that payment may be made only in excess of the Exercise Price.
|
|
21.4.3
|
The Administrator may determine that any payments made in respect of Awards shall be (i) subject to vesting terms substentialy identical to those that applied to the canceled Award immediately prior to the Transaction; and/or (ii) made or delayed to the same extent that payment of consideration to the holders of the Shares in connection with the Transaction is made or delayed as a result of escrows, indemnification, earn outs, holdbacks or any other contingencies; and the terms and conditions applying to the payment made to the Participants, including participation in escrow, indemnification, releases, earn-outs, holdbacks or any other contingencies.
|
|
21.4.4
|
Notwithstanding the foregoing, in the event of a Transaction, the Administrator may determine, in its sole discretion that upon completion of such Transaction the terms of any Award be otherwise amended, modified or terminated, as the Administrator shall deem in good faith to be appropriate and without any liability to the Company or any Affiliate, Parent or Subdisiary thereof, and to their respective its officers, directors, employees and representatives and the respective successors and assigns of any of the foregoing in connection with the method of treatment or chosen course of action permitted hereunder.
|
|
21.4.5
|
Neither the authorities and powers of the Administrator under this Section 21.4, nor the exercise or implementation thereof, shall (i) be restricted or limited in any way by any adverse consequences (tax or otherwise) that may result to any holder of an Award, and (ii) as,
inter alia
, being a feature of the Award upon its grant, be deemed to constitute a change or an amendment of the rights of such holder under this Plan, nor shall any such adverse consequences (as well as any adverse tax consequences that may result from any tax ruling or other approval or determination of any relevant tax authority) be deemed to constitute a change or an amendment of the rights of such holder under this Plan, and may be effected without consent of any Participant and without any liability to the Company or its Affiliates and to their respective its officers, directors, employees and representatives and the respective successors and assigns of any of the foregoing. The Administrator needs not take the same action with respect to all Awards or with respect to all Eligible Recipients. The Administrator may take different actions with respect to the vested and unvested portions of an Award. The Administrator may determine an amount or type of consideration to be received or distributed in a Transaction which may differ as among the Participants, and as between the Participants and any other holders of shares of the Company.
|
|
21.4.6
|
The Administrator’s determinations pursuant to this Section
21.4 shall be conclusive and binding on all Participants.
|
|
21.4.7
|
If determined by the Administrator, the Participants shall be subject to the definitive agreement(s) in connection with the Transaction as applying to holders of Shares including, such terms, conditions, representations, undertakings, liabilities, limitations, releases, indemnities, participating in transaction expenses and escrow arrangement, in each case as determined by the Administrator. Each Participant shall execute such separate agreement(s) or instruments as may be requested by the Company, the Successor Company or the acquirer in connection with such in such Transaction and in the form required by them. The execution of such separate agreement(s) may be a condition to the receipt of assumed or substituted Awards, payment in lieu of the Award or the exercise of any Award.
|
22.
|
Time of Granting Awards
|
23.
|
Amendment and Termination of the Plan
|
|
23.1.
|
Amendment and Termination
. The Board may at any time amend, alter, suspend or terminate the Plan.
|
|
23.2.
|
Shareholders Approval
. The Board shall obtain shareholders approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.
|
|
23.3.
|
Effect of Amendment or Termination
. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant 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 Awards granted under the Plan prior to the date of such termination.
|
24.
|
Conditions Upon Issuance of Shares
|
|
24.1.
|
Legal Compliance
. Shares shall not be issued pursuant to the exercise of an Award granted hereunder unless the exercise of such Award 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.
|
|
24.2.
|
Investment Representations
. The Administrator may require each Participant acquiring Shares to represent and warrant 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.
|
|
24.3.
|
Market Stand-Off
. In connection with any public offering of the Company’s equity securities, pursuant to an effective registration statement, for such period as the Company or its underwriters may request (such period not to exceed one hundred and eighty (180) days following the date of the applicable offering), the Participant 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 Plan without the prior written consent of the Company or its underwriters.
|
25.
|
Rights as a Shareholder; Voting and Dividends
|
|
25.1.
|
Subject to Section
18.3(ii) and unless otherwise determined by the Administrator at any time and subject to Applicable Laws, a Participent shall have no rights as a shareholder of the Company with respect to any Shares covered by the Award until the date of the issuance of a share certificate to the Participent for such Shares. In the case of 102 Option or 3(i) Option (if such Options are being held by a Trustee), the Trustee shall have no rights as a shareholder of the Company with respect to any Shares covered by such Award until the date of the issuance of a share certificate to the Trustee for such Shares for the Participent’s benefit, and the Participent shall have no rights as a shareholder of the Company with respect to any Shares covered by the Award until the date of the release of such Shares from the Trustee to the Participent and the issuance of a share certificate to the Participent for such Shares. Unless otherwise determinaed by the Adminstrator at any time and subject to Applicable Laws, no adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or distribution of other rights, including without limitation in connection with any rights offering, for which the record date is prior to the date such share certificate is issued.
|
|
25.2.
|
The Company may, but shall not be obligated to, register or qualify the sale of Shares under any applicable securities law or any other Applicable Law.
|
26.
|
No Right for Continuing Relationship
|
27.
|
Inability to Obtain Authority
|
28.
|
Default
|
29.
|
Notices
|
30.
|
Reservation of Shares
|
31.
|
Miscellaneous
|
|
31.1.
|
Any tax consequences arising from the grant or exercise of any Awards or from the payment for, or the sale of or other disposition of,s Shares covered thereby or from any other event or act (whether of the Participant, the Trustee, or the Company or its Subsidiaries) hereunder, shall be borne solely by the Participant. The Company, its Parents, subsidiaries and the Trustee shall be entitled to withhold taxes according to the requirements of any Applicable Laws, rules and regulations, including withholding taxes at source and particularly regulation 7(b) of the Income Tax Regulations (tax benefits on the issuance of shares to employees) 2003. Furthermore, the Participant shall agree to indemnify the Company or Subsidiary that employs the Participant and the Trustee, if applicable, 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 Participant. The Company may exercise such indemnification by deducting the Tax subject to indemnification from Participant’s salaries or remunerations. Except as otherwise required by law, the Company and the Trustee shall not be obligated to exercise any Awards on behalf of a Participant, or to release any share certificate, until all tax consequences arising from the exercise of such Awards are resolved in a manner reasonably acceptable to the Company and the Trustee, and all required payments in connection with the exercise of the Award, or the sale of the Shares, have been fully paid by the Employee.
|
|
31.2.
|
The ramifications of any future modification of any Applicable Law regarding the taxation of Awards and/or Shares granted to Participants shall apply to the Participants accordingly and such Participants shall bear the full cost thereof, unless such modified laws expressly provide otherwise. For the avoidance of doubt, should the applicability of such taxing arrangements to this Plan or to securities issued in the framework thereof be stipulated by an application by the Company or by the Trustee that same shall apply, the Company shall be entitled to decide, at its absolute discretion, whether to apply such taxing arrangements and to instruct the Trustee to act accordingly.
|
|
31.3.
|
Governing Law and Jurisdiction
. This Plan shall be governed by and construed and enforced in accordance with the laws of the State of Israel, without giving effect to the principles of conflict of laws. The competent courts of Tel-Aviv, Israel shall have exclusive jurisdiction in any matters pertaining to the Plan.
|
|
31.4.
|
Conflicts
. This Plan (together with the Award Agreements signed by the Company and the Participant) supersedes all of the agreements and/or understandings existing prior to the date of the grant of Awards to an Participant between the Company, or any of its Affiliates, and such Participant in connection with issuance of capital shares of the Company or options for capital shares of the Company to such Participant, other than any written option agreement entered into pursuant to a different stock option plan approved by the Board. Any representation and/or promise and/or undertaking made and/or given by the Company and/or by any of its Affiliates or by any person on their behalf, which have not been expressed herein, shall have no force and effect. For the removal of doubt, it is hereby clarified that in the event of any contradiction between the terms set forth in this Plan and the terms of any Award Agreement, or in a Participant's employment or services agreement, the terms of this Plan shall prevail, unless explicitly provided otherwise in the Award Agreement.
|
32.
|
Multiple Agreements
|
|
1.1.
|
This 2015 United States Sub-Plan to the Check-Cap Ltd. 2015 Equity Incentive Plan, as may be amended from time to time (the "
Sub-Plan
" and the "
Plan
", respectively) shall apply only to Eligible Recipients who are residents of the United States or those who are deemed to be residents of the United States for purposes of the payment of tax ("
U.S. Grantees
"). The provisions specified hereunder shall form an integral part of the Plan.
|
|
1.2.
|
This Sub-Plan is to be read as a continuation of the Plan and applies only to Awards granted to U.S. Grantees following the date of its adoption by the Board, in order for such Awards to comply with the requirements of U.S. law, and with respect to Incentive Stock Options, with the provisions of Sections 421 through 424 of the Code. For the avoidance of doubt, this Sub-Plan shall not supplement or modify the Plan with respect to Awards granted to any Participant who is not a U.S. Grantee.
|
|
1.3.
|
With respect to any Award granted to a U.S. Grantee, in the event of a conflict between any term or provision contained in this Sub-Plan and a term or provision of the Plan, the applicable terms and provisions of this Sub-Plan shall govern and prevail.
|
|
1.4.
|
Subject to adjustment in accordance with Section 21 of the Plan, the maximum aggregate number of Shares that may be issued for all purposes under the Plan and this Sub-Plan shall be equal to the sum of: (i) 2,029,268, constituting the currently remaining shares authorized but unissued under the Check-Cap LLC 2006 Unit Option Plan (the "
2006 Plan
") which are being "rolled over" to the Plan and shall, as of the effective date hereof, cease to be available for issuance under the 2006 Plan; and (ii) any Shares under currently outstanding and unexercised options that were granted under the 2006 Plan (i.e., up to 1,685,364 Ordinary Shares as of the date hereof), that are cancelled, forfeited or expire without being exercised following the date hereof and which are being "rolled-over" to the Plan, and all such Shares may be issued pursuant to any Awards, including Incentive Stock Options.
|
|
1.5.
|
Any capitalized terms not otherwise defined herein shall have the same meanings as in the Plan.
|
|
3.1.
|
The terms and conditions upon which Awards shall be issued and exercised, including the vesting schedules and the Exercise Price, shall be as specified in the Award Agreement to be executed and delivered pursuant to the Plan and this Sub-Plan.
|
|
3.2.
|
The Administrator may grant Awards under the Plan and this Sub-Plan that are intended to be Incentive Stock Options. Such Incentive Stock Options shall comply with the requirements of Section 422 of the Code (or any successor section thereto).
|
|
3.3.
|
Unless the Administrator determines otherwise at any time and subject to the requirements of any Applicable Law, no Incentive Stock Option may be granted to any Ten Percent Shareholder, unless (i) the Exercise Price for such Incentive Stock Option is at least 110% of the Fair Market Value of a Share on the date the Incentive Stock Option is granted; and (ii) the date on which such Incentive Stock Option terminates is a date not later than the day preceding the fifth (5) anniversary of the date on which the Incentive Stock Option is granted. For purposes of this Sub-Plan, "
Ten Percent Shareholder
" shall mean a person who owns shares possessing more than ten percent (10%) of the total combined voting power of all classes of shares of the Company or of any of its Affiliates.
|
|
3.4.
|
Any U.S. Grantee who disposes of Shares acquired upon the exercise of an Incentive Stock Option either (i) within two (2) years after the date of grant of such Incentive Stock Option or (ii) within one (1) year after the transfer of such Shares to the U.S. Grantee, shall notify the Company of such disposition and of the amount realized upon such disposition.
|
|
3.5.
|
Unless the Administrator determines otherwise at any time and subject to any Applicable Laws, all Awards granted to any U.S. Grantee under the Plan and this Sub-Plan are intended to be Nonstatutory Stock Options, unless the applicable Award Agreement expressly states that the Award is intended to be an Incentive Stock Option. Unless the Administrator determines otherwise at any time and subject to the requirements of any Applicable Law, if an Award is intended to be an Incentive Stock Option, and if for any reason such Award (or portion thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Award (or portion thereof) shall be regarded as a Nonstatutory Stock Option granted under the Plan and this Sub-Plan; provided that such Award (or potion thereof) otherwise complies with the Plan's and this Sub-Plan's requirements relating to Nonstatutory Stock Options.
|
|
3.6.
|
In no event shall any member of the Board, the Company or any of its Affiliates
(or their respective employees, officers or directors) have any liability to any Participant (or any other person) due to the failure of an Award to qualify for any reason as an Incentive Stock Option.
|
|
3.7.
|
Unless the Administrator determines otherwise at any time and subject to the requirements of any Applicable Law, Incentive Stock Options may only be granted to Employees of the Company or any Subsidiary. Nonstatutory Stock Options may be granted to Employees or Consultants of the Company or any Subsidiary.
|
|
4.1.
|
Each Award shall be exercisable after the Award becomes vested, or if applicable, following the satisfaction of any other terns or conditions set forth in the Award Agreement, subject to the provisions of the Plan and this Sub-Plan; provided, however, that unless the Administrator determines otherwise at any time and subject to the requirements of any Applicable Law, no Award shall be exercisable after the earlier of: (i) the expiration date set forth in the Award Agreement under which the Award was granted; (ii) in the event of the grant of Incentive Stock Options, the expiration of ten (10) years from the date of grant; (iii) in the event of the grant of Incentive Stock Options to Ten Percent Shareholders, the expiration of five (5) years from the date of grant; or (iv) as otherwise provided by the Plan or this Sub-Plan.
|
|
4.2.
|
To the extent the aggregate Fair Market Value (determined at the date of grant) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by any U.S. Grantee during any calendar year under all equity plans of the Company and any Affiliate exceeds USD 100,000, then unless the Administrator determines otherwise at any time and subject to the requirements of any Applicable Law, the Awards or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory Stock Options.
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5.1.
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In the case of an Incentive Stock Option, the exercise price shall be determined subject to the following, unless the Administrator determines otherwise at any time and subject to the requirements of any Applicable Law:
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(i)
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in case of an Incentive Stock Option granted to a Ten Percent Shareholder, the exercise price shall be no less than one hundred and ten percent (110%) of the Fair Market Value per Share on the date of grant.
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(ii)
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in case of an Incentive Stock Option granted to any U.S. Grantee who is not a Ten Percent Shareholder, the exercise price shall be no less than one hundred percent (100%) of the Fair Market Value per share on the date of grant.
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5.2.
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In the case of a Nonstatutory Stock Option and unless the Board determines otherwise at any time and subject to the requirements of any applicable law, the exercise price shall be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant and shall be subject to such terms and conditions as required under Section 409A of the Code and any U.S. Treasury Regulation promulgated (or, to the extent applicable, proposed) pursuant to an applicable provision of the Code and any applicable guidance thereunder in order to exempt such Award (to the maximum extent possible) from the requirements of Section 409A of the Code.
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9.1.
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This Sub-Plan shall be effective as of the date the Sub-Plan is approved by the Board, subject to the approval of the Plan by a majority of the votes cast by the holders of the Company’s Shares at the next annual meeting or special meeting of shareholders or by the holders of a majority of the outstanding Shares by a written consent in lieu of a meeting. Any grants made under this Sub-Plan prior to such approval shall be effective when made (unless otherwise specified by the Board at the time of grant), but shall be conditioned on, and subject to, such approval of the Sub-Plan by such shareholders.
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9.2.
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Awards may be granted pursuant to this Sub-Plan, until ten (10) years from the date the Plan was approved by the Board, unless the Plan is terminated by the Board, in its discretion, prior to such date, but Awards granted prior to such termination may extend beyond that date.
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e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy
material, statements and other eligible documents online, while reducing costs, clutter and
paper waste. Enroll today via www.amstock.com to enjoy online access.
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1.
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To approve the adoption of the Check-Cap Ltd. Compensation Policy for Executive Officers and Directors.
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FOR
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AGAINST
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ABSTAIN
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o
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o
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o
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YES
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NO
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o
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o
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2.
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To approve the adoption of the Check-Cap Ltd. 2015 Equity Incentive Plan and the Check-Cap Ltd. 2015 United States Sub-Plan to the 2015 Equity Incentive Plan for U.S. tax purposes.
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FOR
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AGAINST
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ABSTAIN
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o
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o
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o
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3.
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To approve the terms of engagement of Mr. William Densel, as Chief Executive Officer.
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FOR
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AGAINST
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ABSTAIN
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o
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o
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o
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YES
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NO
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o
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o
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Note
:
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.
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