____________________________________________

    


    


    VALOR
      COMPUTERIZED SYSTEMS LTD.

    


    


    


    

      THE
        2006 STOCK OPTION PLAN

    

    


    ____________________________________________

    


     

     

     

     

     

     

    
 


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

     

     

    
      	
              1.

            	
              Name

            


    

     

    This
      Plan, as amended from time to time, shall be known as the Valor Computerized
      Systems Ltd.
      Stock Option Plan (the “Option
      Plan”
or
      the
“Plan”).

     

    
      	
              2.

            	
              Purpose
                of the Option Plan

            


    

     

    The
      Option Plan is intended as an incentive to retain, in the employ and/or service
      of Valor Computerized Systems Ltd. (the “Company”),
      Valor
      Computerized Systems Inc., Valor Computerized System NV, Valor Finland Oy,
      Frontline P.C.B. Solutions Limited Partnership, Valor Computerized Systems
      Japan
      KK, Valor Computerized Systems Far East Limited, Valor Computer Systems
      GmbH1,
      and any
      other subsidiary in which the Company shall hold at the time of granting an
      Option, directly or indirectly, no less than 50% of the voting rights or a
      Subsidiary of which hereafter is organized or acquired by the Company
      (“Subsidiary”),
      persons of training, experience, and ability, to attract new employees,
      directors, consultants or service providers, whose services are considered
      valuable, to encourage the sense of proprietorship of such persons, and to
      stimulate the active interest of such persons in the development and financial
      success of the Company by providing them with opportunities to purchase shares
      in the Company, pursuant to the Option Plan approved by the Board of Directors
      of the Company.

     

    This
      Plan
      is effective with respect to Options granted as of January 1, 2006 and shall
      comply with Amendments no. 132 and 147 of the Israeli Tax Ordinance.


     

    
      	
              3.

            	
              Definitions

            


    

     

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

    


    
      	 	
              3.1

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

            


    

    


    
      	 	
              3.2

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

            


    

    


    
      	 	 	
              “Business
                Day”
-
                a day on which trading is conducted on the Stock Exchange. In case
                the
                Company’s shares shall be delisted from the Stock Exchange and be listed
                on another Exchange - a day on which trading is conducted on that
                exchange, and in case the Company’s shares shall not be traded on any
                exchange - Business Day shall mean a day, on which the majority of
                banking
                corporations in Israel are opened for the execution of transactions
                involving foreign currency with the
                public.

            


    

    


    
      	 	
              3.3

            	
              “Capital
                Gain Option (CGO)”
                as defined in Section 6.4 below.

            


    

    


    
      	 	
              3.4

            	
              “Cause”
                means, (i) conviction of any felony involving moral turpitude or
                affecting
                the Company; (ii) any refusal to carry out a reasonable directive
                of the
                chief executive officer, the Board or the Optionee’s direct supervisor,
                which involves the  

            


    

    

_______________

    1  Is
      this
      the exact name of the relevant subsidiary?

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    business
      of the Company or its affiliates and was
      capable of being lawfully performed; (iii) embezzlement of funds of the Company
      or its affiliates; (iv) any breach of the Optionee’s fiduciary duties or duties
      of care towards the Company or its subsidiaries, including without limitation
      disclosure of confidential information of the Company or its subsidiaries;
      and
      (v) any conduct (other than conduct in good faith) reasonably determined by
      the
      Board to be materially detrimental to the Company.

     

    
      	 	
              3.5

            	
               “Chairman”
                means
                the chairman of the Committee.

            


    

    


    
      	 	
              3.6

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

            


    

     

    
      	 	
              3.7

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

            


    

    


    
      	 	
              3.8

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

            


    

    


    
      	 	
              3.9

            	
              “Date
                of Grant”
                for each Option shall mean the date in which the specific Option
                was
                allotted by the Company to the Optionee. Notwithstanding the above,
                the
                Date of Grant for each Approved 102 Option shall be the date in which
                the
                specific option was both allotted and deposited with the Trustee.
                

            


    

    


    
      	 	
              3.10

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

            


    

     

    
      	 	
              3.11

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

            


    

    


    
      	
            	3.12	
              “Expiration
                Date”
                the date on which 10 years from the Date of Grant have lapsed.
                 

            


    

    


    
      	 	
              3.13

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

            


    

     

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

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

     

     

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

     

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

     

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

     

    
      	 	
              3.14

            	
              “ITA”
                means
                the Israeli Tax Authorities.

            


    

     

    
      	 	
              3.15

            	
              “Non-Employee”
                means
                a consultant, adviser, service provider, Controlling Shareholder
                or any
                other person who is not an
                Employee.

            


    

    


    
      	 	
              3.16

            	
              “Ordinary
                Income Option (OIO)”
                as defined in Section 6.5 below.

            


    

    


    
      	 	
              3.17

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

            


    

    


    
      	 	
              3.18

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

            


    

    


    
      	 	
              3.19

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

            


    

    


    
      	 	
              3.20

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

            


    

    


    
      	 	
              3.21

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

            


    

    


    
      	 	
              3.22

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

            


    

    


    
      	 	
              3.23

            	
              “Parent”
                means any entity (other than the Company) in an unbroken chain of
                entities
                ending with the Company if, at the time of granting an Option, such
                entity
                (directly or indirectly), owns stock possessing fifty percent (50%)
                or
                more of total combined voting power of all classes of stock in one
                of the
                other entities in such chain.

            


    

    


    
      	 	
              3.24

            	
              "Profile"-
                the Company's 2006 Stock Option Plan
                Profile.

            


    

    



    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    


    
      	 	
              3.25

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

            


    

    


    
      	 	
              3.26

            	
              “Share”
                means an ordinary share, NIS 0.1 par value, of the
                Company.

            


    

    


    
      	 	
              3.27

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

            


    

    


    
      	 	
              3.28

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

            


    

    


    
      	 	
              3.29

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

            


    

    


    
      	 	
              3.30

            	
              “Unapproved
                102 Option”
                means an Option granted pursuant to Section 102(c) of the Ordinance.
                

            


    

    


    
      	 	
              3.31

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

            


    

    


    
      	 	
              3.32

            	
              “Vesting
                Dates”
                of
                an Option means, the date as of which the Optionee shall be entitled
                to
                exercise it according to the Plan and its attachments as may be amended
                from time to time by the Board or by the Committee.
                

            


    

     

    
      	
              4.

            	
              Administration
                of the Option Plan

            


    

     

    
      	 	
              4.1

            	
              The
                Board or the Committee shall have the power to administer the Option
                Plan.
                Notwithstanding the above, the Board shall automatically have a residual
                authority if no Committee shall be constituted or if such Committee
                shall
                cease to operate for any reason whatsoever.


            


    

     

    
      	 	
              4.2

            	
              The
                Committee shall select one of its members as its Chairman and shall
                hold
                its meetings at such times and places as the Committe shall determine.
                The
                Committee as to the extant it shall deem advisable shall keep records
                of
                its meetings and shall make such rules and regulations for the conduct
                of
                its business.

            


    

     

    Any
      member of such Committee shall be eligible to receive Options under the Option
      Plan while serving on the Committee, unless otherwise specified
      herein.

     

    
      	 	
              4.3

            	
              The
                Committee shall have full power and authority to recommend the Board
                and
                the Board shall have the full power and authority to:
                

            


    

     

    (i)
      designate the participants; (ii) determine the terms and provisions of
      respective Option Agreements (which need not be identical) including, but not
      limited to, the number of shares in the Company to be covered by each Option
      Agreement, provisions concerning the time or times when and the extent to which
      the Options may be exercised and the nature and duration of restrictions as
      to
      transferability or 

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    
      restrictions
        constituting substantial risk of forfeiture; (iii) acceleration of the right
        of
        an Optionee to exercise, in whole or in part, any previously granted Option;
        (iv) designate any kind of options; and (v) make an election as to the type
        of
        Approved 102 Option.
  

    The
      Committee shall have full power and authority to:

     

    (i)
      interpret the provisions and supervise the administration of the Option Plan;
      (ii) determine the Fair Market Value of the Shares; (iii) determine any other
      matter, which is necessary or desirable for, or incidental to administration
      of
      the Option Plan.

     

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

     

    
      	 	
              4.5

            	
              Subject
                to the Company’s Articles of Association all decisions and selections made
                by the Board or the Committee pursuant to the provisions of the Option
                Plan shall be made by a majority of its members except that no member
                of
                the Board or the Committee shall vote on, or be counted for quorum
                purposes, with respect to any proposed action of the Board or the
                Committee relating to any Option to be granted to that member. Any
                decision made in writing shall be executed in accordance with the
                provisions of the Company’s Articles of Association, as the same may be in
                effect from time to time.

            


    

     

    
      	 	
              4.6

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

            


    

     

    
      	 	
              4.7

            	
              Subject
                to the Company’s Articles of Association and the Company’s decision, each
                member of the Board or the Committee shall be indemnified and held
                harmless by the Company against any and all cost and expense (including
                counsel fees) reasonably incurred by him/her, or any liability (including
                any sum paid in settlement of a claim with the approval of the Company)
                arising out of any act or omission to act in connection with the
                Option
                Plan unless arising out of such member's own fraud or bad faith,
                to the
                extent permitted by applicable law. Such indemnification shall be
                in
                addition to any rights of indemnification the member may have as
                a
                director or otherwise under the Company's Articles of Association,
                any
                agreement, any vote of shareholders or disinterested directors, insurance
                policy or otherwise.

            


    

     

    
      	
              5.

            	
              Designation
                of Participants

            


    

     

    
      	 	
              5.1

            	
              The
                persons eligible for participation in the Option Plan as Optionees
                shall
                include any Employees service providers and consultants of the Company
                or
                of any Subsidiary of the Company now exists or hereafter is organized
                or
                acquired by the Company; provided, however, that (i) Employees may
                only be
                granted 102 Options; (ii) Non-Employees may only be granted 3(i)
                Options;
                and (iii) Controlling Shareholders may only be granted 3(i) Options.
                

            


    

    



    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    
 

    
      	 	
              5.2

            	
              The
                grant of an Option hereunder shall neither entitle the recipient
                thereof
                to participate nor disqualify him/her from participating in, any
                other
                grant of Options pursuant to this Option Plan or any other option
                or stock
                plan of the Company or any of its Subsidiaries and
                affiliates.

            


    

    


    
      	 	
              5.3

            	
              Notwithstanding
                anything in the Option Plan to the contrary, all grants of Options
                to
                directors and office holders shall be authorized and implemented
                only in
                accordance with the provisions of the Companies Law, as in effect
                from
                time to time, and any other applicable
                law.

            


    

     

    
      	
              6.

            	
              Designation
                of Options Pursuant To Section
                102

            


    

     

    
      	 	
              6.1

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

            


    

    


    
      	 	
              6.2

            	
              The
                grant of Approved 102 Options shall be made under this Plan adopted
                by the
                Board and shall be conditioned upon the approval of this Plan by
                the
                ITA.

            


    

    


    
      	 	
              6.3
                

            	
              Approved
                102 Option may either be classified as capital gain option or ordinary
                income option.

            


    

    


    
      	 	
              6.4

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

            


    

    


    
      	 	
              6.5

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

            


    

    


    
      	 	
              6.6

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

            


    

    


    
      	 	
              6.7
                

            	
              All
                Approved 102 Options must be held in trust by a Trustee, as described
                in
                Section 7 below.

            


    

    


    
      	 	
              6.8

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

            


    

    
 

    
      	 	
              6.9

            	
              With
                regards to Approved 102 Options, the provisions of the Plan and/or
                the
                

            


    
 

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    Option
      Agreement shall be subject to the provisions
      of Section 102 and the ITA permit, and the said provisions and permit shall
      be
      deemed an integral part of the Plan and of the Option Agreement. Any provision
      of Section 102 and/or the said permit which is necessary in order to receive
      and/or to keep any tax benefit pursuant to Section 102, although not expressly
      specified in the Plan or the Option Agreement, shall be considered binding
      upon
      the Company and the Optionees.

     

    
      	
              7.

            	
              Trustee

            


    

     

    
      	
            	7.1	
              Approved
                102 Options which shall be granted under the Plan and/or any Shares
                allocated or issued upon exercise of such Approved 102 Options and/or
                other shares received subsequently following any realization of rights,
                including without limitation bonus shares, shall be allocated or
                issued to
                the Trustee and held for the benefit of the Optionees for such period
                of
                time as required by Section 102 or any regulations, rules or orders
                or
                procedures promulgated thereunder (the “Holding
                Period”).
                In the case the requirements for Approved 102 Options are not met,
                then
                the Approved 102 Options may be treated as Unapproved 102 Options,
                all in
                accordance with the provisions of Section 102 and regulations promulgated
                thereunder.   

            


    

     

    
      	 	
              7.2
                

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


            


    

     

    
      	 	
              7.3
                

            	
              With
                respect to any Approved 102 Option, subject to the provisions of
                Section
                102 and any rules or regulation or orders or procedures promulgated
                thereunder, an Optionee shall not sell or release from trust any
                Share
                received upon the exercise of an Approved 102 Option and/or any share
                received subsequently following any realization of rights, including
                without limitation, bonus shares, until the lapse of the Holding
                Period.

            


    

    


    
      	 	
              7.4
                

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

            


    

     

    
      
        
          	8.	
                  Shares
                    Reserved for the Option Plan; Restriction
                    Thereon

                


        

      

    

     

    
      	 	
              8.1

            	
              The
                Company has reserved and shall reserve sufficient amount of shares
                authorized but unissued Shares, for the purposes of the Plan and
                for the
                purposes of any other stock option plan which may be adopted by the
                Company in the future, subject to adjustment as set forth in Section
                10
                below. Any Shares which remain unissued and which are not subject
                to the
                outstanding Options at the termination of the Plan shall cease to
                be
                reserved for the purpose of the Plan, but until termination of the
                Plan
                the Company shall at all times reserve sufficient number of Shares
                to meet
                the requirements of the Plan. Should any Option for any reason expire
                or
                be canceled prior to its exercise or relinquishment in full, the
                Shares
                subject to such Option may again be subjected to an Option under
                the Plan
                or under the Company’s other stock option plans.
                

            


    

     


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    
 

    
      	 	
              8.2

            	
              Each
                Option granted pursuant to the Plan, shall be evidenced by a written
                Option Agreement between the Company and the Optionee, in such form
                as the
                Board or the Committee shall from time to time approve. Each Option
                Agreement shall state the number of the Shares to which the Option
                relates
                and the type of Option granted thereunder (whether a CGO, OIO, Unapproved
                102 Option or a 3(i) Option or any other
                kind).

            


    

     

    
      	 	
              8.3

            	
              All
                Shares issued upon exercise of the Options shall entitle the holder
                thereof to receive dividends and other distributions
                thereon.

            


    

     

    
      	
              9.

            	
              Exercise
                Price

            


    

    


    
      	 	
              9.1

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

            


    

    


    
      	 	
              9.2

            	
              The
                Exercise Price shall be payable upon the exercise of the Options
                in a form
                satisfactory to the Committee and in a case of 102 Options conforming
                to
                the requirements of Section 102. The Optionee shall be allowed to
                pay the
                said consideration by cheque or in cash, denoted in New Israeli Shekels
                ("New
                Shekels")
                or
                in U.S. Dollar converted into New Shekels in accordance with the
                representative rate of the U.S. Dollar published by the Bank of Israel
                as
                known on the date in which the exercise notice will be served to
                the
                company. The Committee shall have the authority to postpone the date
                of
                payment on such terms as it may
                determine.

            


    

     

    
      	
              10.

            	
              Adjustments

            


    

    


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

    


    
      	 	
              10.1

            	
              In
                the case of a change in the Company’s share capital structure (including a
                consolidation or split of shares), adjustments shall be made to the
                number
                of shares deriving from the exercise of the Options and of the Exercise
                Price required.

            


    

    


    
      	 	
              10.2

            	
              In
                the case of an issue of bonus shares by the Company, The Optionee
                shall be
                entitled to receive, at the time of exercise of the Options - in
                addition
                to the shares deriving from exercise of the Options, and without
                further
                payment - shares in the number to which he/she would have been entitled
                to
                if he/she had exercised his/her options on the eve of the date determining
                the issuance of the bonus shares.

            


    

    


    
      	 	
              10.3

            	
              Where
                all the shareholders of the Company are offered rights to purchase
                any
                securities of the Company, the Company is required to offer identical
                rights to any Optionee who have not yet exercised her/his vested
                Options
                on the date of determining the right to acquire the same securities,
                as if
                she/he had exercised her/his Options on the eve of the date determining
                the right to participate in the said acquisition, provided however
                that
                the Committee, in its sole discretion shall


            


    

     


    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    determine
      whether to allow the Optionee to enjoy any other benefit
      deriving from the said offer of securities rather than the right to purchase
      it
      in its fair market value.

     

    
      	 	
              10.4

            	
              The
                Company shall furnish written notice to the Optionee regarding any
                proposal presented for approval in connection with the Company’s
                liquidation. Each Optionee shall be entitled to give notice in writing
                of
                his/her wish to be considered as though he/she had exercised the
                Options
                (including also, acceleration and exercise of the Options for shares
                which
                could not yet otherwise have been exercised) no later than 7 days
                prior to
                adopting the resolution of liquidation. The validity of such Optionee’s
                notice is subject to attaching by him/her of the Exercise Price for
                the
                Exercise Shares (this sum shall be returned to the Optionee in case
                the
                liquidation resolution shall not in the end be
                adopted).

            


    

    


    In
      the
      event that the Options are not exercised for shares, they shall be cancelled
      forthwith prior to the date of executing the liquidation, and shall be invalid
      and shall not vest any right whatsoever in the owner thereof.

     

    
      	 	
              10.5

            	
              In
                the event of Transaction and upon consent of the Successor Company,
                the
                unexercised Options shall be substituted by equally ranking options
                of the
                Successor Company (or a parent or subsidiary of the Successor Company)
                as
                were distributed to the shareholders of the Company in connection
                and with
                respect to the Transaction. In the case of such assumption and/or
                substitution of Options, appropriate adjustments shall be made to
                the
                number of shares deriving from the exercise of the Options and to
                the the
                Exercise Price, and any other required changes, so as to reflect
                such
                action and all other terms and conditions of the Option Agreements
                shall
                remain unchanged, including but not limited to the vesting schedule,
                all
                subject to the determination of the Committee or the Board, which
                determination shall be in their sole discretion and final. The Company
                shall notify the Optionee of the Transaction in such form and method
                as it
                deems applicable at least fourteen (14) days prior to the effective
                date
                of such Transaction. 

            


    

     

    In
      case
      the Successor Company does not agree to such substitution upon the Transaction
      all unexercised options whether vested or not shall become null and void,
      invalid and shall not vest any right whatsoever in the owner thereof.


     

    
      	 	
              10.6

            	
              Notwithstanding
                the above and subject to any applicable law, the Board or the Committee
                shall have full power and authority to determine that in certain
                Option
                Agreements there shall be a clause instructing that, if in any such
                Transaction as described in section 10.5 above, the Successor Company
                (or
                parent or subsidiary of the Successor Company) does not agree to
                assume or
                substitute the Options then the Vesting Dates of the Optionee's (who's
                Option Agreement contains such clause) Options that shall not be
                substituted by equally ranking options of the Successor Company (or
                a
                parent or subsidiary of the Successor Company) shall be accelerated
                so
                that any unvested Option or any portion thereof shall be immediately
                vested as of the date which is fourteen (14) days prior to the effective
                date of the Transaction.

            


    

     

    
      
        	 	 	
                For
                  the avoidance of doubt it is hereby clarified that options that
                  were not
                  exercised or substituted (in accordance with clause 10.5 above)
                  prior to
                  the effective date of  

              


      

       

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    the
      Transaction, shall be cancelled forthwith prior
      to the effective date of the Transaction, shall be invalid and shall not vest
      any right whatsoever.

     

    
      	 	
              10.7

            	
              For
                the purposes of section 10.5 above, an Option shall be considered
                assumed
                or substituted if, following the Transaction, the Option confers
                the right
                to purchase or receive, for each Share underlying an Option immediately
                prior to the Transaction, the consideration (whether shares, options,
                cash, or other securities or property) received in the Transaction
                by
                holders of Shares held on the effective date of the Transaction (and
                if
                such holders were offered a choice of consideration, the type of
                consideration chosen by the holders of a majority of the outstanding
                Shares); provided, however, that if such consideration received in
                the
                Transaction is not solely ordinary shares (or their equivalent) of
                the
                Successor Company or its parent or subsidiary, the Committee may,
                with the
                consent of the Successor Company, provide for the consideration to
                be
                received upon the exercise of the Option to be solely ordinary shares
                (or
                their equivalent) of the Successor Company or its parent or subsidiary
                equal in Fair Market Value to the per share consideration received
                by
                holders of a majority of the outstanding Shares in the Transaction;
                and
                provided further that the Committee may determine, in its discretion,
                that
                in lieu of such assumption or substitution of Options for options
                of the
                Successor Company or its parent or subsidiary, such Options will
                be
                substituted for any other type of asset or property including cash
                which
                is fair under the circumstances.

            


    

     

    
      	 	
              10.8

            	
              Notwithstanding
                any other provisions in this Plan/the Profile/Option Agreement (and/or
                any
                of its appendices), the Board and/or the Committee may make any
                changes/amendments/corrections/adjustments etc. to any of the above
                documents as it deem fit according to its absolute
                discretion.

            


    

     

    ANY
      FORM
      OF OPTION AGREEMENT AUTHORIZED BY THE OPTION PLAN MAY CONTAIN SUCH OTHER
      PROVISIONS AS THE COMMITTEE MAY, FROM TIME TO TIME, DEEM ADVISABLE. WITHOUT
      LIMITING THE FOREGOING, THE COMMITTEE MAY, WITH THE CONSENT OF THE OPTIONEE,
      FROM TIME TO TIME CANCEL ALL OR ANY PORTION OF ANY OPTION THEN SUBJECT TO
      EXERCISE, AND THE COMPANY'S OBLIGATION IN RESPECT OF SUCH OPTION MAY BE
      DISCHARGED BY (I) PAYMENT TO THE OPTIONEE OF AN AMOUNT IN CASH EQUAL TO THE
      EXCESS, IF ANY, OF THE FAIR MARKET VALUE OF THE SHARES AT THE DATE OF SUCH
      CANCELLATION SUBJECT TO THE PORTION OF THE OPTION SO CANCELED OVER THE AGGREGATE
      PURCHASE PRICE OF SUCH SHARES, (II) THE ISSUANCE OR TRANSFER TO THE OPTIONEE
      OF
      SHARES OF THE COMPANY WITH A FAIR MARKET VALUE AT THE DATE OF SUCH TRANSFER
      EQUAL TO ANY SUCH EXCESS, OR (III) A COMBINATION OF CASH AND SHARES WITH A
      COMBINED VALUE EQUAL TO ANY SUCH EXCESS, ALL AS DETERMINED BY THE COMMITTEE
      IN
      ITS SOLE DISCRETION. 


    
       

      
        	
                11.

              	
                Term
                  and Exercise of
                  Options

              


      

    
 

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    
 

    
      	 	
              11.1

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

            


    

     

    Notwithstanding
      anything to the contrary herein, an Optionee shall not be entitled to exercise
      Options and the Company shall not be obliged to issue Shares in respect of
      Options, in the following instances:

     

    
      	 	
              (i)

            	
              between
                the 25th
                of
                the last month of each quarter until the end of one Business day
                following
                the Company’s announcement for the financial results of the said
                quarter;

            


    

     

    
      	 	
              (ii)

            	
              four
                (4) Business days prior to the date prescribed by the Board for
                eligibility for receiving dividends, and four (4) further Business
                days
                prior to the date for eligibility for receiving dividends approved
                by the
                shareholders meeting of the
                Company;

            


    

     

    
      	 	
              (iii)

            	
              any
                period of time declared by the Board or the Committee, provided that
                (a) a
                ten (10) days advance notice is given; and (b) such periods declared
                pursuant to this sub-section (iii) do not exceed an aggregate of
                fourteen
                (14) Business days per annum.

            


    

    


    
      	 	
              11.2

            	
              Options,
                to the extent not previously exercised, shall terminate forthwith
                upon the
                earlier of: (i) the Expiration Date; and (ii) the cession of
                employment/service provision of/by the Optionee subject to any extension
                of the period in which the Options are exercisable in any of the
                events
                set forth in section 11.5 below.

            


    

     

    
      	 	
              11.3

            	
              The
                Options may be exercised by the Optionee in whole at any time or
                in part
                from time to time, to the extent that the Options are vested and
                exercisable, and provided that, subject to the provisions of section
                11.5
                below, the Optionee is employed by or providing services to the Company
                or
                any of its Subsidiaries, at all times during the period beginning
                with the
                granting of the Option and ending upon the date of
                exercise.

            


    

    


    
      	 	
              11.4

            	
              Subject
                to the provisions of section 11.5 below, in the event of termination
                of
                the Optionee’s employment and/or services with the Company or a Subsidiary
                of the Company , all Options granted to him/her will immediately
                expire
                [After
                a Transaction in which a Successor Company assumes the Options, the
                Optionee will be holding new option and not the Options as defined
                in the
                Plan, which will expire].
                A notice of termination of employment and/or services by either the
                Company or any of its Subsidiaries or the Optionee shall be deemed
                to
                constitute termination of employment and/or service. For the avoidance
                of
                doubt, in case of such termination of employment or service, the
                unvested
                portion of the Optionee’s Options shall expire and shall not become vested
                and/or exercisable.

            


    

     

    
      
        	 	
                11.5

              	
                Notwithstanding
                  anything to the contrary hereinabove and unless otherwise determined
                  in
                  the Optionee’s Option Agreement, an Option may be exercised after
                  

              


      

       

    

    
 

     

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

     

    the
      date of termination of Optionee's employment or service with the
      Company or any Subsidiary during an additional period of time beyond the date
      of
      such termination in the events specified herein below, but only in case that
      such option was a Vested Options at the time of such termination according
      to
      the Vesting Dates:

     

    
      	 	
              (i)

            	
              In
                the event that the Optionee ceases to be employed by/provide services
                to
                the Company (other than as a result of death or disability as defined
                below), he/she shall be entitled, until the end of a period of ninety
                (90)
                days from the termination date of his/her term of employment/service
                provision, and in any case by no later than the end of the relevant
                Expiration Date.

            


    

     

    
      	 	
              (ii)

            	
              Notwithstanding
                the aforesaid, where the Optionee was dismissed in circumstances
                in which
                he/she is not entitled to severance payment, as stated in the Severance
                Pay Law, 5723-1963, and/or with Cause, all the Options granted to
                him/her
                pursuant to this Plan and the Option Agreement and which were not
                exercised for shares, shall expire. In such event of the resignation
                or
                dismissal of the Optionee, the day of sending the letter of resignation
                to
                the employer or on the day of sending the letter of dismissal to
                the
                employee, as the case may be, shall be deemed, for the purpose of
                this
                Plan, as the termination of his/her employment by the Company, regardless
                of the actual date on which the employment was terminated.
                

            


    

     

    
      	
            	(iii)	
              In
                the event of the termination of employment/service provision of the
                Optionee as a result of a Disability, the Optionee shall have the
                a right,
                until the end of a period of 12 months from the date of terminating
                his/her term of employment/service provision and in any event, no
                later
                than the Expiration Date, to exercise that portion of the Options
                allotted
                to him/her which may be exercised pursuant to the Option Agreement
                until
                the end of the term of his/her
                employment.

            


    

    


    In
      this
      section: “Disability”
-
      the
      inability of the Optionee to fulfill his/her position as a result of an injury
      and/or illness for a continued period of at least six months. 


     

    
      	 	
              (iv)

            	
              In
                the event of the death of The Optionee during the period of his/her
                employment by the Company, the estate or heirs of such Optionee shall
                be
                granted the right - until the end of a period of 12 months from the
                date
                of the Optionee's death, and in any case no later than the Expiration
                Date
                - to exercise that portion of the Options allotted to the Optionee
                and
                which may be exercised pursuant to this Plan until the date of his/her
                death.

            


    

    


    
      	 	
              11.6

            	
              For
                the avoidance of any doubt, a transfer of an employee from one position
                held in the Company or in any of its Subsidiaries to a different
                position
                in the Company or its Subsidiaries, or a transfer between different
                subsidiaries of the Company (including a transfer between the Company
                and
                any of its Subsidiaries) shall not be deemed as cessation of
                employment.

            


    

    



    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    
 

    
      	 	
              11.7

            	
              To
                avoid doubt, the holders of Options shall not have any of the rights
                or
                privileges of shareholders of the Company in respect of any Shares
                purchasable upon the exercise of any part of an Option, nor shall
                they be
                deemed to be a class of shareholders or creditors of the Company
                for
                purpose of the operation of sections 350 and 351 of the Israeli Companies
                Law or any successor to such section until registration of the Optionee
                as
                holder of such Shares in the Company’s register of shareholders (or as
                long as the Company is listed on the Frankfurt Stock Exchange the
                registration of the Optionee as holder of such Shares in a nominee
                company) upon exercise of the Option in accordance with the provisions
                of
                the Plan, but in case of Options and Shares held by the Trustee,
                subject
                to the provisions of Section 7 of the Plan.


            


    

    


    
      	 	
              11.8

            	
              Any
                form of Option Agreement authorized by the Option Plan may contain
                such
                other provisions as the Board or the Committee may, from time to
                time,
                deem advisable. Without limiting the foregoing, the Board or the
                Committee
                may, from time to time cancel all or any of the Options then subject
                to
                exercise and at its sole discretion may decide to, but is not obligated
                to, replace such cancelled Options by any means it may deem
                fit.

            


    

    


    
      	 	
              11.9

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

            


    

     

    
      	12.	
              Vesting

            


    

     

    
      	 	
              12.1

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

            


    

    


    
      	 	
              12.2

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

            


    

     

    
      	
              13.

            	
              The
                Exercised Shares

            


    

     

    The
      Exercised Shares shall rank equally in all respects with the ordinary shares
      of
      the Company’s share capital. At the present time all the outstanding shares in
      the Company’s share capital are ordinary shares of NIS 0.1 par value each and
      are represented by a global certificate deposited with, and registered with
      the
      name of Clearstream, and credited to deposited accounts of the various
      shareholders.

    


    The
      Optionee acknowledges that should the Company's shares be further offered in
      any
      future time to the public in any public market and/or further registered for
      trading in any public market and/or once the Company’s shares are delisted from
      trading and/or removed from registration at a public market (including the
      Stock
      Exchange) and the Company becomes once again a private Company, his/her right
      to
      sell his/her Shares may be subject to some limitations, as set forth in
      accordance with the law 

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

     

    and/or
      by the Company’s underwriters and/or the Articles of Association
      of the Company (as may be varied from time to time) and/or the Company’s
      resolutions. The Optionee unconditionally agrees to any such
      limitations.
 

    Moreover,
      in the event the Company shall become a private company an Optionee who
      exercised his/her options shall use any and all of his/her powers as a
      shareholder (including, but not limited to, in any shareholder’s meeting and/or
      in any case in which his/her voice/vote/support is requested and/or may be
      operated) to support and vote in favor of all decisions taken and/or
      recommendations proposed by the Board, including, but not limited to, any
      decision to merge with other company(ies) and/or sale of the Company’s assets to
      any other entity and/or issue the Company’s shares to the public and/or
      registering its shares as whole or in part to an exchange or any other trade
      venue, and an irrevocable proxy in this respect to the person or persons
      designated by the Board shall be deemed as given by the Optionee who exercised
      his/her Option. Without derogating from the above, and if the Optionee is so
      requested, he/she approves to further execute any power of attorney for the
      effect of the aforesaid in this paragraph.
      

    


    EACH
      EMPLOYEE WHO IS OFFERD OPTIONS UNDER THIS PLAN IS HEREBY REFERRED TO THE FULL
      TEXT OF THE COMPANY’S ARTICLE OF ASSOCIATION. 

    


    It
      is
      hereby stipulated that the Article of Association in any part thereof may be
      changed in the future and the following should not be interpreted as an
      undertaking of any kind on behalf of the Company that such instructions shall
      not be altered/amended.

     

    
      	
              14.

            	
              Dividends

            


    

     

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

     

    
      	
              14.

            	
              Assignability
                and Sale of Options

            


    

     

    
      	 	
              14.1

            	
              No
                Option, granted hereunder, shall be assignable, transferable or given
                as
                collateral or any right with respect to them given to any third party
                whatsoever, other than by will or laws of descent and distribution
                and
                during the lifetime of the Optionee each and all of such Optionee's
                rights
                to purchase Shares hereunder shall be exercisable only by the
                Optionee.

            


    

     

    Any
      such
      action shall result in the immediate expiration of the Option.

    


    
      	 	
              14.2

            	
              As
                long as the Shares are held by the Trustee in favor of the Optionee,
                than
                all rights the last possesses over the Shares are personal, can not
                be
                transferred,  

            


    


    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

    

     

    assigned,
      pledged or mortgaged, other than by will or laws of descent and
      distribution.

     

    
      	
              15.

            	
              Term
                of the Option Plan

            


    

     

    The
      Option Plan shall be effective as of the day it was adopted by the Board and
      shall terminate at the Expiration Date of the last Option granted according
      to
      the Plan.

     

    Notwithstanding
      the above, the termination/cancellation of the Plan shall not derogate from
      any
      of the Optionees obligations with respect to the Options and the Exercised
      Shares towards the Company. 

     

    
      	
              16.

            	
              Amendments
                or Termination

            


    

     

    The
      Board
      may at any time, but after consultation with the Trustee, if applicable, amend,
      alter, suspend or terminate the Plan. Termination of the Plan shall not affect
      the Committee’s ability to exercise the powers granted to it hereunder with
      respect to Options granted under the Plan prior to the date of such termination.
      

     

    
      	
              17.

            	
              Government
                Regulations

            


    

     

    The
      Option Plan, and the granting and exercise of the Option thereunder, and the
      Company's obligation to sell and deliver Shares or cash under the Option, shall
      be subject to all applicable laws, rules and regulations, whether of the State
      of Israel, the United States, Germany or any other State having jurisdiction
      over the Company and/or the Optionee, including the registration of the Shares
      under the United States Securities Act of 1933, and the Ordinance and to such
      approvals by any governmental agencies or securities exchanges as may be
      required. Nothing herein shall be deemed to require the Company to register
      the
      shares under any securities laws of any jurisdiction including, inter alia,
      the
      United States Securities Act of 1933.

     

    
      	
              18.

            	
              Continuance
                of Employment

            


    

     

    Neither
      the Option Plan nor the Option Agreement with the Optionee shall impose any
      obligation on the Company or a Subsidiary thereof, to continue any Optionee
      employment/service providing to the Company (or subsidiary thereof), and nothing
      in the Option Plan or in any Option granted pursuant thereto shall confer upon
      any Optionee any right to continue with his/her employment or service providing
      to the Company or a Subsidiary thereof or restrict the right of the Company
      or a
      Subsidiary thereof to terminate such employment and/or service at any
      time.

     

    
      	
              19.

            	
              Governing
                Law & Jurisdiction

            


    

     

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


    
      
        
        

      

      
        16

        
          

        

      

      
        
        

      

    

    
 

     

     

    
      	
              20.

            	
              Tax
                Consequences

            


    

     

    
      	 	
              20.1

            	
              Any
                tax consequences arising from the grant or exercise of any Option,
                from
                the payment for Shares covered thereby or from any other event or
                act (of
                the Company and/or its Subsidiaries, the Trustee or the Optionee),
                hereunder, shall be borne solely by the Optionee. The Company may
                require
                an Optionee, as a condition of exercising an Option, to pay or otherwise
                provide for any withholding or other taxes that may be imposed with
                respect to such Option or provide an approval satisfactory to the
                Company
                stating that no tax obligations shall be imposed on the Company with
                respect to such Option. The Company and/or its Subsidiaries and/or
                the
                Trustee shall withhold taxes according to the requirements under
                the
                applicable laws, rules, and regulations, including withholding taxes
                at
                source. Furthermore, the Optionee shall indemnify the Company, its
                Subsidiaries and the Trustee and hold them harmless against and from
                any
                and all liability for any such tax or interest or penalty thereon,
                including without limitation, liabilities relating to the necessity
                to
                withhold, or to have withheld, any such tax from any payment made
                to the
                Optionee.

            


    

    


    
      	 	
              20.2

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

            


    

     

    
      	
              21.

            	
              Non-Exclusivity
                of the Option Plan

            


    

     

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

     

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

     

    
      	
              22.

            	
              Multiple
                Agreements

            


    

     

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

     

    


    


    *        
      *         *

     

     

     

    
      
        
        

      

      
        17