S-8





Exhibit 4.1  




	
This
is an unofficial translation of the 2006 Employees Directors and Officers Incentive Plan
of Elbit 
 Imaging Ltd. from the Hebrew language. This translation is made for convenience
purposes only and the 
 Hebrew version is the binding version of the Plan.  







ELBIT IMAGING LTD.  

(the
“Company”) 



Employees and Officers
Incentive Plan – Capital Gain Tax Track as 
 Amended on August 5, 2008 by the Board of Directors  






The Plan is earmarked for the allocation of Company’s non-negotiable Options,

exercisable into Company’s Ordinary Shares of NIS 1 par value each, to employees and

officers of the Company and/or companies belonging to the Company’s Group, pursuant 
 to the terms of Section 102 of the Income Tax
Ordinance [New Version], 5721-1961 – 
 Capital Gain Track, all pursuant to the terms
set out in this Plan below. 




	1 	Introduction
and Definitions 






	 	1.1	Any
expression in this Plan referring to the singular shall also apply to the plural and vice
versa and any expression referring to one gender shall also apply to the other gender,
unless the context otherwise requires. 






	 	1.2	The
terms specified below shall, in this Plan, have the meaning set out opposite them unless
the context otherwise requires: 







	 	 	
	 	"Option" - 	Non-negotiable Option, exercisable into Ordinary Shares of the
	 	  	Company, all pursuant and subject to the provisions of this Plan;
	 	  	
	 	The "Ordinance" and/or the 	The Income Tax Ordinance [New Version], 5721-1961, as shall be
	 	"Income Tax Ordinance" - 	amended from time to time, including regulations and/or rules
	 	  	and/or orders and/or any other directives issued and/or to be
	 	  	issued by virtue thereof;
	 	  	
	 	The "Company's Group" - 	The Company and companies under its control, directly and/or
	 	  	indirectly;
	 	  	
	 	The "102 Section Rules" or 	Income Tax Rules (Tax benefits in Stock Issuance to Employees)
	 	the "Rules" - 	5763-2003;
	 	  	
	 	"Share" - 	Ordinary Share of NIS 1 par value of the Company;
	 	  	
	 	"Grantee" - 	Within the meaning of this term in Section 102 of the Ordinance,
	 	  	to whom Options were granted pursuant to the provisions of this
	 	  	Plan;
	 	  	
	 	The "Plan" or the "Incentive Plan"  	This Plan as shall be amended from time to time;
	 	  	
	 	The "Exercise Shares" - 	As defined in section 11.1 below;
	 	  	
	 	The "Stock Exchange" - 	Tel Aviv Stock Exchange Ltd.;
	 	  	
	 	"NASDAQ" 	NASDAQ Global Select Market;
	 	  	
	 	"Trading Day" - 	A day on which trading takes place on the Stock Exchange;

















	2. 	Capital
Gain Tax Track 







	 	2.1	This
Plan shall be subject to, interpreted in accordance with and comply with all the
requirements of Section 102 of the Ordinance and any written approval of the Tax
Authorities in Israel. 






	 	2.2	This
Plans and the allocations thereunder shall be subject to the provisions of Section 102 of
the Ordinance – Capital Gains Tax Track, as shall be in effect from time to time,
and the rules by virtue thereof, and the Grantees shall be obligated to act pursuant to
the provisions of the Ordinance and such rules. 






	 	2.3	The
allocation of Options under this Plan shall be effected to an employee incentive trust
company (hereinafter: the “Trustee”), as trustee for each Grantee, or
any other trustee to be elected by the Company. The trust terms are specified in a trust
agreement to be signed by and between the Company and the Trustee (hereinafter: the “Trust
Agreement”), attached hereto as an appendix. 






	 	2.4	In
order for the Grantee to pay the tax rates stipulated for the Capital Gains Tax Track,
the Grantee may not transfer and/or sell the Exercise Shares in the Trustee’s
possession up to the end of 24 months from the date of allocation of the Options to the
Trustee for the Grantee, or any other term, which shall be approved by the Tax
Authorities in Israel (hereinafter: the “Lock-Up Period”). 






	 	2.5	In
any event of distribution of bonus shares and/or in the event of offering of rights by
virtue of the Options and/or the Exercise Shares (hereinafter: the “Additional
Rights”), all the Additional Rights shall be allocated to the Trustee for the
Grantees and shall be held by the Trustee up to the end of the Lock-Up Period of the
Options in respect of which the rights were allocated and the terms of the tax track
shall apply to such Additional Rights. 






	 	2.6	In
the event that the Grantee transfers and/or sells the Exercise Shares in the possession
of the Trustee prior to the end of the Lock-Up Period (hereinafter: the “Violation”),
the Grantee shall pay all taxes required to be paid in the wake of committing the
Violation, pursuant to the provisions of section 7 of the Rules, and shall indemnify the
Company for any expense incurred by the Company due to such Violation, including payment
of the employer’s contribution to the National Insurance Institute in the wake of
the Violation. 






	 	2.7	To
remove any doubts, the provisions of Section 102 of the Ordinance are intended to add to
any other provision stipulated in this Plan and nothing in the provisions of section 102
of the Ordinance shall derogate from the provisions of this Plan, including provisions as
to the Period of Consolidation of Entitlement, as defined in section 7 below and/or any
other provisions limiting the Grantee’s option to exercise the Options or transfer
the Shares from the possession of the Trustee. 






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	3.  	Number
of Options to be Allocated under the Plan 






	 	
The
total number of Options to be allocated under this Plan shall be one million (2,000,000)
non-negotiable Options of the Company, exercisable into Company Ordinary Shares of NIS 1
par value each, pursuant to the specification in this Plan below. The number of the
Shares arising from the exercise of the Options shall be subject to the exercise formula
and to adjustments as set out in sections 8.2 and 4 below.  






	4.  	Adjustments 






	 	4.1	In
the event that the Company distributes a cash dividend, the effective date for the
distribution thereof, will take place after the date of the allocation of the Options to
the Trustee for a Grantee, but before the exercise or expiry of the Options, the Exercise
Price, as defined in section 6.4 below, shall be decreased in respect of each Option by
the amount of the dividend per share, less the tax payable thereon. 






	 	4.2	In
the event that the Company distributes bonus shares, the effective date for the
distribution of which takes place after the date of the allocation of the Options to the
Trustee for the Grantee, but before the exercise or expiry of the Options, the number of
Shares to which the Grantee is entitled upon the exercise of the Options shall increase
by the number of the Shares that the Grantee would have been entitled to as bonus shares,
had he exercised the Options prior to the effective date for the distribution of the
bonus shares. The Exercise Price of each Option shall not vary as a result of the
increase in the number of Exercise Shares to which the Grantee is entitled in the wake of
the distribution of bonus shares. 






	 	4.3	If
rights to acquire any securities whatsoever are offered to Company shareholders by way of
rights, the Company shall act with a view that the rights be offered under the same
terms, mutatis mutandis, also to holders of the Options not yet exercised or
expired, as though the holders of such Options have exercised their Options on the eve of
the effective date for the right to participate in the said issuance of rights. The
number of the Exercise Shares shall not increase as a result of the said issuance of
rights. 






	 	4.4	In
any event of division or consolidation of the Company’s share capital, or any other
corporate capitalization event of a significantly similar nature, the Company shall
effect such changes or adjustments as are required to prevent dilution or increase in a
Grantee’s rights, pursuant to the Plan with respect to the number and class of the
Exercise Shares in relation to the Options not yet exercised by the Grantee and/or the
Exercise Price of each Option. 






	 	4.5	In
any event of a merger, spin-off and/or any other structural change, Options which have
been granted under this Plan, shall be replaced by, or converted to, an alternative
option in the Company after such structural change, all at the absolute discretion of the
Company’s Board of Directors. 






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	5.  	Management
of the Plan 






	 	
The
Company’s Board of Directors has the absolute discretion to manage the Plan, adopt
resolutions with respect to the Plan, interpret same and introduce changes therein, as it
deems fit, including a change in the Exercise Price of all or any of the Options, all
subject to the provisions of any law. The Company’s Board of Directors shall not be
obligated to treat all Grantees in an equal manner. 






	6.  	Allocation
of Options 






	 	6.1	Any
allocation of Options under the Plan shall only be implemented upon fulfillment of all
the following conditions: 







	 	A. 	The passage of 30 days from the date of submitting
the application for approval           of the Plan to the Tax Authorities in Israel,
pursuant to the provisions of           Section 102 of the Ordinance;  








	 	B. 	Obtaining
all the approvals required for allocation under the Plan at the           authorized
organs of the Company, pursuant to any law;  












	 	C. 	Obtaining
the Stock Exchange’s approval for the listing of the Exercise           Shares for
trading on the Stock Exchange;  








	 	D. 	Filing
an application with NASDAQ for listing the Exercise Shares for trading           on the
NASDAQ;  






	 	6.2	The
Options allocation date shall be the date on which the Company allocated Options in the
name of the Trustee for each Grantee, in accordance with the provisions of this Plan. 






	 	6.3	The
Options to be allocated to the Trustees for the Grantees under this Plan, shall be
allocated without consideration. 






	 	6.4	The
Exercise Price for any Option to be allocated under this Plan shall be the average of the
closing rates of the Company Share on the Stock Exchange during the 30 trading days
preceding the Option allocation date (hereinafter: the “Exercise Price”). 






	 	6.5	The
Options allocated under this Plan may not be transferred to any Grantee and/or third
party whatsoever, other than transfer by virtue of a Last Will and Testament or under law
and, in such an event, the provisions of Section 102 of the Ordinance and the Rules shall
apply to the Grantee’s heirs and/or transferees. 






	7.  	Entitlement
Consolidation Period  






	 	7.1 	Without
derogating from any of the provisions hereunder, the entitlement of each Grantee to
exercise the Options allocated to the Trustee on his behalf shall be
consolidated on the following dates (hereinafter: “Entitlement
Consolidation Dates”): 







	 	A. 	The
Grantee shall be entitled to exercise one third of the number of the           Options
allocated to the Trustee on his behalf, at the end of one year from the           date of
allocation of the Options to the Trustee for the Grantee.  







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	 	B. 	The
Grantee shall be entitled to exercise another third of the number of the
          Options allocated to the Trustee on his behalf, at the end of two years from
the           date of allocation of the Options to the Trustee for the Grantee.  






	 	C. 	The
Grantee shall be entitled to exercise the last third of the number of the
          Options allocated to the Trustee on his behalf, at the end of three years from
          the date of allocation of the Options to the Trustee for the Grantee.  






	 	
At
the end of three years from the date of allocation of the Options to the Trustee for the
Grantee, the Grantee shall be entitled to exercise all such Options as have been
allocated to the Trustee for his benefit, all subject to the provisions of the Plan.  






	 	7.2	The
Grantee’s entitlement to exercise the Options, on the Entitlement Consolidation
Dates, as set forth in section 7.1 above, shall be subject to the Grantee’s
continued employment or office at any company of the Company’s Group, all in
accordance with the provisions of section 12 below. 






	8.  	Exercise
of Options  






	 	8.1	Subject
to the provisions of this Plan, the Grantee may exercise all or any of the Options,
during the Option Term, as defined in section 9 below, by means of sending a written
exercise notice, signed by the Grantee, to the Company’s registered office and to
the Trustee, specifying, inter alia, the Grantee’s name and identification
card no. as well as the number of Options which the Grantee wishes to exercise
(hereinafter: the “Exercise Notice”). An Exercise Notice shall be
delivered to the Company only on trading days. 






	 	8.2	On
the date of receipt by the Company of the Exercise Notice (and where the Exercise Notice
is received after the hour 13:00, on the trading day subsequent to receipt of the
Exercise Notice by the Company) (hereinafter: the “Exercise Day”), the
Company shall allocate the Exercise Shares, the number of Exercise Shares being
calculated in accordance with the following formula: 







(A x B) - (A x C) 

B





	 	A= 	
The number of Options which the Grantee wishes to exercise that is specified in the
Exercise Notice; 






	 	B= 	
The opening price in NIS of the Company Share on the Stock Exchange on the Exercise Day,
provided that if the opening price exceeds 200% of the Exercise Price, the opening price
shall be set as 200% of the Exercise Price; 






	 	C= 	
   Exercise Price in NIS per Option; 






	 	
Fractions
of Shares shall be rounded up for any fraction of a Share that is equal to or exceeds
0.5, and rounded down for any fraction of a Share that is lower than 0.5.  






	 	
Following
are numerical examples for illustration purposes only: Assuming exercise of 100 Options
by any Grantee, while the Exercise Price per Option amounts to NIS 100 and the opening
price of the Company share on the Stock Exchange on the Exercise Day amounts to NIS 120,
then the number of Exercise Shares to be allocated to the Grantee is 17 Shares.  







5









	 	
Following
are numerical examples for illustration purposes only: Assuming exercise of 100 Options
by any Grantee, while the Exercise Price per Options amounts to NIS 100 and the opening
price of the Company share on the Stock Exchange on the Exercise Day amounts to NIS 200,
then the number of Exercise Shares to be allocated to the Grantee is 50 Shares.  






	 	8.3	A
Grantee may not exercise Options at a total Exercise Price lower than NIS 1,000, other
than where the exercise is exercise of the balance of the Options allocated for the
benefit of the Grantee and for which the Entitlement Exercise Period therefor has been
consolidated. 






	 	8.4	At
any allocation of Exercise Shares, the Company shall convert, into share capital, the par
value of the Exercise Shares to be allocated to share capital out of profits within the
meaning of Section 302(b) of the Companies Law, from the premium on Shares or from any
other source included in its equity in its financial statements, all in accordance with
and subject to the provisions of Section 304 of the Companies Law. 






	 	8.5	At
the request of underwriters, on public offering of Company securities, the Company’s
Board of Directors may resolve that the Exercise Shares may not be sold for a period not
exceeding 180 days, or for such longer period as shall be recommended by the Company’s
Board of Directors. 






	9.  	Option
Term  






	 	
Unless
otherwise determined by the Company’s Board of Directors, all the Options allocated
to the Trustee for a Grantee under this Plan, but which have not been exercised, shall
expire and be cancelled at 17:00, Israel time, at the end of five (5) years from the date
of the allocation thereof to the Trustee for such Grantee (hereinafter: the “Option
Term”), unless they have expired theretofore, pursuant to the provisions of
section 10 below. 






	10.  	Expiry
of Options  






	 	10.1 	The
Options allocated under this Plan shall expire on each of the following occurrences: 






	 	A. 	Exercised
Options shall expire on the date of allocation of the Exercise Shares           therefor;  






	 	B. 	Options
shall expire and shall not be exercisable at the end of the Option           Term;  






	 	C. 	Options
that the Grantee’s entitlement to exercise has been cancelled           under
section 12 below, shall expire and shall confer no rights on such Grantee;  






	 	10.2	Options
that the Grantee’s entitlement to exercise has been cancelled pursuant to the
provisions of section 12 below, shall return to the pool of Options held by a trustee and
the Company may re-grant such Options in the future to Grantees, pursuant to the
provisions of this Plan. 






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	11.  	Exercise
Shares  






	 	11.1	The
Shares arising from the exercise of any Options under this Plan (hereinafter: “Exercise
Shares”) shall have equal rights to those of Company Shares, in all
respects, immediately upon the allocation thereof and shall be entitled to any dividend
or other benefit, the effective date for the right to receive them takes place on or
subsequent to the date of allocation thereof. 






	 	11.2	Subject
to the receipt of a demand from Income Tax for the purpose of recognizing the Plan as a
plan under the Capital Gain Tax Track, each Grantee undertakes to sell the Exercise
Shares up to the end of 10 days from the date of allocation thereof. 






	 	11.3	In
any event where the Grantee is entitled to receive rights and/or bonus shares and/or any
other right conferred on a Grantee by virtue of the Options and/or the Exercise Shares
(hereinafter: the “Rights”) and on the effective date for distribution
of the rights, should the Options and/or the Exercise Shares have been held by the
Trustee, the rights shall be transferred to the Trustee, who shall withhold tax under any
law, if and insofar as applicable, and the provisions of section 2.5 above shall apply to
any such distribution and/or allocation. 






	 	11.4	In
any event that the Company distributes a cash dividend where, on the effective date for
the distribution of the dividend, the Trustee holds Exercise Shares for any of the
Grantees, the Company shall transfer to the Trustee amounts of dividend for the Exercise
Shares held by the Trustee as aforesaid for each Grantee, the Trustee shall withhold tax
under law, if and insofar as required, and shall subsequently transfer the dividend
amounts (after the tax withholding) to the Grantee. 






	12.  	Termination
of Employment or Office  






	 	12.1	Other
than the exclusions set forth in sections 12.2 and 12.3 below, in the event that prior to
the end of the Entitlement Consolidation Period: 






	 	A. 	The
employer-employee relationship between a Grantee and the Company at which           he is
employed on the date of this Plan is terminated on the Grantee’s
          initiative, other than in the event of deterioration in the terms of his
          employment or the seniority of his position; or  






	 	B. 	A
Grantee serving as a director in the Company ceases to serve as director in           the
Company on his initiative, or, in the event of termination of the office of           an
outside director under law;  






	 	
The
Grantee’s entitlement to Options, that the entitlement to be granted them has not
yet been consolidated up to such date, shall expire. The Grantee shall be entitled to
Options that the Entitlement Period therefor has been consolidated, on the date of
termination of employment or office, as the case may be, and such Options shall continue
to be subject to the provisions of this Plan. 






	 	       12.2 	Notwithstanding
the contents of section 12.1 above, in the event of: 






	 	A.	Total
work disability, as defined below, of the Grantee; or  






7









	 	B.	
The Grantee’s demise (Heaven forbid);  






	 	
the
Grantee or his heirs, in the event of demise, shall be entitled to exercise all the
Options allocated to the trustee for the Grantee, immediately after the occurrence of the
event as set out in subsection (a) or (b) above, irrespective of the termination or
non-termination of the Entitlement Consolidation Period, applicable to the Grantee,
subject to the provisions of Section 102 of the Ordinance with respect to Capital Gain
Tax Track and the Rules, the Entitlement Consolidation Period, as set forth in section 7
above, and the other provisions of this Plan.  






	 	
For
the purpose of this section 12.2, “Total Work Disability” shall be deemed
as a stable physical and/or mental condition, lasting at least six (6) months, caused in
consequence of an illness or accident, that prevents any engagement on the part of the
Grantee in a profession and/or engagement suitable to his former level of education,
experience and skills, as shall be determined at the absolute conclusive discretion of
the Company’s Board of Directors.  






	 	12.3	Notwithstanding
the contents of sections 12.1 and 12.2 above, where, prior to the end of the Entitlement
Consolidation Period, the employer-employee relationship between a Grantee and the
company at which he is employed on the date of this Plan, is terminated on the initiative
of the employing company under circumstances which do not confer on the Grantee the right
to receive severance pay under any law, or where a Grantee, serving as director in the
Company, ceases to serve as director in any company of the Company’s Group on the
initiative of the company belonging to the Company’s Group, under circumstances
where restrictions apply to the office of the director under the provisions of any law,
as set forth in Sections 226(a) and 227 of the Companies Law, 5759-1999, the Grantee’s
entitlement to the Options shall expire, irrespective of whether or not his entitlement
to receive them has been consolidated on such date. 






	 	12.4	In
the event that the Grantee has moved to work at another company of the Company’s
Group, the Grantee’s employment term at the other company as aforesaid shall be
deemed, for this purpose, as the employment term at the company at which he was employed
on the date of this Plan, all subject to obtaining appropriate approvals from the Tax
Authorities, if and insofar as required. 






	 	12.5	For
the purpose of this section 12, retirement to pension under the provisions of any law or
agreement shall not be deemed as termination of employer-employee relationship, subject
to obtaining appropriate approvals from the Tax Authorities, if and to the extent
required. 






	13.  	Taxes
and Expenses  






	 	13.1	This
Plan shall be subject to, interpreted in accordance with, and comply with all the
requirements of Section 102 of the Ordinance and any written approval of the Tax
Authorities in Israel. All tax implications under any law (other than Stamp Duty for
allocation of the Exercise Shares, if and to the extent applicable), arising from the
allocation of the Options and/or the designation and/or exercise and/or holding thereof
and/or the sale of the Exercise Shares (or any other security to be allocated under the
Plan) by or on behalf of the Grantee, shall be incurred by the Grantee. The Grantee shall
indemnify the company of the Company’s Group and/or the Trustee and shall hold them
harmless from any liability for any payment of tax and/or fine and/or interest and/or
linkage as aforesaid. 






8









	 	13.2	Whenever
a payment is required from the Grantee and/or from a company in the Company’s Group
and/or from the Trustee through tax withholding, with respect to the Options allocated to
the Trustee for the Grantee and/or the Exercise Shares, the company of the Company’s
Group as aforesaid and/or the Trustee, as the case may be, may demand, from the Grantee,
such sum as is sufficient to cover any demand for tax withholding as aforesaid. Whenever
Shares or any other asset, other than money, are transferred in the wake of the exercise
of Options as aforesaid, to a company of the Company’s Group and/or to the Trustee,
the Company and/or the Trustee may demand from the Grantee to transfer such sum of money
as is sufficient to comply with any demand for tax withholding, and should such sum not
be transferred in a timely fashion, such company and/or the Trustee may hold or offset
(subject to any law) the Shares or any such asset, pending the transfer of payment as
aforesaid on the part of the Grantee. 






	 	13.3	Prior
to the settlement of the tax applicable as aforesaid in Section 7 of the Rules, the
Options or the Exercise Shares may not be voluntarily transferred, assigned, pledged,
attached or otherwise encumbered, and no power of attorney or transfer deed shall be
issued in connection therewith, either with immediate or future effect, other than
transfer by virtue of a last will and testament or under law; where the Options or the
Exercise Shares are transferred pursuant to a last will and testament or under law, as
aforesaid, the provisions of Section 102 of the Ordinance and the provisions of the Rules
shall apply to the Grantee’s heirs or transferees. 






	 	13.4	Expenses
incurred with respect to the management and implementation of this Plan, including
payment of Stamp Duty in connection with the allocation of the Exercise Shares, if and to
the extent applicable, shall be borne by the Company. 






	14.  	Restrictions
on the Exercise of the Options  






	 	
No
Grantee may transfer and/or sell the Exercise Shares in any form whatsoever, other than
after compliance with the restrictions set forth in this section 14 below.  






	 	14.1 	Israeli
Law  






	 	
A
Grantee serving as director or Chief Executive Officer of the Company, or a Grantee who
is a controlling shareholder of the Company, may not transfer and/or sell the Exercise
Shares other than upon compliance with the restrictions on re-sale of securities, laid
down in Section 15.C. of the Securities Law, 5728-1968 (hereinafter: the “Law”)
as a Grantee under an Offering pursuant to Section 15.A.(a)(1) of the Law, such that the
offer of the Exercise Shares on the part of the Grantee shall not be deemed as being a
public offering. 






	 	
No
other Grantee may transfer and/or sell the Exercise Shares other than upon compliance
with the restrictions on re-sale of securities, laid down in Section 15.C. of the Law, as
a Grantee under an Offering pursuant to Section 15.A.(a)(1) of the Law, such that the
offer of the Exercise Shares on the part of the Grantee shall not be deemed as being a
public offering, or upon the Company’s obtaining an exemption under Section 15.D. of
the Law. 







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	 	14.2 	Law
in the United States  






	 	
Notwithstanding
anything stated in this Plan, a Grantee may not exercise Options allocated to a Trustee
for his benefit under the Plan, so long as no registration statement has been submitted
for the registration of the Exercise Shares as aforesaid with the Securities Authority in
the United States. 






	15.  	Period
of Holding the Shares in Trust  






	 	
The
Exercise Shares and the Additional Rights that were allocated to the Trustee by the
Company, shall be held by the Trustee for the benefit of the Grantee for a period not
exceeding 3 years from the date of termination of the Option Term. 






	16.  	No
Rights to Others to Receive Options  






	 	
Subject
to the provisions of the Plan, no other person, save the Grantee, shall have any rights
whatsoever with respect to the Options allocated to the Trustee for a Grantee under the
Plan. 






	17.  	Preservation
of Registered Capital  






	 	
The
Company undertakes to preserve, at all times, a number of Shares in its registered
capital for Exercise Options to be allocated under this Plan. 






	18.  	Applicable
Law and Jurisdiction  






	 	
This
Plan and all accompanying documents that have been delivered or signed by any company of
the Company’s Group with respect to this Plan, shall be interpreted in accordance
with, and subject to, the laws of the State of Israel. The jurisdiction with respect to
this Plan and all accompanying documents, as aforesaid, shall only be vested in the
pertinent courts in Tel Aviv Jaffa.  







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