S-8










EXHIBIT 4.1  



Nova Measuring
Instruments Ltd. 



STOCK OPTION PLAN 8 



	1.  	Purposes
of the Plan. The purposes of this Stock Option Plan           (hereinafter: the “Plan”)
are to attract and retain the best available           personnel for positions of
substantial responsibility, to provide additional           incentive to such individuals
and to promote the success of the Company’s           business, by providing
Employees of the Company and its Subsidiaries with the           opportunity to purchase
shares of the Company, pursuant to the Plan approved by           the Board of Directors
of the Company, and the Company’s Shareholders’          General Meeting which
is designed to benefit from, and is made, subject to           Article 21 below, pursuant
to, the provisions of Section 102 of the Israeli           Income Tax Ordinance [New
Version], 1961 and the rules promulgated there under. 






	2.  	Definitions  






	 	2.1 	“Board” shall mean the Board of Directors of the Company. 






	 	2.2 	“Committee” shall
mean the Committee, appointed by the Board in accordance with Article 4 of this Plan or
the Board, in case no such committee is appointed. 






	 	2.3 	“Company” shall mean Nova Measuring Instruments Ltd., an Israeli corporation. 






	 	2.4 	“Consultant” shall
mean a person providing bona fide services to the Company or a Subsidiary if the services
are not provided in connection with the offer or sale of securities in a capital-raising
transaction, and do not directly or indirectly promote or maintain a market for the
registrant’s securities. 






	 	2.5 	“Continuous
Status as an Employee” shall mean the absence of any interruption or termination
of service as an Employee or Consultant. Continuous Status as an Employee or Consultant
shall not be considered interrupted in the case of sick leave, military leave, or any
other leave of absence not exceeding 90 days, or in case reemployment upon the expiration
of such leave is guaranteed by contract or statute. 






	 	2.6 	“Employee” shall
mean any person, including officers, directors and Consultants, employed by or serving
for the Company or Subsidiary of the Company. 






	 	2.7 	“Exercise
Price” shall mean the Fair Market Value of the Ordinary Shares of the Company at
the time such option is granted to the Employee, unless resolved otherwise by the Board. 






	 	2.8 	“Fair
Market Value” of an Ordinary Share as of a particular date shall mean: 














	  	(i)       
So
long as the Company’s shares are quoted on the NASDAQ National Market,           the
Fair Market Value shall be deemed to be the closing price of the Ordinary
          Shares of the Company on the NASDAQ National Market on the last business day
          immediately prior to the date of grant. If the Company’s shares are traded
          or quoted on a securities exchange or inter-dealer quotation system other than
          NASDAQ National Market and are not quoted on the NASDAQ National Market, the
          Fair Market Value shall be deemed to be the closing price of the Ordinary
Shares           of the Company on such security exchange or inter-dealer quotation
system on the           last business day immediately prior to the date of grant.  






	  	(ii)       
If
actively traded over-the-counter, but not quoted on NASDAQ or quoted or
               traded on another inter-dealer quotation system or exchange, the Fair
Market                Value shall be deemed to be the average of the closing bid prices
over the                30-day period ending immediately prior to the applicable date of
grant.  






	 	2.9 	“Option” shall
mean a stock option granted pursuant to the Plan. 






	 	2.10 	“Optioned
Stock” shall mean Ordinary Stock subject to an Option.






	 	2.11 	“Optionee”shall
mean an Employee who receives an Option.






	 	2.12 	“Ordinary
Stock” shall mean the Ordinary Shares of the Company.






	 	2.13 	“Plan”shall
mean this Stock Option Plan.






	 	2.14 	“Share” shall
mean a share of Ordinary Stock, as adjusted in accordance with Article 12 below. 






	 	2.15 	“Subsidiary” shall
mean each of Nova  Inc.,  a  corporation  registered  in the  U.S.A.,  Nova  K.K.,  a
         corporation  registered in Japan, Nova Measuring  Instruments  Netherlands B.V,
a corporation  registered          in the  Netherlands  and Nova  Measuring  Instruments
 Taiwan Ltd., a corporation  registered in the ROC.          Subsidiary  shall also mean
any other  corporation to be  incorporated by the Company which is considered          as
such according to the Israeli Companies Law.






	3.  	Stock
Subject to the Plan. Subject to the provisions of Article 12 of the           Plan,
the maximum aggregate number of Shares that may be optioned and sold under           the
Plan is 2,500,000 Shares of Ordinary Stock. The Shares may be authorized,           but
unissued, Shares of Ordinary Stock. 






	 	
If
an Option should expire or become unexercisable, for any reason, without having been
exercised in full, the unpurchased Shares subject thereto shall become available for
future grant under the Plan, unless the Plan shall have been terminated. 






	4.  	Administration
of the Plan.  






	 	4.1 	Procedure.
The Plan shall be administered by the Board. 






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		    (i)        Subject
to sub-article (ii), the Company’s Compensation Committee is
               appointed as the Committee under the Plan and shall administer the Plan on
               behalf of the Board, subject to the terms and provisions of the
Compensation                Committee Charter and the Plan. The Compensation Committee
shall continue to                administer the Plan unless and until otherwise directed
by the Board.  







		    (ii)        The
Board may appoint a Committee other than the Compensation Committee
               consisting of not less than three independent Board members to administer
the                Plan on behalf of the Board, subject to such terms and conditions as
decided by                the Board. Once appointed, the Committee shall continue to
serve until otherwise                directed by the Board. The Board may increase the
size of any Committee                appointed pursuant to this sub-article (ii), remove
members (with or without                cause) and appoint new members in substitution
therefore, fill vacancies however                caused or remove all members of the
Committee and thereafter administer the                Plan.  







	 	4.2 	Powers
of the Committee. Subject to the provisions of the Plan, and of any applicable law,
the Committee shall have the authority: (i) to grant Stock Options; (ii) to determine the
Employees to whom, and the time or times at which, Options shall be granted and the
number of Shares to be represented by each Option; (iii) to interpret the Plan; (iv) to
determine the terms and provisions of each Option granted (which need not be identical)
and, subject the consent of the holder thereof, modify or amend each Option; (v) to
authorize any person to execute on behalf of the Company any instrument required to
effectuate the grant of an option previously granted pursuant to the Plan; and (vi) to
make all other determinations deemed necessary or advisable for the administration of the
Plan. No member of the Committee shall be held liable for any act or determination made
in good faith in respect to the Plan. 






	 	
Subject
to the provisions of the Plan, and of any applicable law, the Committee may recommend to
the Board, inter alia: (i) prescription, amendment and rescission of rules and
regulations relating to the Plan; (ii) acceleration or deferral (subject to Optionee’s
consent) of the exercise date of any Option, consistent with the provisions of Article 6
below; (iii) approval of the transfer of the Option by the Optionee to any entity under
the Optionee’s control (the “Transferee”) pursuant to the terms as set
forth in Section 11 below; (iv) adjustments that might be made pursuant to Section 12.1
below; (v) actions that might be taken by the Board as specified in Section 12.2; (vi)
whether cashless exercises should be permitted in accordance with Section 12.3.4; and
(vii) to amend, alter, suspend or discontinue the Plan from time to time.  






	 	4.3 	Effect
of the Committee’s Decision. All decisions, determinations and interpretations
of the Committee shall be final and binding on all Optionees and any other holders of any
Options granted under the Plan, unless otherwise determined by the Board. All decisions,
determinations and interpretations of the Board shall be final and binding on all
Optionees and any other holders of any Options granted under the Plan. 






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	5.  	Eligibility  






	 	5.1 	Stock
Options may be granted to Employees.






	 	5.2 	Nothing
in this Plan or any Option granted hereunder shall confer upon any Optionee any right
with respect to continuation of employment or consulting relationship with the Company,
nor shall it interfere in any way with the Optionee’s right or the Company’s
right to terminate his employment or consulting relationship at any time, with or without
cause. 






	6.  	Term
of Plan.  






	 	
The
Plan shall become effective upon its adoption by the Board or its approval by the
shareholders of the Company, as described in Article 18 of the Plan, whichever is
earlier. It shall continue in effect for a term of 10 years from that date unless sooner
terminated in accordance with the provisions of this Plan.  






	7.  	Term
of Option  






	 	
The
term of each Stock Option shall be no more than 7 years from date of grant.  






	8.  	Trustee  






	 	
Subject
to the provisions of Article 21 below, the Option Awards and/or Shares of the Company
issued upon exercise of the Options will be held in trust, by a Trustee (the “Trustee”)
who will hold the same pursuant to the Company’s instructions from time to time. The
Trustee shall not use the voting rights vested in any such shares and shall not exercise
said rights in any way whatsoever, except in cases when, at his discretion and after
consulting with the Board, the Trustee believes that the said rights should be exercised
for the protection of the Optionees as a minority among the Company’s Shareholders.  






	9.  	Exercise
Price and Consideration  






	 	9.1 	The
consideration to be paid for the exercise of the Option shall be the Exercise Price
multiplied by the number of Shares which are allotted to each Optionee. 






	 	9.2 	The
consideration to be paid for the Shares issued upon exercise of an Option, shall consist
entirely of cash, check, or such other consideration that may be approved from time to
time by the Committee. 






	10.  	Exercise
of Option  






	 	
The
exercise of an Option by an Employee shall be governed by the following provisions:  






	 	10.1 	The
Trustee shall be solely entitled to exercise an Option, provided that the Shares be held
in Trust for a period of not less than two (2) years from the date of approval of this
Plan. 






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	 	10.2 	The
exercise of an Option shall be subject to the schedules, numbers and amounts as
stipulated in the Option Agreement; provided, however, that no Employee shall have the
right to exercise more than as set forth in the following vesting schedule: 






	 	10.2.1 	25%
of the  Optioned  Stock  shall be  exercisable  after 12  month  of the date of grant
 (the  "Initial          vesting Date");






	 	10.2.2 	the
remainder of the Optioned Stock shall be exercisable on a monthly basis so that at the
end of each month after the Initial Vesting Date the Optionee shall be entitled to
exercise 2.083% of the optioned stock; 






	 	10.2.3 	Notwithstanding
anything herein to the contrary, the Board shall have sole discretion to determine that
the vesting schedule may be shortened and that the vesting process shall be accelerated. 






	 	10.3 	Exercise
Procedure. Options granted hereunder shall be exercisable at such times and under
such conditions as determined by the Committee at the time of grant, including
performance criteria relating to the Company and/or the Optionee, and as shall be
permissible under the terms of the Plan. An Option may not be exercised for a fraction of
a Share. 






	 	10.4 	An
Option shall be deemed to be exercised when a written notice of such exercise has been
submitted to the Company in accordance with the terms of the Option by the person
entitled to exercise the Option and provided that full consideration for the Shares with
respect to which the Option is being exercised has been received by the Company. Full
consideration may, as authorized by the Committee, consist of any consideration and
method of payment allowable under the Plan. 






	 	10.5 	The
Trustee shall not exercise the Option and/or deliver Shares to any Optionee unless the
Optionee, prior to or concurrently with such exercise and/or delivery, provides the
Trustee with written evidence satisfactory in form and substance to the Trustee that all
taxes, if any, required to be paid upon such exercise and/or delivery, have, in fact,
been paid, to the tax authorities or to the Company as the case may be. 






	 	10.6 	Until
the issuance (as evidenced by the appropriate entry on the books of the Company or of a
duly authorized transfer agent of the Company) of the stock-certificate evidencing such
Shares, no right to vote or receive dividends or any other rights as a shareholder shall
exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly upon exercise
of the Option. 






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	 	10.7 	Termination
of Status as an Employee. In the event of termination of an Optionee’s
Continuous Status as an Employee, such Optionee may exercise Options to the extent
exercisable by the date of termination within a period of one month therefrom (or
shorter time as may be specified in the applicable Option Agreement), but in no event
later than the date of expiration of the term of such Option as set forth in the Option
Agreement. To the extent that the Optionee was not entitled to exercise the Option at the
date of such termination, or does not exercise such Option within the time specified
herein, the Option shall terminate. In the event that the Optionee’s employment is
terminated by the Company under circumstances which do not entitle such Optionee to
receive compensation for termination and/or in the event that the Optionee breaches any
fiduciary duty and/or confidentiality obligation towards the Company and is dismissed as
a result of such breach, all Options including exercisable Options, shall expire
immediately upon the date on which a notice sent by the Company to the Optionee notifying
the Optionee of the Optionee’s termination. 






	 	10.8 	Disability
of Optionee. Notwithstanding the provisions of Article 10.7 above, in the event of
termination of an Optionee’s Continuous Status as an Employee as a result of his
total and permanent disability, he may exercise his Options to the extent he was entitled
to exercise them at the date of such termination within three (3) months (or such shorter
period as is specified in the applicable Option Agreement) from the date of such
termination (but in no event later than the date of expiration of the term of such Option
as set forth in the Option Agreement). To the extent that the Optionee was not entitled
to exercise the Option at the date of termination, or does not exercise such Option (to
the extent exercisable) within the time specified herein, the Option shall terminate. The
Board shall have the exclusive discretion, in exceptional cases, to decide whether an
extension to the aforesaid periods is to be granted, and under what terms. 






	 	10.9 	Death
of Optionee. Notwithstanding the provisions of Articles 10.7 and 10.8 above, in the
event of the death of an Optionee who shall have been in Continuous Status as an Employee
since the date of grant of the Option, the Option may be exercised, at any time within
six (6) months (or such shorter period as is specified in applicable Option Agreement)
following the date of death (but in no event later than the date of expiration of the
term of such Option as set forth in the Option Agreement), by the Optionee’s estate
or by a person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent of the right to exercise that would have accrued had the Optionee
continued living and remained in Continuous Status as an Employee six (6) months after
the date of death. The Board shall have the exclusive discretion, in exceptional cases,
to decide whether an extension to the aforesaid periods is to be granted, and under which
terms. 






	11.  	Non-Transferability
of Options and Stock Purchase Rights. An Option may           not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any           manner other than by
will or by the laws of descent or distribution and may be           exercised, during the
lifetime of the Optionee, only by the Optionee.           Notwithstanding the
aforementioned, the Board may, at its sole discretion,           approve the transfer of
the Option by the Optionee to any entity under the           Optionee’s control (the
“Transferee”) provided inter alia that:           (i) the Transferee has agreed
in writing to be bound by all obligations by which           the Optionee is bound
including without limitation the Company’s right to           cancel Options which
would otherwise be exercisable in the events described in           Section 10.7 above;
(ii) that the Optionee shall provide assurances, to the           satisfaction of the
Board that all taxes applicable with regard to such transfer           were paid, or an
approval from the tax authority providing that the Company           and/or the Trustee,
as the case may be, are exempt from performing any           withholding and/or from any
other liability with regard to such transfer and           further that any of the Company’s
liabilities under Section 102 of the           Income Tax Ordinance shall expire
immediately upon consummation of such transfer           with regards to the Options so
transferred; and (iii) that the issuance of           Shares issuable in the event of
exercise of the Option by the Transferee is           compliant with the requirements of
the applicable securities law including,           without limitation, the rules
applicable to the registration of shares issuable           under option plans. 






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	12.  	Adjustments
Upon Changes in Capitalization or Merger.  






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






	 	12.2 	Dissolution
or Liquidation. Other than with respect to the events described in Section 12.3
herein, in the event of the proposed dissolution or liquidation of the Company, each
Option will terminate immediately prior to the consummation of such proposed action,
unless otherwise provided by the Board. The Board may, in the exercise of its sole
discretion in such instances, declare that any Option shall terminate as of a date fixed
by the Board and give each Optionee the right to exercise his Option as to all or any
part of the Optioned Stock, including Shares as to which the Option would not otherwise
be exercisable. 






	 	12.3 	Merger,
Sale of Assets, Change of Control.  






	 	12.3.1 	Acceleration
Events: In the event of a (i) proposed sale of all or substantially all of the assets
of the Company or; (ii) a proposed merger of the Company with or into another corporation
or entity, which after such transaction the Company’s Shareholders hold less than
50% of the shares of the surviving entity; or (iii) a proposal to purchase the Company’s
shares so that after such purchase the purchaser holds 50% or more of the Company’s
Shares or; (iv) a Special Purchase Offer as such term is defined in Section 328 of the
Company’s Law – 1999, ( “Acceleration Event”), the vesting process
shall be accelerated so that each Optionee who maintains Continuous Status as an Employee
at the date of completion and perfectionoccurrence of an Acceleration Event shall
be deemed to have held each of his or her Options for a period which is 12 months longer
than the actual period during which the Optionee had actually held each Option, and the
amount of Shares exercisable in such an event shall be calculated accordingly. 






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	 	12.3.2 	Upon
the occurrence of an Acceleration Event, the Company shall notify all Optionees of their
right to exercise their Options, and each Optionee shall be entitled to exercise their
Options, with regard to the amount of Shares exercisable under the Plan, including such
Shares exercisable due to the acceleration of the vesting process, within 15 days of such
notice, by way of sending a notice of exercise to the Company. 






	 	12.3.3 	The
right to exercise any portion of the Option granted which would not otherwise be
exercisable, is subject to the completion and perfection of any of the transactions
described under Section 12.3.1 above, including the attainment of all regulatory and any
other approval required under applicable law. It is specifically stated that in the event
that any of the transactions described under Section 12.3.1 above is not completed and
perfected for any reason whatsoever, such right shall be null and void. In such an event
the Optionee shall be entitled either to cancel his notice of exercise with respect to
all the stock exercised under the notice of exercise described in Section 12.3.2 above,
or exercise that part of the Optioned Stock which would have been exercisable by the
Optionee according to the terms of the Plan if the relevant Acceleration Event was not to
occur, or any part thereof. 






	 	12.3.4 	Cashless
Exercise: The Board at its sole discretion may determine that the exercise of the Option
in the events described in Sections 12.3.1(ii) and (iv) (in the event that the
consideration payable for the Shares purchasable under such transaction is for cash), may
be made by way of deduction of the Exercise Price from the price payable for the Shares
purchasable by the purchaser of the Shares which would be purchased under the terms of
such transaction. The Board shall be entitled to condition such form of exercise
described in this Section 12.3.4 on any terms it may deem fit in order to secure payment
of the exercise price of such Option. 






	13.  	Time
of Granting Options. The date of grant of an Option shall, for all
          purposes, be the date on which the Committee determines to grant such Option.
          Notice of the determination shall be given to each Employee or Consultant to
          whom an Option is so granted within a reasonable time after the date of such
          grant. 






	14.  	Amendment
and Termination of the Plan  






	 	14.1 	Amendment
and Termination. The Board may at any time amend, alter, suspend or discontinue the
Plan from time to time in such respects as the Board may deem advisable. 






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	 	14.2 	Effect
of Amendment or Termination. Any such amendment or termination of the Plan shall not
affect Options already granted, and such Options shall remain in full force and effect as
if this Plan had not been amended or terminated, unless mutually agreed otherwise between
the Optionee and the Board, which agreement must be in writing and signed by the Optionee
and the Company. 






	15.  	Conditions
Upon Issuance of Shares. Shares shall not be issued pursuant           to the
exercise of an Option unless the exercise of such Option and the issuance           and
delivery of such Shares pursuant thereto shall comply with all relevant
          provisions of law, and the requirements of any stock exchange upon which the
          Shares may then be listed, and shall be further subject to the approval of
          counsel for the Company with respect to such compliance. 






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






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






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






	17.  	Agreements. Options
shall be evidenced by written agreements (an           “Option Agreement”) in
such form as the Committee shall approve from           time to time. 






	18.  	Shareholders
Approval  






	 	
The
Plan shall be subject to approval by the shareholders of the Company within twelve (12)
months before or after the date on which the first grant is made. To remove any doubt, if
the Plan is not approved by the Company’s shareholders within 12 months of the date
of grant it shall be deemed null and void and all Options granted under the Plan prior to
the date in which such approval was to be granted shall be invalidated and may not be
exercised under any circumstance. It is further clarified that shareholders approval is
condition precedent to the validity of each Option granted and no Optionee shall be
entitled to any right in lieu of any Option cancelled or invalidated as a result of
failure to obtain shareholder approval for the plan regardless of the reasons which
brought about such failure. No Option shall be exercisable until the Plan is approved by
the shareholders of the Company. 






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	19.  	Governing
Law  






	 	
The
Plan and all instruments issued there under or in connection therewith shall be governed
by, and interpreted in accordance with, the Laws of the State of Israel. 






	20.  	Application
of funds  






	 	
The
proceeds received by the Company from the sale of shares pursuant to the Options granted
under the Plan will be used for general corporate purposes of the Company or any
Subsidiary thereof. 






	21.  	Tax
Consequences  






	 	
This
plan shall be governed by Section 102 of the Israeli Income Tax Ordinance [New version]
1961 and the rules promulgated there under. Any tax consequences arising from the grant or
the exercise of any Option, from payment for shares covered thereby or from any other
event or act (of the Company or the Optionee) hereunder, shall be borne solely by the
Optionee. Furthermore, the Optionee shall agree to indemnify the Company and the Trustee
and hold them harmless against and from any and all liability for any such tax or interest
or penalty. 






	 	
Notwithstanding
the provisions of the preceding paragraph the Board may determine with respect to each
grant and under its sole discretion that the Option granted under such grant shall not be
made in accordance with Section 102 described above, and determine the relevant taxation
mechanism with respect to each grant under Section 102 or otherwise (including any
alternative which may be available under the applicable tax laws at the time of grant).
Such determination shall be made with respect to the entire Plan (subject to applicable
law) or with respect to each particular grant by stating the same on the document of grant
furnished to each such Employee. 






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