Exhibit 4.3


 


MIND CTI LTD.


 


2011 SHARE INCENTIVE PLAN


 


A.      NAME
AND PURPOSE


 


1.          Name:
This plan, as amended from time to time, shall be known as the “MIND CTI Ltd. 2011 Share Incentive Plan”.


 


2.          Purpose:
The purpose and intent of the Plan is to provide incentives to employees, directors, consultants and/or contractors of the
Company, by providing them with opportunities to purchase Shares, pursuant to a plan approved by the Board which is designed to
enable the company to issue equity related awards.


 


Incentives under the Plan will only be issued to Grantees (as
defined below) subject to the Applicable Laws in their respective country of residence.


 


B. DEFINITIONS


 


“Administrator” means (i) the Board, or (ii)
a committee of the Board appointed by the Board for the purpose of the administration of the Plan and, if a committee is appointed,
to the extent acting in accordance with specific authorization and guidelines provided by the Board for such purpose and subject
to any restriction under Applicable Laws.


 


“Adoption Date” means the Date of Grant,
or any other date of commencement of vesting of an Award, for the purposes of the Plan, that is determined by the Administrator
for a given grant of an Award.


 


“Affiliate” means any company (i) that holds
at least 10% of the issued share capital of MIND CTI Ltd. or of its voting power, or (ii) in which MIND CTI Ltd. holds at least
10% of the issued share capital or voting power, or (iii) in which a company under clause (i) above also holds at least 10% of
its issued share capital or voting power.


 


“Applicable Laws” means the requirements
relating to the administration of equity compensation plans under Israeli law, any share exchange or quotation system on which
the Shares are listed or quoted and the applicable laws of any other country or jurisdiction where Awards are granted under the
Plan.


 


“Award” means, individually or collectively,
a grant under the Plan of Options or Shares.


 


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


 


“Cause” means (i) breach of the Grantee’s
duty of loyalty towards the Company, or (ii) breach of the Grantee’s duty of care towards the Company, or (iii) the commission
of any flagrant criminal offense by the Grantee, or (iv) the commission of any act of fraud, embezzlement or dishonesty towards
the Company by the Grantee, or (v) any unauthorized use or disclosure by the Grantee of confidential information or trade secrets
of the Company, or (vi) involvement in a transaction in connection with the performance of duties to the Company which transaction
is adverse to the interests of the Company and which is engaged in for personal profit, or (vii) any other intentional misconduct
by the Grantee (by act or omission) adversely affecting the business or affairs of the Company in a material manner, or (viii)
any act or omission by the Grantee which would allow for the termination of the Grantee’s employment without severance pay,
according to the Israeli Severance Pay Law, 1963, or any similar provision of law in the jurisdiction in which the Grantee is employed.


 



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“Cessation of Service” means Grantee’s
cessation of providing services as a Service Provider of the Company.


 


“Companies Law” means the Israeli Companies
Law, 1999.


 


“Company” means MIND CTI Ltd., a company
organized under the laws of the State of Israel, or any Affiliate thereof.


 


“Consultant” means any person, including
an advisor, engaged by the Company to render services to it, who is not an Employee.


 


“Corporate Transaction” means the
occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:


 


(i)      a
sale or other disposition of all or substantially all, as determined by the Board in its discretion, of the consolidated assets
of the Company and its subsidiaries;


 


(ii)     a
sale or other disposition of at least eighty percent (80%) of the outstanding securities of the Company;


 


(iii)    a
merger, consolidation or similar transaction following which the Company is not the surviving corporation; or


 


(iv)    a
merger, consolidation or reorganization following which the Company is the surviving corporation but the Ordinary Shares of the
Company outstanding immediately preceding the merger, consolidation or reorganization are converted or exchanged by virtue of the
merger, consolidation or reorganization into other property, whether in the form of securities, cash or otherwise.


 


Whether a transaction is a “Corporate Transaction”
as defined above, shall be finally and conclusively determined by the Administrator in its absolute discretion.


 


“Date of Grant” means the effective date
of grant of an Award, as detailed in Section 5.1 below.


 


“Date of Cessation” means the effective date
of a Cessation of Service.


 


“Director” means a member of the Board.


 


“Disability” means the inability to engage
in any substantial gainful occupation for which the Grantee is suited by education, training or experience, by reason of any medically
determinable physical or mental impairment that is expected to result in such person’s death or to continue for a period
of six (6) consecutive months or more.


 


“Employee” means any person, including officers
and Directors, employed by the Company or an Affiliate of the Company. Neither service as a Director nor payment of a director’s
fee by the Company will be sufficient to constitute “employment” by the Company.


 


 



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“Exercise Conditions” means a Vesting Period.


 


“Exercise Price” means (i) the purchase price
per Share subject to an Award, or (ii) the nominal value per Share to be paid upon the vesting of an Award that does not require
exercise by the Grantee, to the extent the Grantee is required to pay such nominal value hereunder, as applicable.


 


“Exercised Share” means a Share issued upon
exercise of an Award or vesting of an Award, as applicable, or, if applicable, a freely transferable Share issued to a Grantee
not resulting from another type of Award.


 


“Grantee” means the person to whom an Award
shall be granted under the Plan.


 


“Notice of Exercise” means a written notice
of exercise of an Award, delivered by a Grantee to the Company.


 


“Notice of Grant” means a written notice
of the grant of an Award, accompanied by an applicable agreement between the Company and the Grantee relating to the terms of grant
of said Award.


 


“Option” means an option to purchase a Share
or Shares.


 


“Plan” means this “MIND CTI Ltd. 2011
Share Incentive Plan”, as amended from time to time.


 


“Representative” means any third party designated
by the Company for the purpose of the exercise of Awards, as provided in Section 8.2 below.


 


“Sale” means the sale of all or substantially
all of the issued and outstanding share capital of the Company.


 


“Service Provider” means an Employee, Director
or Consultant.


 


“Share” means an Ordinary Share, nominal
value of NIS 0.01 each, of the Company.


 


“Stock Market” means a stock
exchange or an electronic securities trading system (such as NASDAQ).


 


“Successor Entity Award” means securities
of any successor entity, as provided in Section 9.3 below.


 


“Tax” means any and all federal, provincial,
state and local taxes of any applicable jurisdiction, and other governmental fees, charges, duties, impositions and liabilities
of any kind whatsoever, including social security, national health insurance or similar compulsory payments, together with all
interest, linkage for inflation, penalties and additions imposed with respect to such amounts.


 


“Vesting Period” of an Award means, for the
purpose of the Plan and its related instruments, the period between the Adoption Date and the date on which (i) the Grantee may
exercise the Award into Exercised Shares; or (ii) if said Award does not require the Grantee to exercise it, the date on which
the Award vests into an Exercised Share; or (iii) the date on which a Share (not resulting from another type of Award) may be freely
transferred by the Grantee (subject to any other restrictions prescribed herein or by law).


 


 



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C.   GENERAL TERMS AND CONDITIONS OF THE PLAN


 


3.   Administration: 


3.1.        The
Plan will be administered by the Administrator, subject to Applicable Laws, including but not limited to the instructions of the
Companies Law.


 


3.2.        Subject
to the general terms and conditions of the Plan, the Administrator shall have the full authority in its discretion, from time to
time and at any time to determine (i) the Grantees under the Plan, (ii) the number of Shares subject to each Award, the type of
Award, and the Exercise Price per Share, (iii) the time or times at which the same shall be granted, (iv) the schedule and conditions,
if applicable, on which Awards may vest or be exercised and on which Shares shall be paid for, (v) the method of payment for Shares
purchased pursuant to any Award, (vi) the method for satisfaction of any tax withholding obligation arising in connection
with an Award, including by the withholding, delivery or sale of Shares, (vii) rules and provisions, as may be necessary or
appropriate to permit eligible Grantees resident or employed in any specific jurisdiction to participate in the Plan and/or to
receive preferential tax treatment in their country of residence, with respect to Awards granted hereunder, including the adoption
of a sub-plan to this Plan, as provided in Section 11.2 below; and/or (viii) any other matter which is necessary or desirable for,
or incidental to, the administration of the Plan.


 


3.3.        The
Administrator may, from time to time, adopt such rules and regulations for carrying out the Plan, as it may deem necessary.


 


3.4.        The
interpretation and construction by the Administrator of any provision of the Plan or of any Award thereunder shall be final and
conclusive and binding on all parties who have an interest in the Plan or any Award or Exercised Share, unless otherwise determined
by the Board.


 


4.   Eligible
Grantees:


4.1           The
Administrator, at its discretion, may grant Awards to any Service Provider of the Company. Anything in the Plan to the contrary
notwithstanding, all grants of Awards shall be authorized and implemented only in accordance with the provisions of Applicable
Laws.


 


4.2           The
grant of an Award to a Grantee hereunder, shall neither entitle such Grantee to participate, nor disqualify him from participating,
in any other grant of Awards pursuant to the Plan or any other incentive plan of the Company.


 


5.   Date
of Grant and Shareholder Rights:


5.1           Date
of Grant. Subject to Sections 7.1 and 7.2 hereof and to any Applicable Laws, the Date of Grant shall be the date the Administrator
resolves to grant such Award, or any future date determined as the effective date of a grant of an Award, if so expressly stated
by the Administrator in its determination relating to the grant of an Award. The Company shall promptly give the Grantee a Notice
of Grant following such resolution.


 


5.2           Voting
Rights; Shareholder Rights. The holder of an Award shall have no shareholder rights with respect to the Shares subject to
such Award until such person (i) shall have exercised such Award or such Award has vested into a Share, as applicable, and (ii)
shall have all restrictions applicable to any Shares issued to him removed, if applicable; and (iii) has paid the applicable Exercise
Price, if any; and (iv) has become the record holder of the Exercised Shares.


 



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6.    Reserved
Shares:


6.1           The
Company shall reserve sufficient number of shares for the purpose of grants of Awards under this Plan.


 


6.2           All
Shares under the Plan, in respect of which the right of a Grantee to purchase or be issued the same shall, for any reason, terminate,
expire or otherwise cease to exist, shall again be available for grant through Awards under the Plan, and under any sub-plans of
this Plan, as the Administrator may determine at its own discretion, from time to time, provided, however, that until termination
of the Plan the Company shall at all times reserve sufficient number of unissued Shares to meet the requirements of the Plan.


 


6.3           Without
derogating from the foregoing, the Administrator shall have full authority in its discretion to determine that the Company may
issue, for the purposes of this Plan and/or any other plans, previously issued Shares that are held by the Company, from time to
time, as Dormant Shares (as such term is defined in the Companies Law).


 


7.   Required
Approvals; Notice of Grant; Vesting:


7.1           The
implementation of the Plan and the granting of any Award under the Plan shall be subject to the Company’s procurement of
all approvals and permits required by Applicable Laws or regulatory authorities having jurisdiction over the Plan, the Awards granted
under it, and the Shares issued pursuant to it.


 


7.2           The
Notice of Grant shall state, inter alia, the number of Shares subject to each Award, the type of Award, the vesting schedule,
the dates when the Award may be exercised and/or will vest (as applicable), any restrictions upon transfer or sale of Shares (if
applicable), the Exercise Price, the tax treatment to which the Award is subject and such other terms and conditions as the Administrator
at its discretion may prescribe, provided that they are consistent with the Plan.


 


7.3           Vesting
of Awards. Unless determined otherwise by the Administrator, the Vesting Period pursuant to which such Awards shall vest, shall
be such that all Awards shall be fully vested on the first business day following the passing of four (4) years from the
Adoption Date, such that 50% of the Awards shall vest on the second anniversary of the Adoption Date and 25% of the Awards shall
vest on each of the third and fourth anniversaries of the Adoption Date.


 


Unless determined otherwise by the Administrator,
any period in which the Grantee shall not be employed by the Company, or in which the Grantee shall have taken an unpaid leave
of absence (excluding a leave for military reserves duty or the mandatory maternity leave determined by law), or in which the Grantee
shall cease to serve as Service Provider of the Company, shall not be included in the Vesting Period.


 


8.   Options:


8.1          Exercise
Price; Re-pricing of Options.


 


8.1.1           The
Exercise Price per Share subject to each Option shall be determined by the Administrator in its sole and absolute discretion, subject
to Applicable Laws and to guidelines adopted by the Board, from time to time. In the event the Exercise Price is not determined
by the Administrator, and provided the Company’s shares are listed on any Stock Market, the Exercise Price of an Option shall
be equal to the average closing price per share of MIND's ordinary shares on the Stock Market during the 30 trading day period
immediately preceding the Date of Grant of such Option.


 



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8.1.2           Subject
to Applicable Laws, the Administrator shall have full authority to, at any time and from time to time, (i) grant in its discretion
to the holder of an outstanding Option, in exchange for the surrender and cancellation of such Option, a new Option having an Exercise
Price lower than provided in the Option so surrendered and canceled and containing such other terms and conditions as the Administrator
may prescribe in accordance with the provisions of the Plan, or (ii) effectuate a decrease in the Exercise Price (see Section 8.1.1
above) of outstanding Options.


 


8.2          Exercise
of Options. Options shall be exercisable pursuant to the terms under which they were awarded and subject to the terms and conditions
of the Plan. The exercise of an Option shall be made by a written Notice of Exercise delivered by the Grantee to the Company at
its principal executive office, and/or to a Representative, in such form and method as may be determined by the Company, specifying
the number of Shares to be purchased and accompanied by the payment of the Exercise Price, at the Company’s or the Representative’s
principal office, and containing such other terms and conditions as the Administrator shall prescribe from time to time.


 


Each payment for Exercised Shares shall be in respect of a whole
number of Shares, and shall be effected in cash or by a bank’s check payable to the order of the Company, or such other method
of payment acceptable to the Company.


 


8.3          Term
of Options.     Unless otherwise determined by the Administrator, anything herein to the contrary notwithstanding,
but without derogating from the provisions of Section 8.5 hereof, if any Option has not been exercised and the Shares subject thereto
not paid for within five (5) years after the Date of Grant (or any shorter or longer period set forth in the Notice of Grant),
such Option and the right to acquire such Shares shall terminate, all interests and rights of the Grantee in and to the same shall
ipso facto expire, and the Shares subject to such Options shall again be available for grant through Awards under the Plan,
or under any sub-plans of the Plan, as provided for in Section 6 herein.


 


8.4          The
exercise of the Options shall be subject to any Applicable Laws, including when applicable, the limitations in connection with
the use of nonpublic information.


 


8.5          Cessation
of Service.


 


8.5.1.   In
the event of a Cessation of Service, all Options theretofore granted to such Grantee, shall terminate as follows:


 


(a)          All
such Options that are not vested on the Date of Cessation shall terminate immediately.


 


(b)          If
the Grantee’s Cessation of Service is by reason of such Grantee's death or Disability, such Options (to the extent vested
at the Date of Cessation) shall be exercisable by the Grantee or the Grantee's guardian, legal representative, estate or other
person to whom the Grantee's rights are transferred by will or by laws of descent or distribution, at any time until the lapse
of twelve (12) months from the Date of Cessation (but in no event after the expiration date of such Options), and shall
thereafter terminate.


 



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(c)          If
the Grantee’s Cessation of Service is due to any reason other than those stated in Sections 8.5.1(b) and 8.5.1(d) herein,
such Options (to the extent vested on the Date of Cessation) shall be exercisable at any time until the lapse of three (3) months
from the Date of Cessation (but in no event after the expiration date of such Options), and shall thereafter terminate; provided,
however, that if the Grantee dies within such period, such Options (to the extent vested on the Date of Cessation) shall
be exercisable by the Grantee's legal representative, estate or other person to whom the Grantee's rights are transferred by will
or by laws of descent or distribution at any time until the lapse of twelve (12) months from the Date of Cessation (but in no event
after the expiration date of such Options), and shall thereafter terminate.


 


(d)          Notwithstanding
the aforesaid, if the Grantee’s Cessation of Service is for Cause, all of the Options whether vested or not shall ipso
facto expire immediately and be of no legal effect.


 


(e)          Whether
the Cessation of Service of a particular Grantee is by reason of “Disability” for the purposes of paragraph 8.5.1(b)
hereof, or is a Cessation of Service other than by reason of such Disability for the purposes of paragraph 8.5.1(c), or is for
Cause as set forth in paragraph 8.5.1(d) hereof, shall be finally and conclusively determined by the Administrator in its absolute
discretion.


 


(f)          Notwithstanding
the aforesaid, under no circumstances shall any Option be exercisable after the specified expiration of the term of such Option.


 


8.5.2    Notwithstanding
the foregoing provisions of this Section 8.5, unless determined otherwise by the Administrator, and for the avoidance of doubt,
the transfer of a Grantee from the employ or service of the Company to the employ or service of an Affiliate, or from the employ
or service of an Affiliate to the employ or service of the Company or another Affiliate, shall not be deemed a termination of employment
or service for purposes hereof.


 


9.    Liquidation
and Corporate Transaction


9.1         Except
as expressly provided in this Section 9, the grant of Awards under the Plan shall in no way affect the right of the Company to
distribute bonus shares, to offer rights to purchase its securities, or to distribute dividends.


 


9.2         Liquidation.
Unless otherwise provided by the Board, in the event of the proposed dissolution or liquidation of the Company, all outstanding
Awards will terminate immediately prior to the consummation of such proposed action. In such case, the Board may declare that any
Award shall terminate as of a date fixed by the Board and give each Grantee the right to exercise his Award or have it vested,
including Award that would not otherwise vest or be exercisable.


  


9.3          Corporate
Transaction.


 


(a)         In
the event of a Corporate Transaction, immediately prior to the effective date of such Corporate Transaction, each Award may, among
other things, at the sole and absolute discretion of the Board, either:


 



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(i)       Be
substituted for a Successor Entity Award such that the Grantee may exercise the Successor Entity Award or have it become vested,
as the case may be, for such number and class of securities of the successor entity which would have been issuable to the Grantee
in consummation of such Corporate Transaction, had the Award vested or been exercised (as applicable), immediately prior to the
effective date of such Corporate Transaction, given the exchange ratio or consideration paid in the Corporate Transaction and the
Vesting Period of the Awards and such other terms and factors that the Administrator determines to be relevant for purposes of
calculating the number of Successor Entity Awards granted to each Grantee; or


 


(ii)      Be assumed by any successor entity such that the Grantee
may exercise the Award or have his/her Award vest (as applicable), for such number and class of securities of the successor entity
which would have been issuable to the Grantee in consummation of such Corporate Transaction, had the Award vested or been exercised
immediately prior to the effective date of such Corporate Transaction, given the exchange ratio or consideration paid in the Corporate
Transaction and the Vesting Period of the Awards and such other terms and factors that the Board determines to be relevant for
this purpose.


 


(iii)     Determine
that the Awards shall be cashed out for a consideration equal to the difference between the price received by the shareholders
of the Company in the Corporate Transaction and the Exercise Price, purchase price, or nominal value, as the case may be, of such
Award.


 


In the event of a clause (i) or clause (ii) action, appropriate
adjustments shall be made to the Exercise Price per Share to reflect such action. In taking any of the actions permitted
under this Section 9.3(a), the Administrator shall not be obligated to treat all Awards, all Awards held by a Grantee, or all Awards
of the same type, similarly.


 


(b)        Immediately
following the consummation of the Corporate Transaction, all outstanding Awards shall terminate and cease to be outstanding, except
to the extent assumed by a successor entity.


 


(c)        Notwithstanding
the foregoing, and without derogating from the power of the Board or Administrator pursuant to the provisions of the Plan, the
Board shall have full authority and sole discretion to determine that any of the provisions of Sections 9.3(a)(i) or 9.3(a)(ii)
above shall apply in the event of a Corporate Transaction in which the consideration received by the shareholders of the Company
is not solely comprised of securities of a successor entity, or in which such consideration is solely cash or assets other than
securities of a successor entity.


 


9.4          Sale.
Subject to any provision in the Articles of Association of the Company and to the Board’s sole and absolute discretion, in
the event of a Sale, each Grantee shall be obligated to participate in the Sale and sell his or her Shares and/or Awards in the
Company, provided, however, that each such Share or Award shall be sold at a price equal to that of any other Ordinary
Share sold under the Sale (less the applicable Exercise Price), while accounting for changes in such price due to the respective
terms of any such Award, and subject to the absolute discretion of the Board.


 


For purposes of a Sale, whether “all or substantially
all of the issued and outstanding share capital of the Company is to be sold”, shall be finally and conclusively determined
by the Board in its absolute discretion.


 


9.5         The
grant of Awards under the Plan shall in no way affect the right of the Company to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business
or assets.


 



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10.   Limitations
on Transfer:


10.1     Unless
determined otherwise by the Administrator, no Award shall be assignable or transferable by the Grantee to whom granted otherwise
than by will or the laws of descent and distribution, and an Award shall vest or may be exercised (as applicable) during the lifetime
of the Grantee only by such Grantee or by such Grantee's guardian or legal representative. The terms of such Award shall be binding
upon the beneficiaries, executors, administrators, heirs and successors of such Grantee. Any Shares acquired upon exercise or vesting
of Awards shall be transferable only in accordance with applicable securities and other local laws, and may be subject to substantial
statutory or regulatory restrictions on transfer, except to the extent exemptions (whether by registration or otherwise) are available.


 


10.2      Underwriter’s Lock-up
and Limitations on the Use of Nonpublic Information. The Grantee’s rights to sell Exercised Shares may be subject
to certain limitations (including a lock-up period), as will be requested by the Company or its underwriters, from time to time,
or upon a specific occurrence, if applicable, and the Grantee unconditionally agrees and accepts any such limitations. Furthermore,
the Grantee’s right to sell Exercised Shares is subject to Applicable Laws, including in connection with limitation relating
to the use of non-public information, if and when applicable.


 


11.  Term and
Amendment of the Plan:


11.1     The
Plan shall terminate upon the earliest of (i) the expiration of the ten (10) year period measured from the date the Plan was
adopted by the Board, or (ii) the termination of all outstanding Awards in connection with a Corporate Transaction. All Awards
outstanding at the time of a clause (i) termination event shall continue to have full force and effect in accordance with the provisions
of the Plan and the documents evidencing such Awards.


 


11.2     Subject
to Applicable Laws and regulations, the Board in its discretion may, at any time and from time to time, amend, alter, extend or
terminate the Plan, as it deems advisable, including without limitation, change the vesting and exercise periods. In addition,
the Administrator may adopt, as part of the Plan and based on it, sub-plans, in order to comply with all relevant and Applicable
Laws and regulations of the country of residence of any Grantees.


 


12.         Withholding
and Tax Consequences:


12.1     All
Tax consequences and obligations arising from the grant, vesting, or exercise of any Award (as applicable), or the subsequent disposition
of, Shares subject thereto or from any other event or act (of the Company or of the Grantee) hereunder, shall be borne solely by
the Grantee, and the Grantee shall indemnify the Company and hold it harmless against and from any and all liability for any such
Tax, including without limitation, monetary liabilities relating to the necessity to withhold, or to have withheld, any such Tax
payment from any payment made to the Grantee. Notwithstanding the above, the Company’s obligation to deliver Shares upon
the exercise or vesting of any Awards granted under the Plan shall be subject to the satisfaction of all applicable Tax withholding
requirements as governed by Applicable Laws or practice.


 


12.2     Withholding
in Shares. The Company shall have the right, but not the obligation, to deduct from the Shares issuable to a Grantee upon the
exercise or vesting of an Award, or to accept from the Grantee the tender of, a number of whole Shares having a fair market value,
as determined by the Company, that will enable the Company to satisfy any Tax withholding obligations of the Company.


 



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12.3    The
Company shall not be required to release any Shares (or Share certificate) to a Grantee until all required payments have been fully
made or secured.


 


12.4    The
Grantee shall, if requested at any time by the Company, provide to the Company within 10 calendar days of such request, any information
regarding the transfer or other disposition of Shares reasonably required by the Company in order for the Company to comply with
applicable local laws and regulations or to obtain any benefits thereunder.


 


13.   Miscellaneous:


13.1    Continuance
of Employment. Neither the Plan nor the grant of an Award thereunder shall impose any obligation on the Company to continue
the employment or service of any Grantee. Nothing in the Plan or in any Award granted thereunder shall confer upon any Grantee
any right to continue in the employ or service of the Company for any period of specific duration, or interfere with or otherwise
restrict in any way the right of the Company to terminate such employment or service at any time, for any reason, with or without
cause.


 


13.2    Notwithstanding
anything to the contrary in the Plan, it is hereby clarified, that any income attributed (or deemed to be attributed) to the Grantee
as a result of the Plan, the grant, vesting or exercise of Awards thereunder, or the sale of Exercised Shares, shall not be taken
into account for the purpose of calculating the Grantee’s eligibility for any rights deriving from the employee-employer
or service provider-client relationship between the Grantee and the Company.


 


13.3    Governing
Law. The Plan and all instruments issued thereunder or in connection therewith, shall be governed by, and interpreted in accordance
with, the laws of the jurisdiction in which the Grantee is generally employed by the Company or provides services to the Company,
excluding the choice of law rules thereof.


 


13.4    Application
of Funds. Any proceeds received by the Company from the sale of Shares pursuant to the exercise or vesting of Awards granted
under the Plan, as applicable, shall be used for general corporate purposes of the Company.


 


13.5    Multiple
Agreements. The terms of each Award may differ from other Awards granted under the Plan at the same time, or at any other
time. The Administrator may also grant more than one grant of Awards to a given Grantee during the term of the Plan, either in
addition to, or in substitution for, one or more Awards previously granted to that Grantee. The grant of multiple Awards may be
evidenced by a single Notice of Grant or multiple Notices of Grant, as determined by the Administrator.


 


13.6    Non-Exclusivity
of the Plan. The adoption of the Plan by the Board shall not be construed as amending, modifying or rescinding any previously
approved incentive arrangement or as creating any limitations on the power of the Board to adopt such other incentive arrangements
as it may deem desirable, including, without limitation, the granting of share-based Awards otherwise than under the Plan, and
such arrangements may be either applicable generally or only in specific cases.


 


		14.	The provisions of the Plan shall not be construed as deviating
from any Applicable Laws, rules and regulations.



 


*****


 



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APPENDIX “A”


 


MIND CTI LTD.


 


ADDENDUM TO THE 2011 SHARE INCENTIVE PLAN


FOR ISRAELI GRANTEES


 


1.   General:


1.1     This
addendum (the “Addendum”) shall apply only to Grantees who are residents of the State of Israel or those who
are deemed to be residents of the State of Israel for tax purposes (collectively, “Israeli Grantees”). The provisions
specified hereunder shall form an integral part of the “MIND CTI Ltd. 2011 Share Incentive Plan” (the “Plan”),
which applies to the grant of Awards.


 


1.2     This
Addendum is to be read as a continuation of the Plan and only modifies the terms of Awards granted to Israeli Grantees so that
they comply with the requirements set by the Israeli law in general, and in particular with the provisions of the Israeli Tax Ordinance
(as defined below), as may be amended or replaced from time to time. For the avoidance of doubt, this Addendum does not add to
or modify the Plan in respect of any other category of Grantees.


 


1.3     The
Plan and this Addendum are complimentary to each other and shall be deemed as one. In any case of contradiction with respect to
Awards granted to Israeli Grantees, whether explicit or implied, between the provisions of this Addendum and the Plan, the provisions
set out in this Addendum shall prevail.


 


1.4     Any
capitalized term not specifically defined in this Addendum shall be construed according to the definition or interpretation given
to it in the Plan.


 


2.    Definitions:


“102 Award” means a grant of an Award to
an Israeli Employee, Director or other office holder of the Company, other than to a Controlling Shareholder, pursuant to the provisions
of Section 102 of the Tax Ordinance, the 102 Rules, and any other regulations, rulings, procedures or clarifications promulgated
thereunder, or under any other section of the Tax Ordinance that will be relevant for such issuance in the future.


 


“102(c) Award” means a 102 Award that will
not be subject to a Taxation Route, as detailed in Section 102(c) of the Tax Ordinance.


 


“3(i) Award” means a grant of an Option to
an Israeli Consultant, contractor or a Controlling Shareholder of the Company pursuant to the provisions of Section 3(i) of the
Tax Ordinance and the rules and regulations promulgated thereunder, or any other section of the Tax Ordinance that will be relevant
for such issuance in the future.


 


“Beneficial Grantee” means the Grantee for
the benefit of whom the Trustee holds an Award in Trust.


 


“Capital Gains Route” means the capital gains
tax route under Section 102(b)(2) of the Tax Ordinance.


 



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“Controlling Shareholder” means a “controlling
shareholder” of the Company, as such term is defined in Section 32(9)(a) of the Tax Ordinance.


 


“Minimum Trust Period” means the minimum
period of time required under a Taxation Route for Awards and/or Exercised Shares to be held in Trust in order for the Beneficial
Grantee to enjoy to the fullest extent the tax benefits afforded under such Taxation Route, as prescribed at any time by Section
102 of the Tax Ordinance.


 


“Ordinary Income Route” means the ordinary
income route under Section 102(b)(1) of the Tax Ordinance.


 


“Rights” means rights issued in respect of
Exercised Shares, including bonus shares.


 


“102 Rules” means the Israeli Income Tax
Rules (Tax Relief in Issuance of Shares to Employees), 2003, as amended.


 


“Taxation Route” means each of the Ordinary
Income Route or the Capital Gains Route.


 


“Tax Ordinance” means the Israeli
Income Tax Ordinance [New Version], 1961, as amended.


 


“Trust” means the holding of an Award or
Exercised Share by the Trustee in Trust for the benefit of the Beneficial Grantee, pursuant to the instructions of a Taxation Route.


 


“Trustee” means a trustee designated by the
Administrator in accordance with the provisions of Section 3 below and, with respect to 102 Awards, approved by the Israeli Tax
Authorities.


 


3.   Administration:


3.1         Subject
to the general terms and conditions of the Plan, the Tax Ordinance, and any other applicable laws and regulations, the Administrator
shall have the full authority in its discretion, from time to time and at any time, to determine:


 


(a)          With
respect to grants of 102 Awards - whether the Company shall elect the Ordinary Income Route or the Capital Gains Route for grants
of 102 Awards, and the identity of the trustee who shall be granted such 102 Awards in accordance with the provisions of the Plan
and the then prevailing Taxation Route.


 


In the event the Administrator determines that the Company shall
elect one of the Taxation Routes for grants of 102 Awards, all grants of 102 Awards made following such election, shall be subject
to the elected Taxation Route and the Company shall be entitled to change such election only following the lapse of one year from
the end of the tax year in which 102 Awards are first granted under the then prevailing Taxation Route or following the lapse of
any shorter or longer period, if provided by law; and


 


(b)          With
respect to the grant of 102 (c) and 3(i) Awards - whether or not such Awards shall be granted to a trustee in accordance with the
terms and conditions of the Plan, and the identity of the trustee who shall be granted such Awards in accordance with the provisions
of the Plan.


 


3.2         Notwithstanding
the aforesaid, the Administrator may, from time to time and at any time, grant 102(c) Awards.


 






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4.   Grant
of Awards and Issuance of Shares:


Subject to the provisions of the Tax Ordinance and applicable
law:


 


(a)          All
grants of Awards to Israeli Employees, Directors and office holders of the Company, other than to a Controlling Shareholder, shall
be of 102 Awards; and


 


(b)          All
grants of Awards to Israeli Consultants, contractors or Controlling Shareholders of the Company shall be of 3(i) Awards.


 


5.   Trust:


5.1         General.


 


(a)          In
the event Awards are deposited with a Trustee, the Trustee shall hold each such Award and any Exercised Shares in Trust for the
benefit of the Beneficial Grantee.


 


(b)          In
accordance with Section 102, the tax benefits afforded to 102 Awards (and any Exercised Shares) in accordance with the Ordinary
Income Route or Capital Gains Route, as applicable, shall be contingent upon the Trustee holding such 102 Awards for the applicable
Minimum Trust Period.


 


(c)          With
respect to 102 Awards granted to the Trustee, the following shall apply:


 


(i)          A
Grantee granted 102 Awards shall not be entitled to sell the Exercised Shares or to transfer such Exercised Shares (or such 102
Awards) from the Trust prior to the lapse of the Minimum Trust Period; and


 


(ii)         Any
and all Rights shall be issued to the Trustee and held thereby until the lapse of the Minimum Trust Period, and such Rights shall
be subject to the Taxation Route which is applicable to such Exercised Shares.


 


(d)          Notwithstanding
the aforesaid, Exercised Shares or Rights may be sold or transferred, and the Trustee may release such Exercised Shares or Rights
from Trust, prior to the lapse of the Minimum Trust Period, provided however, that tax is paid or withheld in accordance with Section
102 of the Tax Ordinance and Section 7 of the 102 Rules, and any other provision in any other section of the Tax Ordinance and
any regulation, ruling, procedure and clarification promulgated thereunder, that will be relevant, from time to time.


 


(e)          The
Company shall register the Exercised Shares issued to the Trustee pursuant to the Plan, in the name of the Trustee for the benefit
of the Israeli Grantees, in accordance with any applicable laws, rules and regulations, until such time that such Shares are released
from the Trust as herein provided.


 


If the Company shall issue any certificates
representing Exercised Shares deposited with the Trustee under the Plan, then such certificates shall be deposited with the Trustee,
and shall be held by the Trustee until such time that such Exercised Shares are released from the Trust as herein provided.


 


(f)          Subject
to the terms hereof, at any time after the Awards are exercised or vested, with respect to any Exercised Shares the following shall
apply:


 



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(i)          Upon
the written request of any Beneficial Grantee, the Trustee shall release from the Trust the Exercised Shares issued, on behalf
of such Beneficial Grantee, by executing and delivering to the Company such instrument(s) as the Company may require, giving due
notice of such release to such Beneficial Grantee, provided, however, that the Trustee shall not so release any such
Exercised Shares to such Beneficial Grantee unless the latter, prior to, or concurrently with, such release, provides the Trustee
with evidence, satisfactory in form and substance to the Trustee, that payment of all taxes, if any, required to be paid upon such
release has been secured.


  


(ii)         Alternatively,
subject to the terms hereof, provided the Shares are listed on a Stock Market, upon the written instructions of the Beneficial
Grantee to sell any Exercise Shares, the Company and/or the Trustee shall use their reasonable efforts to effect such sale and
shall transfer such Shares to the purchaser thereof concurrently with the receipt of, or after having made suitable arrangements
to secure, the payment of the proceeds of the purchase price in such transaction. The Company and/or the Trustee, as applicable,
shall withhold from such proceeds any and all taxes required to be paid in respect of such sale, shall remit the amount so withheld
to the appropriate tax authorities and shall pay the balance thereof directly to the Beneficial Grantee, reporting to such Beneficial
Grantee the amount so withheld and paid to said tax authorities.


 


5.2          Voting
Rights. As long as the Trustee holds the Exercised Shares, the voting rights at the Company’s general meeting attached
to such Exercised Shares will remain with the Trustee. However, the Trustee shall not be obligated to exercise such voting rights
at general meetings nor notify the Grantee of any Shares held in the Trust, of any meeting of the Company’s shareholders.


 


Without derogating from the above, with respect to 102 Awards,
such shares shall be voted in accordance with the provisions of Section 102 and any rules, regulations or orders promulgated thereunder.


 


5.3          Dividends.
Subject to any applicable law, tax ruling or guidelines of the Israeli Tax Authority, as applicable, for so long as Shares deposited
with the Trustee on behalf of a Beneficial Grantee are held in Trust, the cash dividends paid or distributed with respect thereto
shall be distributed directly to such Beneficial Grantee, subject further to any applicable taxation on distribution of dividends,
and when applicable subject to the provisions of Section 102 of the Tax Ordinance, the 102 Rules and the regulations or orders
promulgated thereunder.


 


5.4          Notice
of Exercise. With respect to a 102 Award held in the Trust, a copy of any Notice of Exercise shall be provided to the Trustee,
in such form and method as may be determined by the Trustee in accordance with the requirements of Section 102 of the Tax Ordinance.


 


6.   Notice
of grant:





6.1          The
Notice of Grant shall state, inter alia, whether the Awards granted to Israeli Grantees are 102 Awards (and in particular
whether the 102 Awards are granted under the Ordinary Income Route, the Capital Gains Route or as 102(c) Awards), or 3(i) Awards.
Each Notice of Grant evidencing a 102 Award shall be subject to the provisions of the Tax Ordinance applicable to such awards.


 


6.2          Furthermore,
each Grantee of a 102 Award under a Taxation Route shall be required: (i) to execute a declaration stating that he or she is familiar
with the provisions of Section 102 of the Tax Ordinance and the applicable Taxation Route; and (ii) to undertake not to sell or
transfer the Awards and/or the Exercised Shares prior to the lapse of the applicable Minimum Trust Period, unless he or she pays
all taxes that may arise in connection with such sale and/or transfer.


 



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7.  Sale: 


In the event of a Sale described in Section 9.4 of the Plan,
with respect to Shares held in Trust the following procedure will be applied: The Trustee will transfer the Shares held in Trust
and sign any document in order to effectuate the transfer of Shares, including share transfer deeds, provided, however,
that the Trustee receives a notice from the Board, specifying that: (i) all or substantially all of the issued outstanding share
capital of the Company is to be sold, and therefore the Trustee is obligated to transfer the Shares held in Trust under the provisions
of Section 9.4 of the Plan; and (ii) the Company is obligated to withhold at the source all taxes required to be paid upon release
of the Shares from the Trust and to provide the Trustee with evidence, satisfactory to the Trustee, that such taxes indeed have
been paid; and (iii) the Company is obligated to transfer the consideration for the Shares (less applicable tax and compulsory
payments) directly to the Grantees.


 


8.   Limitations
of Transfer:


In addition to the provisions of Section 10 of the Plan, as
long as Awards and/or Shares are held by the Trustee on behalf of the Grantee, all rights of the Grantee over the Shares are personal,
can not be transferred, assigned, pledged or mortgaged, other than by will or pursuant to the laws of descent and distribution.


 


9.   Taxation:


9.1           Without
derogating from the provisions of Section 12 of the Plan, the provisions of Section 12.1 of the Plan shall apply also to actions
taken by the Trustee. Accordingly, without derogating from the provisions of Section 12.1 of the Plan, the Grantee shall indemnify
the Trustee and hold it harmless against and from any and all liability for any such Tax, including without limitation, monetary
liabilities relating to the necessity to withhold, or to have withheld, any such Tax from any payment made to the Grantee.


 


9.2           The
Trustee shall not be required to release any Share (or Share certificate) to a Grantee until all required Tax payments have been
fully made or secured.


 


9.3           With
regards to 102 Awards, any provision of Section 102 of the Tax Ordinance, the 102 Rules and the regulations or orders promulgated
thereunder, which is necessary in order to receive and/or to preserve any Tax treatment pursuant to Section 102 of the Tax Ordinance,
which is not expressly specified in the Plan or in this Addendum, shall be considered binding upon the Company and the Israeli
Grantee.


 


9.4           Guarantee.
In the event a 102(c) Award is granted to a Grantee, if the Grantee’s employment or service is terminated, for any reason,
such Grantee shall provide the Company, to its full satisfaction, with a guarantee or collateral securing the future payment of
all Taxes required to be paid upon the sale of the Exercised Shares received upon exercise of such 102(c) Award, all in accordance
with the provisions of Section 102 of the Tax Ordinance, the 102 Rules and the regulations or orders promulgated thereunder.


 


10.  Cessation
of Service:


 


It is hereby clarified that the Cessation of Service of an Israeli
Grantee who is an Employee shall be the cessation of the employee-employer relationship between the Israeli Grantee and the Company.


  



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