EX-10.15



 




Exhibit
10.15



ALLOT COMMUNICATIONS LTD.

2006 INCENTIVE COMPENSATION PLAN




     Allot Communications Ltd., an Israeli corporation (the “Company”), has adopted the
Allot Communications Ltd. 2006 Incentive Compensation Plan (the “Plan”) for the benefit of
non-employee directors of the Company, officers and eligible employees and consultants of the
Company and any Subsidiaries and Affiliates (as each term is defined below), as follows:



ARTICLE I.

ESTABLISHMENT; PURPOSES; AND DURATION




     1.1. Establishment of the Plan. The Company hereby establishes this incentive
compensation plan to be known as the “Allot Communications Ltd. 2006 Incentive Compensation Plan,”
as set forth in this document. The Plan permits the grant of Stock Options, Stock Appreciation
Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares, Cash-Based
Awards and Other Stock-Based Awards. The Plan was adopted by the Board of Directors (as defined
below) on October 29, 2006. The Plan shall become effective immediately prior to the effective
date of the initial public offering of the Shares pursuant to a registration statement under the
Securities Act (the “Effective Date”), provided that the Plan is approved by the
holders of a majority of the outstanding Shares which are present and voted at a meeting, which
approval must occur within the period ending twelve (12) months after the date the Plan is adopted
by the Board. The effectiveness of any Awards granted prior to such shareholder approval shall be
specifically subject to and conditioned upon, and no Award shall be vested or exercisable until,
such shareholder approval. If the Plan is not so approved by the Company’s shareholders or the
Company’s initial public offering of Shares does not occur prior to December 31, 2006, the Plan
shall not become effective, and shall terminate immediately, and any Awards previously granted
shall thereupon be automatically canceled and deemed to have been null and void ab
initio. The Plan shall remain in effect as provided in Section 1.3.



     1.2. Purposes of the Plan. The purposes of the Plan are to provide additional
incentives to non-employee directors of the Company and to those officers, employees and
consultants of the Company, Subsidiaries and Affiliates whose substantial contributions are
essential to the continued growth and success of the business of the Company and the Subsidiaries
and Affiliates, in order to strengthen their commitment to the Company and the Subsidiaries and
Affiliates, and to attract and retain competent and dedicated individuals whose efforts will result
in the long-term growth and profitability of the Company and to further align the interests of such
non-employee directors, officers, employees and consultants with the interests of the shareholders
of the Company. To accomplish such purposes, the Plan provides that the Company may grant Stock
Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units,
Performance Shares, Cash-Based Awards and Other Stock-Based Awards.



     1.3. Duration of the Plan. The Plan shall commence on the Effective Date, as described in Section 1.1, and shall
remain in effect, subject to the right of the Board of Directors to amend or terminate the Plan at
any time pursuant to Article XV, until all Shares subject to it



 









 




shall have been delivered, and any
restrictions on such Shares have lapsed, pursuant to the Plan’s provisions. However, in no event
may an Award be granted under the Plan on or after ten years from the Effective Date.




ARTICLE II.

DEFINITIONS




     Whenever used in the Plan, the following terms shall have the meanings set forth below, and
when the meaning is intended, the initial letter of the word shall be capitalized:



     2.1. “Affiliate” means any entity other than the Company and any Subsidiary that is
affiliated with the Company through stock or equity ownership or otherwise and is designated as an
Affiliate for purposes of the Plan by the Committee.



     2.2. “Assumed” means that pursuant to a transaction resulting in a Change of Control,
either (a) the Award is expressly affirmed by the Company or (b) the contractual obligations
represented by the Award are expressly assumed (and not simply by operation of law) by the
surviving or successor corporation or entity to the Company, or any parent or subsidiary of either
thereof, or any other corporation or entity that is a party to the transaction resulting in the
Change of Control, in connection with such Change of Control, with appropriate adjustments to the
number and kind of securities of such surviving or successor corporation or entity, or such other
applicable parent, subsidiary, corporation or entity, subject to the Award and the exercise or
purchase price thereof, which preserves the compensation element of the Award existing at the time
of such Change of Control transaction, and provides for subsequent payout in accordance with the
same (or more favorable) payment and vesting schedule applicable to such Award, as determined in
accordance with the instruments evidencing the agreement to assume the Award. The determination of
Award comparability for this purpose shall be made by the Committee, and its determination shall be
final, binding and conclusive.



     2.3. “Award” means, individually or collectively, a grant under the Plan of Stock
Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Units, Performance
Shares, Performance Units, Cash-Based Awards, and Other Stock-Based Awards.



     2.4. “Award Agreement” means either: (a) a written agreement entered into by the
Company and a Participant setting forth the terms and provisions applicable to an Award granted
under the Plan, or (b) a written or electronic statement issued by the Company to a Participant
describing the terms and provisions of such Award, including any amendment or modification thereof.
The
Committee may provide for the use of electronic, internet or other non-paper Award Agreements,
and the use of electronic, internet or other non-paper means for the acceptance thereof and actions
thereunder by a Participant.



     2.5. “Beneficial Ownership” (including correlative terms) shall have the meaning given
such term in Rule 13d-3 promulgated under the Exchange Act.



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



 









 





     2.7. “Cash-Based Award” means an Award granted to a Participant, as described in
Article IX.



     2.8. “Cause” shall have the definition given such term in a Participant’s Award
Agreement, or in the absence of any such definition, as determined in good faith by the Committee.



     2.9.
“Change of Control” means the occurrence of any of the following:



          (a) an acquisition in one transaction or a series of related transactions (other than directly
from the Company or pursuant to Awards granted under the Plan or compensatory options or other
similar awards granted by the Company) by any Person of any Voting Securities of the Company,
immediately after which such Person has Beneficial Ownership of fifty percent (50%) or more of the
combined voting power of the Company’s then outstanding Voting Securities; provided,
however, that in determining whether a Change of Control has occurred pursuant to this
Section 2.9(a), Voting Securities of the Company which are acquired in a Non-Control Acquisition
shall not constitute an acquisition that would cause a Change of Control; or




          (b) the consummation of any merger, consolidation, recapitalization or reorganization
involving the Company unless:





      (i) the shareholders of the Company, immediately before such merger, consolidation,
recapitalization or reorganization, own, directly or indirectly, immediately following such
merger, consolidation, recapitalization or reorganization, more than fifty percent (50%) of
the combined voting power of the outstanding Voting Securities of the corporation resulting
from such merger or consolidation or reorganization (the “Company Surviving
Corporation”) in substantially the same proportion as their ownership of the Voting
Securities of the Company immediately before such merger, consolidation, recapitalization or
reorganization; and




      (ii) the individuals who were members of the Board immediately prior to the execution
of the agreement providing for such merger, consolidation, recapitalization or
reorganization constitute at least a majority of the members of the board of directors of
the Company Surviving Corporation, or a corporation Beneficially Owning, directly or
indirectly, a majority of the voting securities of the Company Surviving Corporation, and




      (iii) no Person, other than (A) the Company, (B) any Related Entity,
(C) any employee benefit plan (or any trust forming a part thereof) that, immediately prior
to such merger, consolidation, recapitalization or reorganization, was maintained by the
Company, the Company Surviving Corporation, or any Related Entity or (D) any Person who,
together with its Affiliates, immediately prior to such merger, consolidation,
recapitalization or reorganization had Beneficial Ownership of fifty percent (50%) or more
of the then outstanding Voting Securities of the Company, owns, together with its
Affiliates, Beneficial Ownership of fifty percent (50%) or more of the combined voting power
of the Company Surviving Corporation’s then outstanding Voting Securities




(a transaction described in clauses (d)(i) through (d)(iii) above is referred to herein as a
“Non-Control Transaction”); or



 









 





          (c) any sale, lease, exchange, transfer or other disposition (in one transaction or a series
of related transactions) of all or substantially all of the assets or business of the Company to
any Person (other than (A) a transfer or distribution to a Related Entity, or (B) a transfer or
distribution to the Company’s shareholders of the stock of a Related Entity or any other assets).



Notwithstanding the foregoing, a Change of Control shall not be deemed to occur solely because any
Person (the “Subject Person”) acquired Beneficial Ownership of fifty percent (50%) or more
of the combined voting power of the then outstanding Voting Securities of the Company as a result
of the acquisition of Voting Securities of the Company by the Company which, by reducing the number
of Voting Securities of the Company then outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Persons, provided that if a Change of Control would occur
(but for the operation of this sentence) as a result of the acquisition of Voting Securities by the
Company and (1) before such share acquisition by the Company the Subject Person becomes the
Beneficial Owner of any new or additional Voting Securities of the Company in a related transaction
or (2) after such share acquisition by the Company the Subject Person becomes the Beneficial Owner
of any new or additional Voting Securities of the Company which in either case increases the
percentage of the then outstanding Voting Securities of the Company Beneficially Owned by the
Subject Person, then a Change of Control shall be deemed to occur.



Solely for purposes of this Section 2.9, (1) “Affiliate” shall mean, with respect to any
Person, any other Person that, directly or indirectly, controls, is controlled by, or is under
common control with, such Person, and (2) “control” (including with correlative meanings,
the terms “controlling,” “controlled by” and “under common control with”), as applied to any
Person, means the possession, directly or indirectly, of the power to direct or cause the direction
of the management and policies of that Person, whether through the ownership of voting securities
or by contract or otherwise. Any Relative (for this purpose, “Relative” means a spouse,
child, parent, parent of spouse, sibling or grandchild) of an individual shall be deemed to be an
Affiliate of such individual for this purpose. None of the Company or any Person controlled by the
Company shall be deemed to be an Affiliate of any holder of Shares.




     2.10. “Committee” means the Compensation Committee of the Board of Directors or a
subcommittee thereof, or such other committee designated by the Board to administer the Plan.



     2.11. “Company Surviving Corporation” has the meaning provided in Section 2.9(b)(i).



     2.12. “Consultant” means an independent contractor who performs services for the
Company or a Subsidiary or Affiliate in a capacity other than as an Employee or Director.



     2.13. “Director” means any individual who is a member of the Board of Directors of the
Company.



     2.14. “Dividend Equivalents” means the equivalent value (in cash or Shares) of
dividends that would otherwise be paid on the Shares subject to an Award but that have not been
issued or delivered, as described in Article XI.



     2.15. “Effective Date” shall have the meaning ascribed to such term in Section 1.1.



 









 





     2.16. “Employee” means any person designated as an employee of the Company, a
Subsidiary and/or an Affiliate on the payroll records thereof. An Employee shall not include any
individual during any period he or she is classified or treated by the Company, a Subsidiary or an
Affiliate as an independent contractor, a consultant, or any employee of an employment, consulting,
or temporary agency or any other entity other than the Company, a Subsidiary and/or an Affiliate
without regard to whether such individual is subsequently determined to have been, or is
subsequently retroactively reclassified as a common-law employee of the Company, a Subsidiary
and/or an Affiliate during such period. As further provided in Section 18.4, for purposes of the
Plan, upon approval by the Committee, the term Employee may also include Employees whose employment
with the Company, a Subsidiary or an Affiliate has been terminated subsequent to being granted an
Award under the Plan. For the avoidance of doubt, a Director who would otherwise be an “Employee”
within the meaning of this Section 2.16 shall be considered an Employee for purposes of the Plan.



     2.17. “Exchange Act” means the Securities Exchange Act of 1934, as it may be amended
from time to time, including the rules and regulations promulgated thereunder and successor
provisions and rules and regulations thereto.



     2.18. “Fair Market Value” means the fair market value of the Shares as determined by
the Committee by the reasonable application of a reasonable valuation method, consistently applied,
as the Committee deems appropriate.



     2.19. “Fiscal Year” means the calendar year, or such other consecutive twelve-month
period as the Committee may select.



     2.20. “Freestanding SAR” means an SAR that is granted independently of any Options, as
described in Article VII.



     2.21. “Good Reason” shall have the definition given such term in a Participant’s Award
Agreement, or in the absence of any such definition, as determined in good faith by the Committee.



     2.22. “Grant Price” means the price established at the time of grant of an SAR
pursuant to Article VII, used to determine whether there is any payment due upon exercise of the
SAR.



     2.23. “Insider” means an individual who is, on the relevant date, an officer, director
or ten percent (10%) Beneficial Owner of any class of the Company’s equity securities that is
registered pursuant to Section 12 of the Exchange Act, as determined by the Committee in accordance
with Section 16 of the Exchange Act.



     2.24. “Non-Control Acquisition” means an acquisition (whether by merger, stock
purchase, asset purchase or otherwise) by (a) an employee benefit plan (or a trust forming a part
thereof) maintained by (i) the Company or (ii) any corporation or other Person of which fifty
percent (50%) or more of its total value or total voting power of its Voting Securities or equity
interests is owned, directly or indirectly, by the Company (a “Related Entity”); (b) the
Company or any Related Entity; (c) any Person in connection with a Non-Control Transaction; or (d)
any Person that owns, together with
its Affiliates, Beneficial Ownership of fifty percent (50%) or more of the outstanding Voting
Securities of the Company on the Effective Date.



 









 





     2.25. “Non-Control Transaction” shall have the meaning provided in Section 2.9(b).



     2.26. “Non-Employee Director” means a Director who is not an Employee.



     2.27. “Notice” means notice provided by a Participant to the Company in a manner
prescribed by the Committee.



     2.28. “Option” or “Stock Option” means a Stock Option, as described in Article
VI.



     2.29. “Option Price” means the price at which a Share may be purchased by a
Participant pursuant to an Option.



     2.30. “Other Stock-Based Award” means an equity-based or equity-related Award
described in Section 10.1, granted in accordance with the terms and conditions set forth in Article
X.



     2.31. “Participant” means any eligible individual as set forth in Article V who holds
one or more outstanding Awards.



     2.32. “Performance Period” means the period of time during which the performance goals
must be met in order to determine the degree of payout and/or vesting with respect to, or the
amount or entitlement to, an Award.



     2.33. “Performance Share” means an Award of a performance share granted to a
Participant, as described in Article IX.



     2.34. “Performance Unit” means an Award of a performance unit granted to a
Participant, as described in Article IX.



     2.35. “Period of Restriction” means the period during which Shares of Restricted Stock
or Restricted Stock Units are subject to a substantial risk of forfeiture, and, in the case of
Restricted Stock, the transfer of Shares of Restricted Stock is limited in some way, as provided in
Article VIII.



     2.36. “Person” means “person” as such term is used for purposes of Section 13(d) or
14(d) of the Exchange Act, including any individual, corporation, limited liability company,
partnership, trust, unincorporated organization, government or any agency or political subdivision
thereof, or any other entity or any group of persons.



     2.37. “Prior Option Plans” means the Allot Communications Ltd. Stock Option Plan
(2003), the Allot Communications Ltd. Key Employees Share Incentive Plan and the Allot
Communications Ltd. Key Employees of subsidiaries and consultants Share Incentive Plan.



     2.38. “Replaced” means that pursuant to a transaction resulting in a Change of
Control, the Award is replaced with a comparable stock award or a cash incentive program by the
Company, the surviving or successor corporation or entity to the Company, or any parent or
subsidiary of either thereof, or any other corporation or entity that is a party to the transaction
resulting in the Change of Control, in connection with such Change of Control, which preserves



 









 




the
compensation element of the Award existing at the time of such Change of Control transaction, and
provides for subsequent payout in accordance with the same (or more favorable) payment and vesting
schedule applicable to such Award, as determined in accordance with the instruments evidencing the
agreement to assume the Award. The determination of Award comparability for this purpose shall be
made by the Committee, and its determination shall be final, binding and conclusive.




     2.39. “Restricted Stock” means an Award granted to a Participant pursuant to Article
VIII.



     2.40. “Restricted Stock Unit” means an Award, whose value is equal to a Share, granted
to a Participant pursuant to Article VIII.



     2.41. “Rule 16b-3” means Rule 16b-3 under the Exchange Act, or any successor rule, as
the same may be amended from time to time.



     2.42. “Securities Act”
means the Securities Act of 1933, as it may be amended from time to time, including the rules
and regulations promulgated thereunder and successor provisions and rules and regulations thereto.



     2.43. “Share” means an Ordinary Share, par value NIS0.10 per share, of the Company
(including any new, additional or different stock or securities resulting from any change in
corporate capitalization as listed in Section 4.2).



     2.44. “Stock Appreciation Right” or “SAR” means an Award, granted alone (a
“Freestanding SAR”) or in connection with a related Option (a “Tandem SAR”),
designated as an SAR, pursuant to the terms of Article VII.



     2.45. “Subject Person” has the meaning provided in Section 2.9.



     2.46. “Subsidiary” means any present or future corporation which is or would be a
“subsidiary corporation” of the Company as determined by the Committee.



     2.47. “Substitute Awards” means Awards granted or Shares issued by the Company in
assumption of, or in substitution or exchange for, options or other awards previously granted, or
the right or obligation to grant future options or other awards, by a company acquired by the
Company, a Subsidiary and/or an Affiliate or with which the Company, a Subsidiary and/or an
Affiliate combines, or otherwise in connection with any merger, consolidation, acquisition of
property or stock, or reorganization involving the Company, a Subsidiary or an Affiliate.



     2.48. “Tandem SAR” means an SAR that is granted in connection with a related Option
pursuant to Article VII.



     2.49. “Termination” means the time when a Participant ceases the performance of
services for the Company, any Affiliate or Subsidiary, as applicable, for any reason, with or
without Cause, including a Termination by resignation, discharge, death, Disability or Retirement,
but excluding (a) a Termination where there is a simultaneous reemployment (or commencement of
service) or continuing employment (or service) of a Participant by the



 









 




Company, Affiliate or any
Subsidiary, (b) at the discretion of the Committee, a Termination that results in a temporary
severance, and (c) at the discretion of the Committee, a Termination of an Employee that is
immediately followed by the Participant’s service as a Non-Employee Director.




     2.50. “Voting Securities” shall mean, with respect to any Person that is a
corporation, all outstanding voting securities of such Person entitled to vote generally in the
election of the board of directors of such Person.



ARTICLE III.

ADMINISTRATION




     3.1. General. The Committee shall have exclusive authority to operate, manage and
administer the Plan in accordance with its terms and conditions. Notwithstanding the foregoing, in
its absolute discretion, the Board may at any time and from time to time exercise any and all
rights, duties and responsibilities of the Committee under the Plan, including establishing
procedures to be followed by the Committee, but excluding matters which under any applicable law,
regulation or rule, including any exemptive rule under Section 16 of the Exchange Act (including
Rule 16b-3), are required to be determined in the sole discretion of the Committee. If and to the
extent that the Committee does not exist or cannot function, the Board may take any action under
the Plan that would otherwise be the responsibility of the Committee, subject to the limitations
set forth in the immediately preceding sentence.



     3.2. Committee. The members of the Committee shall be appointed from time to time by,
and shall serve at the discretion of, the Board of Directors.



     3.3. Authority of the Committee. The Committee shall have full discretionary
authority to grant or, when so restricted by applicable law, recommend the Board to grant, pursuant
to the terms of the Plan, Awards to those individuals who are eligible to receive Awards under the
Plan. Except as limited by law or by the Articles of Association of the Company, and subject to
the provisions herein, the Committee shall have full power, in accordance with the other terms and
provisions of the Plan, to:



          (a) select Employees, Non-Employee Directors and Consultants who may receive Awards under the
Plan and become Participants;




          (b) determine eligibility for participation in the Plan and decide all questions concerning
eligibility for, and the amount of, Awards under the Plan;




          (c) determine the sizes and types of Awards;




          (d) determine the terms and conditions of Awards, including the Option Prices of Options and
the Grant Prices of SARs;




          (e) grant Awards as an alternative to, or as the form of payment for grants or rights earned
or payable under, other bonus or compensation plans, arrangements or policies of the Company or a
Subsidiary or Affiliate;





 









 








          (f) grant Substitute Awards on such terms and conditions as the Committee may prescribe;




          (g) make all determinations under the Plan concerning Termination of any Participant’s
employment or service with the Company or a Subsidiary or Affiliate, including whether such
Termination occurs by reason of Cause, Good Reason, disability, retirement or in connection with a
Change of Control and whether a leave constitutes a Termination;




          (h) construe and interpret the Plan and any agreement or instrument entered into under the
Plan, including any Award Agreement;




          (i) establish and administer any terms, conditions, restrictions, limitations, forfeiture,
vesting or exercise schedule, and other provisions of or relating to any Award;




          (j) establish and administer any performance goals in connection with any Awards, including
performance criteria and applicable Performance Periods, determine the extent to which any
performance goals and/or other terms and conditions of an Award are attained or are not attained;




          (k) construe any ambiguous provisions, correct any defects, supply any omissions and reconcile
any inconsistencies in the Plan and/or any Award Agreement or any other instrument relating to any
Awards;




          (l) establish, adopt, amend, waive and/or rescind rules, regulations, procedures, guidelines,
forms and/or instruments for the Plan’s operation or administration;




          (m) make all valuation determinations relating to Awards and the payment or settlement
thereof;




          (n) grant waivers of terms, conditions, restrictions and limitations under the Plan or
applicable to any Award, or accelerate the vesting or exercisability of any Award;




          (o) subject to the provisions of Article XV, amend or adjust the terms and conditions of any
outstanding Award and/or adjust the number and/or class of shares of stock subject to any
outstanding Award;




          (p) at any time and from time to time after the granting of an Award, specify such additional
terms, conditions and restrictions with respect to such Award as may be deemed necessary or
appropriate to ensure compliance with any and all applicable laws or rules, including terms,
restrictions and conditions for compliance with applicable securities laws or listing rules,
methods of withholding or providing for the payment of required taxes and restrictions regarding a
Participant’s ability to exercise Options through a cashless (broker-assisted) exercise;




          (q) offer to buy out an Award previously granted, based on such terms and conditions as the
Committee shall establish with and communicate to the Participant at the time such offer is made;




 









 








          (r) determine whether, and to what extent and under what circumstances Awards may be settled
in cash, Shares or other property or canceled or suspended; and




          (s) exercise all such other authorities, take all such other actions and make all such other
determinations as it deems necessary or advisable for the proper operation and/or administration of
the Plan.




     3.4. Award Agreements. The Committee shall, subject to applicable laws and rules,
determine the date an Award is granted. Each Award shall be evidenced by an Award Agreement;
however, two or more Awards granted to a single Participant may be combined in a single
Award Agreement. An Award Agreement shall not be a precondition to the granting of an Award;
provided, however, that (a) the Committee may, but need not, require as a condition
to any Award Agreement’s effectiveness, that such Award Agreement be executed on behalf of the
Company and/or by the Participant to whom the Award evidenced thereby shall have been granted
(including by electronic signature or other electronic indication of acceptance), and such executed
Award Agreement be delivered to the Company, and (b) no person shall have any rights under any
Award unless and until the Participant to whom such Award shall have been granted has complied with
the applicable terms and conditions of the Award. The Committee shall prescribe the form of all
Award Agreements, and, subject to the terms and conditions of the Plan, shall determine the content
of all Award Agreements. Any Award Agreement may be supplemented or amended in writing from time
to time as approved by the Committee; provided that the terms and conditions of any such
Award Agreement as supplemented or amended are not inconsistent with the provisions of the Plan.
In the event of any dispute or discrepancy concerning the terms of an Award, the records of the
Committee or its designee shall be determinative.



     3.5. Discretionary Authority; Decisions Binding. The Committee shall have full
discretionary authority in all matters related to the discharge of its responsibilities and the
exercise of its authority under the Plan. All determinations, decisions, actions and
interpretations by the Committee with respect to the Plan and any Award Agreement, and all related
orders and resolutions of the Committee shall be final, conclusive and binding on all Participants,
the Company and its shareholders, any Subsidiary or Affiliate and all persons having or claiming to
have any right or interest in or under the Plan and/or any Award Agreement. The Committee shall
consider such factors as it deems relevant to making or taking such decisions, determinations,
actions and interpretations, including the recommendations or advice of any Director or officer or
employee of the Company, any director, officer or employee of a Subsidiary or Affiliate and such
attorneys, consultants and accountants as the Committee may select. A Participant or other holder
of an Award may contest a decision or action by the Committee with respect to such person or Award
only on the grounds that such decision or action was arbitrary or capricious or was unlawful, and
any review of such decision
or action shall be limited to determining whether the Committee’s decision or action was
arbitrary or capricious or was unlawful.



     3.6. Attorneys; Consultants. The Committee may consult with counsel who may be
counsel to the Company. The Committee may, with the approval of the Board, employ such other
attorneys and/or consultants, accountants, appraisers, brokers, agents and other persons, any of
whom may be an Employee, as the Committee deems necessary or appropriate. The



 









 




Committee, the
Company and its officers and Directors shall be entitled to rely upon the advice, opinions or
valuations of any such persons. The Committee shall not incur any liability for any action taken
in good faith in reliance upon the advice of such counsel or other persons.




     3.7. Delegation of Administration. Except to the extent prohibited by applicable law,
including any applicable exemptive rule under Section 16 of the Exchange Act (including Rule
16b-3), or the applicable rules of a stock exchange, the Committee may, in its discretion, allocate
all or any portion of its responsibilities and powers under this Article III to any one or more of
its members and/or delegate all or any part of its responsibilities and powers under this Article
III to any person or persons selected by it; provided, however, that the Committee
may not delegate its authority to correct defects, omissions or inconsistencies in the Plan. Any
such authority delegated or allocated by the Committee under this Section 3.7 shall be exercised in
accordance with the terms and conditions of the Plan and any rules, regulations or administrative
guidelines that may from time to time be established by the Committee, and any such allocation or
delegation may be revoked by the Committee at any time.



ARTICLE IV.

SHARES SUBJECT TO THE PLAN




     4.1. Number of Shares Available for Grants. The shares of stock subject to Awards
granted under the Plan shall be Shares. Such Shares subject to the Plan may be either authorized
and unissued shares or previously issued shares acquired by the Company or any Subsidiary. Subject
to adjustment as provided in Section 4.2, the total number of Shares that may be delivered pursuant
to Awards under the Plan shall be (x) 89,732 Shares, representing all Shares remaining available
for issuance and not subject to outstanding awards under the Prior Option Plans on the Effective
Date (as may be increased by no more than 3,451,439 Shares subject to outstanding awards under the
Prior Option Plans on the Effective Date that are subsequently forfeited or terminate for any other
reason before being exercised) and (y) an annual increase on the first day of each fiscal year
during the term of the Plan, beginning January 1, 2007, in each case in an amount equal to the
lesser of (i) 1,000,000 Shares, (ii) 3.5% of the outstanding Shares on the last day of the
immediately preceding year, or (iii) an amount determined by the Board. If (a) any Shares are
subject to an Option, SAR, or other Award which for any reason expires or is terminated or canceled
without having been fully exercised or satisfied, or are subject to any Restricted Stock Award
(including any Shares subject to a Participant’s Restricted Stock Award that are
repurchased by the Company at the Participant’s cost), Restricted Stock Unit Award or other
Award granted under the Plan which are forfeited, or (b) any Award based on Shares is settled for
cash, expires or otherwise terminates without the issuance of such Shares, the Shares subject to
such Award shall, to the extent of any such expiration, termination, cancellation, forfeiture or
cash settlement, be available for delivery in connection with future Awards under the Plan. Any
Shares delivered under the Plan upon exercise or satisfaction of Substitute Awards shall not reduce
the Shares available for delivery under the Plan.



     4.2. Adjustments in Authorized Shares. In the event of any reclassification,
recapitalization, merger or consolidation (other than if resulting in a Change of Control),
reorganization, , stock dividend or other distribution in securities of the Company, stock split or
reverse stock split, combination or exchange of shares, repurchase of shares, or other like change



 









 




in corporate structure, that proportionally apply to all shares of the Company, the Committee,
shall substitute or adjust, as applicable, the number, class and kind of securities which may be
delivered under Section 4.1; the number, class and kind, and/or price (such as the Option Price of
Options or the Grant Price of SARs) of securities subject to outstanding Awards; and other value
determinations applicable to outstanding Awards, as determined by the Committee, in order to
prevent dilution or enlargement of Participants’ rights under the Plan; provided,
however, that the number of Shares subject to any Award shall always be a whole number.
The Committee, shall also make appropriate adjustments and modifications, as determined by the
Committee, in the terms of any outstanding Awards to reflect or related to any such events,
adjustments, substitutions or changes, including modifications of performance goals and changes in
the length of Performance Periods. All determinations of the Committee as to adjustments or
changes, if any, under this Section 4.2 shall be conclusive and binding on the Participants.




     4.3. No Limitation on Corporate Actions. The existence of the Plan and any Awards
granted hereunder shall not affect in any way the right or power of the Company, any Subsidiary or
any Affiliate to make or authorize any adjustment, recapitalization, reorganization or other change
in its capital structure or business structure, any merger or consolidation, any issuance of debt,
preferred or prior preference stock ahead of or affecting the Shares, additional shares of capital
stock or other securities or subscription rights thereto, any dissolution or liquidation, any sale
or transfer of all or part of its assets or business or any other corporate act or proceeding.



ARTICLE V.

ELIGIBILITY AND PARTICIPATION




     5.1. Eligibility. Employees, Non-Employee Directors and Consultants shall be eligible
to become Participants and receive Awards in accordance with the terms and conditions of the Plan.



     5.2. Actual Participation. Subject to the provisions of the Plan, the Committee may, from time to time, select
Participants from all eligible Employees, Non-Employee Directors and Consultants and shall
determine the nature and amount of each Award.



ARTICLE VI.

STOCK OPTIONS




     6.1. Grant of Options. Subject to the terms and provisions of the Plan, Options may
be granted to Participants in such number, and upon such terms, and at any time and from time to
time as shall be determined by the Committee. The Committee may grant an Option or provide for the
grant of an Option, either from time to time in the discretion of the Committee or automatically
upon the occurrence of specified events, including the achievement of performance goals, the
satisfaction of an event or condition within the control of the recipient of the Option or within
the control of others. The granting of an Option shall take place when the Committee by
resolution, written consent or other appropriate action determines to grant such Option for a
particular number of Shares to a particular Participant at a particular Option Price.



 









 





     6.2. Award Agreement. Each Option grant shall be evidenced by an Award Agreement that
shall specify the Option Price, the maximum duration of the Option, the number of Shares to which
the Option pertains, the conditions upon which the Option shall become exercisable and such other
provisions as the Committee shall determine, which are not inconsistent with the terms of the Plan.



     6.3. Option Price. The Option Price for each Option shall be determined by the
Committee and set forth in the Award Agreement; provided that Substitute Awards or Awards
granted in connection with an adjustment provided for in Section 4.2, in the form of stock options,
shall have an Option Price per Share that is intended to maintain the economic value of the Award
that was replaced or adjusted, as determined by the Committee.



     6.4. Duration of Options. Each Option granted to a Participant shall expire at such
time as the Committee shall determine at the time of grant and set forth in the Award Agreement;
provided, however, that no Option shall be exercisable later than the tenth
(10th) anniversary of its date of grant.



     6.5. Exercise of Options. Options shall be exercisable at such times and be subject
to such restrictions and conditions as the Committee shall in each instance determine and set forth
in the Award Agreement, which need not be the same for each grant or for each Option or
Participant.



     6.6. Payment. Options shall be exercised by the delivery of a written notice of
exercise to the Company, in a form specified or accepted by the Committee, or by complying with any
alternative exercise procedures that may be authorized by the Committee, setting forth the number
of Shares with respect to which the Option is to be exercised, accompanied by full payment for such
Shares, which shall include applicable taxes, if any, in accordance with Article XVI. The Option
Price upon exercise of any Option shall be payable to the Company in full either: (a) in cash or
its equivalent; (b) subject to such terms, conditions and limitations as the Committee may
prescribe, by tendering (either by actual delivery or attestation) unencumbered Shares previously
acquired by the Participant exercising such Option having an aggregate Fair Market Value at the
time of exercise equal to the total Option Price, (c) by a combination of (a) and (b); or (d) by
any other method approved or accepted by the Committee in its sole discretion, including, if the
Committee so determines, (x) a cashless (broker-assisted) exercise that complies with all
applicable laws or (y) withholding of Shares otherwise deliverable to the Participant pursuant to
the Option having an aggregate Fair Market Value at the time of exercise equal to the total Option
Price. Subject to any governing rules or regulations, as soon as practicable after receipt of a
written notification of exercise and full payment in accordance with the preceding provisions of
this Section 6.6, the Company shall deliver to the Participant exercising an Option, in the
Participant’s name, evidence of book entry Shares, or, upon the Participant’s request, Share
certificates, in an appropriate amount based upon the number of Shares purchased under the Option,
subject to Section 18.10.



     6.7. Rights as a Shareholder. No Participant or other person shall become the
beneficial owner of any Shares subject to an Option, nor have any rights to dividends or other
rights of a shareholder with respect to any such Shares, until the Participant has actually
received



 









 




such Shares following exercise of his or her Option in accordance with the provisions of
the Plan and the applicable Award Agreement.




     6.8. Termination of Employment or Service(a). Except as otherwise provided in the
Award Agreement, an Option may be exercised only to the extent that it is then exercisable, and if
at all times during the period beginning with the date of granting of such Option and ending on the
date of exercise of such Option the Participant is an Employee or Non-Employee Director, and shall
terminate immediately upon a Termination of the Participant. An Option shall cease to become
exercisable upon a Termination of the holder thereof. Notwithstanding the foregoing provisions of
this Section 6.8 to the contrary, the Committee may determine in its discretion that an Option may
be exercised following any such Termination, whether or not exercisable at the time of such
Termination; provided, however, that in no event may an Option be exercised after
the expiration date of such Option specified in the applicable Award Agreement, except as
determined by the Committee.



ARTICLE VII.

STOCK APPRECIATION RIGHTS




     7.1. Grant of SARs. Subject to the terms and conditions of the Plan, SARs may be
granted to Participants at any time and from time to time as shall be determined by the Committee.
The Committee may grant an SAR (a) in connection and simultaneously with the grant of an Option (a
Tandem SAR) or (b) independent of, and unrelated to, an Option (a Freestanding SAR). The Committee
shall have complete discretion in determining the number of Shares to which an SAR pertains
(subject to Article IV) and, consistent with the provisions of the Plan, in determining the terms
and conditions pertaining to any SAR.



     7.2. Grant Price. The Grant Price for each SAR shall be determined by the Committee
and set forth in the Award Agreement, subject to the limitations of this Section 7.2. The Grant
Price for each Freestanding SAR shall be not less than one hundred percent (100%) of the Fair
Market Value of a Share on the date such Freestanding SAR is granted, except in the case of
Substitute Awards or Awards granted in connection with an adjustment provided for in Section 4.2.
The Grant Price of a Tandem SAR shall be equal to the Option Price of the related Option.



     7.3. Exercise of Tandem SARs. Tandem SARs may be exercised for all or part of the
Shares subject to the related Option upon the surrender of the right to exercise the equivalent
portion of the related Option. A Tandem SAR shall be exercisable only when and to the extent the
related Option is exercisable and may be exercised only with respect to the Shares for which the
related Option is then exercisable. A Tandem SAR shall entitle a Participant to elect, in the
manner set forth in the Plan and the applicable Award Agreement, in lieu of exercising his or her
unexercised related Option for all or a portion of the Shares for which such Option is then
exercisable pursuant to its terms, to surrender such Option to the Company with respect to any or
all of such Shares and to receive from the Company in exchange therefor a payment described in
Section 7.7. An Option with respect to which a Participant has elected to exercise a Tandem SAR
shall, to the extent of the Shares covered by such exercise, be canceled automatically and
surrendered to the Company. Such Option shall thereafter remain exercisable according to its



 









 







terms
only with respect to the number of Shares as to which it would otherwise be exercisable, less the
number of Shares with respect to which such Tandem SAR has been so exercised.



     7.4. Exercise of Freestanding SARs. Freestanding SARs may be exercised upon whatever
terms and conditions the Committee, in its sole discretion, in accordance with the Plan, determines
and sets forth in the Award Agreement.



     7.5. Award Agreement. Each SAR grant shall be evidenced by an Award Agreement that shall specify the number of
Shares to which the SAR pertains, the Grant Price, the term of the SAR, and such other terms and
conditions as the Committee shall determine in accordance with the Plan.



     7.6. Term of SARs. The term of an SAR granted under the Plan shall be determined by
the Committee, in its sole discretion; provided, however, that the term of any
Tandem SAR shall be the same as the related Option and no SAR shall be exercisable more than ten
(10) years after it is granted.



     7.7. Payment of SAR Amount. An election to exercise SARs shall be deemed to have been
made on the date of Notice of such election to the Company. Upon exercise of an SAR, a Participant
shall be entitled to receive payment from the Company in an amount determined by multiplying:



          (a) The excess of the Fair Market Value of a Share on the date of exercise over the Grant
Price of the SAR; by




          (b) The number of Shares with respect to which the SAR is exercised.



Notwithstanding the foregoing provisions of this Section 7.7 to the contrary, the Committee may
establish and set forth in the applicable Award Agreement a maximum amount per Share that will
be payable upon the exercise of an SAR. At the discretion of the Committee, such payment upon
exercise of an SAR shall be in cash, in Shares of equivalent Fair Market Value, or in some
combination thereof.




     7.8. Rights as a Shareholder. A Participant receiving an SAR shall have the rights of
a Shareholder only as to Shares, if any, actually issued to such Participant upon satisfaction or
achievement of the terms and conditions of the Award, and in accordance with the provisions of the
Plan and the applicable Award Agreement, and not with respect to Shares to which such Award relates
but which are not actually issued to such Participant.



     7.9. Termination of Employment or Service. Each SAR Award Agreement shall set forth
the extent to which the Participant shall have the right to exercise the SAR following such
Participant’s Termination, if at all, subject to Section 6.8, as applicable to any Tandem SAR.
Such provisions shall be determined in the sole discretion of the Committee, need not be uniform
among all SARs issued pursuant to the Plan, and may reflect distinctions based on the reasons for
Termination.



 









 





ARTICLE VIII.

RESTRICTED STOCK AND RESTRICTED STOCK UNITS




     8.1. Awards of Restricted Stock and Restricted Stock Units. Subject to the terms and
provisions of the Plan, the Committee, at any time and from time to time, may grant Shares of
Restricted Stock and/or Restricted Stock Units to Participants in such amounts as the Committee
shall determine. Subject to the terms and conditions of this Article VIII and the Award Agreement,
upon delivery of Shares of Restricted Stock to a Participant, or creation of a book entry
evidencing a Participant’s ownership of Shares of Restricted Stock, pursuant to Section 8.6, the
Participant shall have all of the rights of a shareholder with respect to such Shares, subject to
the terms and restrictions set forth in this Article VIII or the applicable Award Agreement or as
determined by the Committee. Restricted Stock Units shall be similar to Restricted Stock, except
no Shares are actually awarded to a Participant who is granted Restricted Stock Units on the date
of grant, and such Participant shall have no rights of a shareholder with respect to such
Restricted Stock Units.



     8.2. Award Agreement. Each Restricted Stock and/or Restricted Stock Unit Award shall
be evidenced by an Award Agreement that shall specify the Period of Restriction, the number of
Shares of Restricted Stock or the number of Restricted Stock Units granted, and such other
provisions as the Committee shall determine in accordance with the Plan. Any Restricted Stock
Award must be accepted by the Participant within a period of ninety (90) days (or such shorter
period as determined by the Committee at the time of award) after the award date, by executing such
Restricted Stock Award Agreement and providing the Committee or its designee a copy of such
executed Award Agreement and payment of the applicable purchase price of such Shares of Restricted
Stock, if any, as determined by the Committee.



     8.3. Nontransferability of Restricted Stock. Except as provided in this Article VIII,
Shares of Restricted Stock may not be sold, transferred, pledged, assigned, encumbered, alienated,
hypothecated or otherwise disposed of until the end of the applicable Period of Restriction
established by the Committee and specified in the Restricted Stock Award Agreement.



     8.4. Period of Restriction and Other Restrictions. The Period of Restriction shall
lapse based on continuing service as a Non-Employee Director or Consultant or continuing employment
with the Company, a Subsidiary or an Affiliate, the achievement of performance goals, the
satisfaction of other conditions or restrictions or upon the occurrence of other events, in each
case, as determined by the Committee, at its discretion, and stated in the Award Agreement.



     8.5. Delivery of Shares, Payment of Restricted Stock Units. Subject to Section 18.10,
after the last day of the Period of Restriction applicable to a Participant’s Shares of Restricted
Stock, and after all conditions and restrictions applicable to such Shares of Restricted Stock have been satisfied or lapse (including
satisfaction of any applicable withholding tax obligations), pursuant to the applicable Award
Agreement, such Shares of Restricted Stock shall become freely transferable by such Participant.
After the last day of the Period of Restriction applicable to a Participant’s Restricted Stock
Units, and after all conditions and restrictions applicable to Restricted Stock Units have been
satisfied or lapse (including satisfaction of any applicable



 









 







withholding tax obligations), pursuant
to the applicable Award Agreement, such Restricted Stock Units shall be settled by delivery of
Shares, a cash payment determined by reference to the then-current Fair Market Value of Shares or a
combination of Shares and such cash payment as the Committee, in its sole discretion, shall
determine, either by the terms of the Award Agreement or otherwise.



     8.6. Forms of Restricted Stock Awards. Each Participant who receives an Award of
Shares of Restricted Stock shall be issued a stock certificate or certificates evidencing the
Shares covered by such Award registered in the name of such Participant, which certificate or
certificates may contain an appropriate legend. The Committee may require a Participant who
receives a certificate or certificates evidencing a Restricted Stock Award to immediately deposit
such certificate or certificates, together with a stock power or other appropriate instrument of
transfer, endorsed in blank by the Participant, with signatures guaranteed in accordance with the
Exchange Act if required by the Committee, with the Secretary of the Company or an escrow holder as
provided in the immediately following sentence. The Secretary of the Company or such escrow holder
as the Committee may appoint shall retain physical custody of each certificate representing a
Restricted Stock Award until the Period of Restriction and any other restrictions imposed by the
Committee or under the Award Agreement with respect to the Shares evidenced by such certificate
expire or shall have been removed. The foregoing to the contrary notwithstanding, the Committee
may, in its discretion, provide that a Participant’s ownership of Shares of Restricted Stock prior
to the lapse of the Period of Restriction or any other applicable restrictions shall, in lieu of
such certificates, be evidenced by a “book entry” (i.e., a computerized or manual entry) in
the records of the Company or its designated agent in the name of the Participant who has received
such Award. Such records of the Company or such agent shall, absent manifest error, be binding on
all Participants who receive Restricted Stock Awards evidenced in such manner. The holding of
Shares of Restricted Stock by the Company or such an escrow holder, or the use of book entries to
evidence the ownership of Shares of Restricted Stock, in accordance with this Section 8.6, shall
not affect the rights of Participants as owners of the Shares of Restricted Stock awarded to them,
nor affect the restrictions applicable to such shares under the Award Agreement or the Plan,
including the Period of Restriction.



     8.7. Voting Rights. Unless otherwise determined by the Committee and set forth in a
Participant’s Award Agreement, to the extent permitted or required by law, as determined by the
Committee, Participants holding Shares of Restricted Stock may be granted the right to exercise
full voting rights with respect to those Shares during the Period of Restriction. A Participant
shall have no voting rights with respect to any Restricted Stock Units.



     8.8. Dividends and Other Distributions. During the Period of Restriction, Participants holding Shares of Restricted Stock shall be
credited with any cash dividends paid with respect to such Shares while they are so held, unless
determined otherwise by the Committee and set forth in the Award Agreement. The Committee may
apply any restrictions to such dividends that the Committee deems appropriate. Except as set forth
in the Award Agreement, in the event of (a) any adjustment as provided in Section 4.2, or (b) any
shares or securities are received as a dividend, or an extraordinary dividend is paid in cash, on
Shares of Restricted Stock, any new or additional Shares or securities or any extraordinary
dividends paid in cash received by a recipient of Restricted Stock shall be subject to the same
terms and conditions, including the Period of Restriction, as relate to the original Shares of
Restricted Stock.



 









 





     8.9. Termination of Employment or Service. Except as otherwise provided in this
Section 8.9, during the Period of Restriction, any Restricted Stock Units and/or Shares of
Restricted Stock held by a Participant shall be forfeited and revert to the Company (or, if Shares
of Restricted Sock were sold to the Participant, the Participant shall be required to resell such
Shares to the Company at cost) upon the Participant’s Termination or the failure to meet or satisfy
any applicable performance goals or other terms, conditions and restrictions to the extent set
forth in the applicable Award Agreement. Each applicable Award Agreement shall set forth the extent
to which, if any, the Participant shall have the right to retain Restricted Stock Units and/or
Shares of Restricted Stock following such Participant’s Termination. Such provisions shall be
determined in the sole discretion of the Committee, shall be included in the applicable Award
Agreement, need not be uniform among all such Awards issued pursuant to the Plan, and may reflect
distinctions based on the reasons for, or circumstances of, such Termination.



ARTICLE IX.

PERFORMANCE UNITS, PERFORMANCE SHARES, AND CASH-BASED AWARDS




     9.1. Grant of Performance Units, Performance Shares and Cash-Based Awards. Subject to
the terms of the Plan, Performance Units, Performance Shares, and/or Cash-Based Awards may be
granted to Participants in such amounts and upon such terms, and at any time and from time to time,
as shall be determined by the Committee, in accordance with the Plan. A Performance Unit,
Performance Share or Cash-Based Award entitles the Participant who receives such Award to receive
Shares or cash upon the attainment of performance goals and/or satisfaction of other terms and
conditions determined by the Committee when the Award is granted and set forth in the Award
Agreement. Such entitlements of a Participant with respect to his or her outstanding Performance
Unit, Performance Share or Cash-Based Award shall be reflected by a bookkeeping entry in the
records of the Company, unless otherwise provided by the Award Agreement. The terms and conditions
of such Awards shall be consistent with the Plan and set forth in the Award Agreement and need not
be uniform among all such Awards or all Participants receiving such Awards.



     9.2. Value of Performance Units, Performance Shares and Cash-Based Awards. Each Performance Unit shall have an initial value that is established by the Committee at
the time of grant. Each Performance Share shall have an initial value equal to the Fair Market
Value of a Share on the date of grant. Each Cash-Based Award shall have a value as shall be
determined by the Committee. The Committee shall set performance goals in its discretion which,
depending on the extent to which they are met, will determine the number and/or value of
Performance Units and Performance Shares and Cash-Based Awards that will be paid out to the
Participant.



     9.3. Earning of Performance Units, Performance Shares and Cash-Based Awards. Subject
to the terms of the Plan, after the applicable Performance Period has ended, the holder of
Performance Units, Performance Shares or Cash-Based Awards shall be entitled to receive payment on
the number and value of Performance Units, Performance Shares or Cash-Based Awards earned by the
Participant over the Performance Period, to be determined as a function of the extent to which the
corresponding performance goals and/or other terms and conditions have been achieved or satisfied.
The Committee shall determine the extent to which any such pre-established performance goals and/or
other terms and conditions of a Performance Unit,



 









 







Performance Share or Cash-Based Award are
attained or not attained following conclusion of the applicable Performance Period. The Committee
may, in its discretion, waive any such performance goals and/or other terms and conditions relating
to any such Award.



     9.4. Form and Timing of Payment of Performance Units, Performance Shares and Cash-Based
Awards. Payment of earned Performance Units, Performance Shares and Cash-Based Awards shall be
as determined by the Committee and as set forth in the Award Agreement. Subject to the terms of
the Plan, the Committee, in its sole discretion, may pay earned Performance Units, Performance
Shares and Cash-Based Awards in the form of cash or in Shares (or in a combination thereof) which
have an aggregate Fair Market Value equal to the value of the earned Performance Units, Performance
Shares or Cash-Based Awards as soon as practicable after the end of the Performance Period and
following the Committee’s determination of actual performance against the performance goals and/or
other terms and conditions established by the Committee. Such Shares may be granted subject to any
restrictions imposed by the Committee, including pursuant to Section 18.10. The determination of
the Committee with respect to the form of payment of such Awards shall be set forth in the Award
Agreement pertaining to the grant of the Award.



     9.5. Rights as a Shareholder. A Participant receiving a Performance Unit, Performance
Share or Cash-Based Award shall have the rights of a shareholder only as to Shares, if any,
actually received by the Participant upon satisfaction or achievement of the terms and conditions
of such Award and not with respect to Shares subject to the Award but not actually issued to such
Participant.



     9.6. Termination of Employment or Service. Each Award Agreement shall set forth the
extent to which the Participant shall have the right to retain Performance Units, Performance
Shares and/or Cash-Based Award
following such Participant’s Termination, if at all. Such provisions shall be determined in
the sole discretion of the Committee, shall be included in the applicable Award Agreement, need not
be uniform among all such Awards issued pursuant to the Plan, and may reflect distinctions based on
the reasons for Termination.



ARTICLE X.

OTHER STOCK-BASED AWARDS




     10.1. Other Stock-Based Awards. The Committee may grant types of equity-based or
equity-related Awards not otherwise described by the terms of the Plan (including the grant or
offer for sale of unrestricted Shares), in such amounts (subject to Article IV) and subject to such
terms and conditions, as the Committee shall determine. Such Other Stock-Based Awards may involve
the transfer of actual Shares to Participants, or payment in cash or otherwise of amounts based on
the value of Shares and may include Awards designed to comply with or take advantage of the
applicable local laws of jurisdictions in which the Participants are located.



     10.2. Value of Other Stock-Based Awards. Each Other Stock-Based Award shall be
expressed in terms of Shares or units based on Shares, as determined by the Committee. The
Committee may establish performance goals in its discretion, and any such performance goals shall
be set forth in the applicable Award Agreement. If the Committee exercises its discretion to



 









 







establish performance goals, the number and/or value of Other Stock-Based Awards that will be paid
out to the Participant will depend on the extent to which such performance goals are met.



     10.3. Payment of Other Stock-Based Awards. Payment, if any, with respect to an Other
Stock-Based Award shall be made in accordance with the terms of the Award, as set forth in the
Award Agreement, in cash or Shares as the Committee determines.



     10.4. Termination of Employment or Service. The Committee shall determine the extent
to which the Participant shall have the right to receive Other Stock-Based Awards following the
Participant’s Termination, if at all. Such provisions shall be determined in the sole discretion of
the Committee, such provisions may be included in the applicable Award Agreement, but need not be
uniform among all Other Stock-Based Awards issued pursuant to the Plan, and may reflect
distinctions based on the reasons for Termination.



ARTICLE XI.

DIVIDEND EQUIVALENTS




     11.1. Dividend Equivalents. Unless otherwise provided by the Committee, no adjustment shall be made in the Shares
issuable or taken into account under Awards on account of cash dividends that may be paid or other
rights that may be issued to the holders of Shares prior to issuance of such Shares under such
Award. The Committee may grant Dividend Equivalents based on the dividends declared on Shares that
are subject to any Award, including any Award the payment or settlement of which is deferred
pursuant to Section 18.6. Dividend Equivalents may be credited as of the dividend payment dates,
during the period between the date the Award is granted and the date the Award becomes payable or
terminates or expires. Dividend Equivalents may be subject to any limitations and/or restrictions
determined by the Committee. Dividend Equivalents shall be converted to cash or additional Shares
by such formula and at such time, and shall be paid at such times, as may be determined by the
Committee.



ARTICLE XII.

TRANSFERABILITY OF AWARDS; BENEFICIARY DESIGNATION




     12.1. All Other Awards. Except as otherwise provided in Section 8.5 or Section 12.3
or a Participant’s Award Agreement or otherwise determined at any time by the Committee, no Award
granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution; provided that
the Committee may permit further transferability, on a general or a specific basis, and may impose
conditions and limitations on any permitted transferability, subject to any applicable Period of
Restriction. Further, except as otherwise provided in a Participant’s Award Agreement or otherwise
determined at any time by the Committee, or unless the Committee decides to permit further
transferability, subject any applicable Period of Restriction, all Awards granted to a Participant
under the Plan, and all rights with respect to such Awards, shall be exercisable or available
during his or her lifetime only by or to such Participant. With respect to those Awards, if any,
that are permitted to be transferred to another individual, references in the Plan to exercise or
payment related to such Awards by or to the Participant shall be deemed to include, as




 










 




determined
by the Committee, the Participant’s permitted transferee. In the event any Award is exercised by
or otherwise paid to the executors, administrators, heirs or distributees of the estate of a
deceased Participant, or such a Participant’s beneficiary, or the transferee of an Award, in any
such case, pursuant to the terms and conditions of the Plan and the applicable Agreement and in
accordance with such terms and conditions as may be specified from time to time by the Committee,
the Company shall be under no obligation to issue Shares thereunder unless and until the Company is
satisfied, as determined in the discretion of the Committee, that the person or persons exercising
such Award, or to receive such payment, are the duly appointed legal representative of the deceased
Participant’s estate or the proper legatees or distributees thereof or the named beneficiary of
such Participant, or the valid transferee of such Award, as applicable. Any purported assignment,
transfer or encumbrance of an Award that does not comply with this Section 12.1 shall be void and
unenforceable against the Company.




     12.2. Beneficiary Designation. Each Participant may, from time to time, name any beneficiary or beneficiaries who shall be
permitted to exercise his or her Option or SAR or to whom any benefit under the Plan is to be paid
in case of the Participant’s death before he or she fully exercises his or her Option or SAR or
receives any or all of such benefit. Each such designation shall revoke all prior designations by
the same Participant, shall be in a form prescribed by the Company, and will be effective only when
filed by the Participant in writing with the Company during the Participant’s lifetime. In the
absence of any such beneficiary designation, a Participant’s unexercised Option or SAR, or amounts
due but remaining unpaid to such Participant, at the Participant’s death, shall be exercised or
paid as designated by the Participant by will or by the laws of descent and distribution.



ARTICLE XIII.

RIGHTS OF PARTICIPANTS




     13.1. Rights or Claims. No individual shall have any rights or claims under the Plan
except in accordance with the provisions of the Plan and any applicable Award Agreement. The grant
of an Award under the Plan shall not confer any rights upon the Participant holding such Award
other than such terms, and subject to such conditions, as are specified in the Plan as being
applicable to such type of Award, or to all Awards, or as are expressly set forth in the Award
Agreement evidencing such Award. Without limiting the generality of the foregoing, nothing
contained in the Plan or in any Award Agreement shall be deemed to:




	 	(a)	 	Give any Employee or Non-Employee Director the right to be retained in the
service of the Company, an Affiliate and/or a Subsidiary, whether in any particular
position, at any particular rate of compensation, for any particular period of time or
otherwise;
	 
	 	(b)	 	Restrict in any way the right of the Company, an Affiliate and/or a Subsidiary
to terminate, change or modify any Employee’s employment or any Non-Employee Director’s
service as a Director at any time with or without Cause;
	 
	 	(c)	 	Confer on any Consultant any right of continued relationship with the Company,
an Affiliate and/or a Subsidiary, or alter any relationship between them, including any




 









 






	 	 	 	right of the Company or an Affiliate or Subsidiary to terminate, change or modify its
relationship with a Consultant;
	 
	 	(d)	 	Give any Employee, Non-Employee Director or Consultant the right to receive any
bonus, whether payable in cash or in Shares, or in any combination thereof, from the
Company, an Affiliate and/or a Subsidiary, nor be construed as limiting in any way the
right of the Company, an Affiliate and/or a Subsidiary to determine, in its sole
discretion, whether or not it shall pay any Employee, Non-Employee Director or
Consultant bonuses, and, if so paid, the amount thereof and the manner of such payment;
or
	 
	 	(e)	 	Give any Participant any rights whatsoever with respect to an Award except as
specifically provided in the Plan and the Award Agreement.





     13.2. Adoption of the Plan. The adoption of the Plan shall not be deemed to give any
Employee, Non-Employee Director or Consultant or any other individual any right to be selected as a
Participant or to be granted an Award, or, having been so selected, to be selected to receive a
future Award.



     13.3. Vesting. Notwithstanding any other provision of the Plan, a Participant’s right
or entitlement to exercise or otherwise vest in any Award not exercisable or vested at the time of
grant shall only result from continued services as a Non-Employee Director or Consultant or
continued employment, as the case may be, with the Company or any Subsidiary or Affiliate, or
satisfaction of any other performance goals or other conditions or restrictions applicable, by its
terms, to such Award.



     13.4. No Effects on Benefits. Payments and other compensation received by a
Participant under an Award are not part of such Participant’s normal or expected compensation or
salary for any purpose, including calculating termination, indemnity, severance, resignation,
redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits
or similar payments under any laws, plans, contracts, arrangements or otherwise. No claim or
entitlement to compensation or damages arises from the termination of the Plan or diminution in
value of any Award or Shares purchased or otherwise received under the Plan.



     13.5. One or More Types of Awards. A particular type of Award may be granted to a
Participant either alone or in addition to other Awards under the Plan.



ARTICLE XIV.

CHANGE OF CONTROL




     14.1. Treatment of Outstanding Awards. In the event of a Change of Control, unless
otherwise specifically prohibited by any applicable laws, rules or regulations or otherwise
provided in any applicable Award Agreement, as in effect prior to the occurrence of the Change of
Control, specifically with respect to a Change of Control:



          (a) In its discretion, and on such terms and conditions as it deems appropriate, the Committee
may provide, either by the terms of the Award Agreement or by resolution





 









 







adopted prior to the
occurrence of such Change of Control, that any Options, SARs and Other Stock-Based Awards (if
applicable) which are outstanding shall become exercisable as
determined by the Committee, notwithstanding anything to the contrary in the Award Agreement.




          (b) In its discretion, and on such terms and conditions as it deems appropriate, the Committee
may provide, either by the terms of the Award Agreement or by resolution adopted prior to the
occurrence of such Change of Control, that restrictions, performance goals or other conditions
applicable to Restricted Stock Units, Shares of Restricted Stock and Other Stock-Based Awards
previously awarded to Participants shall be canceled or deemed achieved, the Period of Restriction
applicable thereto shall terminate, and restrictions on transfer, sale, assignment, pledge or other
disposition applicable to any such Shares of Restricted Stock shall lapse, in each case, to the
extent provided by the Committee, notwithstanding anything to the contrary in the Award Agreement.




          (c) In its discretion, and on such terms and conditions as it deems appropriate, the Committee
may provide, either by the terms of the Award Agreement or by resolution adopted prior to the
occurrence of such Change of Control, that any Awards which are outstanding shall, in whole or in
part, immediately become vested and nonforfeitable.




          (d) In its discretion, and on such terms and conditions as it deems appropriate, the Committee
may provide, either by the terms of the Award Agreement or by resolution adopted prior to the
occurrence of such Change of Control, that the target payment opportunities attainable under any
outstanding Awards of Performance Units, Performance Shares, Cash-Based Awards and other Awards
shall be deemed to have been fully or partially earned for any Performance Period(s), as determined
by the Committee, immediately prior to the effective date of the Change of Control.




          (e) In its discretion, and on such terms and conditions as it deems appropriate, the Committee
may provide, either by the terms of the Award Agreement applicable to any Award or by resolution
adopted prior to the occurrence of such Change of Control, that any Award the payment or settlement
of which was deferred under Section 18.6 or otherwise may be paid or distributed immediately prior
to the Change of Control, except as otherwise provided by the Committee in accordance with Section
16.1(f).




          (f) In its discretion, and on such terms and conditions as it deems appropriate, the Committee
may provide, either by the terms of the Award Agreement applicable to any Award or by resolution
adopted prior to the occurrence of the Change of Control, that any outstanding Award shall be
adjusted by substituting for each Share subject to such Award immediately prior to the transaction
resulting in the Change of Control the consideration (whether stock or other securities of the
surviving corporation or any successor corporation to the Company, or a parent or subsidiary
thereof, or that may be issuable by another corporation that is a party to the transaction
resulting in the Change of Control) received in such transaction by holders of Shares for each
Share held on the closing or effective date of such transaction, in which event the aggregate
Option Price or Grant Price, as applicable, of the Award shall remain the same; provided,
however, that if such consideration received in such transaction is not solely stock of a
successor, surviving or other corporation, the Committee may provide for the




 









 







consideration to be
received upon exercise or payment of an Award, for each Share subject to such Award, to be solely
stock or other securities of the successor, surviving or other
corporation, as applicable, equal in fair market value, as determined by the Committee, to the
per-Share consideration received by holders of Shares in such transaction.




          (g) In its discretion, and on such terms and conditions as it deems appropriate, the Committee
may provide, either by the terms of the Award Agreement applicable to any Award or by resolution
adopted prior to the occurrence of the Change of Control, that any outstanding Award (or portion
thereof) shall be converted into a right to receive cash, on or as soon as practicable following
the closing date or expiration date of the transaction resulting in the Change of Control in an
amount equal to the highest value of the consideration to be received in connection with such
transaction for one Share, or, if higher, the highest Fair Market Value of a Share during the
thirty (30) consecutive business days immediately prior to the closing date or expiration date of
such transaction, less the per-Share Option Price, Grant Price or outstanding unpaid purchase
price, as applicable to the Award, multiplied by the number of Shares subject to such Award, or the
applicable portion thereof.




          (h) The Committee may, in its discretion, provide that an Award can or cannot be exercised
after, or will otherwise terminate or not terminate as of, a Change of Control.




     14.2. No Implied Rights; Other Limitations. No Participant shall have any right to
prevent the consummation of any of the acts described in Section 4.2 or 14.1 affecting the number
of Shares available to, or other entitlement of, such Participant under the Plan or such
Participant’s Award. Any actions or determinations of the Committee under this Article XVI need
not be uniform as to all outstanding Awards, nor treat all Participants identically.
Notwithstanding the adjustments described in Section 14.1, in no event may any Option or SAR be
exercised after ten (10) years from the date it was originally granted.



ARTICLE XV.

AMENDMENT, MODIFICATION, AND TERMINATION




     15.1. Amendment, Modification, and Termination. The Board may, at any time and with
or without prior notice, amend, alter, suspend, or terminate the Plan, and the Committee may, to
the extent permitted by the Plan, amend the terms of any Award theretofore granted, including any
Award Agreement, in each case, retroactively or prospectively; provided, however,
that no such amendment, alteration, suspension, or termination of the Plan shall be made which,
without first obtaining approval of the shareholders of the Company (where such approval is
necessary to satisfy any applicable law, regulation or rule (including the applicable regulations
and rules of the SEC and any national securities exchange)), would:




     (a) except as is provided in Section 4.2, increase the maximum number of Shares which
may be sold or awarded under the Plan;




     (b) except as is provided in Section 4.2, decrease the minimum Option Price or Grant
Price requirements of Section 7.2, respectively;




     (c) change the class of persons eligible to receive Awards under the Plan;



 









 






     (d) extend the duration of the Plan or the period during which Options or SARs may be
exercised under Section 6.4 or 7.6, as applicable; or




     (e) otherwise require shareholder approval to comply with any applicable law,
regulation or rule (including the applicable regulations and rules of the SEC and any
national securities exchange).


In addition, (A) no such amendment, alteration, suspension or termination of the Plan or any Award
theretofore granted, including any Award Agreement, shall be made which would materially impair the
previously accrued rights of a Participant under any outstanding Award without the written consent
of such Participant, provided, however, that the Board may amend or alter the Plan
and the Committee may amend or alter any Award, including any Agreement, either retroactively or
prospectively, without the consent of the applicable Participant, (x) so as to preserve or come
within any exemptions from liability under Section 16(b) of the Exchange Act, pursuant to the rules
and releases promulgated by the SEC (including Rule 16b-3), or (y) if the Board or the Committee
determines in its discretion that such amendment or alteration either (I) is required or advisable
for the Company, the Plan or the Award to satisfy, comply with or meet the requirements of any law,
regulation, rule or accounting standard or (II) is not reasonably likely to significantly diminish
the benefits provided under such Award, or that such diminishment has been or will be adequately
compensated, and (B) except as is provided in Section 4.2, but notwithstanding any other provisions
of the Plan, neither the Board nor the Committee may take any action: (1) to amend the terms of an
outstanding Option or SAR to reduce the Option Price or Grant Price thereof, cancel an Option or
SAR and replace it with a new Option or SAR with a lower Option Price or Grant Price, or that has
an economic effect that is the same as any such reduction or cancellation; or (2) to cancel an
outstanding Option or SAR having an Option Price or Grant Price above the then-current Fair Market
Value of the Shares in exchange for the grant of another type of Award.




ARTICLE XVI.

TAX WITHHOLDING AND OTHER TAX MATTERS




     16.1. Tax Withholding. The Company and/or any Subsidiary or Affiliate are authorized
to withhold from any Award granted or payment due under the Plan the amount of all taxes due in
respect of such Award or payment and take any such other action as may be necessary or appropriate,
as determined by the Committee, to satisfy all obligations for the payment of such taxes. The
recipient of any payment or distribution under the Plan shall make arrangements satisfactory to the
Company, as determined in the Committee’s discretion, for the satisfaction of any tax obligations
that arise by reason of any such payment or distribution. The Company shall not be required to
make any payment or distribution under or relating to the Plan or any Award until such obligations
are satisfied or such arrangements are made, as determined by the Committee in its discretion.



     16.2. Withholding or Tendering Shares. Without limiting the generality of Section 16.1, the Committee may in its discretion permit
a Participant to satisfy or arrange to satisfy, in whole or in part, the tax obligations incident
to an Award by: (a) electing to have the Company withhold Shares or other property otherwise
deliverable to such Participant pursuant to his or her



 









 




Award (provided, however,
that the amount of any Shares so withheld shall not exceed the amount necessary to satisfy required
withholding obligations using the minimum statutory withholding rates for tax purposes, including
payroll taxes, that are applicable to supplemental taxable income) and/or (b) tendering to the
Company Shares owned by such Participant (or by such Participant and his or her spouse jointly) and
purchased or held for the requisite period of time as may be required to avoid the Company’s or the
Affiliates’ or Subsidiaries’ incurring an adverse accounting charge, based, in each case, on the
Fair Market Value of the Shares on the payment date as determined by the Committee. All such
elections shall be irrevocable, made in writing, signed by the Participant, and shall be subject to
any restrictions or limitations that the Committee, in its sole discretion, deems appropriate.




     16.3. Restrictions. The satisfaction of tax obligations pursuant to this Article XVI
shall be subject to such restrictions as the Committee may impose, including any restrictions
required by applicable law or the rules and regulations of the SEC, and shall be construed
consistent with an intent to comply with any such applicable laws, rule and regulations.



ARTICLE XVII.

LIMITS OF LIABILITY; INDEMNIFICATION




     17.1. Limits of Liability.



          (a) Any liability of the Company or a Subsidiary or Affiliate to any Participant with respect
to any Award shall be based solely upon contractual obligations created by the Plan and the Award
Agreement.




          (b) None of the Company, any Subsidiary, any Affiliate, any member of the Board or the
Committee or any other person participating in any determination of any question under the Plan, or
in the interpretation, administration or application of the Plan, shall have any liability, in the
absence of bad faith, to any party for any action taken or not taken in connection with the Plan,
except as may expressly be provided by statute.




          (c) Each member of the Committee, while serving as such, shall be considered to be acting in
his or her capacity as a director of the Company. Members of the Board of Directors and members of
the Committee acting under the Plan shall be fully protected in relying in good faith upon the
advice of counsel and shall incur no liability except for gross negligence or willful misconduct in
the performance of their duties.




          (d) The Company shall not be liable to a Participant or any other person as to: (i) the
non-issuance of Shares as to which the Company has been unable to obtain from any
regulatory body having relevant jurisdiction the authority deemed by the Committee or the
Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, and (ii)
any tax consequence expected, but not realized, by any Participant or other person due to the
receipt, exercise or settlement of any Option or other Award.




     17.2. Indemnification. Subject to the requirements of applicable law, each individual
who is or shall have been a member of the Committee or of the Board, or an officer of the Company
to whom authority was delegated in accordance with Article III, shall be indemnified



 









 




and held
harmless by the Company against and from any loss, cost, liability, or expense that may be imposed
upon or reasonably incurred by him or her in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she may be involved by
reason of any action taken or failure to act under the Plan and against and from any and all
amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or
her in satisfaction of any judgment in any such action, suit, or proceeding against him or her,
provided he or she shall give the Company an opportunity, at its own expense, to handle and
defend the same before he or she undertakes to handle and defend it on his or her own behalf,
unless such loss, cost, liability, or expense is a result of the individual’s own willful
misconduct or except as provided by statute. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such individual may be entitled under the
Company’s Articles of Association, as a matter of law, or otherwise, or any power that the Company
may have to indemnify or hold harmless such individual.




ARTICLE XVIII.

MISCELLANEOUS




     18.1. Drafting Context. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine; the plural shall include the singular
and the singular shall include the plural. The words “Article,” “Section,” and “paragraph” herein
shall refer to provisions of the Plan, unless expressly indicated otherwise. The words “include,”
“includes,” and “including” herein shall be deemed to be followed by “without limitation” whether
or not they are in fact followed by such words or words of similar import, unless the context
otherwise requires.



     18.2. Forfeiture Events.



          (a) Notwithstanding any provision of the Plan to the contrary, the Committee shall have the
authority to determine (and may so provide in any Agreement) that a Participant’s (including his or
her estate’s, beneficiary’s or transferee’s) rights (including the right to exercise any Option or
SAR), payments and benefits with respect to any Award shall be subject to reduction, cancellation,
forfeiture or recoupment in the event of the Participant’s Termination for Cause or due to
voluntary resignation; serious misconduct; violation of the Company’s or a
Subsidiary’s or Affiliate’s policies; breach of fiduciary duty; unauthorized disclosure of any
trade secret or confidential information of the Company or a Subsidiary or Affiliate; breach of
applicable noncompetition, nonsolicitation, confidentiality or other restrictive covenants; or
other conduct or activity that is in competition with the business of the Company or any Subsidiary
or Affiliate, or otherwise detrimental to the business, reputation or interests of the Company
and/or any Subsidiary or Affiliate; or upon the occurrence of certain events specified in the
applicable Award Agreement (in any such case, whether or not the Participant is then an Employee,
Non-Employee Director or Consultant). The determination of whether a Participant’s conduct,
activities or circumstances are described in the immediately preceding sentence shall be made by
the Committee in its good faith discretion, and pending any such determination, the Committee shall
have the authority to suspend the exercise, payment, delivery or settlement of all or any portion
of such Participant’s outstanding Awards pending an investigation of the matter.





 









 








          (b) If the Company is required to prepare an accounting restatement (x) due to the material
noncompliance of the Company, as a result of misconduct, with any financial reporting requirement
under the securities laws, if a Participant knowingly or grossly negligently engaged in such
misconduct, or knowingly or grossly negligently failed to prevent such misconduct, or if a
Participant is one of the individuals subject to automatic forfeiture under Section 304 of the
Sarbanes-Oxley Act of 2002, the Participant shall reimburse the Company the amount of any payment
in settlement of an Award earned or accrued during the twelve- (12-) month period following the
first public issuance or filing with the SEC (whichever just occurred) of the financial document
embodying such financial reporting requirement, and (y) the Committee may in its discretion provide
that if the amount earned under any Participant’s Award is reduced by such restatement, such
Participant shall reimburse the Company the amount of any such reduction previously paid in
settlement of such Award.




     18.3. Severability. In the event any provision of the Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the
Plan, and the Plan shall be construed and enforced as if the illegal or invalid provision had not
been included.



     18.4. Transfer, Leave of Absence. The Committee shall have the discretion to
determine the effects upon any Award, upon an individual’s status as an Employee, Non-Employee
Director or Consultant for purposes of the Plan (including whether a Participant shall be deemed to
have experienced a Termination or other change in status) and upon the exercisability, vesting,
termination or expiration of any Award in the case of: (a) any Participant who is employed by an
entity that ceases to be an Affiliate or Subsidiary (whether due to a spin-off or otherwise), (b)
any transfer of a Participant between locations of employment with the Company, an Affiliate,
and/or Subsidiary or between the Company, an Affiliate or Subsidiary or between Affiliates or
Subsidiaries, (c) any leave of absence of a Participant, (d) any change in a Participant’s status
from an Employee to a Consultant or a Non-Employee Director, or vice versa, (e) any increase or
decrease in the scope of engagement of a Participant; and (f) upon approval by the Committee, any
Employee who experiences a Termination but becomes employed by a partnership, joint venture,
corporation or other entity not meeting the requirements of an Affiliate or Subsidiary.



     18.5. Exercise and Payment of Awards. An Award shall be deemed exercised or claimed
when the Secretary of the Company or any other Company official or other person designated by the
Committee for such purpose receives appropriate written notice from a Participant, in form
acceptable to the Committee, together with payment of the applicable Option Price, Grant Price or
other purchase price, if any, and compliance with Article XVI, in accordance with the Plan and such
Participant’s Award Agreement.



     18.6. Deferrals. To the extent provided in the Award Agreement, the Committee may
permit or require a Participant to defer such Participant’s receipt of the payment of cash or the
delivery of Shares that would otherwise be due to such Participant by virtue of the lapse or waiver
of the Period of Restriction or other restrictions with respect to Restricted Stock or the payment
or satisfaction of Restricted Stock Units, Performance Units, Performance Shares, Cash-Based Awards
or Other Stock-Based Awards. If any such deferral election is required or permitted, (a) such
deferral shall represent an unfunded and unsecured obligation of the Company and shall not confer
the rights of a shareholder unless and until Shares are issued



 









 




thereunder; (b) the number of Shares
subject to such deferral shall, until settlement thereof, be subject to adjustment pursuant to
Section 4.2; and (c) the Committee shall establish rules and procedures for such deferrals and
payment or settlement thereof, which may be in cash, Shares or any combination thereof, and such
deferrals may be governed by the terms and conditions of any deferred compensation plan of the
Company or Affiliate specified by the Committee for such purpose.




     18.7. Loans. The Company may, in the discretion of the Committee, extend one or more
loans to Participants in connection with the exercise or receipt of an Award granted to any such
Participant; provided, however, that the Company shall not extend loans to any
Participant if prohibited by law or the rules of any stock exchange or quotation system on which
the Company’s securities are listed. The terms and conditions of any such loan shall be
established by the Committee.



     18.8. No Effect on Other Plans. Neither the adoption of the Plan nor anything
contained herein shall affect any other compensation or incentive plans or arrangements of the
Company or any Subsidiary or Affiliate, or prevent or limit the right of the Company or any
Subsidiary or Affiliate to establish any other forms of incentives or compensation for their
directors, officers, eligible employees or consultants or grant or assume options or other rights
otherwise than under the Plan.



     18.9. Section 16 of Exchange Act. Unless otherwise stated in the Award Agreement,
notwithstanding any other provision of the Plan, any Award granted to an Insider shall be subject
to any additional limitations set forth in any applicable exemptive rule under Section 16 of the
Exchange Act (including Rule 16b-3) that are requirements for the application of such exemptive
rule, and the
Plan and the Award Agreement shall be deemed amended to the extent necessary to conform to
such limitations.



     18.10. Requirements of Law; Limitations on Awards.



          (a) The granting of Awards and the issuance of Shares under the Plan shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required.




          (b) If at any time the Committee shall determine, in its discretion, that the listing,
registration and/or qualification of Shares upon any securities exchange or under any law, or the
consent or approval of any governmental regulatory body, is necessary or desirable as a condition
of, or in connection with, the sale or purchase of Shares hereunder, the Company shall have no
obligation to allow the grant, exercise or payment of any Award, or to issue or deliver evidence of
title for Shares issued under the Plan, in whole or in part, unless and until such listing,
registration, qualification, consent and/or approval shall have been effected or obtained, or
otherwise provided for, free of any conditions not acceptable to the Committee.




          (c) If at any time counsel to the Company shall be of the opinion that any sale or delivery of
Shares pursuant to an Award is or may be in the circumstances unlawful or result in the imposition
of excise taxes on the Company or any Subsidiary or Affiliate under the statutes, rules or
regulations of any applicable jurisdiction, the Company shall have no obligation





 









 







to make such sale
or delivery, or to make any application or to effect or to maintain any qualification or
registration under the Securities Act, or otherwise with respect to Shares or Awards and the right
to exercise or payment of any Option or Award shall be suspended until, in the opinion of such
counsel, such sale or delivery shall be lawful or will not result in the imposition of excise taxes
on the Company or any Subsidiary or Affiliate.




          (d) Upon termination of any period of suspension under this Section 18.10, any Award affected
by such suspension which shall not then have expired or terminated shall be reinstated as to all
Shares available before such suspension and as to the Shares which would otherwise have become
available during the period of such suspension, but no suspension shall extend the term of any
Award.




          (e) The Committee may require each person receiving Shares in connection with any Award under
the Plan to represent and agree with the Company in writing that such person is acquiring such
Shares for investment without a view to the distribution thereof, and/or provide such other
representations and agreements as the Committee may prescribe. The Committee, in its absolute
discretion, may impose such restrictions on the ownership and transferability of the Shares
purchasable or otherwise receivable by any person under any Award as it deems appropriate. Any
such restrictions shall be set forth in the applicable Award Agreement, and the certificates
evidencing such shares may include any legend that the Committee deems appropriate to reflect any
such restrictions.




          (f) An Award and any Shares received upon the exercise or payment of an Award shall be subject
to such other transfer and/or ownership restrictions and/or legending
requirements as the Committee may establish in its discretion and may be referred to on the
certificates evidencing such Shares, including restrictions under applicable securities laws, under
the requirements of any stock exchange or market upon which such Shares are then listed and/or
traded, and under any blue sky or state securities laws applicable to such Shares.




     18.11. Participants Deemed to Accept Plan. By accepting any benefit under the Plan,
each Participant and each person claiming under or through any such Participant shall be
conclusively deemed to have indicated their acceptance and ratification of, and consent to, all of
the terms and conditions of the Plan and any action taken under the Plan by the Board, the
Committee or the Company, in any case in accordance with the terms and conditions of the Plan.



     18.12. Governing Law. The Plan and, except as provided below or in an applicable
subplan, each Award Agreement to a Participant shall be governed by the laws of the State of
Israel, excluding any conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of the Plan to the substantive law of another jurisdiction. Unless
otherwise provided in the Award Agreement, Participants are deemed to submit to the exclusive
jurisdiction and venue of the courts in Tel-Aviv, Israel, to resolve any and all issues that may
arise out of or relate to the Plan or any related Award Agreement.



     18.13. Plan Unfunded. The Plan shall be unfunded. The Company shall not be required
to establish any special or separate fund or to make any other segregation of assets to assure the
issuance of Shares or the payment of cash upon exercise or payment of any Award. Proceeds




 










 




from the sale of Shares pursuant to Options or other Awards granted under the Plan shall
constitute general funds of the Company.





	 	18.14.	 	Administration Costs. The Company shall bear all costs and expenses incurred in
administering the Plan, including expenses of issuing Shares pursuant to any Options or other
Awards granted hereunder.
	 
	 	18.15.	 	Uncertificated Shares. To the extent that the Plan provides for issuance of
certificates to reflect the transfer of Shares, the transfer of such Shares may nevertheless be
effected on a noncertificated basis, to the extent not prohibited by applicable law or the rules of
any stock exchange.
	 
	 	18.16.	 	No Fractional Shares. An Option or other Award shall not be exercisable with respect
to a fractional Share or the lesser of fifty (50) shares or the full number of Shares then subject
to the Option or other Award. No fractional Shares shall be issued upon the exercise or payment of
an Option or other Award and any such fractions shall be rounded to the nearest whole number.
	 
	 	18.17.	 	Participants. Notwithstanding any provision of the Plan to the contrary, in order to
comply with the laws or practices of countries in which the Company, any Affiliate, and/or any
Subsidiary operates or has Employees, Non-Employee Directors or Consultants, the Committee, in its
sole discretion, shall have the power and authority to:






	 	(a)	 	Determine which Affiliates and Subsidiaries shall be covered by the Plan;
	 
	 	(b)	 	Determine which Employees, Non-Employee Directors and/or Consultants are eligible to
participate in the Plan;
	 
	 	(c)	 	Grant Awards (including substitutes for Awards), and modify the terms and conditions
of any Awards, on such terms and conditions as the Committee determines necessary or
appropriate to permit participation in the Plan by individuals otherwise eligible to so
participate, or otherwise to comply with applicable laws or conform to applicable
requirements or practices of the applicable jurisdictions;
	 
	 	(d)	 	Establish subplans and adopt or modify exercise procedures and other terms and
procedures, to the extent such actions may be necessary or advisable. Any subplans and
modifications to Plan terms and procedures established under this Section 18.18 by the
Committee shall be attached to the Plan as appendices; and
	 
	 	(e)	 	Take any action, before or after an Award is made, that the Committee, in its
discretion, deems advisable to obtain approval or comply with any necessary local
government regulatory exemptions or approvals.






Notwithstanding the above, the Committee may not take any actions hereunder, and no Awards shall
be granted, that would violate any applicable law.



* * *




 









 









ALLOT COMMUNICATIONS LTD.




APPENDIX A — ISRAEL




TO THE 2006 INCENTIVE COMPENSATION PLAN 





	1.	 	GENERAL
	 
	1.1.	 	This appendix (the: “Appendix”) shall apply only to Israeli Participants who are residents
of the state of Israel or those who are deemed to be residents of the state of Israel for the
payment of tax. The provisions specified hereunder shall form an integral part of the 2006
Incentive Compensation Plan of Allot Communications Ltd. (hereinafter: the “Plan”, the
“Company”), which applies to the issuance of Awards to employees, directors, consultants and
service provides of the Company or its Affiliates.
	 
	1.2	 	This Appendix is effective with respect to Awards granted as of January 1, 2003 and shall
comply with Amendment no. 132 of the Israeli Tax Ordinance.
	 
	1.3.	 	This Appendix is to be read as a continuation of the Plan and only modifies Awards granted
to Israeli Participants so that they comply with the requirements set by the Israeli law in
general, and in particular with the provisions of Section 102 (as specified herein), as may
be amended or replaced from time to time. For the avoidance of doubt, this Appendix does not
add to or modify the Plan in respect of any other category of Participants.
	 
	1.4.	 	The Plan and this Appendix are complimentary to each other and shall be deemed as one.
Subject to section 1.3 above, in any case of contradiction, whether explicit or implied,
between any definitions and/or provisions of this Appendix and the Plan, the provisions set
out in this Appendix shall prevail.
	 
	1.5.	 	Any capitalized terms not specifically defined in this Appendix shall be construed according
to the interpretation given to it in the Plan.






	2.	 	DEFINITIONS
	 
	2.1	 	“Affiliate” means any “employing company” within the meaning of Section 102(a) of the
Ordinance.




 









 













	2.2	 	“Approved 102 Award” means an Award granted pursuant to Section 102(b) of the Ordinance and
held in trust by a Trustee for the benefit of the Israeli Participant.
	 
	2.3	 	“Award” notwithstanding Section 2.3 of the Plan, for the purpose of this Appendix, Award
means an Award to purchase one or more Shares of the Company or Stock Appreciation Rights,
Restricted Stock Awards, Restricted Stock Units, Performance Shares, Performance Units,
Cash-Based Awards, and Other Stock-Based Awards.
	 
	2.4	 	“Capital Gain Award (CGA)” means an Approved 102 Award elected and designated by the Company
to qualify under the capital gain tax treatment in accordance with the provisions of Section
102(b)(2) of the Ordinance.
	 
	2.5	 	“Controlling Shareholder” shall have the meaning ascribed to it in Section 32(9) of the
Ordinance.
	 
	2.6	 	“Employee” means an Israeli Participant who is employed by the Company or its Affiliates,
including an individual who is serving as a director or an office holder, but excluding any
Controlling Shareholder.
	 
	2.7	 	“Israeli Participant” means a person who receives or holds an Award under the Plan and this
Appendix.
	 
	2.8	 	“ITA” means the Israeli Tax Authorities.
	 
	2.9	 	“Ordinary Income Award (OIA)” means an Approved 102 Award elected and designated by the
Company to qualify under the ordinary income tax treatment in accordance with the provisions
of Section 102(b)(1) of the Ordinance.
	 
	2.10	 	“102 Award” means any Award granted to Employees pursuant to Section 102 of the Ordinance.
	 
	2.11	 	“3(i) Award” means an Award granted pursuant to Section 3(i) of the Ordinance to any person
who is a Non- Employee.
	 
	2.12	 	“Israeli Award Agreement” notwithstanding Section 2.4 of the Plan, for the purpose of this
Appendix, Israeli Award Agreement shall mean a written agreement entered into and signed by
the Company and an Israeli Participant that sets out the terms and conditions of an Award.
	 
	2.13	 	“Non-Employee” means an Israeli Participant who is a consultant, adviser, service provider,
Controlling Shareholder or any other person who is not an Employee.




 









 













	2.14	 	“Ordinance” means the Israeli Income Tax Ordinance [New Version] 1961 as now in effect or as
hereafter amended.
	 
	2.15	 	“Ordinary Share” means an ordinary share of, par value NIS 0.10 of the Company.
	 
	2.16	 	“Section 102” means section 102 of the Ordinance and any regulations, rules, orders or
procedures promulgated thereunder as now in effect or as hereafter amended.
	 
	2.17	 	“Trustee” means any person appointed by the Company to serve as a trustee and approved by
the ITA, all in accordance with the provisions of Section 102(a) of the Ordinance.
	 
	2.18	 	“Unapproved 102 Award” means an Award granted pursuant to Section 102(c) of the Ordinance and
not held in trust by a Trustee.






	3.	 	ISSUANCE OF AWARDS
	 
	3.1	 	Notwithstanding Article V of the Plan and in addition thereto, any Israeli Participants
eligible for participation in the Plan and this Appendix as Israeli Participants shall
include any Employees and/or Non-Employees of the Company or of any of the Company’s
Affiliate; provided, however, that (i) Employees may only be granted 102 Awards; and
(ii) Non-Employees and/or Controlling Shareholders may only be granted 3(i) Awards.
	 
	3.2	 	The Company may designate Awards granted to Employees pursuant to Section 102 as Unapproved
102 Awards or Approved 102 Awards.
	 
	3.3	 	The grant of Approved 102 Awards shall be made under this Appendix, and shall be conditioned
upon the approval of this Appendix by the ITA.
	 
	3.4	 	Approved 102 Awards may either be classified as Capital Gain Awards (“CGAs”) or Ordinary
Income Awards (“OIAs”).




 









 












	 	3.5	 	No Approved 102 Awards may be granted under this Appendix to any eligible Employee, unless
and until, the Company’s election of the type of Approved 102 Awards as CGA or OIA granted to
Employees (the “Election”), is appropriately filed with the ITA. Such Election shall become
effective beginning the first date of grant of an Approved 102 Award under this Appendix and
shall remain in effect until the end of the year following the year during which the Company
first granted Approved 102 Awards. The Election shall obligate the Company to grant only the
type of Approved 102 Award it has elected, and shall apply to all Israeli Participants who
were granted Approved 102 Awards during the period indicated herein, all in accordance with
the provisions of Section 102(g) of the Ordinance. For the avoidance of doubt, such Election
shall not prevent the Company from granting Unapproved 102 Awards simultaneously.
	 
	 	3.6	 	All Approved 102 Awards must be held in trust by a Trustee, as described in Section 4 below.
	 
	 	3.7	 	For the avoidance of doubt, the designation of Unapproved 102 Awards and Approved 102 Awards
shall be subject to the terms and conditions set forth in Section 102.






	4.	 	TRUSTEE






	 	4.1	 	Approved 102 Awards which shall be granted under this Appendix and/or any Ordinary Shares
allocated or issued upon exercise or vesting of such Approved 102 Awards and/or other shares
received subsequently following any realization of rights, including without limitation bonus
shares, shall be allocated or issued to the Trustee and held for the benefit of the Employee
for such period of time as required by Section 102 (the “Holding Period”). In case the
requirements for Approved 102 Awards are not met, then the Approved 102 Awards shall be
regarded as Unapproved 102 Awards, all in accordance with the provisions of Section 102.
	 
	 	4.2	 	Notwithstanding anything to the contrary, the Trustee shall not release any Ordinary Shares
allocated or issued upon exercise or vesting of Approved 102 Awards prior to the full payment
of the Employee’s tax liabilities, if any, arising from Approved 102 Awards which were
granted to him/her and/or any Ordinary Shares allocated or issued upon exercise or vesting of
such Awards.
	 
	 	4.3	 	With respect to any Approved 102 Award, subject to the provisions of Section 102, an Israeli
Participant shall not sell or release from trust any Share received upon the exercise or
vesting of an Approved 102 Award and/or any share received subsequently following any
realization of rights, including without limitation, bonus shares, until the lapse of the
Holding Period required under Section 102. Notwithstanding the above, if any such sale or
release occurs during the Holding Period, the sanctions under Section 102 shall apply to and
shall be borne solely by such Israeli Participant.




 









 












	 	4.4	 	Upon receipt of any Approved 102 Award, the Employee will sign an undertaking to release the
Trustee from any liability in respect of any action or decision duly taken and bona fide
executed in relation with this Appendix, or any Approved 102 Award or Ordinary Share granted
to him thereunder.
	 
	 	5.	 	THE AWARDS






Notwithstanding anything to the contrary in the Plan and in addition thereto, the terms and
conditions upon which the Awards shall be issued and exercised or vest, as applicable, shall be as
specified in the Israeli Award Agreement to be executed pursuant to the Plan and to this Appendix.
Each Israeli Award Agreement shall state, inter alia, the number of Ordinary Shares to which the
Award relates, the type of Award granted thereunder (whether a CGA, OIA, Unapproved 102 Award or a
3(i) Award), and any applicable vesting provisions and exercise price that may be payable.




	6.	 	FAIR MARKET VALUE






Without derogating from Section 2.18 of the Plan and solely for the purpose of determining the tax
liability pursuant to Section 102(b)(3) of the Ordinance, if at the date of grant of any CGA, the
Company’s Shares are listed on any established stock exchange or a national market system or if the
Company’s Shares will be registered for trading within ninety (90) days following the date of grant
of the CGAs, the fair market value of the Ordinary Shares at the date of grant shall be determined
in accordance with the average value of the Company’s Shares on the thirty (30) trading days
preceding the date of grant or on the thirty (30) trading days following the date of registration
for trading, as the case may be.



 









 







	7.	 	EXERCISE OF AWARDS THAT ARE OPTIONS TO PURCHASE ORDINARY SHARES






Awards that represent options to purchase Ordinary Shares shall be exercised by the Israeli
Participant by giving a written or electronic notice to the Company and/or to any third party
designated by the Company (the “Representative”), in such form and method as may be determined by
the Company and, when applicable, by the Trustee, in accordance with the requirements of Section
102, which exercise shall be effective upon receipt of such notice by the Company and/or the
Representative and the payment of the exercise price for the number of Ordinary Shares with
respect to which the Award is being exercised, at the Company’s or the Representative’s principal
office. The notice shall specify the number of Ordinary Shares with respect to which the Award is
being exercised.




	8.	 	ASSIGNABILITY AND SALE OF AWARDS






	8.1.	 	Notwithstanding any other provision of the Plan, no Award or any right with respect thereto,
or purchasable hereunder, whether fully paid or not, shall be assignable, transferable or
given as collateral or any right with respect to them given to any third party whatsoever,
and during the lifetime of the Israeli Participant each and all of such Israeli Participant’s
rights with respect to an Award shall belong only to the Israeli Participant.
	 
	 	 	Any such action made directly or indirectly, for an immediate validation or for a
future one, shall be void.
	 
	8.2	 	As long as Awards or Ordinary Shares purchased or issued hereunder are held by the Trustee
on behalf of the Israeli Participant, all rights of the Israeli Participant over the Shares
are personal, can not be transferred, assigned, pledged or mortgaged, other than by will or
laws of descent and distribution.
	 
	9.	 	INTEGRATION OF SECTION 102 AND TAX ASSESSING OFFICER’S PERMIT
	 
	9.1.	 	With regards to Approved 102 Awards, the provisions of the Plan and/or the Appendix and/or
the Israeli Award Agreement shall be subject to the provisions of Section 102 and the Tax
Assessing Officer’s permit and/or any pre-rulings obtained by the ITA, and the said
provisions, permit and/or pre-rulings shall be deemed an integral part of the Plan and of the
Appendix and of the Israeli Award Agreement.




 









 












	 	9.2.	 	Any provision of Section 102 and/or the said permit and/or pre-rulings which is necessary in
order to receive and/or to keep any tax benefit pursuant to Section 102, which is not
expressly specified in the Plan or the Appendix or the Israeli Award Agreement, shall be
considered binding upon the Company and the Israeli Participants.
	 
	 	10.	 	DIVIDEND






Notwithstanding anything to the contrary in the Plan and solely for the purpose of Awards granted
under this Appendix, with respect to all Ordinary Shares (but excluding, for avoidance of any
doubt, any unexercised Awards) allocated or issued upon the exercise or vesting of Awards
purchased or received, as applicable, by the Israeli Participant and held by the Israeli
Participant or by the Trustee, as the case may be, the Israeli Participant shall be entitled to
receive dividends, if any, in accordance with the quantity of such Shares, subject to the
provisions of the Company’s Articles of Association (and all amendments thereto) and subject to
any applicable taxation on distribution of dividends, and when applicable subject to the
provisions of Section 102.




	 	11.	 	TAX CONSEQUENCES
	 
	 	11.1	 	Notwithstanding anything to the contrary in Article XVI of the Plan and solely for the
purpose of Awards granted under this Appendix, any tax consequences arising from the grant,
exercise or vesting of any Award, from the payment for Ordinary Shares covered thereby or
from any other event or act (of the Company, and/or its Affiliates, and the Trustee or the
Israeli Participant), hereunder, shall be borne solely by the Israeli Participant. The
Company and/or its Affiliates, and/or the Trustee shall withhold taxes according to the
requirements under the applicable laws, rules, and regulations, including withholding taxes
at source. Furthermore, the Israeli Participant shall agree to indemnify the Company and/or
its Affiliates and/or the Trustee and hold them harmless against and from any and all
liability for any such tax or interest or penalty thereon, including without limitation,
liabilities relating to the necessity to withhold, or to have withheld, any such tax from any
payment made to the Israeli Participant.
	 
	 	11.2	 	The Company and/or, when applicable, the Trustee shall not be required to release any share
certificate to a Israeli Participant until all required payments have been fully made.
	 
	 	11.3	 	With respect to Unapproved 102 Award, if the Israeli Participant ceases to be employed by
the Company or any Affiliate, the Israeli Participant shall extend to the Company and/or its
Affiliate a security or guarantee for the payment of tax due at the time of sale of Shares,
all in accordance with the provisions of Section 102 and the rules, regulation or orders
promulgated thereunder.




 









 













	 	12.	 	TERM OF PLAN AND APPENDIX
	 
	 	 	 	Notwithstanding anything to the contrary in Article XV of the Plan and in addition thereto, the
Company shall obtain all approvals for the adoption of this Appendix or for any amendment to this
Appendix as are necessary to comply with (i) any applicable law, including without limitation U.S.
securities laws and the securities laws of any other jurisdiction applicable to Awards granted to
Israeli Participant under this Appendix, (ii) any national securities exchange on which the Shares
are traded, and (iii) any applicable rules and regulations promulgated by the U.S. Securities and
Exchange Commission.
	 
	 	13.	 	GOVERNING LAW & JURISDICTION
	 
	 	 	 	This Appendix shall be governed by and construed and enforced in accordance with the laws of the
State of Israel applicable to contracts made and to be performed therein, without giving effect to
the principles of conflict of laws. The competent courts in Tel Aviv shall have sole jurisdiction
in any matters pertaining to this Appendix.





* * *





 










 





ALLOT COMMUNICATIONS LTD.




APPENDIX B – UNITED STATES




TO THE 2006 INCENTIVE COMPENSATION PLAN 





	1.	 	SPECIAL PROVISIONS FOR U.S. TAXPAYERS






	1.1.	 	This Appendix (the “Appendix”) to the Allot Communications Ltd. 2006 Incentive
Compensation Plan (the “Plan”) was adopted by the Board on October 29, 2006. The
Appendix shall become effective on the Effective Date, provided that the Appendix is
approved by the holders of a majority of the outstanding Shares which are present and voted at
a meeting, or by written consent in lieu of a meeting, which approval must occur within the
period ending twelve (12) months after the date the Appendix is adopted by the Board. The
effectiveness of any Awards granted pursuant to this Appendix prior to such shareholder
approval shall be specifically subject to and conditioned upon, and no such Award shall be
vested or exercisable until, such shareholder approval. If the Appendix is not so approved by
the Company’s shareholders or the Company’s initial public offering of Shares does not occur
prior to December 31, 2006, the Appendix shall not become effective, and shall terminate
immediately, and any Awards previously granted pursuant to the Appendix shall thereupon be
automatically canceled and deemed to have been null and void ab initio.
	 
	1.2.	 	The provisions specified hereunder apply only to persons who are subject to U.S. federal
income tax (any such person, a “U.S. Taxpayer”).
	 
	1.3.	 	This Appendix is to be read as a continuation of the Plan and only applies with respect to
Options and other Awards granted under the Plan to U.S. Taxpayers. The purpose of this
Appendix is to establish certain rules and limitations applicable to Options and other Awards
that may be granted or issued under the Plan to U.S. Taxpayers from time to time, in
compliance with applicable tax, securities and other applicable laws currently in force. For
the avoidance of doubt, this Appendix does not add to or modify the Plan in respect of any
other category of Israeli Participants.
	 
	1.4.	 	The Plan and this Appendix are complimentary to each other and shall be deemed as one.
Subject to section 1.3 above, in any case of contradiction, whether explicit or implied,
between any definitions and/or provisions of this Appendix and the Plan, the provisions set
out in this Appendix shall prevail.






	2.	 	DEFINITIONS




Capitalized terms not otherwise defined herein shall have the meaning assigned to them in the Plan.
The following additional definitions will apply to grants made pursuant to this Appendix,
provided, however, that to the extent that such definitions are provided for in the
Plan and this Appendix, the definitions in this Appendix shall apply to Awards granted to U.S.
Taxpayers:




 









 









	2.1.	 	“Affiliate” means any entity other than the Company and any Subsidiary that is
affiliated with the Company through stock or equity ownership or otherwise and is designated
as an Affiliate for purposes of the Plan by the Committee; provided, however,
that, notwithstanding any other provisions of the Plan to the contrary, for purposes of NQSOs
and SARs, if an individual who otherwise qualifies as an Employee or Non-Employee Director
provides services to such an entity and not to the Company or a Subsidiary, such entity may
only be designated an Affiliate if the Company qualifies as a “service recipient,” within the
meaning of Code Section 409A, with respect to such individual; provided
further that such definition of “service recipient” shall be determined by (i)
applying Code Section 1563(a)(1), (2) and (3), for purposes of determining a controlled group
of corporations under Code Section 414(b), using the language “at least 50 percent” instead of
“at least 80 percent” each place it appears in Code Section 1563(a)(1), (2) and (3), and by
applying Treasury Regulations Section 1.414(c)-2, for purposes of determining trades or
businesses (whether or not incorporated) that are under common control for purposes of Code
Section 414(c), using the language “at least 50 percent” instead of “at least 80 percent” each
place it appears in Treasury Regulations Section 1.414(c)-2, and (ii) where the use of Shares
with respect to the grant of an Option or SAR to such an individual is based upon legitimate
business criteria, by applying Code Section 1563(a)(1), (2) and (3), for purposes of
determining a controlled group of corporations under Code Section 414(b), using the language
“at least 20 percent” instead of “at least 80 percent” at each place it appears in Code
Section 1563(a)(1), (2) and (3), and by applying Treasury Regulations Section 1.414(c)-2, for
purposes of determining trades or businesses (whether or not incorporated) that are under
common control for purposes of Code Section 414(c), using the language “at least 20 percent”
instead of “at least 80 percent” at each place it appears in Treasury Regulations Section
1.414(c)-2. This definition shall have no effect on the definition of Affiliate used with
respect to the definition of Change of Control.
	 
	2.2.	 	“Code” means the Internal Revenue Code of 1986, as it may be amended from time to
time, including rules and regulations promulgated thereunder and successor provisions and
rules and regulations thereto.
	 
	2.3.	 	“Fair Market Value” means the fair market value of the Shares as determined by the
Committee by the reasonable application of a reasonable valuation method, consistently
applied, as the Committee deems appropriate; provided, however, that, with
respect to ISOs, for purposes of Section 6.3 of the Plan and Sections 3.4 and 3.5 of this
Appendix, such fair market value shall be determined subject to Section 422(c)(7) of the Code;
provided further, however, that if the Shares are readily tradable on
an established securities market, Fair Market Value on any date shall be the last sale price
reported for the Shares on such market on such date or, if no sale is reported on such date,
on the last date preceding such date on which a sale was reported. In each case, the
Committee shall determine Fair Market Value in a manner that satisfies the applicable
requirements of Code Section 409A.
	 
	2.4.	 	“Incentive Stock Option” or “ISO” means a right to purchase Shares under the
Plan in accordance with the terms and conditions set forth in Article VI of the Plan and which
is




 









 












designated as an Incentive Stock Option and which is intended to meet the requirements of
Section 422 of the Code.




	2.5.	 	“Nonqualified Stock Option” or “NQSO” means a right to purchase Shares under
the Plan in accordance with the terms and conditions set forth in Article VI of the Plan and
which is not intended to meet the requirements of Section 422 of the Code or otherwise does
not meet such requirements.
	 
	2.6.	 	“Qualified Change of Control” means a Change of Control that qualifies as a change
in the ownership or effective control of the Company, or in the ownership of a substantial
portion of the assets of the Company, within the meaning of Section 409A(a)(2)(A)(v) of the
Code.
	 
	2.7.	 	“Separation from Service” means a Termination that qualifies as a separation from
service within the meaning of Code Section 409A(a)(2)(A)(i).
	 
	2.8.	 	“Subsidiary” means any present or future corporation which is or would be a
“subsidiary corporation” of the Company as the term is defined in Section 424(f) of the Code.






	3.	 	INCENTIVE STOCK OPTIONS






	3.1.	 	Each Award Agreement shall specify whether an Option is intended to be a ISO or an NQSO. To
the extent that any Option granted to a U.S. Taxpayer does not qualify as an ISO (whether
because of its provisions or the time or manner of its exercise or otherwise), such Option, or
the portion thereof which does not so qualify, shall constitute a separate NQSO.
	 
	3.2.	 	No ISO shall be granted to any individual otherwise eligible to participate in the Plan who
is not an Employee of the Company or a Subsidiary on the date of granting of such Option. Any
ISO granted under the Plan shall contain such terms and conditions, consistent with the Plan,
as the Committee may determine to be necessary to qualify such Option as an “incentive stock
option” under Section 422 of the Code. Any ISO granted under the Plan may be modified by the
Committee to disqualify such Option from treatment as an “incentive stock option” under
Section 422 of the Code
	 
	3.3.	 	The total number of Shares that may be delivered pursuant to Incentive Stock Options granted
under the Plan shall be the number of Shares set forth in the third sentence of Section 4.1 of
the Plan, as adjusted pursuant to Section 4.1 of the Plan, but without application of the last
sentence of such section.
	 
	3.4.	 	Notwithstanding any intent to grant ISOs, an Option granted under the Plan will not be
considered an ISO to the extent that it, together with any other “incentive stock options”
(within the meaning of Section 422 of the Code, but without regard to subsection (d) of such
Section) under the Plan and any other “incentive stock option” plans of the Company, any
Subsidiary and any “parent corporation” of the Company within the meaning of Section 424(e) of
the Code, are exercisable for the first time by any Participant during any calendar year with
respect to Shares having an aggregate Fair





 









 











Market Value in excess of $100,000 (or such other limit as may be required by the Code) as
of the time the Option with respect to such Shares is granted. The rule set forth in the
preceding sentence shall be applied by taking Options into account in the order in which
they were granted.




	3.5.	 	No ISO shall be granted to an individual otherwise eligible to participate in the Plan who
owns (within the meaning of Section 424(d) of the Code), at the time the Option is granted,
more than ten percent (10%) of the total combined voting power of all classes of stock of the
Company or a Subsidiary or any “parent corporation” of the Company within the meaning of
Section 424(e) of the Code. This restriction does not apply if at the time such ISO is
granted the Option Price of the ISO is at least 110% of the Fair Market Value of a Share on
the date such ISO is granted, and the ISO by its terms is not exercisable after the expiration
of five years from such date of grant.
	 
	3.6.	 	Notwithstanding any other provision of the Plan to the contrary, with respect to a Tandem SAR
granted in connection with an ISO: (i) the Tandem SAR will expire no later than the
expiration of the related ISO; (ii) the value of the payment with respect to the Tandem SAR
may not exceed the difference between the Fair Market Value of the Shares subject to the
related ISO at the time the Tandem SAR is exercised and the Option Price of the related ISO;
and (iii) the Tandem SAR may be exercised only when the Fair Market Value of the Shares
subject to the ISO exceeds the Option Price of the ISO.
	 
	3.7.	 	No ISO or Tandem SAR granted in connection with an ISO may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent
and distribution or in accordance with Section 11.2 of the Plan. Further, all ISOs and Tandem
SARs granted in connection with ISOs granted to a Participant shall be exercisable during his
or her lifetime only by such Participant.
	 
	3.8.	 	Any changes to ISOs pursuant to Section 4.2 of the Plan shall, unless the Committee
determines otherwise, only be effective to the extent such adjustments or changes do not cause
a “modification” (within the meaning of Section 424(h)(3) of the Code) of such ISOs or
adversely affect the tax status of such ISOs. Any such adjustment with respect to an Award
intended to be an ISO shall be made only to the extent consistent with such intent, unless the
Board or the Committee determines otherwise.
	 
	3.9.	 	The Committee may require a Participant to give prompt written notice to the Company
concerning any disposition of Shares received upon the exercise of an ISO within: (i) two (2)
years from the date of granting such ISO to such Participant or (ii) one (1) year from the
transfer of such Shares to such Participant or (iii) such other period as the Committee may
from time to time determine. The Committee may direct that a Participant with respect to an
ISO undertake in the applicable Award Agreement to give such written notice described in the
preceding sentence, at such time and containing such information as the Committee may
prescribe, and/or that the certificates evidencing Shares acquired by exercise of an ISO refer
to such requirement to give such notice.




 









 












	4.	 	DEFERRED COMPENSATION






	4.1.	 	If any Award would be considered deferred compensation as defined under Code Section 409A and
would fail to meet the requirements of Code Section 409A, then such Award shall be null and
void; provided, however, that the Committee may permit deferrals of
compensation pursuant to the terms of a Participant’s Award Agreement, a separate plan, or a
subplan which (in each case) meets the requirements of Code Section 409A. Additionally, to the
extent any Award is subject to Code Section 409A, notwithstanding any provision herein to the
contrary, this Appendix shall not permit the acceleration of the time or schedule of any
distribution related to such Award, except as permitted by Code Section 409A.
	 
	4.2.	 	Notwithstanding any provisions of the Plan to the contrary, in no event shall any deferral
under Section 18.6 of the Plan be permitted if the Committee determines that such deferral
would result in the imposition of additional tax under Code Section 409A of the Code.
	 
	4.3.	 	The Committee shall not extend the period to exercise an Option or Stock Appreciation Right
to the extent that such extension would cause the Option or Stock Appreciation Right to become
subject to Code Section 409A. An Agreement may provide that the period of time over which an
NQSO may be exercised shall be automatically extended if on the scheduled expiration date of
such Option the Participant’s exercise of such Option would violate applicable securities
laws; provided, however, that during such extended exercise period the Option
may only be exercised to the extent the Option was exercisable in accordance with its terms
immediately prior to such scheduled expiration date; provided further,
however, that such extended exercise period shall end not later than thirty (30) days
after the exercise of such Option first would no longer violate such laws.
	 
	4.4.	 	Unless the Committee provides otherwise in an Award Agreement, each Restricted Stock Unit,
Performance Unit, Performance Share, Cash-Based Award and/or Other Stock-Based Award shall be
paid in full to the Participant no later than the fifteenth day of the third month after the
end of the first calendar year in which such Award is no longer subject to a “substantial risk
of forfeiture” within the meaning of Code Section 409A. If the Committee provides in an Award
Agreement that a Restricted Stock Unit, Performance Unit, Performance Share, Cash-Based Award
or Other Stock-Based Award is intended to be subject to Code Section 409A, the Award Agreement
shall include terms that are intended to satisfy the requirements of Section 409A.
	 
	4.5.	 	No Dividend Equivalents shall relate to Shares underlying an Option or SAR unless such
Dividend Equivalent rights are explicitly set forth as a separate arrangement and do not cause
any such Option or SAR to be subject to Code Section 409A.
	 
	4.6.	 	Notwithstanding any other provisions of the Plan or any Award Agreement to the contrary, if a
Termination that is not a Separation from Service occurs, and payment or distribution of an
Award constituting deferred compensation subject to Code Section 409A would otherwise be made
or commence on the date of such Termination




 









 






	 	 	(pursuant to the Plan, the Award Agreement or otherwise), (i) the vesting of such Award
shall accelerate in accordance with the Plan and the Award Agreement, (ii) such payment or
distribution shall not be made or commence prior to the earliest date on which Code Section
409A permits such payment or distribution to be made or commence without additional taxes or
penalties under Code Section 409A, and (iii) in the event any such payment or distribution
is deferred in accordance with the immediately preceding clause (ii), such payment or
distribution that would have been made prior to the deferred payment or commencement date,
but for Code Section 409A, shall be paid or distributed on such earliest payment or
commencement date, together, if determined by the Committee, with interest at the rate
established by the Committee.
	 
	4.7.	 	Notwithstanding any other provisions of the Plan or any Award Agreement to the contrary, if a
Change of Control that is not a Qualified Change of Control occurs, and payment or
distribution of an Award constituting deferred compensation subject to Section 409A of the
Code would otherwise be made or commence on the date of such Change of Control (pursuant to
the Plan, the Award Agreement or otherwise), (i) the vesting of such Award shall accelerate in
accordance with the Plan and the Award Agreement, (ii) such payment or distribution shall not
be made or commence prior to the earliest date on which Code Section 409A permits such payment
or distribution to be made or commence without additional taxes or penalties under Section
409A, and (iii) in the event any such payment or distribution is deferred in accordance with
the immediately preceding clause (ii), such payment or distribution that would have been made
prior to the deferred payment or commencement date, but for Code Section 409A, shall be paid
or distributed on such earliest payment or commencement date, together, if determined by the
Committee, with interest at the rate established by the Committee.
	 
	4.8.	 	Neither the Board nor the Committee shall take any action that would cause an Award that is
otherwise exempt from Code Section 409A to become subject to Code Section 409A, or that would
cause an Award that is subject to Code Section 409A to fail to satisfy the requirements of
Code Section 409A.
	 
	4.9.	 	Although the Company intends to administer the Plan so that Awards will be exempt from, or
will comply with, the requirements of Code Section 409A, the Company does not warrant that any
Award under the Plan will qualify for favorable tax treatment under Code Section 409A or any
other provision of federal, state, local, or non-United States law. The Company shall not be
liable to any Participant for any tax, interest, or penalties the Participant might owe as a
result of the grant, holding, vesting, exercise, or payment of any Award under the Plan.






	5.	 	SECTION 83(B) ELECTION




If a Participant makes an election under Section 83(b) of the Code to be taxed with respect to an
Award as of the date of transfer of Shares rather than as of the date or dates upon which the
Participant would otherwise be taxable under Section 83(a) of the Code, such Participant shall
deliver a copy of such election to the Company immediately after filing such election with the
United States Internal Revenue Service. Neither the Company nor any Subsidiary or Affiliate


 









 






shall have any liability or responsibility relating to or arising out of the filing or not filing
of any such election or any defects in its construction.





	6.	 	GOVERNING LAW AND JURISDICTION




This Appendix shall be governed by and construed and enforced in accordance with the laws of the
State of Israel applicable to contracts made and to be performed therein, without giving effect to
the principles of conflict of laws. Unless otherwise provided in the Award Agreement, Participants
are deemed to submit to the exclusive jurisdiction and venue of the courts in Tel-Aviv, Israel, to
resolve any and all issues that may arise out of or relate to this Appendix or any related Award
Agreement.



* * *