Document:

S-8

Exhibit 4.2  

SILICOM LTD.  

U.S. SHARE OPTION PLAN
(2000)  

A.     NAME AND
PURPOSE  

         1.       
          Name: This plan, as amended from time to time, shall be known as the
          Silicom Ltd. U.S. Share Option Plan (2000) (the “Plan”). 

         2.       
          Purpose: The purpose and intent of the Plan is to provide incentives to
          officers, consultants and certain other present and future employees and
          directors (each, a “Service Provider”) of Silicom Ltd. (the
          “Company”) and its subsidiaries by providing them with opportunities
          to purchase shares in the Company, pursuant to a plan approved by the Board of
          Directors of the Company (the “Plan”). The Plan is intended to comply
          with the provisions of the United States Internal Revenue Code, as amended from
          time to time, and any successor statute thereto (the “Code”). The
          Options to purchase Ordinary Shares of the Company (the “Options”)
          granted under the Plan may contain such terms as will qualify the Options as
          Incentive Stock Options (“ISO”) within the meaning of Section 422(b)
          of the Code. 

The word “Company” when
used in the Plan with reference to employment or retention of Service Providers, shall
include subsidiaries of the Company. The word “subsidiary”, when used in the
Plan, shall mean any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company if, at the time of the granting of the option,
each of the corporations other than the last corporation in the unbroken chain owns shares
possessing 50 percent or more of the total combined voting power of all classes of shares
in one of the other corporations in such chain. 

B.     GENERAL
TERMS AND CONDITIONS OF THE PLAN  

     3.        Administration:  

		    3.1        The
Plan will be administered by the Board of Directors of the Company, either directly or
upon the recommendation of a share option advisory committee appointed and maintained by
the Board for such purpose (the “Committee”). If appointed, the
Committee will consist of such number of Directors of the Company (not less than two (2)
in number), as may be fixed from time to time by the Board of Directors of the Company.
The Board of Directors shall appoint the members of the Committee, may from time to time
remove members from, or add members to, the Committee and shall fill vacancies in the
Committee however caused. The Board of Directors shall automatically have residual
authority if no Committee is appointed, or if such Committee ceases to operate for any
reason whatsoever. In such events, the term Committee, whenever used herein, shall mean
the Board of Directors of the Company.  

		    3.2        Subject
to the general terms and conditions of this Plan, the Board of Directors shall have sole
authority, in its absolute discretion, to determine, and the Committee, if any, shall
have full power and authority to make recommendations to the Board concerning (i) the
Service Providers to whom Option Awards (as hereinafter defined) shall be granted (“Grantees”),
(ii) the number of shares to be covered by each Option Award, (iii) the time or times at
which the same shall be granted, (iv) the schedule and conditions on which such Option
Awards may be exercised and on which such shares shall be paid for, and/or (v) any other
matter which is necessary or desirable for, or incidental to, the administration of the
Plan. In determining the number of shares covered by the Option Awards to be granted to
each Grantee, the Committee shall consider, among other things, the Grantee’s salary
and the duration of the Grantee’s employment by the Company.  

		    3.3        The
Board may from time to time adopt such rules and regulations for carrying out the Plan as
it may deem best. No member of the Board of Directors or of the Committee, if any, shall
be liable for any action or determination made in good faith with respect to the Plan or
any Option Award granted thereunder.  

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

     4.        Eligible
Grantees:  

		    4.1        NISOs
(as defined in Section 6.3 below) may be granted to employees, Directors or consultants
of the Company or any parent or subsidiary of the Company (“Service Providers”).
ISOs (as defined in Section 6.3 below) may be granted only to employees. Each Option
shall be designated in the Option Agreement as either an ISO or a NISO. However,
notwithstanding such designation, to the extent that the aggregate Fair Market Value (as
hereinafter defined) of the Shares with respect to which ISOs are exercisable for the
first time by the Grantee during any calendar year (under all plans of the Company and
any parent or subsidiary) exceeds $100,000, such Options shall be treated as NISOs. For
purposes of this Section 4.1, ISOs shall be taken into account in the order in which they
were granted.  

		    4.2        Subject
to any restriction imposed by applicable law, Option Awards may be granted to any
officer, key employee or other employee, consultant or contractor of the Company or any
of its subsidiaries, whether or not a Director of the Company or a subsidiary. The grant
of an Option Award to a Grantee hereunder, shall neither entitle such Grantee to
participate, nor disqualify the Grantee from participating, in any other grant of options
pursuant to this Plan or any other share incentive or share option plan of the Company or
any of its subsidiaries.  

		    4.3        The
“Fair Market Value” shall mean the last reported sales price (as expressed in
dollars on the trading day immediately preceding the date of grant) of the Ordinary
Shares on the principal United States national securities exchange on which the Ordinary
Shares are designated for trading, or if the Ordinary Shares are not designated for
trading on a United States national securities exchange, on the National Association of
Securities Dealers Automated Quotations (“NASDAQ”) National Market System or
the SMALLCAP Market System, or, if the Ordinary Shares are not designated for trading on
the NASDAQ National Market System or the SMALLCAP Market System, the average of the
closing bid and asked prices as reported on the NASDAQ System or, if not so reported, as
furnished by the National Quotation Bureau.  

2

         5.       
          Reserved Shares: The Company has reserved 200,000 authorized but unissued
          Ordinary Shares (nominal value NIS 0.01 per share) for purposes of the Plan,
          subject to adjustment as provided in paragraph 11 hereof. Any shares under the
          Plan, in respect of which the right hereunder of a Grantee to purchase the same
          shall for any reason terminate, expire or otherwise cease to exist, shall again
          be available for grant through Option Awards under the Plan. 

         6.       
          Option Awards: 

		    6.1        The
Board in its discretion may award to Grantees options to purchase shares in the Company
available under the Plan (“Option Awards”). Option Awards may be granted at any
time after this Plan has been approved by the Board of Directors of the Company and the
shares reserved for the Plan effectively created. The date of grant of each Option Award
shall be the date specified by the Board at the time such award is made.  

		    6.2        The
instrument granting an Option Award shall state, inter alia, the number of shares covered
thereby, the dates when it may be exercised, the option price, the schedule on which such
shares may be paid for and such other terms and conditions as the Board in its discretion
may prescribe, provided that they are consistent with this Plan.  

		    6.3        Option
Awards granted under the Plan may be of two types: (i) Incentive Stock Options (“ISO”)
and (ii) Non-Incentive Stock Options (“NISO”). ISO means any stock option
intended to be and designated as an “Incentive Stock Option” within Section 422
of the Code; NISO means any stock option that is not an ISO. To the extent that any Stock
Option does not qualify as an ISO, it shall constitute a corporate NISO.  

	 	        Anything
in the Plan to the contrary notwithstanding, no term of this Plan relating to an ISO
shall be interpreted, amended, or altered, nor shall any discretion or authority granted
under the Plan be so exercised, so as to disqualify the Plan under Section 422 of the
Code, or, without the consent of the participant(s) affected, to disqualify any ISO under
such Section 422.  

	 	        Options
granted under the Plan shall be subject to the following terms and conditions and shall
contain such additional terms and conditions, not inconsistent with the terms of the
Plan, as the Committee shall deem appropriate:  

		    (a)        Option
Price. The per share exercise price for the Shares to be issued                upon
exercise of an Option shall be such price as is determined by the Committee
               in accordance with applicable law. Notwithstanding the foregoing, the
option                price per share purchasable under an ISO shall be not less than
100% of the Fair                Market Value of the stock at the time of grant. However,
any ISO granted to any                participant who, at the time the option was granted
owns, in accordance with                Section 424(d) of the Code, more than 10% of the
voting power of all classes of                stock of the Company or of a parent or
subsidiary corporation shall have an                exercise price of no less than 110%
of the Fair Market Value of the Stock at the                time of grant.  

3

		    (b)        Option
Term. The term of each ISO shall be fixed by the Committee, but no                ISO
shall be exercisable more than ten years after the date the ISO is granted.
               However, any ISO granted to any participant who, at the time the option is
               granted owns, in accordance with Section 424(d) of the Code, more than 10%
of                the voting power of all classes of stock of the Company or of a parent
or                subsidiary corporation may not have a term of more than five years. No
option                may be exercised by any person after expiration of the term of the
option.  

		    (c)        Exercisability. ISO’s
shall be exercisable at such time or times and                subject to such terms and
conditions as shall be determined by the Committee at                or after grant. If
the Committee provides, in its discretion, that any ISO is                exercisable
only in installments, the Committee may waive such installment                exercise
provisions at any time at or after grant in whole or in part, based on
               such factors as the Committee shall determine in its sole discretion.  

		    (d)        Non-Transferability
of Options. No stock option (whether an ISO or NISO)                shall be
transferable by the participant otherwise than by will or by the laws                of
descent and distribution, and all stock options shall be exercisable, during
               the participant’s lifetime, only by the participant.  

		    (e)        Incentive
Stock Option Limitations. To the extent required for                “Incentive
Stock Option” status under Section 422 of the Code, the                aggregate
Fair Market Value (determined as of the time of grant) of the stock                with
respect to which ISO’s are exercisable for the first time by the
               participant during any calendar year under the Plan and/or any other stock
               option plan of the Company and its parent or subsidiary, if any, shall not
               exceed $100,000.  

    7.        Option
Prices: Subject to Section 6.3, the price per share covered by                each
Option Award shall be as determined by the Board.  

         8.       
          Exercise of Option Award: 

		    8.1        Option
Awards shall be exercisable pursuant to the terms under which they were awarded, as set
forth in the Option Agreement, and subject to the terms and conditions of this Plan.
Unless the Board provides otherwise, vesting of Options granted hereunder shall be tolled
during any unpaid leave of absence. An Option may not be exercised for a fraction of a
Share.  

		    8.2        An
Option Award, or any part thereof, shall be exercisable by the Grantee’s signing and
returning to the Company at its principal office, a “Notice of Exercise” in
such form and substance as may be prescribed by the Company from time to time from the
person entitled to exercise the Option, and (ii) full payment for the Shares with respect
to which the Option is exercised. The optionee shall sign and deliver to the company,
upon its request, a separate investment representation, certificate or such other
document as may be required by the Company’s counsel. Furthermore, the Company may
place a legend on any share certificate delivered to an optionee to the effect that such
shares were acquired pursuant to such an investment representation without registration
of the shares, if necessary.  

4

		    8.3        Anything
herein to the contrary notwithstanding, but without derogating from the provisions of
paragraph 10 hereof, if any Option Award, or any part thereof, has not been exercised and
the shares covered thereby not paid for within ten (10) years after the date of grant (or
any other period set forth in the instrument granting such Option Award pursuant to
Section 7) (the “Termination Date”), such Option Award, or such part thereof,
and the right to acquire such shares shall terminate, all interests and rights of the
Grantee in and to the same shall expire.  

		    8.4        Payment
for Ordinary Shares purchased under an option granted hereunder shall be made in full
upon exercise of the option, by certified or bank cashier’s check payable to the
order of the Company, or by any other means acceptable to the Company. The Ordinary
Shares purchased shall thereupon be promptly delivered, provided, however, that the
Company may, in its discretion require that an optionee pay to the Company, at the time
of exercise, such amount as the Company deems necessary to satisfy its obligation to with
hold taxes incurred by reason of the exercise or the transfer of shares thereupon. Each
payment for shares under an Option Award shall be in respect of a whole number of shares.  

		    8.5        An
optionee or a transferee of an option shall have no rights as a shareholder with respect
to any share covered by his option until he shall have become the holder of record of
such share, and he shall not be entitled to any dividends or distributions or other
rights in respect of such share for which the record date is prior to the date on which
he shall have become the holder of record thereof.  

         9.       
          Termination of Employment: 

		    9.1        Resignation
and Termination Without Cause. If an Optionee who is a Service Provider resigns, or
is terminated without “cause” (as defined below), the Optionee may exercise the
Option within such period of time as is specified in the Option Agreement to the extent
the Option is vested on the date of cessation of such Optionee’s employment or
service relationship with the Company (the “Cessation Date”), but in no event
later than the Termination Date. In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for a period of three (3) months after the
Cessation Date. All of such Optionee’s rights with respect to the options granted to
him or her under the Plan that are not vested at the Cessation Date shall terminate and
the underlying Shares shall revert to the Plan immediately upon the Cessation Date. If
within three (3) months of the Cessation Date, such Optionee does not exercise his or her
option awards, all of such Optionee’s rights with respect to any options that have
not been exercised shall terminate and the underlying Shares shall revert to the Plan  

		    9.2        Termination
For Cause. If an Optionee who is a Service Provider is terminated for “cause” (as
defined below), his options shall terminate immediately upon the date of such termination
for cause. All of such Optionee’s rights with respect to the options granted to him
or her under the Plan, whether vested or unvested at the Cessation Date, shall terminate
and the underlying Shares shall revert to the Plan immediately upon the Cessation Date.  

5

		    9.3        Death,
Disability. If an Optionee ceases to be a Service Provider as a result of the Optionee’s
disability, or dies while a Service Provider, the Optionee (or in the case of death, the
Optionee’s estate or a person who acquires the right to exercise the Option by
bequest or inheritance) may exercise the Option within such period of time as is
specified in the Option Agreement to the extent the Option is vested on the date of
disability or death (but in no event later than the Termination Date). In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable for twelve
(12) months following the Optionee’s date of disability or death. If, on the date of
disability or death, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan. If, after
the date of disability or death, the Optionee (or his estate or a person who acquires the
right to exercise the Option by bequest or inheritance) does not exercise the Option
within the time specified in the Option Agreement or this Plan, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan. “Disability” shall
mean a physical or mental infirmity which impairs the Optionee’s ability to
substantially perform the duties of employment for a period of at least ninety (90)
consecutive days.  

		    9.4        Deemed
Cessation. In the event of resignation or discharge of an Optionee from the employ of
the Company or a subsidiary, such Optionee’s employment or termination of services
shall, for the purposes of this Article, be deemed to have ceased upon the earlier of (a)
the delivery to the employee of notice of discharge or the delivery to the Company or the
subsidiary of the letter of resignation, as the case may be, or (b) the effective date of
such resignation or discharge.  

		    9.5        “Cause”.
For the purposes of this Plan, “cause” shall mean reasons which, as
determined by the Company in its discretion, amount to untrustworthiness, bad faith or
fraud.  

         10.       
          Adjustments: Upon the happening of any of the following described events,
          a Grantee’s rights to purchase shares under the Plan shall be adjusted as
          hereinafter provided: 

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

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		     10.2        Merger,
Acquisition, or Asset Sale.  

     (a)    
          In the event of a merger or consolidation of the Company with or into another
          corporation resulting in such other corporation being the surviving entity or
          resulting in the Company being the surviving entity and any other person or
          entity owning fifty percent (50%) or more of the outstanding voting power of the
          Company’s securities, an acquisition of all or substantially all of the
          shares of the Company, or the sale of substantially all of the assets of the
          Company (each such event, a “Transaction”), each outstanding Option
          shall be assumed or an equivalent option or right shall be substituted by the
          successor corporation or a parent or subsidiary of the successor corporation. 

     (b)    
          For the purposes of this sub-section 10.2, the Option shall be considered
          assumed if, following a Transaction, the option or right confers the right to
          purchase or receive, for each share subject to the Option immediately prior to
          the Transaction, the consideration (whether stock, cash, or other securities or
          property) received in the Transaction by holders of Ordinary Shares for each
          share held on the effective date of the Transaction (and if holders were offered
          a choice of consideration, the type of consideration chosen by the holders of a
          majority of the outstanding Shares); provided, however, that if such
          consideration received in the Transaction is not solely common stock of the
          successor corporation or its parent, the Board may, with the consent of the
          successor corporation, provide for the consideration to be received upon the
          exercise of the Option, for each share subject to the Option, to be solely
          ordinary shares of the successor corporation or its parent equal in fair market
          value to the per share consideration received by holders of Ordinary Shares in
          the Transaction. 

		    10.3        The
foregoing adjustments and the manner of application of the foregoing provisions shall be
determined by the Board in its sole discretion. Any such adjustment may provide for the
elimination of any fractional share which might otherwise become subject to an option.  

         11.       
          Assignability and Sale of Shares: No option shall be transferable except
          by will or the laws of descent and distribution. During the lifetime of the
          optionee, the option shall be exercisable only by him. 

         12.       
          Term and Amendment of the Plan: 

		    12.1        The
Plan was adopted by the Board of Directors of the Company on October 24, 2000, and shall
expire on October 24, 2010 (except as to Option Awards outstanding on that date).  

		    12.2        The
Board may, without the consent of the Company’s shareholders or optionees under the
Plan, at any time terminate the Plan entirely and at any time, from time to time, amend
or modify the Plan, provided that no such action shall adversely affect optionees
theretofore granted hereunder without the optionee’s consent, and provided further
that no such action by the Board, without approval of the shareholders, may (a) increase
the total number of Ordinary Shares which may be purchased pursuant to options granted
under the Plan; (b) expand the persons eligible to receive options under the Plan; (c)
extend the maximum term of options granted hereunder; or (d) extend the term of the Plan.  

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         13.       
          Continuance of Employment: Neither the Plan nor the Agreement shall
          impose any obligation on the Company or a subsidiary thereof to continue any
          Grantee in its employ or service, and nothing in the Plan or in any Option Award
          granted pursuant thereto shall confer upon any Grantee any right to continue in
          the employ or service of the Company or a subsidiary thereof, or restrict the
          right of the Company or a subsidiary thereof, to terminate such employment or
          service at any time. 

         14.       
          Governing Law: The Plan and all instruments issued thereunder or in
          connection therewith, shall be governed by, and interpreted in accordance with,
          the laws of the State of Israel, subject to the provisions of the applicable
          United States securities laws. 

         15.       
          Application of Funds: The proceeds received by the Company from the sale
          of shares pursuant to Option Awards granted under the Plan will be used for
          general corporate purposes of the Company or any subsidiary thereof. 

         16.       
          Tax Consequences: Any tax consequences arising from the grant or exercise
          of any Option Award, from the payment for shares covered thereby or from any
          other event or act (of the Company, the subsidiary that employs or engages the
          services of the Grantee, or the Grantee) hereunder, shall be borne solely by the
          Grantee. Furthermore, the Grantee shall agree to indemnify the Company, the
          subsidiary that employs or engages the services of the Grantee, 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 Grantee. Except as otherwise required by law, the Company shall not be
          obligated to exercise any Options on behalf of a Grantee until all tax
          consequences arising from the exercise of such Options are resolved in a manner
          reasonably acceptable to the Company. The Company or any of its subsidiaries may
          make such provisions and take such steps as it may deem necessary or appropriate
          for the withholding of all taxes required by law to be withheld with respect to
          Options granted under the Plan and the exercise thereof, including, but not
          limited, to (i) deducting the amount so required to be withheld from any other
          amount then or thereafter payable to a Grantee, and/or (ii) requiring a Grantee
          to pay to the Company or any of its subsidiaries the amount so required to be
          withheld as a condition of the issuance, delivery, distribution or release of
          any Shares. 

         17.       
          Conditions Upon Issuance of Shares. 

		    17.1        Legal
Compliance. Shares shall not be issued pursuant to the exercise of an Option unless
the exercise of such Option and the issuance and delivery of such Shares shall comply
with applicable laws and shall be further subject to the approval of counsel for the
Company with respect to such compliance.  

		    17.2        Investment
Representations. As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for the
Company, such a representation is required. The certificates for such Shares may include
any legend which the Company deems appropriate to reflect any restrictions on transfer or
any other restrictions required by applicable law or this Plan. All certificates for
Shares issued pursuant to the Plan shall be subject to such stop transfer orders and
other restrictions as the Company may deem advisable under the rules, regulations and
other requirements of the Securities and Exchange Commission, any stock exchange or
interdealer quotation system upon which the Shares are then listed or quoted, and any
applicable federal or state securities laws.  

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         18.       
          Inability to Obtain Authority. The inability of the Company to obtain
          authority from or comply with the rules and regulations of any regulatory body
          having jurisdiction or any applicable laws, which authority or compliance is
          deemed by the Company’s counsel to be necessary to the lawful issuance and
          sale of any Shares hereunder, shall relieve the Company of any liability in
          respect of the failure to issue or sell such Shares as to which such requisite
          authority or compliance shall not have been obtained. 

         19.       
          Reservation of Shares. The Company, during the term of this Plan, shall
          at all times reserve and keep available such number of Shares as shall be
          sufficient to satisfy the requirements of the Plan. 

         20.       
          Stockholder Approval. The Plan shall be subject to approval by the
          stockholders of the Company within twelve (12) months after the date the Plan is
          adopted. Such stockholder approval shall be obtained in the degree and manner
          required under applicable laws. 

9S-8

Exhibit 4.3  

SILICOM LTD. 

SHARE OPTION PLAN
(2004) 

	1.  	NAME.  

This plan, as amended from time to
time, shall be known as the Silicom Ltd. Share Option Plan (2004) (the “Plan”). 

	2.  	PURPOSE
AND DEFINITIONS.  

	2.1 	The
purposes of this Plan are to attract and retain the best available personnel for
positions of substantial responsibility, to provide additional incentive to employees,
directors, office holders and consultants of Silicom Ltd. (the “Company”) and
of any Subsidiary (as defined below), and to promote the Company’s business by
providing such individuals with opportunities to receive options (the “Options”)
to purchase the Company’s Ordinary Shares, nominal value NIS 0.01 (the “Shares”)
pursuant to the Plan. 

	2.2 	Options
granted pursuant to this Plan to individuals or entities that are subject to Israeli
taxation may be granted (a) pursuant to Section 102 of the Ordinance (as defined below)
and shall be held for the benefit of the Grantees and (b) pursuant to Section 3(i) of the
Ordinance. 

	2.3 	In
the event that Options shall be granted under this Plan to Service Providers (as defined
below) who are not deemed to be residents of Israel for Israeli tax law purposes,
specific terms and conditions for such grants shall be set forth in an appendix to this
Plan, approved by the Board of Directors of the Company (the “Board”). 

	2.4  	Definitions.
As used herein, the following definitions shall apply: 

	  	(a)       
“102
Capital Gains Track Grant” means a 102 Trustee Grant elected and
                    designated to qualify under the capital gains tax treatment in
accordance with                     the provisions of Section 102(b)(2) of the Ordinance.  

	  	(b)       
“102
Ordinary Income Track Grant” means a 102 Trustee Grant elected
                    and designated to qualify under the ordinary income tax treatment in
accordance                     with the provisions of Section 102(b)(1) of the Ordinance.  

	  	(c)       
“102
Trustee Grant” means Options granted pursuant to Section 102(b)
                    of the Ordinance and held in trust by a Trustee for the benefit of
the Grantee,                     and includes both 102 Capital Gains Track Grants and 102
Ordinary Income Track                     Grants.  

	  	(d)       
“3(i)
Grant” means any Options granted pursuant to Section 3(i) of                     the
Ordinance to any person who is not an Eligible 102 Grantee.  

	 	(e)        
“Cause” means
any of the following: (i) the                     Grantee’s embezzlement of any
Company property or asset, or any theft or                     intentional destruction of
property, whether or not criminal action is brought                     against the
Grantee; (ii) the Grantee’s negligently performing or                     neglecting
his responsibilities as Service Provider, or failure or inability to
                    perform any reasonable assigned duties, when such failure may harm
the                     Company’s business or commercial relationships, after
written notice from                     the Company of, and a reasonable opportunity to
cure, such failure or inability;                     (iii) any material breach of
the Grantee of any employment agreement                     between the Grantee and the
Company, which breach is not cured after written                     notice from the
Company of, and a reasonable opportunity to cure, such material
                    breach; or (iv) the Grantee’s conviction of any criminal
act which                     involves moral turpitude, or the Grantee’s concealment
of such conviction                     prior to commencement of his or her relationship
as Service Provider; (v) the                     Grantee’s breach of Company
regulations which breach is not cured after                     written notice from the
Company of, and a reasonable opportunity to cure, such                     breach; or
(vi) Grantee’s destruction of Company materials, appliances or
                    machines or reduction of yield or production. For purposes of the
definition of                     Cause, the “Company” shall also refer to a
Subsidiary for which a                     Grantee is employed or provides services.  

	  	(f)       
“Cessation” means
termination of the Service Provider’s                     relationship with the
Company. In the event of Cessation of a Grantee’s                     relationship
with the Company, such Grantee’s relationship with the Company
                    shall be deemed to have ceased upon the delivery to the Grantee of
notice of                     discharge or the delivery to the Company of the letter of
resignation, as the                     case may be, irrespective of the effective date
of such resignation or                     discharge.  

	  	(g)       
“Companies
Law” means the Israeli Companies Law 5759-1999, as amended                from time
to time.  

	  	(h)       
“Consultant” means
any person who is engaged by the Company or by a                     Subsidiary to render
consulting, advisory or other services to such entity who                     is not an
Employee.  

	  	(i)       
“Controlling
Shareholder” means, pursuant to Section 32(9) of the                     Ordinance,
an employee who prior to the grant or as a result of the exercise of
                    any Option, holds or would hold, directly or indirectly, in his name
or with a                     relative (as defined in the Ordinance) either: (i) 10% of
the outstanding shares                     of the Company, (ii) 10% of the voting power
of the Company, (iii) the right to                     hold or purchase 10% of the
outstanding equity or voting power, (iv) the right                     to obtain 10% of
the “profit” of the Company (as defined in the                     Ordinance),
or (v) the right to appoint a director of the Company, or as such
                    definition is amended or replaced from time to time.  

	  	(j)       
“Eligible
102 Grantee” means an Employee deemed an Israeli resident                     for
taxation purposes, who is not a Controlling Shareholder of the Company.  

	  	(k)       
“Employee” means
an employee, officer or director of the Company or                     of a Subsidiary.  

	 	(l)
       “Grantee” means
a person to whom Options shall be granted pursuant to                     this Plan.  

2

	  	(m)       
“Non-Trustee
Grant” means an Option granted pursuant to Section                     102(c) of the
Ordinance to an Eligible 102 Grantee and not held in trust by a
                    Trustee.  

	  	(n)       
“Ordinance” means
the Israeli Income Tax Ordinance (New Version)                     1961, as amended from
time to time and, most recently, by the Law Amending the                     Income Tax
Ordinance (Number 132) 2002 and any regulations, rules, orders,
                    guidelines, interpretations or procedures promulgated thereunder by
the Israeli                     Income Tax Authorities (the “ITA”), including
but not limited to the                     Income Tax Rules (Tax Benefits in Stock
Issuance to Employees) 5763-2003 (the                     “Rules”).  

	  	(o)       
“Required
Holding Period” means the requisite period prescribed by the
               Ordinance (including the Rules) or such other period as may be required by
the                ITA, during which Options granted by the Company and/or the underlying
Shares                from a 102 Trustee Grant must be held by the Trustee for the
benefit of the                person to whom they were granted subject to the applicable
laws.  

	  	(p)       
“Service
Provider” means an Employee or Consultant.  

	  	(q)       
“Subsidiary” means
(i) any entity that, directly or indirectly, is                     controlled by the
Company or (ii) any entity in which the Company has a                     significant
equity interest, in either case as determined by the Board.  

	  	(r)       
“Trustee” means
a person or entity designated by the Company to serve                     as a trustee
and who is approved by the ITA in accordance with the provisions of
                    the Ordinance.  

	3.  	ADMINISTRATION.  

	3.1 	The
Plan will be administered by the Board. The Board may, in its discretion, appoint and
maintain a Share Option Committee (the “Committee”) to administer the Plan to
the extent permissible under applicable law as may be amended from time to time, which
will consist of such number of directors of the Company (not less than two (2) in
number), as may be determined from time to time by the Board. The Board shall from time
to time add, appoint or remove members of the Committee and shall fill vacancies in the
Committee however caused. 

	3.2 	The
Committee shall select one of its members as its Chairman and shall hold its meetings at
such times and places as it shall determine. Actions at a meeting of the Committee at
which a majority of its members are present or acts approved in writing by all members of
the Committee, shall be the valid acts of the Committee. The Committee may appoint a
secretary, who shall keep records of its meetings and shall make such rules and
regulations for the conduct of its business as it shall deem advisable. 

	3.3 	 Subject
to the general terms and conditions of this Plan, the Board shall have full authority in
its discretion, from time to time and at any time, to determine (i) the identity of the
Grantees, (ii) the number of Shares to be covered by each Option, (iii) the time or times
at which Options shall be granted, (iv) the schedule and conditions on which Options may
be exercised and on which Shares shall be paid for including but not limited to vesting
terms, acceleration terms, restrictions and transferability, and (v) any other matter
which is necessary or desirable for, or incidental to, the administration of the Plan
including the interpretation of the Plan. The Board may, in its sole discretion, delegate
some or all of the powers listed above to the Committee to the extent permitted by
applicable law. The Board may from time to time adopt such rules and regulations for
carrying out the Plan as it may deem appropriate. Grants of Options shall be made
pursuant to written notification to Grantees setting out the terms of the grant, all as
further set forth below. 

3

	3.4 	 In
the event that the Board appoints a Committee, the Committee shall not be entitled to
grant Options to the Grantees unless permitted to do so under applicable law. However, in
the event that the Committee is authorized to do so by the Board, it may issue Shares
underlying Options which have been granted by the Board and duly exercised pursuant to
the provisions hereof, in accordance with Section 112(a)(5) of the Companies Law. 

	3.5 	No
member of the Board or of the Committee shall be liable for any action or determination
made in good faith with respect to the Plan or any Option granted thereunder. Each member
of the Board or the Committee shall be indemnified and held harmless by the Company
against any cost or expense (including counsel fees) reasonably incurred by him, or any
liability (including any sum paid in settlement of a claim with the approval of the
Company) arising out of any act or omission to act in connection with the Plan unless
arising out of such member’s own fraud or bad faith, to the extent permitted by
applicable law. Such indemnification shall be in in accordance with the rights of
indemnification the member may have as a director or otherwise under the Company’s
Articles of Association, any agreement, any vote of stockholders or disinterested
directors, insurance policy or otherwise. 

	3.6 	The
interpretation and construction by the Board of any provision of the Plan or of any
Option thereunder shall be final and conclusive unless otherwise determined by the Board.
In the event that the Board appoints a Committee, the interpretation and construction by
the Committee of any provision of the Plan or of any Option thereunder shall be final and
conclusive unless otherwise determined by the Board. 

	3.7 	Any
additional costs associated in the administration and implementation of this Plan
including but not limited to the costs involved in retaining a trustee, broker or any
other third party desired by the Company to facilitate the transactions contemplated
under this Plan, shall be borne solely by the Grantee unless determined otherwise by the
Board or by the Committee. 

	4.  	ELIGIBLE
GRANTEES.  

	4.1 	No
Option may be granted pursuant to this Plan to any director of the Company at the time of
the grant, unless such grant is approved in the manner prescribed for the approval of
compensation of directors under the Companies Law. 

	4.2 	 Subject
to the limitation set forth in Section 4.1 above and any restriction imposed by
applicable law, Options may be granted to any Service Provider.The grant of an
Option to a Grantee hereunder shall neither entitle such Grantee to participate, nor
disqualify such Grantee from participating, in any other grant of Options pursuant to
this Plan or any other share incentive or share option plan of the Company. 

4

	4.3 	 102
Trustee Grants may be granted to Eligible 102 Grantees only. Eligible 102 Grantees may
receive only 102 Trustee Grants or Non-Trustee Grants. Grantees who are not Eligible 102
Grantees may only be granted 3(i) Options under this Plan. 

	4.4 	 Subject
to the terms of the Plan, the Option Agreement (as defined below) and/or any other
documents evidencing the Options granted pursuant to this Plan shall indicate whether the
grant is a 102 Trustee Grant, a Non-Trustee Grant or a 3(i) Grant; and, if the grant is a
102 Trustee Grant, whether it is a 102 Capital Gains Track Grant or a 102 Ordinary Income
Track Grant. 

	5.  	TERMS
AND CONDITIONS OF 102 TRUSTEE OPTIONS  

	5.1 	Unless
determined otherwise by the Board and to the extent permitted by applicable law, each 102
Trustee Grant will be deemed granted on the date stated in a written notice by the
Company, provided that on or before such date (i) the Company has provided notification
to the Trustee and (ii) the Grantee has signed all documents required pursuant to this
Section 5. 

	5.2 	Each
102 Trustee Grant made to a Grantee and each certificate for Shares acquired pursuant to
the exercise thereof shall be issued to and registered in the name of a Trustee and shall
be held in trust for the benefit of the Grantee for the Required Holding Period until the
date in which the Grantee will decide to sell the Shares or release the Shares from the
Trustee subject to the provisions of the Ordinance. After termination of the Required
Holding Period, the Trustee may release such Option and any such Shares acquired pursuant
to the exercise thereof, provided that (i) the Trustee has received an acknowledgment
from the ITA that the Grantee has paid any applicable tax due pursuant to the Ordinance
or (ii) the Trustee and/or the Company and/or its Subsidiary has withheld any applicable
tax due pursuant to the Ordinance. The Trustee shall at no time release any 102 Trustee
Grant or Shares issued upon exercise of such 102 Trustee Grant, prior to the full payment
of the Grantee’s tax liabilities. 

	5.3 	Each
102 Trustee Grant (whether a 102 Capital Gains Track Grant or a 102 Regular Income Track
Grant, as applicable) shall be subject to the relevant terms of Section 102 of the
Ordinance, which shall be deemed an integral part of the 102 Trustee Grant and which
shall prevail over any term contained in the Plan or any Option Agreement which is not
consistent therewith. Any provision of the Ordinance and any approval issued by the
Income Tax Commissioner not expressly specified in this Plan or in an Option Agreement,
that are necessary to receive or maintain any tax benefit pursuant to the Ordinance,
shall be binding on the Grantee. Any 102 Trustee Grant made hereunder shall comply with
the Ordinance and the terms and conditions of any trust agreement entered into between
the Company and the Trustee. For avoidance of doubt, it is reiterated that compliance
with the Ordinance specifically includes compliance with the Rules. Further, the Grantee
agrees to execute any and all documents which the Company and/or the Trustee may
reasonably determine to be necessary in order to comply with the Ordinance and,
particularly, the Rules including but not limited to the entering into of a written
undertaking to the Company stating among other things (a) the type of 102 Trustee Grant
held or to be held by the Trustee for the benefit of the Grantee, (b) that the provisions
of the Ordinance will apply to the 102 Trustee Grant and (c) that there are restrictions
on the sale of the Shares (or release of Shares by the Trustee). 

5

	5.4 	With
respect to each 102 Trustee Grant and subject to the terms of the Ordinance, during the
Required Holding Period, the Grantee shall not require the Trustee to release or sell the
Shares including with respect to other shares received subsequently following any
realization of rights derived from the Shares (including stock dividends), to the Grantee
or to a third party, unless permitted to do so by applicable law. Notwithstanding the
foregoing and subject to applicable law, the Trustee may, pursuant to a written request,
release and transfer such Shares to the Grantee or to a designated third party, provided
that both of the following conditions have been fulfilled prior to such transfer: (i)
payment has been rendered to the tax authorities of all taxes required to be paid upon
the release and transfer of the Shares, and confirmation of such payment has been
received by the Trustee and (ii) the Trustee has received written confirmation from the
Company that all requirements for such release and transfer have been fulfilled according
to the terms of the Company’s corporate documents, the Plan, the Option Agreement
and any applicable law. Notwithstanding anything herein to the contrary, any such sale or
release during the Required Holding Period by the Grantee will result in adverse tax
ramifications under the Ordinance and the Rules and such consequences shall be borne
solely by the Grantee. 

	5.5 	Each
Grantee shall be entitled to receive dividends declared, if applicable, in accordance
with the number of Shares allocated or acquired pursuant to the exercise of a 102 Trustee
Grant, subject to any applicable taxation on distribution of dividends and when
applicable subject to the provisions of the Ordinance. In the event that the dividend is
paid in the form of Shares or such other form of equity, such Shares or equity must be
first transferred to the Trustee and shall be subject to the provisions of the Ordinance
including but not limited to the application of the Required Holding Period. 

	5.6 	Notwithstanding
anything herein to the contrary, if an Option granted as a 102 Trustee Grant is exercised
by the Grantee during the Required Holding Period, the Shares issued upon such exercise
shall be issued in the name of the Trustee for the benefit of the Grantee. If such an
Option is exercised after the Required Holding Period ends, the Shares issued upon such
exercise shall, at the election of the Grantee, either (i) be issued in the name of the
Trustee or (ii) be transferred to the Grantee directly, provided that the Grantee first
complies with all applicable provisions of the Plan, the Option Agreement and the
Ordinance including with respect to the payment of all applicable taxes owed. 

	5.7 	Notwithstanding
anything herein to the contrary, in the case of a Non-Trustee Grant, if the Grantee
ceases to be employed by the Company or the Subsidiary, as applicable, while such Option
is still valid, the Grantee shall be obligated to deliver to the Company or the
Subsidiary, as applicable, a security or guarantee for the payment of tax due at the time
of the sale of the Shares, all in accordance with the provisions of the Ordinance. 

6

	6.  	GRANTS
MADE UNDER SECTION 3(I) OF THE ORDINANCE  

        The
Board may choose to deposit Options from a 3(i) Grant with a trustee. In such event, the
trustee shall hold such Options in trust, until exercised by the Grantee, pursuant to the
Company’s instructions from time to time as set forth in a trust agreement which will
be entered into between the Company and the trustee. If determined by the Board, the
trustee shall be responsible for withholding any taxes to which a Grantee may become
liable upon the exercise of Options. 

	7.  	RESERVED
SHARES.  

	7.1 	Subject
to adjustment from time to time as provided below (including but not limited to
adjustments made pursuant to Section 12 below), five hundred eighty two thousand seven
hundred and fifty (582,750) Shares shall be available for issuance under the Plan for as
long as the Plan remains in effect. Shares issued under the Plan shall be drawn from
authorized and unissued shares of the Company. Until termination of the Plan the Company
shall at all times reserve a sufficient number of Shares to meet the requirements of the
Plan. Should any Option for any reason expire or be canceled prior to its exercise or
relinquishment in full, the Shares subject to such Option shall again be made available
for issuance under the Plan. 

	7.2 	No
fractional shares shall be issued or delivered pursuant to the Plan, and the Committee
shall determine whether cash, other securities or other property shall be paid or
transferred in lieu of any fractional shares, or whether such fractional shares or any
rights thereto shall be canceled, terminated or otherwise eliminated. 

	8.  	GRANT
OF OPTIONS.  

	8.1 	The
Board and/or the Committee, as applicable, in its discretion may award to Grantees,
Options to purchase Shares in the Company available under the Plan. Subject to applicable
law, the date of grant of each Option shall be the date specified by the Board and/or the
Committee, as applicable, at the time such award is made. 

	8.2 	The
instrument/written document governing the granting and specific terms of an Option under
this Plan as determined by the Board and/or the Committee (the “Option Agreement”),
shall state, inter alia, the number of Shares at the type of option granted covered
thereby, the dates when it may be exercised, the exercise price per Share subject to the
Option, the schedule on which such Shares may be paid for and such other terms and
conditions as the Board and/or the Committee, as applicable, in its discretion may
prescribe, provided that they are consistent with this Plan. 

	9.  	OPTION
PRICES.  

	9.1 	The
exercise price of an Option shall be determined by the Board or by the Committee, in
either case in its sole and absolute discretion in accordance with applicable law,
subject to any guidelines as may be determined by the Board from time to time, and may be
greater than, less than or equal to the “Fair Market Value” (as defined below)
of each Share. Notwithstanding the foregoing, the exercise price shall not be less than
the nominal value of each Share. Each Option Agreement will contain the exercise price
determined for each Grantee. 

7

	 9.2  	"Fair
Market Value"  means,  as of any date,  the value of the Shares  determined as follows: 

		    (i)        If
the Shares are listed on any established stock exchange or a national market
          system, the Fair Market Value shall be the closing sales price for such stock
          (or the closing bid, if no sales were reported) as quoted on such exchange or
          system for the last market trading day prior to the time of determination, as
          reported in The Wall Street Journal or such other source as the Board or
          the Committee deems reliable;  

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

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

	10.  	EXERCISE
OF OPTION.  

	10.1 	Options
shall be exercisable pursuant to the terms under which they were awarded and subject to
the terms and conditions of this Plan, the Option Agreement and the Ordinance. 

	10.2 	An
Option, or any part thereof, shall be exercisable by the Grantee’s signing and
returning to the Company at its principal office (and to the Trustee, if applicable), a
“Notice of Exercise” in such form and substance as may be prescribed by the
Board or by the Committee from time to time, together with full payment for the Shares
underlying such Option. 

	10.3 	The
exercise price shall be payable upon the exercise of the Option in a form satisfactory to
the Board or by the Committee and subject to limitations set forth by applicable law,
including without limitation, cash-less exercise (including on a net-issuance basis
without any cost to the Grantee), by cash or by check. Subject to applicable law, the
Board or the Committee shall have the authority to postpone the date of payment on such
terms as it may determine. 

	10.4 	Until
the Shares are issued (as evidenced by the appropriate entry in the official share
register of the Company or of a duly authorized transfer agent of the Company) no right
to vote or right to receive dividends or any other rights as a shareholder shall exist
with respect to such Shares, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such Shares promptly after the Option is exercised.
No adjustment will be made for a dividend or other right the record date for which is
prior to the date the Shares are issued, except as provided in Section 12 of the Plan. 

	10.5 	If
the Company’s Shares are publicly traded, payment for the Shares underlying an
Option may be made all or in part by the delivery (on a form prescribed by the Company)
of an irrevocable direction to a securities broker approved by the Company to sell Shares
and to deliver all or part of the sales proceeds to the Company as payment of the
exercise price (or the relevant portion thereof, as applicable) plus any withholding
taxes and related fees. 

8

	11.  	TERMINATION
OF RELATIONSHIP AS SERVICE PROVIDER.  

	11.1 	Resignation
and Termination Without Cause. Unless otherwise stated in the Option Agreement, if a
Grantee resigns, or is terminated without cause from his or her relationship as a Service
Provider, such Grantee may, at any time prior to the expiration of the term of the Option
Agreement, exercise any of his or her Options that are vested at the date of Cessation
for a period of three (3) months from the Cessation. At the end of such three (3) month
period, the Grantee’s rights shall terminate with respect to any Options vested on
the date Cessation and not exercised, and the underlying Shares shall revert to the Plan.
All of such Grantee’s rights with respect to the Options granted to him or her under
the Plan that are not vested at the date of Cessation, shall terminate and the underlying
Shares shall revert to the Plan immediately upon the Cessation. 

	11.2 	Termination
For Cause. Unless otherwise stated in the Option Agreement, if a Grantee’s
relationship as a Service Provider is terminated for Cause, such Grantee shall no longer
have the right to exercise his or her Options following the Cessation. All of such Grantee’s
rights with respect to the Options granted to him or her under the Plan as of the date of
Cessation shall terminate and the underlying Shares shall revert to the Plan immediately
upon the Cessation. 

	11.3 	Death
and Disability. Unless otherwise stated in the Option Agreement, if a Grantee should
die, or if a Grantee ceases to serve as a Service Provider by reason of such Grantee
becoming incapacitated while a Service Provider as a result of an accident or illness or
other cause which is approved by the Board or by Committee, such Grantee (or such Grantee’s
successors, as the case may be) may, for a period of one (1) year from the Cessation,
exercise any of his or her Options that are vested at the date of Cessation. At the end
of such one (1) year period, the Grantee’s rights shall terminate with respect to
any Options vested on the date Cessation and not exercised, and the underlying Shares
shall revert to the Plan. All of such Grantee’s rights with respect to the Options
granted to him or her under the Plan that are not vested at the date of Cessation, shall
terminate and the underlying Shares shall revert to the Plan immediately upon the
Cessation 

	11.4 	Continuation
of Relationship. A Service Provider’s relationship with the Company shall not be
deemed to have ceased (i) with respect to an Employee, in the event of any leave of
absence approved by the Company (or by the subsidiary that employs the Grantee) or (ii)
in the event of employee transfers between the Company and a Subsidiary. 

9

	12.  	ADJUSTMENTS.  

        Upon
the occurrence of any of the following described events, a Grantee’s rights to
purchase Shares under the Plan shall be adjusted as hereinafter provided: 

	12.1  	Changes
in Capitalization.  

        Subject
to any required action by the shareholders of the Company and to the consent of the Board,
the number of Shares covered by each outstanding Option, the number of Shares which have
been reserved for issuance under the Plan but as to which no Options have yet been granted
or which have been returned to the Plan upon cancellation or expiration of an Option, as
well as the price per share of Shares covered by each such outstanding Option, may be
proportionately adjusted for any increase or decrease in the number of issued Shares
resulting from a share split, reverse share split, bonus shares (stock dividend),
combination or reclassification of the Shares, or any other increase or decrease in the
number of issued Shares effected for nominal or for no consideration to the Company. Such
adjustment shall be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the Company of
shares of any class, or securities convertible into shares of any class, shall affect, and
no adjustment by reason thereof shall be made with respect to, the number or price of
Shares subject to an Option. 

	12.2  	Merger,
Acquisition, or Asset Sale.  

        (a)
          In the event of a merger or consolidation of the Company with or into another
          corporation resulting in such other corporation being the surviving entity, or
          resulting in the Company being the surviving entity and any other person or
          entity owning fifty percent (50%) or more of the outstanding voting power of
the           Company’s securities, an acquisition of all or substantially all of
the           shares of the Company, or the sale of substantially all of the assets of
the           Company (each such event, a “Transaction”), each outstanding
Option           shall be assumed or an equivalent option or right shall be substituted
by the           successor corporation or a parent or subsidiary of the successor
corporation.  

        (b)
          For the purposes of this sub-section 12.2, the Option shall be considered
          assumed if, following a Transaction, the option or right confers the right to
          purchase or receive, for each share subject to the Option immediately prior to
          the Transaction, the consideration (whether stock, cash, or other securities or
          property) received in the Transaction by holders of Ordinary Shares for each
          share held on the effective date of the Transaction (and if holders were
offered           a choice of consideration, the type of consideration chosen by the
holders of a           majority of the outstanding Shares); provided, however, that if
such           consideration received in the Transaction is not solely common stock of
the           successor corporation or its parent, the Board may, with the consent of the
          successor corporation, provide for the consideration to be received upon the
          exercise of the Option, for each share subject to the Option, to be solely
          ordinary shares of the successor corporation or its parent equal in fair market
          value to the per share consideration received by holders of Ordinary Shares in
          the Transaction.  

	12.3 	The
foregoing adjustments and the manner of application of the foregoing provisions shall be
determined by the Board in its sole discretion. Any such adjustment may provide for the
elimination of any fractional share which might otherwise become subject to an option. 

10

	13.  	NON-TRANSFERABILITY
OF OPTIONS.  

        No
Option may be transferred other than by will or by the laws of descent and distribution,
and during the Grantee’s lifetime an Option may be exercised only by such Grantee. 

	14.  	TERM
AND AMENDMENT OF THE PLAN.  

	14.1 	No
Option may be granted by the Board under the Plan after the tenth (10th)
anniversary of the Effective Date, provided however, that any Option granted by the Board
prior to such date may extend beyond such date and the authority of the Board to amend,
alter, adjust suspend, discontinue, or terminate any such Option, to waive conditions or
rights attached to such Option and the authority of the shareholders to amend the Plan to
the extent applicable, shall also extend beyond such date. 

	14.2 	Subject
to any requirements of applicable law and unless otherwise expressly provided for in an
Option Agreement, the Board may at any time, but after notification to any trustee, if
applicable, amend, alter, suspend or terminate the Plan. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Grantee, unless
mutually agreed otherwise between the Grantee and the Company, which agreement must be in
writing and signed by the Grantee and the Company. Termination of the Plan shall not
affect the Board’s ability to exercise the powers granted to it hereunder with
respect to any Option granted under the Plan prior to the date of such termination. 

	15.  	TERM
OF OPTION.  

        Anything
herein to the contrary notwithstanding, but without derogating from the provisions of
Section 11 and Section 14 hereof, if any Option, or any part thereof, has not been
exercised and the Shares covered thereby not paid for within ten (10) years after the date
of grant (or any shorter period set forth in the Option Agreement), such Option, or such
part thereof, and the right to acquire such Shares shall terminate, and all interests and
rights of the Grantee in and to the same shall expire. 

	16. 	CONTINUANCE
OF EMPLOYMENT OR SERVICE. 

        Neither
this Plan nor any offer of Options to a Grantee shall impose any obligation on the Company
or a Subsidiary, to continue to employ or engage the services of any Grantee, and nothing
in the Plan or in any Option granted pursuant thereto shall confer upon any Grantee any
right to continue in the employ or service of the Company or a Subsidiary or restrict the
right of the Company or a Subsidiary thereof to terminate such employment or services at
any time. 

	17.  	COMPLIANCE
WITH SECURITIES LAWS.  

	17.1 	Notwithstanding
any other provision of the Plan, the Board shall have no obligation to issue or deliver
any Shares under the Plan or make any other distribution of benefits under the Plan
unless, in the opinion of the Company’s counsel, such issuance, delivery or
distribution would comply with all applicable laws (including, without limitation, the
requirements of the United States Securities Act of 1933, as amended (the Securities Act”)),
and the applicable requirements of any other securities laws, exchange or similar entity. 

11

	17.2 	The
Company shall be under no obligation to any Grantee to register for offering or resale or
to qualify for exemption under the Securities Act or similar law of any foreign
jurisdiction, or to register or qualify under state securities laws or foreign securities
laws, any Shares, security or interest in a security paid or issued under, or created by,
the Plan, or to continue in effect any such registrations or qualifications, if made. 

	17.3 	As
a condition to the exercise of an Option, the Company may require (a) that the
Grantee represent and warrant at the time of any such exercise or receipt that such
Shares are being purchased or received only for the Grantee’s own account and
without any present intention to sell or distribute such Shares and (b) such other
action or agreement by the Grantee as may from time to time be necessary to comply with
applicable securities laws. 

	17.4 	At
the option of the Company, a stop-transfer order against any such Shares may be placed on
the official share register of the Company, and a legend indicating that such Shares may
not be pledged, sold or otherwise transferred, unless an opinion of counsel is provided
(concurred in by counsel for the Company) stating that such transfer is not in violation
of any applicable law or regulation, may be stamped on share certificates to ensure
exemption from registration. The Board may also require that the Grantee execute and
deliver to the Company a purchase agreement or such other agreement as may be in use by
the Company at such time that describes certain terms and conditions applicable to the
Shares. 

	18.  	GOVERNING
LAW.  

        The
Plan and all instruments issued thereunder or in connection therewith, shall be governed
by, and interpreted in accordance with, the laws of the State of Israel. without giving
effect to the principles of conflict of laws. The competent courts of Tel-Aviv, Israel
shall have sole jurisdiction in any matters pertaining to the Plan. 

	19.  	TAXES.  

	19.1 	Any
tax consequences arising from the grant or exercise of any Option, from the payment for
Shares covered thereby, or from any other related event or act (of the Company, and/or a
Subsidiary, and/or the Trustee and/or the Grantee), hereunder, shall be borne solely by
the Grantee, including but not limited to the ultimate liability for income tax, social
insurance or other tax related liabilities or withholding obligations in connection with
or derived from the grant of an Option. The Company and/or its Subsidiary, 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 Grantee
shall agree to indemnify the Company and/or the Subsidiary 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 Grantee for which the Grantee is
responsible, including specifically any additional tax liability the Company may incur as
a result of an exercise in connection with a 102 Trustee Grant or any transfer effected
prior to conclusion of the Required Holding Period. To the extent permitted by applicable
law and provided that such implementation will not create variable accounting problems
for the Company, the Company and/or the Subsidiary and/or the Trustee may make such
provisions and take such steps as it/they may deem necessary or appropriate for the
withholding of all taxes required by law to be withheld with respect to Options granted
under the Plan and the exercise thereof, including, but not limited, to (i) deducting the
amount so required to be withheld from any other amount then or thereafter payable to a
Grantee, and/or (ii) requiring a Grantee to pay to the Company or any Subsidiary the
amount so required to be withheld as a condition of the issuance, delivery, distribution
or release of any Shares. In addition, the Grantee will be required to pay any amount
that exceeds the tax to be withheld and transferred to the tax authorities, pursuant to
applicable Israeli tax regulations. 

12

	19.2 	The
receipt of these Options and the acquisition of the shares to be issued upon the exercise
of the Options may result in tax consequences for the Grantee. The description of tax
consequences set forth in this Plan does not purport to be complete. THE GRANTEE IS
ADVISED TO CONSULT WITH A TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF RECEIVING
OR EXERCISING THE OPTIONS. 

	20.  	NON-EXCLUSIVITY
OF THE PLAN 

The adoption of the Plan by the
Company shall not be construed as amending, modifying or rescinding any previously
approved incentive arrangements or as creating any limitations on the power of the
shareholders to adopt such other incentive arrangements as it may deem desirable and in
accordance with applicable law. Nothing contained in the Plan shall prevent the Company
from adopting or continuing in effect other or additional incentive compensation
arrangements for Service Providers of the Company or of any Subsidiary.  

	21.  	MULTIPLE
AGREEMENTS 

The terms of each Option granted
under the Plan may differ from any other Option granted at the same time or at any other
time under the Plan and there shall be no obligation for uniformity of treatment of
Service Providers with respect to any grant under the Plan.  

	22.  	EFFECTIVE
DATE 

The effective date of the Plan is
the date on which the shareholders of the Company ratify the adoption of the Plan, which
was previously approved by the Board, at a duly convened meeting of the shareholders (the
“Effective Date”).  

13

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