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                                                                    EXHIBIT 4.11

FREE TRANSLATION FROM HEBREW
                           DELTA GALIL INDUSTRIES LTD.
                          (In this Plan "THE COMPANY")
                              CHAPTER A - PREAMBLE

1.     GENERAL
       The Company is registered in Israel and its securities are traded on The
       Tel-Aviv Stock Exchange Ltd. (in this Plan: "THE TASE"). The American
       Depositary Shares (ADS) of the Company are traded in the U.S.A. by means
       of the Nasdaq National Market (in this Plan "NASDAQ").

       The Options offered to employees in accordance with this Plan will not be
       registered for trade on any stock exchange. The Shares that shall result
       from the exercise of the Options offered to employees in accordance with
       this Plan will be registered for trade on the TASE like the existing
       shares of the paid up share capital of the Company; and may be converted
       to ADS traded on NASDAQ in accordance with the rules applicable there.

2.     PERMITS AND APPROVALS
       The Company has received from the Israel Securities Authority an
       exemption from the provisions of The Securities Law - 1968 with regard to
       the offer of securities to employees of the Company in Israel, because
       the Rules as to the allotment of shares on NASDAQ apply on the Company.

       The Company shall apply to the TASE in order to obtain the TASE's
       approval to register for trade on the TASE the shares to be allotted upon
       exercise of the Options (hereinafter "TASE APPROVAL").

                   CHAPTER B - THE OFFER TO ENTITLED EMPLOYEES

3.     THE EMPLOYEES' OPTION PLAN
       The objects of the Option Plan are participation of the employees in the
       success of the Company and the creation of an incentive for the employees
       to contribute to the success of the Company that expresses itself, inter
       alia, in the price at which the shares of the Company are traded on the
       TASE. The Plan is also intended to give an incentive to the employees to
       tie their future with the future of the Company for several years, thus
       enabling the Company to rely on skilled professional manpower of its
       employees for an extended period, while encouraging an aspiration for
       excellence and rewarding its employees for investing effort and ability
       in their work for the Company. The Plan constitutes an additional element
       in the existing rewards system. The Plan is intended for employees who
       are in the full time employ of the Company and/or its subsidiaries.

4.     THE SECURITIES OFFERED TO THE EMPLOYEES

       (a)  On May 9, 2006, the Board of Directors of the Company decided to
            approve an Option Plan in accordance with which up to 1,100,000
            Options may from time to time be allotted to employees of the
            Company and of its subsidiaries without consideration.

       (b)  the same meeting the Board of Directors of the company decided to
            allot without consideration pursuant to the Plan, out of the total
            quantity of Options available for allotment pursuant thereto,
            668,652 Options to employees of the Company and of its subsidiaries
            whose identity and the quantity to be allocated to each of them were
            determined in the resolution (hereinafter in this Plan collectively
            referred to as "THE ENTITLED EMPLOYEES" or "THE OFFER RECIPIENTS").
            The Entitled Employees do not include interested parties by virtue
            of their shareholdings in the Company or employees who will become
            interested parties as a result of the

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            exercise of all the non-negotiable Options held by them and which
            are offered to them in accordance with this Plan.

       (c)  The number of Options to which each of the Entitled Employees shall
            be entitled to, was determined by the Board of Directors of the
            Company in accordance with the potential of his future contribution
            to the Company, his seniority, his management responsibility and/or
            his professionalism and professional excellence.

            (1)   With regard to 10 senior employees (hereinafter "THE SENIOR
                  EMPLOYEES"), the Board decided that their entitlement to part
                  of the Options allotted to them will vest - pursuant to the
                  provisions of section 5(a) (4) hereafter, only if the profit
                  of the Company (before tax) in 2007 as shown in the audited
                  Financial Statements of the Company for that year (after
                  deduction of non-recurrent capital gains) will be not less
                  that 27.5 million US Dollars. (These Options will hereafter be
                  named "THE 2007 RESULTS CONDITIONED OPTIONS"). For the removal
                  of doubt it is clarified that if the profits of the Company in
                  2007 as aforesaid, are not less than the said amount, the
                  Senior Employees will be entitled to the entire quantity of
                  the 2007 Results Conditioned Options (pursuant to the
                  provisions of section 5(a) (4) hereafter), and if the profits
                  of the Company in 2007 are less than the said amount, the
                  Senior Employees will be not be entitled to any of the 2007
                  Results Conditioned Options.

            (2)   With regard to 9 employees from the Senior Employees, the
                  Board decided that their entitlement to another part of the
                  Options allotted to them will vest - pursuant to the
                  provisions of section 5(a) (5) hereafter, only if the profit
                  of the Company (before tax) in 2008 as shown in the audited
                  Financial Statements of the Company for that year (after
                  deduction of non-recurrent capital gains) will be not less
                  that 32.5 million US Dollars. (These Options will hereafter be
                  named "THE 2008 RESULTS CONDITIONED OPTIONS"). For the removal
                  of doubt it is clarified that if the profits of the Company in
                  2008 as aforesaid, are not less than the said amount, the
                  Senior Employees will be entitled to the entire quantity of
                  the 2008 Results Conditioned Options (pursuant to the
                  provisions of section 5(a) (5) hereafter), and if the profits
                  of the Company in 2008 are less than the said amount, the
                  Senior Employees will be not be entitled to any of the 2008
                  Results Conditioned Options

       (d)  The balance of the Options not yet allotted pursuant to the
            resolution of the Board (431,348 Options) to particular employees
            (which Options will also be held by the Trustee), are reserved from
            time to time in accordance with the principles of the Plan, to
            existing and/or future employees, who, at the time of the allotment
            or as a result thereof, do not hold 5% or more of the issued share
            capital of the Company. The identity of the employees and the number
            of Options to be allotted to such employees will be determined by
            the Board of Directors of the Company, in accordance with the
            recommendation of the CEO. The determining price for the purpose of
            determining the exercise price of the said Options will be as
            determined by the Board of Directors. The dates for exercise by such
            employees and the periods for exercise will be reckoned from the
            date of allotment of the Options to the employee.

       (e)  The Options may be exercised for Ordinary Shares of the Company of
            NIS 1 par value each ("THE EXERCISE SHARES"), in such manner that
            each Option may be exercised for one (1) Ordinary Share of NIS 1 par
            value each, pursuant to the exercise terms set out in this Plan,
            except if otherwise determined by the Board of Directors.

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       (f)  The Options are not transferable by the Entitled Employees, and will
            not be registered for trade on any Stock Exchange.

                        CHAPTER 3 - DETAILS OF THE OFFER

5.     (a)  GRANT OF THE OPTIONS

            (1)      The Company will allot to ISOP Trust Company (hereinafter
                     "THE TRUSTEE"), 1,100,000 Options for the Entitled
                     Employees, within sixty (60) days of receipt of the TASE
                     approval and of receipt of other approvals required for the
                     Plan by Law, but in no event less than thirty (30) days
                     from the delivery of a notice to the Tax Commissioner
                     (hereinafter "THE DATE OF ALLOTMENT"). The Trustee will
                     hold the Options and will deal with them as follows.

            (2)      Subject to the other provisions of the Plan detailed
                     hereafter and subject to the blocking period of employees
                     to whom the Israel tax law is applicable as set out in
                     section 16 hereafter, the right of an Employee to exercise
                     the Options allotted to him (with the exception of those
                     Employees which will be subject to the provisions of
                     sub-section (3) below; the 2007 Results Conditioned Options
                     and the 2008 Results Conditioned Options to the extent that
                     the Employee has any such Options and in respect of which
                     the provisions of sub-section (4) or (5) below are
                     applicable) will vest as follows: one quarter of the
                     Options to which he is entitled as above will vest and may
                     be exercised at the end of one year from the Date of
                     Allotment ("THE FIRST PORTION" and "THE FIRST PORTION
                     ENTITLEMENT DATE"); the second quarter of the Options to
                     which he is entitled as above will vest and may be
                     exercised by the Employee at the end of two years from the
                     Date of Allotment ("THE SECOND PORTION" and "THE SECOND
                     PORTION ENTITLEMENT DATE"); the third quarter of the
                     Options to which he is entitled as aforesaid will vest and
                     may be exercised at the end of three years from the Date of
                     Allotment ("THE THIRD PORTION" and "THE THIRD PORTION
                     ENTITLEMENT DATE"); while the fourth quarter of the Options
                     to which he is entitled as aforesaid will vest and may be
                     exercised at the end of four years from the Date of
                     Allotment ("THE FOURTH PORTION" and "THE FOURTH PORTION
                     ENTITLEMENT DATE").

            (3)      Subject to the other provisions of the Plan detailed
                     hereafter and subject to the blocking period of employees
                     to whom the Israel tax law is applicable as set out in
                     section 16 hereafter, the right of some Employees [16
                     Employees which are entitled to 10,000 Options or more,
                     each (with the exception of the 2007 Results Conditioned
                     Options and the 2008 Results Conditioned Options to the
                     extent that the Employee has any such Options and in
                     respect of which the provisions of sub-section (4) or (5)
                     below are applicable] to exercise the Options allotted to
                     him will vest as follows: one third of the Options to which
                     he is entitled as above will vest and may be exercised at
                     the end of two years from the Date of Allotment ("THE FIRST
                     THIRD" and "THE FIRST THIRD ENTITLEMENT DATE"); the second
                     third of the Options to which he is entitled as above will
                     vest and may be exercised by the Employee at the end of
                     three years from the Date of Allotment ("THE SECOND THIRD"
                     and "THE SECOND THIRD ENTITLEMENT DATE); while the last
                     third of the Options to which he is entitled as aforesaid
                     will vest and may be exercised at the end of four years
                     from the Date of Allotment ("THE LAST THIRD" and "THE LAST
                     THIRD ENTITLEMENT DATE").

            (4)      Subject to the other provisions of the Plan detailed
                     hereafter and subject to the blocking period of employees
                     to whom the Israel tax law is applicable as set out in
                     section 16 hereafter, the right of any Senior Employee to
                     exercise the 2007 Results Conditioned Options allotted to
                     him will vest at the end of two years from the Date of
                     Allotment ("THE 2007 OPTIONS ENTITLEMENT DATE) and shall be
                     exercisable in 2 portions as set out in sub-section 5(b)(3)
                     below. For removal of doubt it is clarified

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                     that if it should transpire that the trade results of the
                     company for 2007 (in accordance with the audited Financial
                     statements of the Company) do not entitle the senior
                     Employees to the 2007 Results Conditioned Options allotted
                     to the Trustee on for them [namely, if the profits of the
                     Company (before tax with deduction of non-recurrent capital
                     gains) is less that 27.5 million US Dollars], such Options
                     will expires and will not confer of those Employees any
                     rights vis-a-vis the Company. Notwithstanding the
                     aforesaid, if, after publication of the audited Financial
                     Statements of the Company for 2007, the accountants of the
                     Company should amend the Financial Statements in such
                     manner as may change the profits of the Company (whether
                     upwards or downwards), the entitlement of the Senior
                     Employees to the 2007 Results Conditioned Options will be
                     fixed in accordance with the figures of the Amended
                     Financial Statements as certified by the accounts of the
                     Company; provided however that the Employees will not be
                     required to return to the Company any shares actually
                     received by them (if any) prior to amendment of the
                     Financial Statements. A decision of the Board of Directors
                     or any committee of the Board as to entitlement of the
                     Senior Employees to the 2007 Results Conditioned Options
                     will be final and not be appealed by the Employees.

            (5)      Subject to the other provisions of the Plan detailed
                     hereafter and subject to the Blocking Period of employees
                     to whom the Israel tax law is applicable as set out in
                     section 16 hereafter, the right of any Senior Employee to
                     exercise the 2008 Results Conditioned Options allotted to
                     him will vest at the end of three years from the Date of
                     Allotment ("THE 2008 OPTIONS ENTITLEMENT DATE) and shall be
                     exercisable in 2 portions as set out in sub-section 5(b)(4)
                     below. For removal of doubt it is clarified that if it
                     should transpire that the trade results of the company for
                     2008 (in accordance with the audited Financial statements
                     of the Company) do not entitle the senior Employees to the
                     2008 Results Conditioned Options allotted to the Trustee on
                     for them [namely, if the profits of the Company (before tax
                     with deduction of non-recurrent capital gains) is less that
                     32.5 million US Dollars], such Options will expires and
                     will not confer of those Employees any rights vis-a-vis the
                     Company. Notwithstanding the aforesaid, if, after
                     publication of the audited Financial Statements of the
                     Company for 2008, the accountants of the Company should
                     amend the Financial Statements in such manner as may change
                     the profits of the Company (whether upwards or downwards),
                     the entitlement of the Senior Employees to the 2008 Results
                     Conditioned Options will be fixed in accordance with the
                     figures of the Amended Financial Statements as certified by
                     the accounts of the Company; provided however that the
                     Employees will not be required to return to the Company any
                     shares actually received by them (if any) prior to
                     amendment of the Financial Statements. A decision of the
                     Board of Directors or any committee of the Board as to
                     entitlement of the Senior Employees to the 2008 Results
                     Conditioned Options will be final and not be appealed by
                     the Employees.

            (6)      Notwithstanding the aforesaid in sub-sections (2) (3) (4)
                     and (5) above but subject to the provisions of section 16
                     hereafter, the Board of directors is entitled to determine
                     that the vesting period for entitlement of any Employee to
                     the Options allotted to him will be less than the vesting
                     period as fixed above and/or to allot to him options in a
                     lesser quantity of portions.

            (7)      The Options may be exercised by the Employee, on the
                     relevant dates as in sub-section (b) above, only if on the
                     date of entitlement to the relevant portion as provided in
                     section 5(a) (2); 5(a) (3) ; 5(a) (4) or 5 (a)(5) above, as
                     the case may be, he was an employee of the Company. If the
                     Employee was not employed by the Company on the date of
                     entitlement to such portion, the Options of such portion
                     and subsequent portions (including the 2007 Results
                     Conditioned Options and the 2007 Results Conditioned
                     Options) will be void and will not confer any right
                     vis-a-vis the Company.

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       (b)  PERIODS AND CONDITIONS FOR EXERCISE OF THE OPTIONS

            (1)      After vesting of entitlement as in provided in section 5(a)
                     (2) above and subject to the other provisions of the Plan,
                     the said Options may be exercised, at any time, as per the
                     decision of the Offer Recipient, in whole or in part, as
                     follows:

                     (a)    The First Portion - during four years commencing on
                            the Date of Entitlement to the First Portion.

                     (b)    The Second Portion - during three years commencing
                            on the Date of Entitlement to the Second Portion.

                     (c)    The Third Portion - during three years commencing on
                            the Date of Entitlement to the Third Portion.

                     (d)    The Fourth Portion - during three years commencing
                            on the Date of Entitlement to the Fourth Portion.

            (2)      After vesting of entitlement as in provided in section 5(a)
                     (3) above and subject to the other provisions of the Plan,
                     the said Options may be exercised, at any time, as per the
                     decision of the Offer Recipient, in whole or in part, as
                     follows:

                     (a)    The First Third - during four years commencing on
                            the Date of Entitlement to the First Portion.

                     (b)    The Second Third - during three years commencing on
                            the Date of Entitlement to the Second Third.

                     (c)    The Last Third - during three years commencing on
                            the Date of Entitlement to the Third Portion.

            (3)      After vesting of entitlement as in provided in section 5(a)
                     (4) above and subject to the other provisions of the Plan,
                     the 2007 Results Conditioned Options may be exercised, at
                     any time, as per the decision of the Offer Recipient, in
                     whole or in part, as follows:

                     (a)    The First Half - during three years commencing on
                            the 2007 Options Entitlement Date.

                     (b)    The Second Half - during three years commencing
                            after one year from the 2007 Options Entitlement
                            Date.

            (4)      After vesting of entitlement as in provided in section 5(a)
                     (5) above and subject to the other provisions of the Plan,
                     the 2008 Results Conditioned Options may be exercised, at
                     any time, as per the decision of the Offer Recipient, in
                     whole or in part, as follows:

                     (a)    The First Half - during three years commencing on
                            the 2008 Options Entitlement Date.

                     (b)    The Second Half - during three years commencing
                            after one year from the 2008 Options Entitlement
                            Date.

                     (The   above periods in sections (1), (2) (3) and (4) are
                     referred to in this Plan as "THE EXERCISE PERIOD")

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            (5)      Notwithstanding the aforesaid, the following conditions
                     shall apply to the exercise of the Options:

                     (a)    The Options may be exercised provided that at the
                            time of entitlement to those Options [as detailed in
                            section 5(a)(2); 5(a)(3); 5(a)(4) or 5(a)(5) above],
                            the Employee will be employed by the Company and
                            that during the period up to that time the Employee
                            has not terminated his employment in the Company
                            and/or has not given notice of termination of his
                            employment in the Company and/or has not received
                            notice of termination of his employment by the
                            Company. For the sake of caution it is hereby
                            clarified that such an Employee, whose entitlement
                            to any Portion vested previously, will be entitled
                            to exercise those Options even if at the actual time
                            of exercise he is not employed by the Company,
                            provided, however, that such Employee which will
                            cease to be employed by the Company for any reason
                            whatsoever, shall be entitled to exercise the
                            Options vested prior to the termination of his
                            employment - if not previously expired - within the
                            later of (1) 60 days after the date of termination
                            of employment or (2) 60 days after the expiration of
                            the Blocking Period, as hereinafter defined, but in
                            any event not later than the relevant Exercise
                            Period. Notwithstanding the above, a Senior Employee
                            which was granted 2007 Results Conditioned Options
                            or 2008 Results Conditioned Options, which will
                            cease to be employed by the Company after the 2007
                            Option Entitlement Date or after the 2008 Option
                            Entitlement Date but before the commencement of the
                            Exercise period for the second half of such
                            Conditioned Options, shall be entitled to exercise
                            the said Options which the Exercise Period thereof
                            commenced after the termination of employment - if
                            not previously expired - within 60 days after the
                            commencement of the Exercise Period for those
                            Options. An Option which the Employee is not
                            entitled to exercise pursuant to the provisions of
                            this sub-section will expire and will be void and
                            will not confer upon the Offer Recipient any right
                            whatsoever.

                     (b)    Notwithstanding the aforesaid in sub-section (a)
                            above, in the event of the death of the Offer
                            Recipient, or in the event of his retirement at age
                            65 onwards, or in the event of retirement for
                            reasons of disability, the Offer Recipient or his
                            legal successor, as the case may be, shall be
                            entitled to exercise the entire balance of the
                            Options allotted to him, including Options the date
                            of entitlement of which has not yet arrived, in part
                            or in whole - on the exercise dates fixed in the
                            Plan and in accordance with the provisions of the
                            Plan. The Company shall be entitled to require from
                            the successors legal documentation confirming their
                            rights in the estate of the Offer Recipient, a
                            written undertaking from the successor in title to
                            accept all the provisions of the Plan and any other
                            document required by the Company as proof of the
                            entitlement of the successors and so to ensure
                            compliance with the terms of the Plan by said
                            successors.

                     (c)    Notwithstanding the aforesaid in sub-section (a)
                            above, in exceptional cases, taking into
                            consideration the circumstances of each case, the
                            Board of Directors of the Company may, upon
                            recommendation of the CEO, permit an employee
                            subject to section 16 hereafter to exercise Options
                            in a quantity that exceeds the amount to which he is
                            entitled in accordance sub-section (a) above, but in
                            no event more than the quantity of Options allotted
                            to the employee.

                            For the purposes of this section - the expression
                            "COMPANY" [excluding for purposes of sub-section
                            (c)] includes also a subsidiary of the Company and
                            the expression "DISABILITY" shall be deemed to mean
                            inability of the

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                                      -7-

                            employee to engage in his duties as a result of
                            injury and/or illness for a period of at least six
                            months.

            (6)      The offer to the employees in accordance with this Plan or
                     any offer to employees who may become entitled in the
                     future shall not be construed as imposing upon the Company
                     an obligation to continue to employ the employee and/or as
                     limiting the Company from terminating the employment of the
                     employee and/or as conferring upon the employee the right
                     to continue to be employed by the Company.

            (7)      The Board of Directors of the Company may use existing
                     Options allotted to the Trustee, which entitlement of an
                     employee thereto has become void as mentioned in section
                     5(a) (7) above or for any other reason, for the purpose of
                     their re-allocation to other employees in accordance with
                     the principles of this Plan, in an amount equal to the
                     amount of Options the entitlement of exercise of which have
                     become void. The determining price for the purpose of
                     exercise of such Options shall be as fixed by the Board (in
                     accordance with approval by the tax authorities for re-use
                     of such options, if such approval is requisite). The dates
                     for exercise by such employees and the Exercise Periods
                     shall be counted starting on the new date of allotment of
                     the Options.

       (c)  OPTION PRICE AND EXERCISE PRICE

            (1)      The Options will be allotted to the Entitled Employees,
                     without consideration.

            (2)      The exercise price of each Option (hereinafter "THE
                     EXERCISE PRICE") will be paid to the Company at the time of
                     exercise. The Exercise Price will be fixed by the Board.
                     With regard to 668,652 Options that are the subject of the
                     decision of the Board dated May 9, 2006, the Board decided
                     that the Exercise Price of each Option will be [8.43] US
                     Dollars, as detailed in such decision (The Price of Delta`s
                     shares on TASE at the closing of May 11, 2006 converted to
                     U.S. dollars based on the exchange rate of the U.S. dollar
                     published by the Bank of Israel on that date). The time of
                     exercise will be the date on which a notice in writing of
                     the Option holder of his desire to exercise the Option,
                     subject to payment of the Exercise Price, arrives to the
                     Company ("THE EXERCISE DATE" and "THE EXERCISE NOTICE"),
                     provided that the Exercise Notice shall be delivered to the
                     Company during the Exercise Period. The Options may be
                     exercised in portions (starting from the termination of the
                     blocking period) and in such case the provisions of this
                     section will be applicable subject to the necessary
                     changes.

       (d)    REGISTRATION FOR TRADE OF THE EXERCISE SHARES

              Registration of the Exercise Shares on the TASE will be made
              shortly after the allotment thereof by the Company.

       (e)    RIGHTS OF THE EXERCISE SHARES

              The Exercise Shares will be equal in rights to the existing shares
              of the same class in the capital of the Company (Ordinary Shares
              of NIS 1 par value each), for all intents and purposes. The said
              shares will be entitled to any dividend or other bonus the Record
              Date for the receipt of which is on the Exercise Date or
              thereafter. For the removal of doubt it is clarified that for so
              long as the Options have not been exercises, the holders thereof
              will not be entitled to a dividend distributed to shareholders, if
              any, at any time prior to exercise.

6.     NOTICES TO ENTITLED EMPLOYEES

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                                      -8-

       (a)    Following the decision of the Board, the Company shall give each
              of the Entitled Employees a notice in writing as to the number of
              Options that he is entitled to receive within the framework of
              this Plan and as to the Exercise Price. If at the time of the
              decision of the Board there have not been received all of the
              approvals required for allotment (including approvals of the tax
              authorities), the Company will notify the employees accordingly.
              The Company shall furnish the Plan to each employee in Israel
              entitled to options under the Plan, or alternatively will make the
              Plan available for perusal in every work place at which Employees
              of the Company in Israel are employed in a sufficient quantity
              that will enable every interested employee to peruse the Plan.
              After filing S-8 Form with the SEC, the Company will furnish each
              employee in Israel entitled to Options under the Plan, the S-8
              Form, and will also furnish each employee who so desires all
              Appendices to S-8 Form, including any document to which reference
              is made directly or indirectly in S-8 Form, including appendices
              thereto. Alternatively the Company will make the S-8 Form
              available for perusal in every work place where employees of the
              Company in Israel entitled to Options are employed, in a
              sufficient quantity that will enable every employee interested to
              peruse the same, and will also provide the rest of the appendices
              to S-8 Form to any employee who might be interested. The Company
              will arrange for translation in Hebrew of the S-8 Form, if
              required.

       (b)    (1) Within 30 days after approval by the board of the audited
              Financial Statements of the Company for 2007, the Company will
              notify the Trustee whether or not the Senior Employees to whom
              2007 Result Conditioned Options were allotted are entitled to
              receive those Options, subject to the provisions of this Plan
              generally and the provisions of section 5(a) (4) above in
              particular.

              (2) Within 30 days after approval by the board of the audited
              Financial Statements of the Company for 2008, the Company will
              notify the Trustee whether or not the Senior Employees to whom
              2008 Result Conditioned Options were allotted are entitled to
              receive those Options, subject to the provisions of this Plan
              generally and the provisions of section 5(a) (5) above in
              particular.

       (c)    Each of the Entitled Employees will be required to sign an
              undertaking (hereinafter "THE UNDERTAKING") which will include the
              following main provisions: (i) a declaration of the employee as to
              his agreement to accept the Options offered to him and his
              agreement to all the provisions of this Plan, including but
              without derogating from the generality of the foregoing, his
              agreement to bear the cost of all tax liabilities and other
              compulsory payments that will ensue from the offer and allotment
              of the Options, the exercise thereof or sale of the Exercise
              Shares; (ii) the employee's undertaking to comply with the
              provisions of Israeli and US law regarding the prohibition of use
              of insider information of the Company; (iii) an undertaking of the
              employee to comply with the provisions of section 102 of The
              Income Tax (New Version) Ordinance 1961, as it may from time to
              time be amended, including regulations and/or rules and/or
              decisions and/or any other provisions issued or which may be
              issued by virtue thereof (hereinafter "THE INCOME TAX ORDINANCE"
              and "SECTION 102", as the case may be) including Income Tax rules
              (Tax Concessions for Allotment of Shares to Employees) - 2003
              (hereinafter "THE RULES" or "INCOME TAX RULES") and if he is not
              an Israeli employee, all relevant tax provisions applicable to
              him; (iv) an undertaking of the employee not to sell and not to
              remove from the trust the Exercised Shares before the end of the
              Blocking Period (if such exists). (v) An undertaking of the
              employee to comply with the procedure for exercise of the Options
              and sale of the Exercise Shares, as shall be agreed between the
              Company and the Trustee, and any additional provision of the trust
              agreement entered into between the Company and the Trustee.

       (d)    The right to receive the Option Warrants is granted to Entitled
              Employees personally and may not be transferred and/or assigned
              and/or waived in favor of any other person, including other
              Entitled Employees. Under the terms of the Plan no person, except
              for the

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                                      -9-

              Entitled Employee, shall have any rights whatsoever with regard to
              the Options allotted to the Entitled Employee under the Plan.

7.     EXERCISE OF THE OPTION WARRANTS

       (a)    If an employee wishes to exercise Options to which he entitled in
              accordance with this Plan, the employee shall submit to the
              Trustee, by means of the Company, an Exercise Application in a
              form to be determined by the Trustee and which may be obtained at
              the offices of the Company during the Exercise Period. The
              employee shall state in the Exercise Application how many Options
              that he wishes to exercise and shall also state his choice of one
              of the following alternatives:

              (1)    Exercise and instructions to the Trustee to hold the
                     Exercise Shares for him, in a Trust Account to be opened by
                     the Trustee for the employee;

              (2)    Exercise and instructions to the Trustee to sell forthwith
                     the Exercise Shares, in whole or in part, on behalf of the
                     employee as the employee may instruct;

              (3)   Exercise and instructions to the Trustee to transfer to the
                    Bank account of the employee the Exercise Shares registered
                    in the name of Bank Leumi LeIsrael Nominee Company Ltd.
                    ("THE NOMINEE COMPANY").

       (b)    The Trustee will check with the Company the entitlement of the
              employee to implementation of the instruction, and provided the
              Trustee shall receive confirmation in writing from the Company
              that the employee is indeed entitled to exercise the Options or to
              exercise the Options and to sell the Exercise Shares or to
              exercise the Options and to release the Exercise Shares, as the
              case may be, the Trustee shall act accordingly.

       (c)    If the employee chooses the alternative detailed in section
              7(a)(1) above, the employee shall furnish the Trustee with a
              confirmation in writing that the Company has received from the
              employee the Exercise Price of the Options to which the Exercise
              Notice relates. The Exercise Shares will be actually allotted in
              the name of the Trustee and shall registered in the name of the
              Trustee in the registers of the Company, or alternatively, will be
              allotted in the name of the Nominee Company and will be deposited
              in a Trust Account in the name of the Trustee.

       (d)    If the employee chooses the alternative stated in section 7(a)(2)
              above, namely a request to sell the Exercise Shares on his behalf
              subject to exercise of the Options, the employee shall furnish the
              Trustee with an instruction to sell the Exercise Shares on the
              TASE and to transfer to the Company the Exercise Price of the
              Options to which Exercise Notice relates. The employee shall also
              instruct the Trustee to deduct the amount of the tax (including
              National Insurance, Health Tax, and any other compulsory payment,
              if applicable) and other compulsory payments applicable to the
              employee in respect of the exercise of the Options and sale of the
              Shares. The Exercise Shares will in fact be allotted in the name
              of the Trustee and registered in the name of the Trustee in the
              registers of the Company or, alternatively, will be allotted in
              the name of the Nominee Company and transferred to the Trustee,
              pursuant to the provisions, if any, of the TASE. If the employee
              gives an Exercise Notice and notice for sale of the Exercise
              Shares, he will not be entitled to cancel the same if the exercise
              and/or the sale has been carried out already. If the Trustee
              receives the consideration for the sale, the Trustee will do as
              follows with the consideration: (1) Deduct from the consideration
              for the sale of the Shares the amount of Income Tax due by law and
              in accordance with certificates of the Income Tax Authorities as
              well as other compulsory payments applicable to the employee in
              respect of exercise of the Options and sale of the Shares, in
              amounts furnished to the Trustee by

<PAGE>

                                      -10-

              the Company, and the Trustee shall transfer such amounts to the
              authorities, as the case may be; (2) Deduct the Exercise Price
              from the consideration for the sale of the Shares, and transfer
              the same to the Company; (3) Deduct from the consideration for the
              sale of the Shares the commission due to the Trustee and to the
              selling broker in accordance with the provisions of the Agreement
              entered by the Company with the Trustee; (4) Transfer to the bank
              account of the employee the consideration of the sale, less the
              amounts specified in sections (1), (2) and (3) above.

       (e)    If the employee chooses the alternative detailed in section
              7(a)(3) above, namely a request that the Exercise Shares be
              transferred to him, the employee shall attach to the Exercise
              Notice, a written confirmation that the Company has received from
              the employee the exercise Price of the Options exercises, a
              confirmation of the Tax Commissioner certifying that the employee
              has paid the amount of Income Tax due from him in respect of the
              transfer of the Shares as above, pursuant to Section 102 or in
              accordance with any other law, together with confirmation by the
              Company that the employee has paid the other compulsory payments
              applicable to him. Within 15 business days thereafter, the Trustee
              will transfer the Exercise Shares to the Nominee Company to the
              credit of the employee, and the Company will apply to the TASE for
              registration of the said Exercise Shares on the TASE.

       (f)    The Company shall be entitled at any time to introduce changes in
              the exercise procedures and instructions for sale, to the extent
              required, at the discretion of the Company, in order to
              facilitate, to render efficient and to improve the exercise
              procedures, the exercise and the release as well as the exercise
              and the sale, and to make them better suitable to any changes
              which may be introduced in the Israeli and/or US laws, as well as
              in the light of the experience of such matters accumulated in the
              future by the Company. The Company shall furnish to the Entitled
              Employees notice of any such change to the extent that the
              relevant change concerns them. The changes will be made in
              coordination with the Trustee and subject to the provisions of
              Section 102 and the Regulations and Rules thereunder to the extent
              applicable to the relevant Offer Recipients.

       (g)    The provisions of this section (and all sub-sections thereof) will
              apply, with the changes required for sale on NASDAQ of ADSs of the
              Company that may be allotted to any of the Entitled Employee who
              may so wish, against the Exercise Shares, by means of a broker to
              be appointed by the Company and according to the conditions which
              shall be required at that time in respect of the same, by the
              broker or as per the conditions applicable to American Depositary
              Shares on NASDAQ and in accordance with the relevant tax laws
              which shall be applicable to the exercise and sale of those
              Options.

       (h)    The Ordinary Shares to be allotted upon exercise of the Options
              shall, as from the date of their allotment, be equal in all rights
              for all intents and purposes to the existing Ordinary Shares in
              the share capital of the Company, and inter alia will entitle the
              holder to full rights to distribution of dividends or other bonus,
              the Record Date for the distribution of which (ex date) occurs on
              the Exercise Date or thereafter.

       ADMINISTRATION OF PLAN

8.     (a)    Subject to provisions of law, the Board of Directors of the
              Company is authorized, at it absolute discretion, to make use of
              all powers and authorities that the Board deems in order to
              administer the Plan, including decision as to who will be the
              Offer Recipients pursuant to the Plan, decision on the number of
              Options allocated for each Offer Recipient and the Exercise Price
              of the Options.

       (b)    The Board or a committee appointed by the Board, is authorized,
              subject to provisions of law, to fix the time or times for
              allotment of the Options and any provisions or conditions in
              accordance with which the options will be allocated, in

<PAGE>

                                      -11-

              addition to those listed in the Plan; to take any steps or action
              required or desirable for administration and implementation of the
              Plan; to interpret any provision of the Plan and to carry out any
              act required as a result of such interpretation, including
              expedition of the dates upon which the Options may be exercised,
              and if necessary to interpret and instruct as to how any provision
              of the Plan should be carried out.

9.     Notwithstanding the aforesaid in section 8 above, any interpretation,
       decision or act of the Board or committee appointed by the Board, must
       not contradict the provisions of section 102 and no waiver or amendment
       of the provisions of this Plan will prejudice in a material manner the
       rights of the Offer Recipients in respect of the Options granted to them
       pursuant to the Plan, without prior consent of such Offer Recipients.

     CHAPTER 4 - PROTECTION OF OPTION HOLDERS DURING THE PERIOD OF THE PLAN

10.    ADJUSTMENTS IN RESPECT OF DISTRIBUTION OF BONUS SHARES DURING THE PERIOD
       OF THE PLAN

       (a)    If the Company distributes bonus shares and the Record Date for
              distribution of the same (hereinafter "THE BONUS DATE") shall
              occur after the date of allotment to the employee but prior to the
              Exercise Date, the Exercise Price of each Option will not be
              altered, but the number of Shares that the Option holder will be
              entitled to receive on the Exercise Date will be increased by the
              number of Shares to which the Option holder would have been
              entitled to as Bonus Shares had he exercised the Option prior to
              the Bonus Date.

       (b)    Adjustments in respect of distribution of Bonus Shares pursuant to
              the provisions of this section will also be made in respect of
              Options included in the Plan, even if they shall be allocated
              after to the Bonus Date.

       (c)    The Exercise Price of each Option will not change as a result of
              the increase of the number of Exercise Shares that the Option
              holder is entitled to, as aforesaid in this section. The
              provisions relating to the Exercise Shares will also apply to the
              Shares which shall be added to the Exercise Shares, subject to the
              necessary changes.

       (d)    In the event of adjustments in accordance with this section, the
              employee will not be entitled to receive a fraction of a whole
              Share.

       (e)    The number of Exercise Shares to which a holder of an Option
              Warrant shall be entitled will only be adjusted in the event of
              the distribution of Bonus Shares as aforesaid, but not in the
              event of other allotments of securities (including allotments to
              interested parties). For the avoidance of doubt, it is clarified
              that the Exercise Price will not be altered even in the event of
              distribution of Dividends by the Company before the Date of
              Exercise.

       (f)    The Bonus Shares will be allotted to the Trustee, and the
              provisions of the Plan and of the Trust Agreement which apply with
              respect to Shares ensuing from exercise of the Options.

11.    PROVISIONS REGARDING ISSUE OF RIGHTS DURING THE PERIOD OF THE PLAN

       (a)    In the event of issue of rights by the Company to its
              Shareholders, each one of the Offer Recipients will be offered
              identical rights in the same amounts to those which would have
              been offered to the holder of Options not yet exercised, as though
              he had exercised his Options prior to the Record Date, on the date
              of exercise of the Options. The payment to be effected for
              utilization of the rights, in the event that utilization should be
              subject to any payment whatsoever, will be paid on the date of
              exercise of the Options, linked to the Representative Rate of
              Exchange of the US Dollar to the Representative Rate of Exchange
              on the date determined at the time of the allotment as the final
              date for utilization of the rights by Shareholders ("THE ORIGINAL
              DATE FOR UTILIZATION OF RIGHTS")

<PAGE>

                                      -12-

              up to the Representative Rate of Exchange of the US Dollar last
              published prior to the date of exercise of the Options ("RIGHTS
              UTILIZATION PRICE").

       (b)    In the event of a issue of rights by the Company to its
              Shareholders, in the framework of which convertible securities are
              issued, the final date for realization or conversion of which
              falls before the final date for exercise of the Options not yet
              exercised ("THE CONVERTIBLE SECURITIES"), each of the Offer
              Recipients will be entitled - subject to section 13 hereafter - to
              utilize the rights offered to him in the said issue even before
              the exercise of the Options allocated to him in accordance with
              the Plan but not later than the final utilization date of the
              Convertible Securities issued, in such manner, on such dates and
              on such other terms which were set for that purpose in respect of
              Shareholders of the Company in the Prospectus of the rights issue,
              provided that if the rights of the issue include different classes
              of securities ("UNITS"), the Offer Recipient will be obligated to
              utilize the rights in respect of the Units in their entirety and
              to pay the full price for utilization of those rights.

       (c)    The Company will include this undertaking at the time of the issue
              of the Convertible Securities, so that the number of securities
              the registration of which will be applied for will include the
              quantity of securities to which the Offer Recipient will be
              entitled to in accordance with this section.

       (d)    The Company's Accountant will certify the amount offered by the
              Company that each of the Offer Recipients is entitled to receive
              and the amounts to be paid by him as provided above in this
              section.

       (e)    Adjustments in respect of the issue of rights in accordance with
              the provisions of this section will also be made in respect of
              Options included in the Plan that shall be allocated after the
              issue date.

12.    In the event of distribution of rights, including Bonus Shares, ensuing
       from the allotted Options, all the additional rights shall be allocated
       to the Trustee in favor of the Offer Recipients and shall be held by the
       Trustee until the end of the original blocking period of the Options in
       connection with which the rights were allocated and the tax path terms
       shall apply to those additional rights.

13.    ADDITIONAL PROVISIONS FOR PROTECTION OF THE OPTION HOLDERS

       (a)    The right of the Offer Recipients to securities of the Company in
              the event of distribution of Bonus Shares and/or rights issue, as
              set out in sections 11 and 12 above, will be reserved until the
              Exercise Date of the Options and will be implemented only on the
              Exercise Date; namely - only upon exercise of the Options, in
              whole or in part, by the Offer Recipient, will the Offer Recipient
              be entitled to receive or to purchase, as the case may be, the
              securities to which he was entitled as a result of the
              distribution of Bonus Shares or the rights issue, as the case may
              be, in respect of the given number of Exercise Shares actually
              exercised at any given times.

       (b)    To ensure the rights of the Offer Recipient as aforesaid in this
              section, the Company will set aside a sufficient amount of
              securities its registered share capital to enable all Offer
              Recipients to exercise their rights as aforesaid.

14.    As from the date of the Plan, and for as long as the Options have not
       been exercised, but in any event not later than the termination of the
       Exercise Period of such Options, the following provisions will apply to
       the holders of Option Warrants:

<PAGE>

                                      -13-

       (a)    The Company will reserve a sufficient number of Shares in its
              registered share capital, to secure the right of exercise of the
              Options including the right to Bonus Shares (if they should be
              distributed) and, if need be, the Company will increase its
              registered share capital.

       (b)    The Company shall refrain from distribution of Bonus Shares which
              might cause a lowering of the price of one Option Share to less
              than its par value.

       (c)    The Company will not alter the rights attached to the Ordinary
              Shares of NIS 1 par value and will not issue Shares of a new class
              are entitled to participate in the surplus assets in the event of
              winding up, except with the approval by Special Resolution of the
              Option Warrants holders.

       (d)    In the event of adoption of a resolution for the voluntary winding
              up of the Company, the Company will give written notice to all
              Option holders of Option Warrants regarding the adoption of such
              resolution. In that event, every Option holder will be entitled,
              within 30 days of the date of the notice, to notify the Company in
              writing of his desire to be regarded as having utilized his right
              of exercise prior to adoption of the resolution. In such event,
              and after payment of the Exercise Price, the holder shall be
              entitled to participate in an amount equal to the sum he would
              have received upon the winding up of the Company as holder of the
              Shares resulting from exercise of the Option Warrants held by him
              prior to the adoption of the resolution to wind up, should any
              balance remain for distribution.

       (e)    In the event that there shall be any change in the par value of
              Shares of the Company of the same class as the Exercise Shares,
              such changes will also apply mutatis mutandis to the Exercise
              Shares; however, the holder of an Option Warrant will not be
              entitled to receive part of a Share. All part of Shares that may
              ensue as a result of any such act will be sold by the Company on
              the TASE during a period of one month from the date of such
              allotment after the surpluses accumulate to whole shares of NIS 1
              par value each in a quantity suitable for trade on the TASE. The
              net proceeds, less sales expenses, commissions and other levies,
              will be paid to those entitled within 15 days of the date of sale.

       (f)    Should the Company be a party to an agreement or arrangement for
              Share exchange (such as a merger or reorganization) (hereinafter
              "THE EXCHANGE DEAL") under which the holders of the Ordinary
              Shares of the Company are offered the exchange of those Shares for
              Shares of some other company, the Company shall have the right to
              obligate all of its employees who have not yet exercised the
              Option Warrants held by them or for them, to accept Options which
              may exercised for Shares of the other Company, instead of the
              Options of the Company held by them, mutatis mutandis to the
              exchange ratio set for all Shareholders of the Company, provided
              that the total Exercise Price in respect of all substitute Options
              which shall be allotted will be equal to the total Exercise Price
              in respect of all such Options held by or on behalf of the
              employee which have not yet been exercised, and further provided
              that the employee will not be prejudiced in any manner in all
              matters relating to the periods for exercise determined in this
              Plan, subject to approval by the Income Tax Authorities regarding
              continuous blocking period.

15.    TAX ASPECTS AND COMPULSORY PAYMENTS

       (a)    Any tax liabilities, including Income Tax, National Insurance,
              Health Tax and any other compulsory payment applicable to an
              employee in respect of the receipt of the Option Warrants, their
              exercise and sale of the Exercise Shares, will be borne in full by
              the employees who received the Option Warrants. The Company will
              not bear the burden of the tax, if so imposed on said employees,
              in respect of the Offer to the employees, either by way of
              grossing up or in any other manner.

<PAGE>

                                      -14-

       (b)    The Company will notify the Tax Authorities of the adoption of the
              Plan, to the extent that the Plan relates to employees who are
              subject to Israeli tax law, within the framework of section 102 of
              The Income Tax Ordinance (New Version). The Options to which this
              Plan relates (including Options offered to employees who are not
              subject to the Israeli tax laws) will be deposited with the
              Trustee.

       TAXATION AND BLOCKING PERIOD

16.    The Blocking Period of the Options and of the Option Shares (hereinafter
       "THE BLOCKING PERIOD") shall be 24 months from the date of the allotment
       to the Trustee on behalf of the Offer Recipient, or such other period
       that may be determined by the Israel Tax Authorities in accordance with
       the provisions of the capital gains track by means of a trustee.

17.    Pursuant to the terms of section 102 and the Rules, an Offer Recipient
       may not receive from the Trustee, sell or perform any act with the
       Exercise Shares before the end of the Blocking Period. If an Offer
       Recipient should sell or transfer from the Trustee the Exercise Shares
       before the end of the Blocking Period (hereinafter "BREACH"), the Offer
       Recipient must pay all the required taxes due to breach of section 7 of
       the Rules. Without derogating from the generality of the above, should
       the employer be required to effect any payment whatsoever to the National
       Insurance due to breach of the Blocking Period by the Offer Recipient
       shall indemnify the Company in respect of such payment.

18.    The Company, at its exclusive discretion, shall choose which tax track
       will the Options be allotted and shall inform the Offer Recipient by
       which track the Options have been allotted. As long as the Company did
       not notify the Employee otherwise, the track which the Company choused
       for the Allotment of options by this Plan, is the Capital gain track by
       means of a trustee. For the sake of caution, it is hereby clarified that
       the Company is entitled, provided if permitted by law, to alter its
       choice and all the Options allotted after alteration of the choice, shall
       be subject to the new tax stream, and the Offer Recipient will not will
       not have any contention whatsoever resulting from the change of choice.
       It is also clarified that also in accordance with the capital gains
       taxation by means of a trustee stream, the employee may be liable for
       income tax at the ordinary rates in respect of differences, if any,
       between the Exercise Price fixed by the Board and the average price of
       the shares during the 30 trading days prior to allotment of the Options
       to the Trustee.

19.    The Blocking Period, if any, is in addition to the Rights Crystallization
       Period specified in section 5 above. The Blocking Period and the Rights
       Crystallization Period can overlap one another, but neither can be a
       substitute the other, and each constitutes an independent condition for
       the Options allotted.

20.    TAX WITHHOLDING AT SOURCE
       Whenever payment shall required from an Offer Recipient or from the
       Company or from the subsidiary company by means of tax withholding at
       source in connection with the Options allotted to an Offer Recipient or
       in connection with the Exercise Shares, the Company or the subsidiary
       company shall be entitled to demand from the Offer Recipient a sum
       sufficient to cover any such requirement for tax withholding at source.
       In any event when Shares or any other non-cash asset are transferred
       following the exercise of Options, the Company or the subsidiary company
       shall have the right to demand that the Offer Recipient transfer a sum of
       money sufficient to satisfy the requirement of any tax withholding at
       source, and if that amount should not be transferred at that time, the
       Company or the subsidiary company shall have the right to hold or to
       offset (by law) the Shares or any other asset as mentioned above up to
       the amount due for such taxes until the transfer of the said payment by
       the Offer Recipient.

       Before payment of the tax applicable as set out in section 7 of the
       Rules, it shall not be possible to sell, transfer, pledge, mortgage or
       institute any other voluntary pledge on the Options or Exercise Shares,
       and there shall not be issued in their respect any power of attorney or

<PAGE>

                                      -15-

       conveyance, whether effective immediately or whether effective at a
       future date, except for transfer under a testament or by law as mentioned
       above. Should the Options or Exercise Shares be transferred under a
       testament or by law as aforementioned, the conditions of section 102 of
       the General Instructions shall apply to the successors or transferees of
       the Offer Recipient.

21.    The above provisions of this Plan relate to the laws of the State of
       Israel in force at the date of the Plan in respect of employees who are
       subject to Israeli law. The provisions of the law regarding compulsory
       payments and tax aspects in respect of Option Warrants allotted pursuant
       to this Plan may change from time to time. The provisions of the law
       regarding compulsory payments and tax levies in respect of the Option
       Warrants paid to employees to whom Israeli tax laws do not apply, are not
       described in this document, and each one of the Entitled Employees should
       check the tax laws which apply to him, accordingly.

       THE ABOVE DOES NOT PRETEND TO BE AN AUTHORIZED INTERPRETATION OF THE
       PROVISIONS OF THE LAW MENTIONED ABOVE NOR AN OVERALL DESCRIPTION OF ALL
       PROVISIONS OF THE LAW CONCERNING THE TAXES WHICH MIGHT APPLY WITH REGARD
       TO THE OPTION WARRANTS OFFERED TO THE EMPLOYEES, AND SHOULD NOT BE DEEMED
       PROFESSIONAL LEGAL ADVICE ON THE SUBJECT. AS CUSTOMARY WITH INVESTMENT
       DECISIONS, ANY EMPLOYEE ENTITLED TO RECEIVE OPTION WARRANTS WHO DECIDES
       TO EXERCISE THEM SHOULD TAKE INTO ACCOUNT THE VARIOUS TAX ASPECTS AND THE
       TAX IMPLICATIONS OF HIS INVESTMENT. THE EMPLOYEE SHOULD SEEK PROFESSIONAL
       ADVICE, INCLUDING LEGAL AND TAX CONSULTANTS, TAKING INTO ACCOUNT HIS
       SPECIAL CHARACTERISTICS AND THE LAWS APPLICABLE TO HIM.

22.    GENERAL

       (a)    The expenses required for purposes of management and
              implementation of this Plan (including Stamp Duty, as shall apply)
              shall be borne by the Company. The Company shall be entitled to
              use the consideration it shall receive as a consequence of
              realization of the Options for its general needs and for its
              current activities.

       (b)    This Plan and all attached documents, which have been delivered
              and/or which have been signed by the Company or by its
              subsidiaries in connection with the Plan, shall be interpreted
              under the Laws of the State of Israel. This Plan shall be subject,
              to the extend it relates to Offer Recipients which are subject to
              the Israeli Law, to Section 102 and to any other written
              confirmation to be issued by the Israeli Tax authorities. The
              above does not derogate from the contents of tax laws applicable
              to the Offer Recipients (in the event that there are laws
              applicable to the Participants that are not the tax laws of the
              State of Israel) nor to derogate from the terms of the rules
              applicable to companies whose shares are registered for trading on
              NASDAQ.

       (c)    In addition to the blocking period imposed by section 102 of the
              Income tax [New Version] Ordinance, at the request of the
              underwriters at the time of a public offer of securities of the
              Company, the Board or a committee appointed by the Board may
              decide that the Exercise Shares will be subject to a Lock Up for
              up to 180 days, or for a longer period, during which the Offer
              recipients are not permitted to sell their shares.

       (d)    It is not obligatory to relate to all Offer recipients in a like
              manner.

       (e)    In the event of a contradiction between the provisions of this
              Plan and the letter of allocation, the provisions of this Plan
              will take precedence. In the event of a contradiction between the
              exercise provisions of this Plan and the exercise provisions fixed
              in the agreement between the company and the Trustee, the
              provisions of the agreement with the Trustee will take precedence.

23.    VOTING

       So long as the Exercise Shares are held by the Trustee in trust for the
       Offer Recipients, an Offer Recipient will be entitled to vote the
       Exercise Shares. The Company will send to the Trustee

<PAGE>

                                      -16-

       notices in respect of General Meetings of the Company and the Trustee
       will send such notices to every Offer Recipient. An offer recipient who
       wishes to participate at general Meetings of the company or to exercise
       his voting right in respect of the Exercise Shares held in trust for him
       by the Trustee, must request the Trustee in writing at least four days
       prior to the Meeting or in accordance with the times fixed in the
       agreement between the Company the Trustee, and the Trustee will send a
       Power of Attorney empowering participation at the General Meeting and
       voting in respect of the exercise Shares held in trust for him by the
       Trustee in conformity with the arrangements of the Company relating to
       all shareholders.

24.    NOTICES

       Any notice from the Company to holders of Option Warrants will be given
       by notice in writing to be delivered to the employee at his place of work
       or at the notice board at his place of work or at his registered address
       at the Company.The WPP Executive Stock Option Plan

 Exhibit 4.34 
 THE WPP EXECUTIVE STOCK OPTION PLAN 
 As adopted by the Directors on 
 24th June, 1996 
 and amended by the
Compensation Committee of the Board on 
 23rd April, 1997 
 and amended by the Compensation Committee of the Board on 
 24th September, 1998 
 and amended by the Compensation Committee of the Board on 
 5th May, 1999 (with the approval of the shareholders on 28th June, 1999) 
 and amended by the
Compensation Committee of the Board on 
 22nd September, 1999 
 and amended by the Compensation Committee of the Board on 
 20th September, 2000
(with the approval of shareholders 
 on 26th June, 2000) 
 and amended by the Compensation Committee of the 
 Board on 17th April 2001 (with the approval of shareholders 
 on 25th June 2001) 
 and amended by the Compensation Committee of the Board 
 on 6th August
2003 
 and amended by the Compensation Committee of the Board 
 on 25 October 2004 
 and amended by the Compensation Committee of the Board 
 on 18 August 2005, such amendments taking effect on 
 25 October 2005 
 By a resolution on 30 August 2005 the Board of WPP Group plc 
 has committed to issue WPP Group plc shares in exchange for the shares of the Company 
 issued to Participants, as set out in the Articles of Association of the Company 

 CONTENTS 
  

			
	 1       DEFINITIONS AND INTERPRETATION
	  	2
		
	 2       ELIGIBILITY
	  	3
		
	 3       GRANT OF OPTIONS
	  	4
		
	 4       LIMITS
	  	5
		
	 5       EXERCISE OF OPTIONS
	  	7
		
	 6       TAKEOVER, RECONSTRUCTION AND WINDING-UP
	  	9
		
	 7       VARIATION OF CAPITAL
	  	10
		
	 8       ALTERATIONS
	  	10
		
	 9       MISCELLANEOUS
	  	11
		
	 10     WITHHOLDING
	  	11
		
	 11     WPP GROUP PLC
	  	12
		
	          APPENDIX 3
	  	20
		
	          APPENDIX 4
	  	22
		
	          APPENDIX 5
	  	23
		
	          APPENDIX 6
	  	24

  

 1 

 1    DEFINITIONS AND INTERPRETATION 
  

	1.1	In this Plan1, unless the context otherwise
requires: 

 the “Board” means the board of directors of the Company or a committee appointed by such
board of directors; 
 the “Board of WPP Group plc” means the board of directors of WPP Group plc or a committee appointed by
such board of directors; 
 the “Company” means WPP 2005 plc (registered in England and Wales No. 1003653);

 “Depository” means any depository or depositories which hold or whose nominee holds WPP ADSs; 
 the “Grant Date” in relation to an Option means the date on which the Option was granted; 
 “Group Member” means: 
 a
Participating Company or a body corporate which is (within the meaning of section 736 of the Companies Act 1985) the Company’s holding company or a subsidiary of the Company’s holding company; or 
 a body corporate which is (within the meaning of section 258 of that Act) a subsidiary undertaking of a body corporate within paragraph (a) above and
has been designated by the Board for this purpose; 
 “ITEPA” means the Income Tax (Earnings and Pensions) Act
20032; 
 “Key Feature” means a provision of this Plan which is necessary in order to meet the requirements of Schedule 43; 
 “Option” means a right to acquire Shares or WPP ADSs under the Plan; and a right to acquire
Shares shall be known as a “Share Option” and a right to acquire WPP ADSs shall be known as an “ADS Option”; 
 “Participant” means a person who holds an Option granted under the Plan4; 
 “Participating Company” means the Company or any Subsidiary; 
 the “Plan” means the WPP Executive Stock Option Plan as herein set out but subject to any alterations or additions made under Rule 8
below; 
 “Schedule 4” means Schedule 4 to ITEPA5; 
  

	1	As amended by the Compensation Committee of the Board on 25 October 2004 

	2	As amended by the Compensation Committee of the Board on 25 October 2004 

	3	As amended by the Compensation Committee of the Board on 25 October 2004 

	4	As amended by the Compensation Committee of the Board on 25 October 2004 

	5	As amended by the Compensation Committee of the Board on 25 October 2004 

  

 2 

 “Schedule 9” means Schedule 9 to the Taxes Act 1988; 
 “Scheme” means the Scheme of Arrangement set out in part 4 of the circular to share owners relating to the recommended proposals for the
introduction of a new parent company by means of a scheme of arrangement under section 425 of the Companies Act 1985 or with or subject to any modification, addition or condition approved or imposed by the High Court of Justice in England and Wales;

 “Share” means an ordinary share in the capital of the Company, and for the purposes of Rule 4 (Limits) and if the context
requires, other provisions of the Rules “Shares” include WPP ADSs; 
 “Subsidiary” means a body corporate which is
a subsidiary of the Company within the meaning of section 736 of the Companies Act 1985; 
 “the Taxes Act 1988” means the
Income and Corporation Taxes Act 1988; 
 “the WOP” means the WPP Worldwide Ownership Plan (originally adopted on
24th June, 1996) as from time to time amended; 
 “WPP ADS” means an American Depository Share representing 5 Shares
pursuant to the Amended and Restated Deposit Agreement between the Company and Citibank NA as of 24th October, 1995 and/or any other American depository share arrangement sponsored by the Company; 
 “WPP Group plc” means the public limited company incorporated in England and Wales with registered number 5537577; 
 “WPP Receipt” means an American Depository Receipt evidencing WPP ADSs; 
 and expressions not otherwise defined herein have the same meanings as they have in Schedule 46. 
  

	(2)	Any reference in the Plan to any enactment includes a reference to that enactment as from time to time modified, extended or re-enacted. 

 2    ELIGIBILITY 
  

	(2)	Subject to sub-rule (3) below, a person is eligible to be granted an Option under the Plan if (and only if) he is a full-time director or qualifying employee of a Participating
Company. 

  

	(3)	For the purposes of sub-rule (1) above: 

  

	 	(a)	a person shall be treated as a full-time director of a Participating Company if he is obliged to devote to the performance of the duties of his office or employment with that
and any other Participating Company not less than 25 hours a week; 

  

	6	As amended by the Compensation Committee of the Board on 25 October 2004 

  

 3 

	 	(b)	a qualifying employee, in relation to a Participating Company, is an employee of the Participating Company (other than one who is a director of a Participating Company).

  

	(3)	A person is not eligible to be granted an Option under the Plan at any time within the two years immediately preceding the date (if any) on which he is bound to retire in accordance
with the terms of his contract of employment. 

 3    GRANT OF OPTIONS 
  

	(1)	Subject to sub-rule (2) below and Rule 4 below, the Board may grant or procure the grant to any person who is eligible to be granted an Option under the Plan an Option to
acquire Shares in the Company, upon the terms set out in the Plan and upon such other objective terms as the Board may specify; and for this purpose an option to acquire means7 an option to subscribe.
Unless the Board otherwise determines Share Options shall be granted to persons who are eligible under the Plan and who are resident in the United Kingdom and ADS Options shall be granted to other persons who are eligible. 8 

  

	(2)	An Option may only be granted under the Plan: 

  

	 	(a)	within the period of 6 weeks beginning with the date on which the Plan is approved and adopted by the Company in general meeting or the dealing day next following the date on which
the Company announces its results for any period, or at any other time when the circumstances are considered by the Board to be sufficiently exceptional to justify the grant thereof; and 

  

	 	(b)	within the period of 10 years beginning with the date on which the Plan is approved and adopted as aforesaid 24th June, 1996. 

  

	(3)	The price at which Shares may be acquired by the exercise of an Option shall be determined by the Board before the grant thereof, but shall not be less than:

  

	 	(a)	in the case of a Share Option, if Shares of the same class as those Shares are listed in the London Stock Exchange Daily Official List, the average middle-market quotation of Shares
of that class (as derived from that List) over a number of consecutive dealing days (being not more than five) immediately preceding the Grant Date; 

  

	 	(b)	in the case of a Share Option, if paragraph (a) above does not apply, the market value (within the meaning of Part VIII of the Taxation of Chargeable Gains Act 1992) of Shares
of that class, as reasonably determined by the Board; 

  

	7	As amended by the Compensation Committee of the Board on 25 October 2004. 

	8	As amended by the Compensation Committee of the Board on 25 October 2004. 

  

 4 

	 	(c)	in the case of an ADS Option, the fair market value of a WPP ADS as quoted on NASDAQ over a number of consecutive dealing days (being not more than five) immediately preceding the
Grant Date; or 

  

	 	(d)	except in the case of an Option to acquire shares otherwise than by subscription, the nominal value of those Shares. 

  

	(4)	An Option granted under the Plan to any person: 

  

	 	(a)	shall not, except as provided in Rule 5(4) below, be capable of being transferred by him; and 

  

	 	(b)	shall lapse forthwith if he is adjudged bankrupt. 

 4    LIMITS 
  

	(1)	No options shall be granted under the Plan or the WOP which would, at the time they are granted, exceed the limit set out in this Rule 4(1). 

 That limit is that the number of shares which:; 
  

	 	(a)	shall have been issued; or 

  

	 	(b)	may be issued 

 in pursuance of options granted under the
Plan or the WOP in the period of 10 years beginning with 28th June, 1999 (which is subject to the requirement under Rule 3(2)(b) that Options may only be granted within 10 years after 28th June, 1996) must not exceed such number as
represents 10 per cent9 of the ordinary share capital of the Company in issue at the time of grant of the
options. In applying this Rule, Shares issued under any other employee share scheme adopted by the Company after 28th June 1999 (or Shares issued or capable of issue under any other share option scheme of the Company adopted after that date, as
the case may be) shall also count against that limit. 
  

	(2)	No person shall be granted Options under the Plan in any period of 12 months (except in exceptional circumstances (as determined by the Board) or in the year of appointment of any
person) which would, at the time they are granted, cause the market value of the Shares in the Company for which he may subscribe in pursuance of Options granted to him in that period of 12 months under the Plan or under any other share option
scheme (other than a savings related scheme) adopted by the Company, to exceed 400% of the person’s annual salary as at that time;10 and for the purposes of this sub-rule: 

  

	 	(a)	any Option which shall have been released to any extent shall be treated to that extent as if it were still exercisable; 

  

	9	This limit should be read in conjunction with the limit agreed in a letter, dated 18 June 1999, to the Association of British Insurers from the group finance
director (this footnote was added following the meeting of the Compensation Committee of the Board on 25 October 2004). 

	10	Amended pursuant to a resolution of the Compensation Committee in April 2001 

  

 5 

	 	(b)	shares in a Participating Company shall not be regarded as benefits in kind; 

  

	 	(c)	where a payment of remuneration is made otherwise than in sterling, the payment shall be treated as being of the amount of sterling ascertained by applying such rate of exchange
published in a national newspaper as the Board shall reasonably determine; and 

  

	 	(d)	a person’s remuneration shall be deemed to include fees paid to a company whose principal purpose is to provide his services, being services of a nature which he would be
expected to perform as an employee of a Participating Company, and being fees referable to those services and exclusive of VAT. 

  

	(3)	For the purposes of this Rule, the market value of the Shares in relation to which an Option was granted shall be calculated: 

  

	 	(a)	in the case of an Option granted under the Plan, as on the day by reference to which the price at which Shares may be acquired by the exercise thereof was determined in accordance
with Rule 3(3) above; 

  

	 	(b)	in the case of an option granted under any option scheme (other than a savings related scheme) approved by the Inland Revenue, as at the time when it was granted or, in a case where
an agreement relating to the Shares has been made under paragraph 29 of Schedule 9 or paragraph 22 of Schedule 4, such earlier time or times as may be provided in the agreement; and11 

  

	 	(c)	in the case of any other option, as on the day or days by reference to which the price at which shares may be acquired by the exercise thereof was determined

  

	 	(d)	and the Board may adopt such exchange rate as it thinks fit for the conversion of one currency to another currency. 

  

	(4)	No person shall be granted an Option under the Plan if the number of Shares which may be acquired on exercise of that Option, when added to the number of Shares which have been or
may still be acquired on the exercise of Options previously granted to him under the Plan, exceeds 3% of the total of: 

  

	 	(a)	the number of Shares which have been or may still be acquired on the exercise of Options previously granted to all persons under the Plan, and 

  

	 	(b)	the number of Shares still available for the grant of Options under the Plan. 

  

	(5)	Any Option granted under the Plan shall be limited and take effect so that the above limits are complied with. 

  

	11	As amended by the Compensation Committee of the Board on 25 October 2004 

  

 6 

 5    EXERCISE OF OPTIONS 
  

	(1)	The exercise of any Option granted under the Plan shall be effected in such form and manner as the Board may from time to time prescribe. 

  

	(2)	Subject to sub-rules (4) and (5) below and to sub-rules (1) and (3) of Rule 6 below, an Option granted under the Plan may not be exercised before the third
anniversary of the Grant Date. 

  

	(3)	Subject to sub-rule (4) and paragraphs (a) and (c) of sub-rule (5) and paragraph (b) of sub-rule 7 below and to sub-rules (1) and (3) of Rule 6
below, an Option granted under the Plan may not be exercised if the relevant condition is not satisfied; and in this sub-rule the relevant condition is a condition related to performance which constitutes a term specified by the Board as mentioned
in Rule 3(1) above or, if there is no such condition, the condition in the Schedule hereto provided that if the grant of an Option was made subject to the satisfaction of a condition the Board may determine that the sub-rule (3) shall not apply
to the exercise of that Option.12 

  

	(4)	If any Participant dies before exercising an Option granted to him under the Plan and at a time when either he is a director or employee of a Group Member or he is or would but for
sub-rule (3) above be entitled to exercise the Option by virtue of sub-rule (5) below, the Option may (and must, if at all) be exercised by his personal representatives within 12 months after the date of his death.

  

	(5)	If any Participant ceases to be a director or employee of a Group Member (otherwise than by reason of his death), the following provisions apply in relation to any Option granted to
him under the Plan: 

  

	 	(a)	if he so ceases by reason of injury or disability, or by reason only that his office or employment is in a company which ceases to be a Group Member, or relates to a business or
part of a business which is transferred to a person who is not a Group Member, the Option may (and subject to sub-rule (4) above must, if at all) be exercised within the exercise period; 

  

	 	(b)	if he so ceases by reason of retirement on or after reaching the age at which he is bound to retire in accordance with the terms of his contract of employment (or, if there is no
such age, if he retires at all), the Option may (and subject to sub-rule (4) above must, if at all) be exercised within the exercise period, but subject to sub-rule (3) above; 

  

	 	(c)	if he so ceases for any other reason, the Option may not be exercised at all unless the Board shall so permit, in which event it may (and subject to sub-rule (4) above must, if
at all) be exercised to the extent permitted by the Board within the exercise period; 

 and in this sub-rule the exercise
period is the period which shall expire 12 months after his so ceasing or 42 months after the Grant Date, whichever shall be the latest. 
  

	12	As amended by the Compensation Committee of the Board on 25 October 2004 

  

 7 

  

	(6)	Subject to sub-rule 6(A) below, a Participant shall not be treated for the purposes of sub-rule (5) above as ceasing to be a director or employee of a Group Member until such
time as he is no longer a director or employee of any Group Member and a female Participant who ceases to be such a director or employee by reason of pregnancy or confinement and who exercises her right to return to work under the Employment Rights
Act 1996 before exercising an Option under the Plan shall be treated for those purposes as not having ceased to be such a director or employee. 

  

	(6A)	In the case of Options granted after 1st September 1999 (other than under the Approved Part), a Participant, who gives or is given notice to leave employment as a director or
employee of a Group Member in any circumstances other than death or in those circumstances referred to in sub-rule (5)(a) or (b), shall, if he subsequently ceases to be in such employment, be treated for the purposes of sub-rule (5) above
as ceasing to be a director or employee of a Group Member on the date on which that notice is given (and for the avoidance of doubt any purported exercise of the option during the period of notice shall be of no effect). If a Participant is given
notice to leave employment as a director or employee of a Group Member and the Board subsequently uses its discretion under sub-rule (5)(c) to allow his Option to be exercisable, nothing in this sub-rule (6)A will make his Option lapse or cease
to be exercisable. 

  

	(7)	Notwithstanding any other provision of the Plan, an Option granted under the Plan (a) may not be exercised after the expiration of the period of 10 years (or such shorter
period as the Board may have determined before the grant thereof) beginning with the Grant Date (the last day of such period being the “Expiry Date”); and (b) in respect of any option granted after 1 September 1998, such option
shall be exercisable for the period of four (4) months ending on the Expiry Date irrespective of whether the relevant condition (as that term is defined in Rule 5(3)) has been satisfied. 

  

	(8)	Within 30 days after an Option under the Plan has been exercised by any person, the grantor of the Option shall, in the case of a Share Option, procure the allotment13 to him (or a nominee for him) of the number of Shares in respect of which the Option has been exercised and, in the case of an
ADS Option, procure the issue to him of a WPP Receipt evidencing the WPP ADSs in respect of which the Option has been exercised (including, if appropriate, by procuring the allotment or transfer of Shares to a Depository) unless:

  

	 	(a)	the Board considers that the issue or transfer thereof would not be lawful in all relevant jurisdictions; or 

  

	 	(b)	in a case where a Group Member is obliged to account for any tax (in any jurisdiction) for which the person in question is liable by virtue of the exercise of the Option, that or
another Group Member is unable to withhold the tax from his remuneration nor has received payment from him of a corresponding amount. 

  

	13	As amended by the Compensation Committee of the Board on 25 October 2004. 

  

 8 

	(8A)	The Board may agree with any Participant at any time that an Option granted under the Plan before 28th June, 1999 shall be treated as if it had been an ADS Option (and not a
Share Option). The Board shall select such exchange rate as it considers appropriate for converting the price at which Shares may be acquired from sterling to U.S. dollars. 

  

	(9)	All Shares allotted under the Plan shall rank pari passu in all respects with the Shares of the same class for the time being in issue save as regards any rights attaching to
such Shares by reference to a record date prior to the date of the allotment. 

  

	(10)	If Shares of the same class as those allotted under the Plan are listed in the London Stock Exchange Official List, the Company shall apply to the London Stock Exchange for any
Shares so allotted to be admitted to that List. 

 6    TAKEOVER, RECONSTRUCTION AND WINDING-UP 
  

	(1)	If any person obtains control of the Company or WPP Group plc (within the meaning of section 840 of the Taxes Act 1988) as a result of making a general offer to acquire Shares in
the Company or WPP Group plc, or having obtained such control makes such an offer, the Board shall within 7 days of becoming aware thereof notify every Participant thereof and, subject to sub-rules (4), (5) and (7) of Rule 5 above, an
Option granted under the Plan may be exercised within three months (or such longer period as the Board may permit) of such notification. 

  

	(2)	For the purposes of sub-rule (1) above, a person shall be deemed to have obtained control of the Company or WPP Group plc if he and others acting in concert with him have
together obtained control of it. 

  

	(3)	If any person becomes bound or entitled to acquire Shares in the Company or WPP Group plc under sections 428 to 430F of the Companies Act 1985, or if under section 425 of that Act
the Court sanctions a compromise or arrangement proposed for the purposes of or in connection with a scheme for the reconstruction of the Company or WPP Group plc or the amalgamation of either of those companies with any other company or companies,
or if the Company or WPP Group plc passes a resolution for voluntary winding up, or if an order is made for the compulsory winding up of the Company or WPP Group plc, the Board shall forthwith notify every Participant thereof and any Option granted
under the Plan may, subject to sub-rules (4), (5) and (7) of Rule 5 above, be exercised within one month of such notification, but to the extent that it is not exercised within that period shall (notwithstanding any other provision of the
Plan) lapse on the expiration thereof. 

  

	(4)	The Board may determine (the determination to apply equally to all Options outstanding at the time) that the provisions of sub-rules (1) and (3) above will neither cause
Options to become exercisable nor to lapse at different times than would otherwise be the case, if the Board considers that the Options will continue to be an appropriate incentive notwithstanding the changed circumstances, or that the position of
Participants can be adequately preserved by the grant to them of some other right or rights in substitution for or addition to the existing rights. 

  

 9 

 7    VARIATION OF CAPITAL 
  

	(1)	In the event of any increase or variation of the share capital of the Company (whenever effected), the Board may make such adjustments as it considers appropriate under sub-rule
(2) below. 

  

	(2)	An adjustment made under this sub-rule shall be to one or more of the following: 

  

	 	(a)	the number of Shares in respect of which any Option granted under the Plan may be exercised; 

  

	 	(b)	the price at which Shares may be acquired by the exercise of any such Option; 

  

	 	(c)	where any such Option has been exercised, but no Shares have been allotted or transferred pursuant to such exercise, the number of Shares which may be so allotted or transferred and
the price at which they may be acquired. 

  

	(3)	An adjustment under sub-rule (2) above may have the effect of reducing the price at which Shares may be acquired by the exercise of an Option to less than their nominal value,
but only if and to the extent that the Board shall be authorised to capitalise from the reserves of the Company a sum equal to the amount by which the nominal value of the Shares in respect of which the Option is exercised and which are to be
allotted pursuant to such exercise exceeds the price at which the same may be subscribed for and to apply such sum in paying up such amount on such Shares; and so that on exercise of any Option in respect of which such a reduction shall have been
made the Board shall capitalise such sum (if any) and apply the same in paying up such amount as aforesaid. 

  

	(4)	As soon as reasonably practicable after making any adjustment under sub-rule (2) above, the Board shall give notice in writing thereof to any Participant affected thereby.

 8    ALTERATIONS 
  

	(1)	Subject to sub-rule (2) below, the Board may at any time alter or add to all or any of the provisions of the Plan, or the terms of any Option granted under it, in any respect
provided that no amendment shall take effect unless and until it is approved by the Board of WPP Group plc. 

  

	(2)	No alteration or addition to the advantage of Participants shall be made under sub-rule (1) above to any Rule of the Plan without the prior approval by ordinary resolution of
the members of WPP Group plc in general meeting other than a minor amendment to benefit the administration of the Plan, to take account of a change in legislation or to obtain or maintain favourable tax, exchange control or regulatory treatment for
any Participant or Group Member. 

  

 10 

	(3)	As soon as reasonably practicable after making any alteration or addition under sub-rule (1) above, the Board shall give notice in writing thereof to any Participant affected
thereby. 

 9    MISCELLANEOUS 
  

	(1)	The rights and obligations of any individual under the terms of his office or employment with any Group Member shall not be affected by his participation in the Plan or any right
which he may have to participate therein, and an individual who participates therein shall by participating be deemed to waive any and all rights to compensation or damages in consequence of the termination of his office or employment for any reason
whatsoever insofar as those rights arise or may arise from his ceasing to have rights under or be entitled to exercise any Option under the Plan as a result of such termination. 

  

	(2)	In the event of any dispute or disagreement as to the interpretation of the Plan, or as to any question or right arising from or related to the Plan, the decision of the Board shall
be final and binding upon all persons. 

  

	(3)	The Company and any Subsidiary may provide money to the trustees of any trust or any other person to enable them or him to acquire Shares to be held for the purposes of the Plan
(which Shares may be held by a Depository on behalf of any such trustees or other person) or enter into any guarantee or indemnity for these purposes, to the extent permitted by section 153 of the Companies Act 1985. 

  

	(4)	In the event that Shares are transferred to a Participant in pursuance of any Option granted under the Plan, the Participant shall, if so required by the person making the transfer,
join that person in making a claim for relief under section 165 of the Taxation of Chargeable Gains Act 1992 in respect of the disposal made by him in effecting such transfer, should such relief be available. 

  

	(5)	Any notice or other communication under or in connection with the Plan may be given by personal delivery or by sending the same by post, in the case of a company to its registered
office, and in the case of an individual to his last known address, or, where he is a director or employee of a Group Member, either to his last known address or to the address of the place of business at which he performs the whole or substantially
the whole of the duties of his office or employment. 

  

	(6)	The Board may establish further plans based on the Plan but modified to take account of local tax, exchange control or securities laws in overseas territories, provided that any
Shares made available under such further plans are treated as counting against the limits expressed in Rule 4(1) to (6). 

 10    WITHHOLDING 
  

	(1)	The grant or exercise of any Option under this Plan is subject to the condition that the grant or an exercise of the Option shall not be valid unless the Participant has, in
addition to complying with the other requirements of this Plan, paid or procured the payment to the Group Member which is his employer, or otherwise provided for (in a manner satisfactory to that Group Member or, if appropriate, the trustees of any
employee benefit trust) an amount equal to the Taxation for which any Group Member may be liable by reason of that grant or exercise.14 

	14	As amended by the Compensation Committee of the Board on 25 October 2004 

  

 11 

	(2)	Without limitation to (1) above, the Company or any other Group Member which is a Participant’s employer or the trustees of any employee benefit trust may withhold any
amount and make such arrangements as it considers necessary which comply with applicable law to meet any liability to Taxation in respect of the grant, exercise or cancellation of Options or other event relating to Options or in respect of any
benefit under this Plan. These arrangements may include the sale of any Shares on behalf of a Participant, which the Participant is deemed to have authorised, to produce a cash sum sufficient to meet the Taxation liabilities referred to in this Rule
10.15 

  

	(3)	The Company may in its sole discretion waive the requirements set out in this Rule 10 in respect of any part of the Participant’s employer’s liability to Taxation,
including in particular, any employer’s liability to National Insurance Contributions. 

 In this Rule,
“Taxation” means all forms of taxation or levy by any state or any political subdivision of a state and includes income tax, Pay as You Earn, National Insurance or other social security contributions, whether being the primary liability of
the employer or the employee, or any other person. 
  

	11	WPP GROUP PLC 

  

	(1)	The Articles of Association of the Company have been amended so that WPP Group plc will automatically acquire (and a Participant will be obliged to transfer) shares in the Company
issued to the relevant Participant in exchange for the same number of WPP Group plc shares as would have been received in respect of those shares of the Company under the Scheme (but adjusted, if appropriate, to take into account any variations in
the share capital of the Company and/or WPP Group plc that occur after the Scheme). 

  

	(2)	The Board of WPP Group plc have resolved that WPP Group plc will in all cases acquire shares in Company acquired by Participants under the Plan as described in sub-rule (1).

	15	As amended by the Compensation Committee of the Board on 25 October 2004 

  

 12 

 SCHEDULE 
  

	1	The condition in this Schedule is that 

  

	(i)	The average WPP TSR for a Relevant End Period exceeds the average WPP TSR for a Relevant Base Period by an amount which, expressed as a percentage, is greater than the percentage by
which the average FT-SE 100 TSR for the same Relevant End Period exceeds the average FT-SE 100 TSR for the same Relevant Base Period; and that the same shall have been computed by the Company and communicated to the Participant. The Company shall be
obliged to perform the calculation and communicate the result to the Participant not later than the fifth working day following the end of the calendar month in which the last weekday of the Relevant End Period falls. 

 For the purposes of the paragraph above: 
  

	 	(a)	a Relevant Base Period is any period of 60 weekdays of which the last is the day 3 years prior to the last weekday of the Relevant End Period (or, if that day is not a weekday, the
last preceding weekday) and is not earlier than the last weekday before the Grant Date (weekdays in this Schedule being Monday to Friday inclusive, including bank holidays); 

  

	 	(b)	a Relevant End Period is any period of 60 weekdays; 

  

	 	(c)	FT-SE 100 TSR on any day means the total shareholder return figure for the index FT-SE 100 companies (currently known as the index of “total return”) published in the
Financial Times in respect of that day; 

  

	 	(d)	WPP TSR on any day means the total shareholder return figure for the Company calculated on the same basis as total shareholder return is calculated for the purposes of FT-SE 100
TSR. 

 AND 
  

	(ii)	Looking at two associated financial years of the Company of which the later one is the third financial year after the earlier one, the earnings per Share of the Company for the
later one must have exceeded its earnings per share for the earlier one by an amount which, when expressed as a fraction of the last mentioned earnings per share, is not less than ((R2-R1)/R1) + 0.06, where R1 is the retail prices index for the last
month in the earlier year and R2 is the retail prices index for the last month in the later year. 

 For the
purposes of the paragraph above 
  

	 	(e)	the earnings per share of the Company shall be taken to be its headline earnings per Share, as calculated in accordance with the principles set out in Statement of Investment
Practice No.1 “The Definition of IIMR Headline Earnings” issued by The Institute of Investment Management and Research, or shall be calculated on such basis as shall have been determined by the Board before the grant of the Option;

  

 13 

	 	(f)	two financial years of the Company are associated if the earlier one is not earlier than the financial year of the Company last preceding the Grant Date and the later one is
not later than the financial year of the Company last preceding the date on which the Option is exercised; 

  

	 	(g)	“financial year” has the same meaning as in section 742 of the Companies Act 1985; 

  

	 	(h)	the retail prices index is the general index of retail prices (for all items) published by the Central Statistical Office of the Chancellor of the Exchequer or, if that index
is not published for the month in question, any substituted index or index figures published by that Office. 

  

	2	The Board may make such adjustments to the method of calculating WPP TSR, FT-SE 100 TSR, earnings per share or any other feature of the above condition as it considers appropriate
to take account of any increase or variation of the share capital of the Company, any change to the calculation of FT-SE 100 TSR or to earnings per share or any other factors considered by the Board to be relevant. 

  

 14 

 APPENDIX 1 
 This Appendix constitutes the Inland Revenue approved part of the WPP Executive Stock Option Plan (“the Approved Part”). The terms of the Approved Part are identical to those of the other part of the said scheme to which
this Approved Part is appended except as follows: 
  

	1.	In the definition of “Subsidiary” in Rule 1(1), add to the end words “and is under the control of the Company within the meaning of Section 840 of the
Taxes Act 1988”. 

  

	2.	In Rule 2(3), add to the end the words “nor when he is not eligible to participate in the Plan by virtue of paragraph 9 of Schedule 4”.16

  

	2A.	Only Share Options, and not ADS Options, shall be granted under the Approved Part. 

  

	3.	In Rule 3(1), after the word “Company”, add the words “which satisfy the requirements of paragraphs 16 – 20 of Schedule 4”.17 

  

	4.	In Rule 3(2), after the words “general meeting”, add the words “the date on which the Approved Part is approved by the Inland Revenue under Schedule 9”.

  

	5.	In Rule 3(3)(a), add at the end the words “(or such other dealing day or days as may be agreed with the Inland Revenue)”. 

  

	6.	In Rule 3(3)(b), delete the words “reasonably determined by the Board” and substitute the words “agreed in advance for the purposes of the Plan with the Shares
Valuation Division of the Inland Revenue, on the Grant Date (or such other day as may be agreed with the Inland Revenue)”. 

  

	7.	Add the following as Rule 4(3A): 

 “No person shall be granted Options
under the Approved Part which would, at the time they are granted, cause the aggregate market value of the Shares which he may acquire in pursuance of Options granted to him under the Approved Part or under any other share option scheme, not being a
savings related share option scheme, approved under Schedule 9 or Schedule 4 and established by the Company or by any associated company of the Company (and not exercised) to exceed or further exceed £30,000 or such other limit as may be
prescribed in paragraph 6 of Schedule 4”.18 
  

	7A.	In sub-rule 5(3) the additional words beginning “provided that” to the end of sub-rule 5(3) shall not apply to Options granted under the Approved Part.19 

	16	As amended by the Compensation Committee of the Board on 25 October 2004 

	17	As amended by the Compensation Committee of the Board on 25 October 2004

	18	As amended by the Compensation Committee of the Board on 25 October 2004

	19	Amended by resolution of the Compensation Committee dated 6 August 2003

  

 15 

	8.	In Rule 5(5), delete the words “or 42 months after the Grant Date” and substitute the words “42 months after the Grant Date or 42 months after the last date prior to
his so ceasing on which he exercised an option (not being one granted under a savings related share option scheme) in circumstances in which paragraphs (a) and (b) of Section 185(3) of the Taxes Act 1988 applied”.

  

	8A.	Add the following after Rule 5(5)(b) as Rule 5(5)(bb): 

 “if he so ceases by reason of redundancy (within the meaning of the Employment Rights Act 1996) the Option may not be exercised at all following such cessation”. 
  

	8B.	In Rule 5(5)(c), delete the words “(including without limitation by reason of redundancy (within the meaning of the Employment Rights Act 1996))”.

  

	8C.	In Rule 5(6A) delete the words “after 1st September 1999 (other than under the Approved Part” and replace those words with “18th May, 2000”. 

  

	9.	Add the following as Rule 5(7A): 

 “A Participant
shall not be eligible to exercise an Option under the Plan at any time when he is not eligible to participate in the Plan by virtue of paragraph 9 of Schedule 4”. 
  

	9A.	Rule 5(8A) shall not apply. 

  

	10.	Add the following as Rules 6(5) and (6): 

  

	 	“(5)	(a)    If any company (“the acquiring company”): 

 obtains control of the Company as a result of making – 
 (i) a general offer to acquire the whole of the issued ordinary
share capital of the Company which is made on a condition such that if it is satisfied the person making the offer will have control of the Company, or 
 (ii) a general offer to acquire all the Shares in the Company which are of the same class as the Shares which may be acquired by the exercise of Options granted under the Plan, or 
  

	 	(b)	obtains control of the Company in pursuance of a compromise or arrangement sanctioned by the court under section 425 of the Companies Act 1985 or Article 418 of the Companies
(Northern Ireland) Order 1986, or 

  

	 	(c)	becomes bound or entitled to acquire Shares in the Company under sections 428 to 430F of that Act or Articles 421 to 423 of that Order, 

 any Participant may at any time within the appropriate period (which expression shall be construed in accordance with paragraph 26 of Schedule 4), by agreement with the
acquiring company, release any Option granted under the Plan which has not lapsed (“the old option”) in consideration of the grant to him of an option (“the new option”) which (for the purposes of that paragraph) is
equivalent to the old option but relates to shares in a different company (whether the acquiring company itself or some other company falling within paragraph 16(b) or (c) of Schedule 4).20 

	20	As amended by the Compensation Committee of the Board on 25 October 2004

  

 16 

	 	(6)	The new option shall not be regarded for the purposes of sub-rule (5) above as equivalent to the old option unless the conditions set out in paragraph 27 of Schedule 4 are
satisfied, but so that the provisions of the Plan shall for this purpose be construed as if:21

  

	 	(i)	the new option were an option granted under the Plan at the same time as the old option; 

  

	 	(ii)	except for the purposes of the definitions of “Group Member”, “Participating Company” and “Subsidiary” in Rule 1(1) above and the reference to
“the Board” in Rule 5(7) above, the expression “the Company” were defined as “a company whose shares may be acquired by the exercise of options granted under the Plan”; 

  

	 	(iii)	the relevant condition referred to in Rule 5(3) above had been satisfied; and 

  

	 	(iv)	Rule 8(2) below were omitted.” 

  

	11.	At the start of Rule 7(1), add the words “Subject to sub-rule (2A) below”. 

  

	12.	In Rule 7(1), delete the words “increase or.” 

  

	13.	Add the following as Rule 7(2A): 

 “At a time when the Plan is
approved by the Inland Revenue under Schedule 4, no adjustment under sub-rule (2) above shall be made without the prior approval of the Inland Revenue.” 
  

	14.	In Rule 8(1) delete the words “sub-rule (2)” and substitute the words “sub-rules (2), (2A) and (2B)”. 

  

	15.	At the end of Rule 8(1), add the words “(having regard to the fact that, if an alteration or addition which does not solely relate to a special term is made at a time when the
Plan is approved by the Inland Revenue under Schedule 4, the alteration or addition to any Key Feature will not thereafter have effect unless the Inland Revenue have approved the alteration or addition)”.22 

  

	16.	Add the following as Rule 8(2A) and (2B): 

 “(2A) No alteration or
addition to the disadvantage of any Participant, other than to a special term, shall be made under sub-rule (1) above unless: 
  

	(a)	the Board shall have invited every relevant Participant to give an indication as to whether or not he approves the alteration or addition, and 

	21	As amended by the Compensation Committee of the Board on 25 October 2004

	22	As amended by the Compensation Committee of the Board on 25 October 2004

  

 17 

	(b)	the alteration or addition is approved by a majority of those Participants who have given such an indication. 

  

	(2B)	No alteration or addition which solely relates to a special term subject to which an Option has been granted shall be under sub-rule (1) above unless: 

 

	(a)	there shall have occurred an event which shall have caused the Board reasonably to consider that the special term would not, without the alteration or addition, achieve its original
purpose, and 

  

	(b)	the Board shall act fairly and reasonably in making the alteration or addition.” 

 17. At the end of Rule 8(3), add the words “and if the Plan is then approved by the Inland Revenue under Schedule 4, to the Inland Revenue.”23 
  

	18.	Add as Rule 8(4): 

 “Any reference in this Rule to a special term is a
reference to a term specified by the Board as mentioned in Rule 3(1) above or a term of the Schedule hereto”. 
  

	19.	Delete Rule 9(6). 

	23	As amended by the Compensation Committee of the Board on 25 October 2004 

  

 18 

 APPENDIX 2 
 Special Rules Applicable to Grants of Incentive Stock Options 
 1. Options granted in accordance with the Plan
(either including or excluding Appendix 1 thereto) may be designated as “Incentive Stock Options” (“ISOs”) within the meaning of section 422 of the United States Internal Revenue Code of 1986, as amended (the “U.S.
Tax Code”). 
 2. The aggregate number of Shares (including Shares comprised in any WPP ADS) for which ISOs may be granted under Appendix 2 shall
not exceed 73,811,500. 
 3. The class of persons who may receive ISOs shall, in addition to the limitations imposed by Rule 2 of the Plan, be limited to
those persons who are employees of the Company or its “parent” or “subsidiary” corporations within the meaning of sections 424(f) and (g), respectively, of the U.S. Tax Code. 
 4. In addition to any other restrictions contained in the Plan, ISOs shall not be transferable otherwise than by will or the laws of descent and distribution. During the
lifetime of the person to whom an ISO is granted, the ISO shall be exercisable only by such person. 
 5. To the extent that the aggregate market value of
Shares (including Shares comprised in any WPP ADS) with respect to which ISOs are exercisable (determined without regard to this sentence) for the first time by a Participant during any calendar year (under all plans or schemes of the Company or its
“parent” and “subsidiary” corporations within the meaning of sections 424(f) and (g), respectively, of the U.S. Tax Code) exceeds US $100,000, such Options shall to the extent of such excess be treated as Options which are not
ISOs. For the purposes of the preceding sentence, the market value of any Shares (including Shares comprised in any WPP ADS) subject to an ISO shall be determined at the time such ISO is granted. 
 6. This schedule shall be deemed to be included within the Plan as adopted by shareholders for the purpose of any ISO grants. 
  

 19 

 APPENDIX 3 
 India 
 The plan will apply to options granted to residents in India with the following modifications:

 1.      Notwithstanding any other provision of the Plan, a person is eligible to be granted an option under this Appendix if
(and only if) he is a full-time director or qualifying employee (as defined in Rule 2(2)) of a Participating Company (whether or not the Company itself) resident in India. 
 2.      Notwithstanding any other provision of the Plan, the exercise of an option will only take effect on the date on which the shares acquired by virtue of that exercise are sold by
the Participant. 
 3.      Notwithstanding any other provision of the Plan, an option granted to a Participant under this
Appendix shall not be capable of being transferred by that Participant except as provided in Rule 5(4) (in the event of a Participant’s death). 
 4.      Notwithstanding any other provision of the Plan: 
  

	 	(a)	any exercise of an option by a Participant is only effective if, and to the extent that, the net proceeds (that is, after taking account of dealing costs and any interest on the
money, if any, lent to the Participant to facilitate the exercise of the option) from the immediate sale of the shares acquired by the exercise of that option would be not less than the price at which the Participant is able to acquire the shares by
virtue of that option; 

  

	 	(b)	in the event that the net proceeds from the sale of shares acquired by the exercise of an option by a Participant on the day of acquisition of such shares would be less than the
price at which the Participant may acquire the shares by virtue of that option, with the result that there would be a shortfall between the acquisition price and the net proceeds of such sale, any purported exercise of the option will not take
effect. 

 5.      Further to 4 above, and notwithstanding any other provision of the Plan, neither the Company
nor any Participating Companies make any representation or guarantee as to whether an intended exercise of an option by Participant on any given day will be effective, and neither the Company nor any Participating Company shall be considered to be
or held accountable or liable in any way for the inability of a Participant to exercise his option as a consequence of the restrictions on exercise set out in 4 above. 
 6.      The exercise of an option granted under this Appendix shall be effected in the following manner: 
  

	 	(a)	The exercise shall be deemed to take effect, if at all, 3 working days after the receipt by the Company of the Participant’s notice of his intention to exercise it.

  

	 	(b)	Assuming that the Company is able to establish that the condition referred to in paragraph 4(a) above is met, a third party selected by the Company will lend the option exercise
price to the Participant by way of transferring the sum directly to the Company. 

  

 20 

	 	(c)	The Company will then issue the shares to a nominee for the Participant, which nominee will be a company controlled by a firm of stockbrokers nominated by the Company.

  

	 	(d)	The nominee will sell the shares in question on the Participant’s behalf. 

  

	 	(e)	The nominee will receive the sale price and deduct from this dealing costs and the interest, if any referred to in paragraph 4(a) above. 

  

	 	(f)	As soon as practicable the remaining balance will be converted into Indian Rupees at the best rate reasonably obtainable on the foreign exchange markets and the resulting sum (net
of costs of conversion) remitted to the Participant. 

 7.      The Plan shall be administered by the Board or a
committee appointed by it and any determination by it shall be final for the purposes of the Plan’s administration in respect of employees of a Participating Company (whether or not the Company itself) resident in India. 
  

 21 

 APPENDIX 4 
 Belgium 
 The Plan will apply to Options granted to residents of Belgium after 1 January 1999 with the
following modifications. 
  

	1.	In Rule 3(4), a further sub-rule (c) shall be added as follows: 

 “(c)      shall be cancelled if he notifies the Company that he refuses to accept the Option within 60 days of the date of the Company’s communication to him in respect of the
Option.” 
  

	2.	In Rule 5(2), delete the words: 

 “the third
anniversary of the Grant Date” 
 and substitute the words 
 “the 1 January following the third anniversary of the Grant Date.” 
  

	3.	In Rule 5(4), delete the words: 

 “within 12 months
after the date of his death.” 
 and substitute the words 
 “in the later of the period of 12 months commencing with the date of his death or the period of 6 months commencing on 1 January following the third anniversary of the Grant Date.” 
  

	4.	In Rule 5(5), delete the words: 

 “and in this
sub-rule the exercise period is the period which shall expire 12 months after his so ceasing on 42 months after the Grant Date, whichever shall be the latest” 
 and substitute the words 
 “and in this sub-rule the exercise period is the period which shall
commence on the 1 January following the third anniversary of the Grant Date (the “Third Anniversary”) and expire 12 months after his so ceasing or 6 months after the Third Anniversary, whichever shall be the latest.”

  

 22 

 APPENDIX 5 
 Netherlands 
 The Plan will apply to Options granted to residents of the Netherlands with the following alterations: 
  

	1.	Rule 5(7) shall be deleted and replaced by the following in substitution:- 

 “(7)    Notwithstanding any other provision of the Plan, an Option granted under the Plan may not be exercised after the expiration of 4 years (or such shorter period as the Board may have determined before the
grant thereof) beginning with the Grant Date.” 
  

	2.	Rule 10 shall be amended by the insertion of the following sub-rule: 

 “(5)    Without prejudice to sub-rules (1) to (4) above, each Option is granted subject to the condition that, upon such Option becoming exercisable in accordance with the Rules of the Plan, the
Participant will pay or procure the payment to the Group Member which is his employer or otherwise provide for (in a manner satisfactory to that Group Member or, if appropriate, the trustees of any employee benefit trust), an amount equal to
Taxation which any Group Member or the trustees of any employee benefit trust may be required to withhold on the Participant’s behalf by reason of that Option becoming exercisable. No Option in the Netherlands may be exercised, unless the
Participant has complied with his obligations under this Rule 10(5).” 
  

 23 

 APPENDIX 6 
 Switzerland 
 The Plan will apply to Options granted to the residents of Switzerland on or after 1 January 2002 with the modification
that in Rule 5(7) the words “and six months” be inserted after the words “10 years”. 
  

 24

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