Document:

Exhibit 4.5

 

THE ESTÉE LAUDER COMPANIES INC.

 

4.150% Senior Notes due 2047

 

February 9, 2017

 

OFFICERS’ CERTIFICATE

 

THE UNDERSIGNED, Tracey T. Travis and Spencer G. Smul, do hereby certify that they are the duly appointed, qualified and acting Executive Vice President and Chief Financial Officer and Senior Vice President, Deputy General Counsel and Secretary, respectively, of The Estée Lauder Companies Inc., a Delaware corporation (the “Company”), and they do hereby further certify that there is hereby established pursuant to the authority granted by the resolutions adopted by the Board of Directors of the Company at a duly held meeting of the Board of Directors on November 11, 2016 (the “Resolutions”) and Section 3.01 of the Indenture, dated as of November 5, 1999 (the “Indenture”), between the Company and U.S. Bank Trust National Association, as successor in interest to State Street Bank and Trust Company, N.A., as trustee (the “Trustee”), the series of Securities (as that term is used in Section 3.01 of the Indenture) to be issued under the Indenture, which series of Securities shall have the following terms and such additional terms as shall be set forth in the form of Notes (as defined below) attached hereto as Exhibit A (unless otherwise defined herein, capitalized terms used herein have the meanings assigned thereto in the Indenture):

 

1.                                      The Securities shall be entitled the “4.150% Senior Notes due 2047” (the “Notes”).

 

2.                                      The initial aggregate principal amount of the Notes that are to be authenticated and delivered under the Indenture is $500,000,000, (except for Notes authenticated and delivered upon registration of transfer of or in exchange for, or in lieu of other Notes pursuant to Section 3.04, 3.06, 3.07, 9.06, 11.07 or 13.05 of the Indenture).  This series may be reopened and additional Notes of this series may be issued in accordance with the terms of the Indenture.

 

3.                                      The principal amount of the Notes shall mature on March 15, 2047, subject to the provisions of Section 5.02 of the Indenture respecting acceleration.

 

4.                                      The Notes shall bear interest from February 9, 2017, or from the most recent Interest Payment Date to which interest has been paid or provided for, at the rate of 4.150% per annum for the Notes, payable semiannually in arrears on March 15 and September 15 of each year, commencing September 15, 2017, for payment to holders on the respective Regular Record Dates, which dates shall be the next preceding March 1 and September 1, respectively.

 

5.                                      The principal of and interest on the Notes shall be payable at, and any Notes surrendered for registration of transfer or exchange shall be delivered to, the office

 

 

or agency maintained by the Company for that purpose, pursuant to the Indenture (initially the Corporate Trust Office of the Trustee in the Borough of Manhattan, in the City of New York); except that at the option of the Company, interest may be paid (a) by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or (b) by wire transfer to an account maintained by the Person entitled thereto as specified in the Security Register.

 

6.                                      The Notes are redeemable, in whole or in part, at the Company’s option at any time prior to the Par Call Date at a redemption price equal to the Make-Whole Price.  The “Make-Whole Price” means an amount equal to the greater of (1) 100% of the principal amount of the Notes being redeemed, or (2) an amount equal to, as determined by an Independent Investment Banker, the sum of the present value of the remaining scheduled payments of principal and interest on the Notes being redeemed that would be due on or after the date of redemption to, but excluding, the Par Call Date but for such redemption (not including any portion of interest accrued on the Notes being redeemed as of the date of redemption), discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30 day months) at the Adjusted Treasury Rate, plus, in each case, accrued and unpaid interest thereon to, but excluding, the date of redemption.

 

The Notes are redeemable, in whole or in part, at the Company’s option at any time on or after the Par Call Date at a redemption price equal to 100% of the principal amount of the Notes being redeemed, plus accrued and unpaid interest thereon to, but excluding, the date of redemption.

 

Notice of any redemption will be provided at least 30 days but not more than 60 days before the date of redemption to each registered holder of the Notes to be redeemed.  Unless the Company defaults in payment of the redemption price, on and after the date of redemption, interest will cease to accrue on the Notes or portion thereof called for redemption.

 

“Adjusted Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) that is the same as the Comparable Treasury Price for such redemption date, plus 20 basis points.

 

“Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker that (1) has the maturity comparable to the remaining term of the Notes to be redeemed, calculated as if the maturity date of such Notes were the Par Call Date (the “Remaining Life”) and (2) would be used, at the time of selection and in accordance with customary financial practice, to price new issues of corporate debt securities with a maturity comparable to the Remaining Life of the Notes to be redeemed.

 

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“Comparable Treasury Price” means, with respect to any redemption date, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, (B) if the Trustee obtains fewer than three such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Quotations, or (C) if only one Reference Treasury Dealer Quotation is received, such Reference Treasury Dealer Quotation.

 

“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Trustee after consultation with the Company.

 

“Par Call Date” means September 15, 2046.

 

“Reference Treasury Dealer” means (A) Citigroup Global Markets Inc., J.P. Morgan Securities LLC or Merrill Lynch, Pierce, Fenner & Smith Incorporated (or their respective affiliates which are Primary Treasury Dealers) and their respective successors; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), the Company will substitute therefor another Primary Treasury Dealer; and (B) any other Primary Treasury Dealer selected by the Company.

 

“Reference Treasury Dealer Quotation” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. (New York City time) on the third business day preceding such redemption date.

 

7.                                      The Notes shall not be subject to the operation of any sinking fund or an analogous provision.

 

8.                                      There shall be the following additions to the covenants of the Company set forth in Article 10 of the Indenture with respect to the Notes:

 

Limitation on Liens.  The Company covenants that, so long as any of the Notes remain outstanding, it shall not, nor shall it permit any Consolidated Subsidiary to, create or assume any Indebtedness for money borrowed which is secured by a pledge, mortgage, lien, charge, encumbrance or security interest (“liens”) of or upon any assets, whether now owned or hereafter acquired, of the Company or any such Consolidated Subsidiary without equally and ratably securing the Notes by a lien ranking ratably with and equal to (or at the option of the Company, senior to) such secured Indebtedness for as long as such Indebtedness remains outstanding and is so secured, except that the foregoing restriction shall not apply to (a) liens on any assets of any corporation or other business entity existing at the time such Person becomes a Consolidated Subsidiary; (b) liens on any assets (including, without limitation, property, shares of stock or

 

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indebtedness) existing at the time of acquisition of such assets by the Company or a Consolidated Subsidiary, or liens to secure the payment of all or any part of the purchase price of such assets upon the acquisition of such assets by the Company or a Consolidated Subsidiary or to secure any indebtedness incurred or guaranteed by the Company or a Consolidated Subsidiary prior to, at the time of, or within 360 days after such acquisition (or in the case of real property, the completion of construction (including any improvements on an existing asset) or commencement of full operation of such, property, whichever is later), which indebtedness is incurred or guaranteed for the purpose of financing all or any part of the purchase price thereof or, in the case of real property, construction or improvements thereon; provided, however, that in the case of any such acquisition, construction or improvement, the lien shall not apply to any assets theretofore owned by the Company or a Consolidated Subsidiary, other than, in the case of any such construction or improvement, any real property on which the property so constructed, or the improvement, is located; (c) liens on any assets securing indebtedness owed by any Consolidated Subsidiary to the Company or another wholly owned Subsidiary; (d) liens existing on the date of initial issuance of the Notes; (e) liens on any assets of a corporation or other business entity existing at the time such Person is merged into or consolidated with the Company or a Subsidiary or at the time of a purchase, lease or other acquisition of the assets of such Person as an entirety or substantially as an entirety by the Company or a Subsidiary; (f) liens on any assets of the Company or a Consolidated Subsidiary in favor of the United States of America or any state thereof, or any department, agency or instrumentality or political subdivision of the United States of America or any state thereof, or in favor of any other country, or any political subdivision thereof, to secure partial, progress, advance or other payments pursuant to any contract or statute or to secure any indebtedness incurred or guaranteed for the purpose of financing all or any part of the purchase price (or, in the case of real property, the cost of construction) of the assets subject to such liens (including, but not limited to, liens incurred in connection with pollution control, industrial revenue or similar financing); (g) any extension, renewal or replacement or successive extensions, renewals or replacements, in whole or in part, of any lien referred to in the foregoing clauses (a) to (f), inclusive, including the refinancing thereof without increase of the principal of the indebtedness secured by such lien (except to the extent of any fees or costs associated with any such extension, renewal or replacement); (h) liens imposed by law, such as mechanics’, workmen’s, repairmen’s, materialmen’s, carriers’, warehousemen’s, vendors’ or other similar liens arising in the ordinary course of business, or governmental (federal, state or municipal) liens arising out of contracts for the sale of products or services by the Company or any Consolidated Subsidiary, or deposits or pledges to obtain the release of any of the foregoing liens; (i) pledges, liens or deposits under worker’s compensation laws or similar legislation and liens or judgments thereunder which are not currently dischargeable, or in connection with bids, tenders, contracts (other than for the payment of money) or leases to which the Company or any Consolidated Subsidiary is a party, or to secure public or statutory obligations of the Company or any Consolidated Subsidiary, or in connection with obtaining or maintaining self-insurance or to obtain the benefits of any law, regulation or arrangement pertaining to unemployment insurance, old age pensions, social security or similar matters, or to secure surety, performance, appeal

 

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or customs bonds to which the Company or any Consolidated Subsidiary is a party, or in litigation or other proceedings such as, but not limited to, interpleader proceedings, and other similar pledges, liens or deposits made or incurred in the ordinary course of business; (j) liens created by or resulting from any litigation or other proceeding which is being contested in good faith by appropriate proceedings, including liens arising out of judgments or awards against the Company or any Consolidated Subsidiary with respect to which the Company or such Consolidated Subsidiary is in good faith prosecuting an appeal or proceedings for review or for which the time to make an appeal has not yet expired; or final unappealable judgment liens which are satisfied within 15 days of the date of judgment; or liens incurred by the Company or any Consolidated Subsidiary for the purpose of obtaining a stay or discharge in the course of any litigation or other proceeding to which the Company or such Consolidated Subsidiary is a party; (k) liens for taxes or assessments or governmental charges or levies not yet due or delinquent, or which can thereafter be paid without penalty, or which are being contested in good faith by appropriate proceedings; landlord’s liens on property held under lease; and any other liens or charges incidental to the conduct of the business of the Company or any Consolidated Subsidiary or the ownership of the assets of any of them which were not incurred in connection with the borrowing of money or the obtaining of advances or credit and which do not, in the opinion of the Company, materially impair the use of such assets in the operation of the business of the Company or such Consolidated Subsidiary or the value of such assets for the purposes thereof; or (l) liens relating to accounts receivable of the Company or any of its Subsidiaries which have been sold, assigned or otherwise transferred to another Person in a transaction classified as a sale of accounts receivable in accordance with generally accepted accounting principles (to the extent the sale by the Company or the applicable Subsidiary is deemed to give rise to a lien in favor of the purchaser thereof in such accounts receivable or the proceeds thereof).

 

Notwithstanding the above, the Company or any Consolidated Subsidiary may, without securing the Notes, create or assume any Indebtedness which is secured by a lien which would otherwise be subject to the foregoing restrictions, provided that at the time of such creation or assumption, after giving effect thereto, Exempted Debt does not exceed 15% of the total assets of the Company and its Subsidiaries on a consolidated basis, determined in accordance with generally accepted accounting principles as reflected on the Company’s most recent publicly available consolidated balance sheet.

 

Limitation on Sale and Lease-Back Transactions.  The Company covenants that, so long as any of the Notes remain outstanding, the Company shall not, nor shall the Company permit any Consolidated Subsidiary to, enter into any sale and lease-back transaction with respect to any assets, other than any sale lease-back transaction (involving a lease for a term of not more than three years), unless either (a) the Company or such Consolidated Subsidiary would be entitled to incur Indebtedness secured by a lien on the assets to be leased in an amount at least equal to the Attributable Debt in respect of such transaction without equally and ratably securing the Notes pursuant to clauses (a) through (l) inclusive of the covenant with respect to “Limitation on Liens” above, or (b) the proceeds of the sale of the assets to be leased are at least equal

 

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to their fair market value (as determined by the Board of Directors of the Company) and the proceeds are applied to the purchase or acquisition (or, in the case of real property, the construction) of assets or to the retirement (other than at maturity or pursuant to a mandatory sinking fund or mandatory redemption provision) of Indebtedness. The foregoing limitation shall not apply, if at the time the Company or any Consolidated Subsidiary enters into such sale and lease-back transaction, and after giving effect thereto, Exempted Debt does not exceed 15% of the total assets of the Company and its Subsidiaries on a consolidated basis, determined in accordance with generally accepted accounting principles as reflected on the Company’s most recent publicly available consolidated balance sheet.

 

The term “Attributable Debt” in connection with a sale and lease-back transaction shall mean, as of the date of determination, the lesser of (a) the fair value of the assets subject to such transaction, as determined by the Company’s Board of Directors, or (b) the present value of the obligations of the lessee for net rental payments during the term of any lease discounted at the rate of interest set forth or implicit in the terms of such lease or, if not practicable to determine such rate, the weighted average interest rate per annum borne by the debt securities outstanding pursuant to the Indenture and subject to limitations on sale and lease-back transaction covenants, compounded semi-annually in either case as determined by the Company’s principal accounting or financial officer.

 

The term “Consolidated Subsidiary” shall mean any Subsidiary substantially all the property of which is located, and substantially all the operations of which are conducted, in the United States of America whose financial statements are consolidated with those of the Company in accordance with generally accepted accounting principles, excluding any Subsidiary substantially all the assets of which consist of stock or other securities of any Subsidiary substantially all the property of which and substantially all the operations of which are conducted outside the United States of America.

 

The term “Exempted Debt” shall mean the sum of the following as of the date of determination: (i) Indebtedness of the Company and its Consolidated Subsidiaries incurred after the date of initial issuance of the Notes and secured by liens not permitted to be created or assumed pursuant to the covenant with respect to “Limitation on Liens” above, and (ii) Attributable Debt of the Company and its Consolidated Subsidiaries in respect of every sale and lease-back transaction entered into after the date of initial issuance of the Notes, other than leases expressly permitted by the covenant with respect to “Limitation on Sale and Lease-Back Transactions” above.

 

The term “Indebtedness” shall mean all items classified as indebtedness on the most recent publicly available consolidated balance sheet of the Company and its Consolidated Subsidiaries, in accordance with generally accepted accounting principles.

 

The term “net rental payments” under any lease of any period shall mean the sum of the rental and other payments required to be paid in such period by the lessee

 

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thereunder, not including, however, any amounts required to be paid by such lessee (whether or not designated as rental or additional rental) on account of maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates or similar charges required to be paid by such lessee thereunder or any amounts required to be paid by such lessee thereunder contingent upon the amount of sales, maintenance and repairs, reconstruction, insurance, taxes, assessments, water rates or similar charges.

 

The term “Subsidiary” shall mean any corporation, association, partnership, joint venture, limited liability company or other business entity of which at least a majority of the total voting power of the equity interest under ordinary circumstances for the election of the board of directors, managers or trustees thereof shall at the time be owned by the Company or by the Company and one or more Subsidiaries or by one or more Subsidiaries.

 

Purchase of Notes Upon a Change of Control Repurchase Event.  If a Change of Control Repurchase Event (defined below) occurs, unless the Company has exercised its right to redeem the Notes as described in paragraph 6 above, the Company shall make an offer to each holder of Notes to repurchase all or any part (in multiples of $2,000 principal amount) of that holder’s Notes at a repurchase price in cash equal to 101% of the aggregate principal amount of Notes repurchased plus any accrued and unpaid interest on the Notes repurchased to the date of repurchase. Within 30 days following any Change of Control Repurchase Event or, at the option of the Company, prior to any Change of Control (defined below), but after the public announcement of the Change of Control, the Company shall provide a notice to each holder stating:

 

(i)                                     that a Change of Control has occurred or is about to occur and that such holder has the right to require the Company to purchase such holder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof on the date of purchase, plus accrued and unpaid interest to, but not including, the date of purchase;

 

(ii)                                  the circumstances and relevant facts regarding such Change of Control Repurchase Event or, if the Change of Control is about to occur, the circumstances and relevant facts regarding such Change of Control;

 

(iii)                               the purchase date (which shall be no earlier than 30 calendar days nor later than 60 calendar days from the date such notice is provided);

 

(iv)                              the instructions, as determined by the Company, that a holder must follow in order to have its Notes purchased; and

 

(v)                                 that the offer to purchase is conditioned on the Change of Control Repurchase Event occurring on or prior to the specified purchase

 

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date, if provided prior to the date of consummation of the Change of Control.

 

The Company shall comply with the requirements of Rule 14e-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any other securities laws and regulations to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control Repurchase Event.  To the extent that the provisions of any securities laws or regulations conflict with the Change of Control Repurchase Event provisions of the Notes, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached any obligations under the Change of Control Repurchase Event provisions of the Notes by virtue of such conflict.

 

On the Change of Control Repurchase Event payment date, the Company shall, to the extent lawful:

 

(i)                                     accept for payment all Notes or portions of Notes properly tendered pursuant to the Company’s offer;

 

(ii)                                  deposit with the paying agent an amount equal to the aggregate purchase price in respect of all Notes or portions of Notes properly tendered; and

 

(iii)                               deliver or cause to be delivered to the Trustee the Notes properly accepted, together with an officers’ certificate stating the aggregate principal amount of Notes being purchased by the Company.

 

The paying agent will promptly pay, from funds deposited by the Company for such purpose, to each holder of Notes properly tendered the purchase price for the Notes, and the Trustee will promptly authenticate and mail (or cause to be transferred by book-entry) to each holder a new note equal in principal amount to any unpurchased portion of any Notes surrendered.

 

The Company shall not be required to make an offer to repurchase the Notes upon a Change of Control Repurchase Event if a third party makes an offer in the manner, at the times and otherwise in compliance with the requirements for an offer made by the Company and such third party purchases all Notes properly tendered and not withdrawn under its offer.

 

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

 

(1)                                 the direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and those of the subsidiaries of the Company, taken as a whole, to any “person” (individually and as that term is used in Section 13(d)(3) and Section 14(d)(2) of the

 

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Exchange Act), other than the Company or a wholly owned subsidiary of the Company;

 

(2)                                 the adoption of a plan relating to the liquidation or dissolution of the Company;

 

(3)                                 the first day on which a majority of the members of the board of directors of the Company are not Continuing Directors;

 

(4)                                 the consummation of any transaction or series of related transactions (including, without limitation, any merger or consolidation) the result of which is that any “person” (individually and as that term is used in Section 13(d)(3) and Section 14(d)(2) of the Exchange Act), other than the Company, a wholly owned subsidiary of the Company or Lauder Family Members, becomes the beneficial owner, directly or indirectly, of more than 50% of the Voting Stock of the Company, and following such transaction or transactions, Lauder Family Members beneficially own less than 50% of the Voting Stock of the Company, in each case, measured by voting power rather than number of shares; or

 

(5)                                 the consummation of a so-called “going private/Rule 13e-3 Transaction” that results in any of the effects described in paragraph (a)(3)(ii) of Rule 13e-3 under the Exchange Act (or any successor provision), following which Lauder Family Members beneficially own, directly or indirectly, more than 50% of the Voting Stock of the Company, measured by voting power rather than number of shares.

 

Notwithstanding the foregoing, a transaction effected to create a holding company for the Company that is subject to the provisions of Article 8 (Merger, Consolidation and Sale of Assets) of the Indenture will not be deemed to involve a Change of Control if (a) pursuant to such transaction the Company becomes a wholly owned subsidiary of such holding company and (b) the holders of the Voting Stock of such holding company immediately following such transaction are the same as the holders of the Voting Stock of the Company immediately prior to such transaction.

 

“Below Investment Grade Rating Event” means the Notes are rated below Investment Grade by both Rating Agencies on any date from the date of the public notice of an arrangement that could result in a Change of Control until the end of the 60-day period following public notice of the occurrence of a Change of Control (which period shall be extended so long as the rating of the Notes is under publicly announced consideration for possible downgrade by either of the Rating Agencies); provided that a Below Investment Grade Rating Event otherwise arising by virtue of a particular

 

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reduction in rating shall not be deemed to have occurred in respect of a particular Change of Control (and thus shall not be deemed a Below Investment Grade Rating Event for purposes of the definition of Change of Control Repurchase Event hereunder) if the Rating Agencies making the reduction in rating to which this definition would otherwise apply do not announce or publicly confirm or inform the Trustee in writing at its request that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of, or in respect of, the applicable Change of Control (whether or not the applicable Change of Control shall have occurred at the time of the Below Investment Grade Rating Event).

 

“Change of Control Repurchase Event” means the occurrence of both a Change of Control and a Below Investment Grade Rating Event.

 

“Continuing Directors” means, as of any date of determination, any member of the board of directors of the Company who:

 

(1)                                 was a member of such board of directors on the first date that any of the Notes were issued; or

 

(2)                                 was nominated for election or elected to the board of directors of the Company with the approval of a majority of the Continuing Directors who were members of the board of directors of the Company at the time of such nomination or election.

 

“Investment Grade” means a rating of Baa3 or better by Moody’s (or its equivalent under any successor rating categories of Moody’s) and BBB- or better by S&P (or its equivalent under any successor rating categories of S&P) (or, in each case, if such Rating Agency ceases to rate the Notes for reasons outside of the control of the Company, the equivalent investment grade credit rating from any Rating Agency selected by the Company as a replacement Rating Agency).

 

“Lauder Family Members” includes only the following persons:  (i) the estate of Mrs. Estee Lauder; (ii) each descendant of Mrs. Lauder (a “Lauder Descendant”) and their respective estates, guardians, conservators or committees; (iii) each “Family Controlled Entity” (as defined below); and (iv) the trustees, in their respective capacities as such, of each “Family Controlled Trust” (as defined below).  The term “Family Controlled Entity” means (i) any not-for-profit corporation if at least 80% of its board of directors is composed of Lauder Descendants; (ii) any other corporation if at least 80% of the value of its outstanding equity is owned by Lauder Family Members; (iii) any partnership if at least 80% of the value of its partnership interests are owned by Lauder Family Members; and (iv) any limited liability or similar company if at least 80% of the value of the company is owned by Lauder Family Members.  The term “Family Controlled Trust” includes the trusts existing on November 16, 1995 and set forth on Schedule A to the Company’s Restated Certificate of Incorporation as in effect on the date hereof and trusts the primary beneficiaries of which are Lauder Descendants, spouses of Lauder Descendants and/or charitable organizations, provided that if the trust

 

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is a wholly charitable trust, at least 80% of the trustees of such trust consist of Lauder Descendants.

 

“Moody’s” means Moody’s Investors Service, Inc.

 

“Rating Agency” means:

 

(1)                                 each of Moody’s and S&P; and

 

(2)                                 if either of Moody’s or S&P ceases to rate the Notes or fails to make a rating of the Notes publicly available for reasons outside of the control of the Company, a “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) of the Exchange Act selected by the Company as a replacement agency for Moody’s or S&P, or both, as the case may be.

 

“S&P” means Standard & Poor’s, a division of S&P Global Inc.

 

“Voting Stock” as applied to stock of any person, means shares, interests, participations or other equivalents in the equity interest (however designated) in such person having ordinary voting power for the election of a majority of the directors (or the equivalent) of such person, other than shares, interests, participations or other equivalents having such power only by reason of the occurrence of a contingency.

 

9.                                      The Indenture, with certain exceptions as therein provided, may be amended or modified by the Company and the Trustee with the consent of the holders of not less than a majority in aggregate principal amount of the Securities at the time Outstanding of all series affected thereby, voting as a single class, whether or not consented to by any holder of the Notes.

 

Notwithstanding the foregoing, holders of the Notes shall vote as a separate class with respect to modifications or amendments that affect only the Notes, and the holders of other series of Outstanding Securities shall not have any voting rights with respect to such matters as they relate to the Notes.

 

10.                               The Notes shall only be issued as Registered Securities.

 

11.                               The Notes shall be issued in permanent global form without interest coupons, initially issued to Cede & Co., as nominee of The Depository Trust Company (the initial depository therefor), in accordance with Section 3.03 of the Indenture.

 

[signatures appear on the following page]

 

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IN WITNESS WHEREOF, the undersigned have executed this Certificate on the date written first above.

 

	
 
    	
/s/ Tracey T. Travis
    
	
 
    	
Name: Tracey T.   Travis
    
	
 
    	
Title:   Executive   Vice President and Chief Financial Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
/s/ Spencer G. Smul
    
	
 
    	
Name: Spencer G.   Smul
    
	
 
    	
Title:   Senior   Vice President, Deputy General Counsel and Secretary
    

 

 

[Signature Page to Officers’ Certificate 2047 Notes]

 

 

 

Exhibit A

 

THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITARY OR A NOMINEE OF THE DEPOSITARY.  THIS NOTE IS NOT EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE (OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.

 

	
REGISTERED
    	
$500,000,000
    
	
 
    	
 
    
	
No. 001
    	
CUSIP # 29736R AK6
    
	
 
    	
ISIN # US29736RAK68
    

 

THE ESTÉE LAUDER COMPANIES INC.

 

4.150% SENIOR NOTES DUE 2047

 

The Estée Lauder Companies Inc., a Delaware corporation (the “Company”), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal amount stated above on March 15, 2047 (the “Maturity Date”) and to pay interest thereon at the rate per annum equal to 4.150% (the “Interest Rate”) until the principal hereof is fully paid or duly made available for payment.  The Company will pay interest (computed on the basis of a 360-day year of twelve 30-day months) semi-annually in arrears on March 15 and September 15 of each year (each an “Interest Payment Date”) commencing September 15, 2017 and on the Maturity Date on said principal amount at the Interest Rate per annum specified above.  Interest on this Note will accrue from the most recent Interest Payment Date to which interest has been paid or duly provided for or, if no interest has been paid, from February 9, 2017 until the principal hereof has been paid or made available for payment.  The interest so payable, and punctually paid or duly provided for, on the Interest Payment Dates, will, as provided in the Indenture referred to below, be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the March 1 or September 1 whether or not a Business Day, as the case may be, next preceding such Interest Payment Date; provided, however, that interest payable on the Maturity Date will be payable to the Person to whom the principal hereof shall be payable; and provided, further, however, that if such Interest Payment Date would fall on a day that is not a Business Day, such Interest Payment Date shall be the following day that is a Business Day with the same force and effect as if made on the Interest Payment Date.  Any such interest which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date

 

A-1

 

shall forthwith cease to be payable to the Holder on such Regular Record Date, and may be paid to the Person in whose name this Note (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to the Holder of this Note not less than ten days prior to such Special Record Date, or may be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.

 

Payment of the principal of and interest on this Note shall be made at the office or agency of the Trustee maintained for that purpose in the Borough of Manhattan, The City of New York, in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public and private debt; provided, however, that payment of interest on any Interest Payment Date (other than the Maturity Date) may be made at the option of the Company by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register, or by wire transfer of immediately available funds, if the registered holder has so requested by a notice in writing delivered to the Trustee not less than 16 days prior to the Interest Payment Date on which such payment is due, which notice shall provide appropriate instructions for such transfer.

 

The principal hereof and interest due at maturity will be paid upon maturity in immediately available funds against presentation of this Note at the office or agency of the Trustee maintained for that purpose in the Borough of Manhattan, the City of New York.

 

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH ON THE FACE HEREOF.

 

This Note shall be governed by and construed in accordance with the laws of the State of New York.

 

Unless the certificate of authentication hereon has been executed by U.S. Bank Trust National Association, as successor in interest to State Street Bank and Trust Company, N.A., the Trustee under the Indenture, or its successor thereunder by the manual signature of one of its authorized signatories, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

 

A-2

 

IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal.

 

	
Dated February 9,   2017
    	
THE ESTÉE LAUDER   COMPANIES INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name: Tracey T.   Travis
    
	
 
    	
 
    	
Title:   Executive   Vice President and Chief Financial Officer
    

 

 

CERTIFICATE OF AUTHENTICATION

 

This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture.

 

	
 
    	
U.S. BANK TRUST   NATIONAL ASSOCIATION, as successor in interest to STATE STREET BANK AND TRUST   COMPANY, N.A., as Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Authorized Signatory
    

 

 

[Signature Page to 2047 Global Note]

 

 

[Reverse of Note]

 

THE ESTÉE LAUDER COMPANIES INC.

 

4.150% SENIOR NOTES DUE 2047

 

This Note is one of a duly authorized issue of debentures, notes or other evidences of indebtedness (hereinafter called the “Securities”) of the Company of the series hereinafter specified, all such Securities issued and to be issued under the Indenture dated as of November 5, 1999 (herein called the “Indenture”) between the Company and U.S. Bank Trust National Association, as successor in interest to State Street Bank and Trust Company, N.A., as trustee (herein called the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures or officers’ certificates, as applicable, supplemental thereto (including without limitation that certain Officers’ Certificate dated February 9, 2017 relating to the Company’s 4.150% Senior Notes due 2047) reference is hereby made for a statement of the respective rights and limitations of rights thereunder of the Company, the Trustee and the Holders of the Securities, and the terms upon which the Securities are, and are to be, authenticated and delivered.  As provided in the Indenture, Securities may be issued in one or more series, which different series may be issued in various aggregate principal amounts, may mature at different times, may bear interest, if any, at different rates, may be subject to different redemption provisions, if any, may be subject to different repayment provisions, if any, may be subject to different sinking, purchase or analogous funds, if any, may be subject to different covenants and Events of Default and may otherwise vary as in the Indenture provided or permitted.  This Note is one of a series of the Securities designated as 4.150% Senior Notes due 2047 (the “Notes”).  The Notes are unsecured and rank pari passu with all other unsecured and unsubordinated indebtedness of the Company.  The Notes are not subject to a sinking fund.

 

The Notes are redeemable, in whole or in part, at the Company’s option at any time prior to the Par Call Date at a redemption price equal to the Make-Whole Price.  The “Make-Whole Price” means an amount equal to the greater of (1) 100% of the principal amount of the Notes being redeemed, or (2) an amount equal to, as determined by an Independent Investment Banker, the sum of the present value of the remaining scheduled payments of principal and interest on the Notes being redeemed that would be due on or after the date of redemption to, but excluding, the Par Call Date but for such redemption (not including any portion of interest accrued on the Notes being redeemed as of the date of redemption), discounted to the date of redemption on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus, in each case, accrued and unpaid interest thereon to, but excluding, the date of redemption.

 

The Notes are redeemable, in whole or in part, at the Company’s option at any time on or after the Par Call Date at a redemption price equal to 100% of the principal amount of the Notes being redeemed, plus accrued and unpaid interest thereon to, but excluding, the date of redemption.

 

Notice of any redemption will be provided at least 30 days but not more than 60 days before the date of redemption to each registered holder of the Notes to be redeemed.  Unless

 

A-4

 

the Company defaults in payment of the redemption price, on and after the date of redemption, interest will cease to accrue on the Notes or portion thereof called for redemption.

 

“Adjusted Treasury Rate” means, with respect to any redemption date, the rate per annum equal to the semi-annual yield to maturity of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) that is the same as the Comparable Treasury Price for such redemption date, plus 20 basis points.

 

“Comparable Treasury Issue” means the United States Treasury security selected by an Independent Investment Banker that (1) has the maturity comparable to the remaining term of the Notes to be redeemed, calculated as if the maturity date of such Notes were the Par Call Date (the “Remaining Life”) and (2) would be used, at the time of selection and in accordance with customary financial practice, to price new issues of corporate debt securities with a maturity comparable to the Remaining Life of the Notes to be redeemed.

 

“Comparable Treasury Price” means, with respect to any redemption date, (A) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, (B) if the Trustee obtains fewer than three such Reference Treasury Dealer Quotations, the average of all such Reference Treasury Quotations, or (C) if only one Reference Treasury Dealer Quotation is received, such Reference Treasury Dealer Quotation.

 

“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Trustee after consultation with the Company.

 

“Par Call Date” means September 15, 2046.

 

“Reference Treasury Dealer” means (A) Citigroup Global Markets Inc., J.P. Morgan Securities LLC or Merrill Lynch, Pierce, Fenner & Smith Incorporated (or their respective affiliates which are Primary Treasury Dealers) and their respective successors; provided, however, that if any of the foregoing shall cease to be a primary U.S. Government securities dealer in New York City (a “Primary Treasury Dealer”), the Company will substitute therefor another Primary Treasury Dealer; and (B) any other Primary Treasury Dealer selected by the Company.

 

“Reference Treasury Dealer Quotation” means, with respect to each Reference Treasury Dealer and any redemption date, the average, as determined by the Trustee, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. (New York City time) on the third business day preceding such redemption date.

 

If any Event of Default (as defined in the Indenture) with respect to the Notes shall occur and be continuing, the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Notes may declare the principal of all the Notes due and payable in the manner and with the effect provided in the Indenture.

 

The Indenture, as supplemented by an Officers’ Certificate in connection with the issuance of the Notes, permits, with certain exceptions as therein provided, the amendment

 

A-5

 

thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Securities of all series affected thereby, voting as a single class, whether or not consented to by any Holder of this Note.

 

Notwithstanding the foregoing, Holders of the Notes shall vote as a separate class with respect to modifications or amendments that affect only the Notes, and the Holders of other series of Outstanding Securities shall not have any voting rights with respect to such matters as they relate to the Notes.

 

The Indenture also contains provisions permitting the Holders of specified percentages in aggregate principal amount of the Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of each series, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences.  Any such consent or waiver by the Holder of this Note shall be conclusive and binding upon such Holder and upon future Holders of this Note and of any Note issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof whether or not notation of such consent or waiver is made upon this Note.

 

Holders of Securities may not enforce their rights pursuant to the Indenture or the Securities except as provided in the Indenture.  No reference herein to the Indenture and no provision of this Note or the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and interest on this Note at the time, place, and rate, and in the coin or currency, herein prescribed.

 

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note may be registered on the Security Register of the Company, upon surrender of this Note for registration of transfer at the office or agency of the Company in the Borough of Manhattan, the City of New York, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company, and this Note duly executed by, the Holder hereof or by his attorney duly authorized in writing and thereupon one or more new Notes, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.

 

The Notes are issuable only in registered form without coupons in minimum denominations of $2,000 and integral multiples of $1,000.  As provided in the Indenture and subject to certain limitations therein set forth, this Note is exchangeable for a like aggregate principal amount of Notes of different authorized denominations as requested by the Holder surrendering the same.

 

No service charge will be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.

 

Prior to the due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note

 

A-6

 

be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice of the contrary.

 

All capitalized terms used in this Note and not otherwise defined herein shall have the meanings assigned to them in the Indenture.

 

A-7

 

ABBREVIATIONS

 

The following abbreviations, when used in the inscription on the face of this instrument, shall be construed as though they were written out in full according to applicable laws or regulations:

 

	
TEN COM - 
    	
as tenants in   common
    
	
 
    	
 
    
	
TEN ENT - 
    	
as tenants by   the entireties
    
	
 
    	
 
    
	
JT TEN -
    	
as joint tenants with   right of survivorship and not as tenants in common
    
	
 
    	
 
    
	
UNIF GIFT MIN ACT -
    	
 
    	
Custodian
    	
 
    
	
 
    	
(Cust)
    	
 
    	
(Minor)
    
	
 
    	
 
    
	
 
    	
Under Uniform   Gifts to Minors Act
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(State)
    

 

Additional abbreviations may also be used though not in the above list.

 

A-8

 

ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned
 hereby sell(s), assign(s) and transfer(s) unto

 

 

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

 

 

 

 

 

PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE

 

 

the within Note and all rights thereunder, hereby irrevocably constituting and appointing

 

 

 

Attorney to transfer said Note on the books of the Company, with full power of substitution in the premises.

 

	
Dated:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(Signature   Guarantee)
    	
 
    	
 
    

 

A-9Exhibit 4.2

 

ISRAELI SHARE AWARD PLAN

__________________________________________________________________________________________

 

KAMADA LTD.

 

THE 2011 ISRAELI SHARE AWARD PLAN

 

(*In compliance with Amendment No. 132 of the Israeli Tax Ordinance, 2002)

 

ISRAELI SHARE AWARD PLAN

__________________________________________________________________________________________

 

This plan, as amended from time to time, shall be known as Kamada Ltd. 2011 Israeli Share Award Plan (the “ISAP”).

 

1.   PURPOSE OF THE ISAP

 

The ISAP is intended to provide an incentive to retain, in the employ of the Company and its Affiliates (as defined below), persons of training, experience, and ability, to attract new employees, directors, consultants, service providers and any other entity which the Board (as defined below) shall decide their services are considered valuable to the Company, to encourage the sense of proprietorship of such persons, and to stimulate the active interest of such persons in the development and financial success of the Company by providing them with opportunities to purchase Shares in the Company, pursuant to the ISAP.

 

2.   DEFINITIONS

 

For purposes of the ISAP and related documents, including the Award Agreement, the following definitions shall apply:

	 	2.1	
“Affiliate” means any Employing Company.

	 	2.2	
“Approved 102 Award” means an Award granted pursuant to Section 102(b) of the Ordinance and held in trust by a Trustee for the benefit of the Grantee.

	 	2.3	
“Award” means, individually or collectively, a grant under the ISAP of Options or Restricted Shares or any combination thereof.

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

	 	2.5	
“Capital Gain Award (CGA)” as defined in Section 5.4 below.

	 	2.6	
“Cause” means, (i) conviction of any felony involving moral turpitude or affecting the Company; (ii) any refusal to carry out a reasonable directive of the chief executive officer, the Board or the Grantee’s direct supervisor, which involves the business of the Company or its Affiliates and was capable of being lawfully performed; (iii) embezzlement of funds of the Company or its Affiliates; (iv) any breach of the Grantee’s fiduciary duties or duties of care towards the Company; including without limitation disclosure of confidential information of the Company; and (v) any conduct (other than conduct in good faith) reasonably determined by the Board to be materially detrimental to the Company.

 

	 	2.7	
“Chairman” means the chairman of the Committee.

	 	2.8	
“Committee” means the Company's compensation committee appointed by the Board, which shall consist of no fewer than two members of the Board.

2

ISRAELI SHARE AWARD PLAN

__________________________________________________________________________________________

 

2.9           “Company” means Kamada Ltd., an Israeli company.

2.10         “Companies Law” means the Israeli Companies Law 5759-1999.

	 	2.11	
“Controlling Shareholder” shall have the meaning ascribed to it in Section 32(9) of the Ordinance.

	 	2.12	
“Date of Grant” means, the date of grant of an Award, as set forth in the Grantee’s Award Agreement, in accordance with the Board's resolution.

	 	2.13	
“Employee” means a person who is employed by the Company or its Affiliates, including an individual who is serving as a director or an office holder, but excluding a Controlling Shareholder.

 

2.14        "Employing Company" shall have the meaning ascribed to it in Section 102(a) of the Ordinance.

 

	 	2.15	
“Expiration date” means the date upon which an Award shall expire, as set forth in Section 10.2 of the ISAP.

 

	 	2.16	
“Fair Market Value” means as of any date, the value of a Share determined as follows:

 

(i) If the Shares are listed on any established stock exchange or a national market system, including without limitation the Tel-Aviv Stock Exchange, NASDAQ National Market system, or the NASDAQ SmallCap Market of the NASDAQ Stock Market, the Fair Market Value shall be the closing sales price for such Shares (or the closing bid, if no sales were reported), as quoted on such exchange or system for the last market trading day prior to time of determination, as reported in the Wall Street Journal, or such other source as the Board deems reliable. Without derogating from the above, solely for the purpose of determining the tax liability pursuant to Section 102(b)(3) of the Ordinance, if at the Date of Grant the Shares are listed on any established stock exchange or a national market system or if the Shares will be registered for trading within ninety (90) days following the Date of Grant, the Fair Market Value of a Share at the Date of Grant shall be determined in accordance with the average value of a Share on the thirty (30) trading days preceding the Date of Grant or on the thirty (30) trading days following the date of registration for trading, as the case may be;

 

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

 

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

 

	 	2.17	
“Grantee” means a person who receives or holds an Award under the ISAP.

	 	2.18	
“ISAP” means this 2011 Israeli Share Award Plan as may be amended from time to time.

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ISRAELI SHARE AWARD PLAN

__________________________________________________________________________________________

 

	 	2.19	
“ITA” means the Israeli Tax Authorities.

	 	2.20	
“Non-Employee” means a consultant, adviser, service provider, Controlling Shareholder or any other person who is not an Employee.

	 	2.21	
“Ordinary Income Award (OIA)” as defined in Section 5.5 below.

	 	2.22	
“Option” means an option to purchase one or more Shares of the Company pursuant to the ISAP.

	 	2.23	
“102 Award” means any Award granted to Employees pursuant to Section 102 of the Ordinance.

	 	2.24	
“3(i) Award” means any Award granted pursuant to Section 3(i) of the Ordinance to any person who is Non- Employee.

 

	 	2.25	
“Award Agreement” means the signed written agreement between the Company and a Grantee that sets out the terms and conditions of an Award.

 

	 	2.26	
“Ordinance” means the Israeli Income Tax Ordinance [New Version] 1961 as now in effect or as hereafter amended.

	 	2.27	
“Purchase Price” means the price for each Share subject to an Option.

	 	2.28	
“Restricted Share” means Shares subject to certain restrictions granted to a Grantee under the ISAP.

	 	2.29	
“Restricted Period” shall have the meaning ascribed to it in Section 5A.3 below.

	 	2.30	
“Section 102” means section 102 of the Ordinance as now in effect or as hereafter amended.

2.31         “Share(s)” means an ordinary share, NIS 1.00 par value, of the Company.

	 	2.32	
“Successor Company” means any entity the Company is merged to or is acquired by, in which the Company is not the surviving entity.

	 	2.33	
“Transaction” means (i) merger, acquisition or reorganization of the Company with one or more other entities in which the Company is not the surviving entity, or (ii) a sale of all or substantially all of the assets of the Company.

	 	2.34	
“Trustee” means any individual appointed by the Company to serve as a trustee and approved by the ITA, all in accordance with the provisions of Section 102(a) of the Ordinance.

	 	2.35	
“Unapproved 102 Award” means an Award granted pursuant to Section 102(c) of the Ordinance and not held in trust by a Trustee.

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ISRAELI SHARE AWARD PLAN

__________________________________________________________________________________________

 

	 	2.36	
“Vested Award” means any Award, which has already been vested according to the Vesting Dates.

	 	2.37	
“Vesting Dates” means, as determined by the Board or by the Committee, the date as of which the Grantee shall be entitled to exercise the Options or part of the Options, as set forth in section 12 of the ISAP or the date on which the Restricted Period with respect to a Restricted Share shall elapse.

3.             ADMINISTRATION OF THE ISAP

 

	 	3.1	
The Board shall have the power to administer the ISAP either directly or upon the recommendation of the Committee, all as provided by applicable law and in the Company’s Articles of Association. Notwithstanding the above, the Board shall automatically have residual authority if no Committee shall be constituted or if such Committee does not exercise any of the powers granted to it hereunder or if such Committee shall cease to operate for any reason.

 

	 	3.2	
The Committee shall select one of its members as its Chairman and shall hold its meetings at such times and places as the Chairman shall determine. The Committee shall keep records of its meetings and shall make such rules and regulations for the conduct of its business as it shall deem advisable.

 

	 	3.3	
The Committee shall have the power to recommend to the Board and the Board shall have the full power and authority to: (i) designate participants; (ii) determine the terms and provisions of the respective Award Agreements, including, but not limited to, the type and number of Awards to be granted to each Grantee, including the number of Shares to be covered by each Option or the number of Restricted Shares to be covered by each Award of Restricted Shares, provisions concerning the time and the extent to which the Options may be exercised or concerning the Restricted Period and the nature and duration of restrictions as to the transferability or restrictions constituting substantial risk of forfeiture and to cancel or suspend awards, as necessary; (iii) determine the Fair Market Value of the Shares covered by each Award; (iv) make an election as to the type of Approved 102 Award; and (v) designate the type of Awards.

 

Subject to applicable law, the Committee shall have full power and authority to :(i) grant Awards to the Grantees and to issue Restricted Shares and Shares underlying Options duly exercised pursuant to the provisions herein, in accordance with section 288(b) of the Companies Law; (ii) alter any restrictions and conditions of any Options or Shares subject to any Awards (iii); interpret the provisions and supervise the administration of the ISAP; (iv) accelerate the right of a Grantee to exercise in whole or in part, any previously granted Option; (v) determine the Purchase Price of the Option; (vi) prescribe, amend and rescind rules and regulations relating to the ISAP; and (vii) make all other determinations deemed necessary or advisable for the administration of the ISAP, including, without limitation, to adjust the terms of the ISAP or any Award Agreement so as to reflect (a) changes in applicable laws and (b) the laws of other jurisdictions within which the Company wishes to grant Awards.

 

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ISRAELI SHARE AWARD PLAN

__________________________________________________________________________________________

 

	 	3.4	
Notwithstanding the above, the Committee shall not be entitled to grant Awards to persons who are not Employees, however, it will be authorized to issue Shares underlying Options which have been granted by the Board and duly exercised pursuant to the provisions herein in accordance with section 112(a)(5) of the Companies Law.

 

	 	3.5	
The Board shall have the authority to grant, at its discretion, to the holder of an outstanding Option, whether or not such holder is an Employee, in exchange for the surrender and cancellation of such Option, a new Option having a purchase price equal to, lower than or higher than the Purchase Price of the original Option so surrendered and canceled and containing such other terms and conditions as the Committee may prescribe in accordance with the provisions of the ISAP. The Committee shall have the same authority solely with respect to holders of outstanding Options who are Employees.3.6Subject to the Company’s Articles of Association, all decisions and selections made by the Board or the Committee pursuant to the provisions of the ISAP shall be made by a majority of its members except that no member of the Board or the Committee shall vote on, or be counted for quorum purposes, with respect to any proposed action of the Board or the Committee relating to any Award to be granted to that member,, unless permitted under applicable law and in accordance therewith. Any decision reduced to writing shall be executed in accordance with the provisions of the Company’s Articles of Association, as the same may be in effect from time to time.

 

	 	3.7	
The interpretation and construction by the Committee of any provision of the ISAP or of any Award Agreement thereunder shall be final and conclusive unless otherwise determined by the Board.

 

	 	3.8	
Subject to the Company’s Articles of Association and the Company’s decision, and to all approvals legally required, including, but not limited to the provisions of the Companies Law, each member of the Board or the Committee shall be indemnified and held harmless by the Company against any cost or expense (including counsel fees) reasonably incurred by him/her, or any liability (including any sum paid in settlement of a claim with the approval of the Company) arising out of any act or omission to act in connection with the ISAP, unless arising out of such member's own fraud or bad faith, to the extent permitted by applicable law. Such indemnification shall be in addition to any rights of indemnification the member may have as a director or otherwise under the Company's Articles of Association, any agreement, any vote of shareholders or disinterested directors, insurance policy or otherwise.

 

4.   DESIGNATION OF PARTICIPANTS

 

	 	4.1	
The persons eligible for participation in the ISAP as Grantees shall include any Employees and/or Non-Employees of the Company or of any Affiliate; provided, however, that (i) Employees may only be granted 102 Awards; (ii) Non-Employees may only be granted 3(i) Awards; and (iii) Controlling Shareholders may only be granted 3(i) Awards.

 

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ISRAELI SHARE AWARD PLAN

__________________________________________________________________________________________

 

	 	4.2	
The grant of an Award hereunder shall neither entitle the Grantee to participate nor disqualify the Grantee from participating in, any other grant of Awards pursuant to the ISAP or any other option or share plan of the Company or any of its Affiliates.

 

	 	4.3	
Anything in the ISAP to the contrary notwithstanding, all grants of Awards to directors and office holders shall be authorized and implemented in accordance with the provisions of the Companies Law or any successor act or regulation, as in effect from time to time.

5.   DESIGNATION OF AWARDS PURSUANT TO SECTION 102

 

	 	5.1	The Company may designate Awards granted to Employees pursuant to Section 102 as Unapproved 102 Awards or Approved 102 Awards.

 

	 	5.2	
The grant of Approved 102 Awards shall be made under this ISAP adopted by the Board as described in Section 15 below, as may be amended by the Board from time to time, and shall be conditioned upon the approval of this ISAP by the ITA.

 

	 	5.3	
Approved 102 Awards may either be classified as an Capital Gain Award (“CGA”) or Ordinary Income Award (“OIA”).

	 	5.4	
Approved 102 Awards elected and designated by the Company to qualify under the capital gain tax treatment in accordance with the provisions of Section 102(b)(2) shall be referred to herein as “CGA”.

	 	5.5	
Approved 102 Awards elected and designated by the Company to qualify under the ordinary income tax treatment in accordance with the provisions of Section 102(b)(1) shall be referred to herein as “OIA”.

	 	5.6	
The Company’s election of the type of Approved 102 Awards as CGA or OIA granted to Employees (the “Election”), shall be appropriately filed with the ITA before the Date of Grant of an Approved 102 Award. Such Election shall become effective beginning the first Date of Grant of an Approved 102 Award under this ISAP and shall remain in effect until the end of the year following the year during which the Company first granted Approved 102 Awards. The Election shall obligate the Company to grant only the type of Approved 102 Awards it has elected, and shall apply to all Grantees who were granted Approved 102 Awards during the period indicated herein, all in accordance with the provisions of Section 102(g) of the Ordinance. For the avoidance of doubt, such Election shall not prevent the Company from granting Unapproved 102 Awards or 3(i) Awards simultaneously.

	 	5.7	
All Approved 102 Awards must be held in trust by a Trustee, as described in Section 6 below.

	 	5.8	
For the avoidance of doubt, the designation of Unapproved 102 Awards and Approved 102 Awards shall be subject to the terms and conditions set forth in Section 102 of the Ordinance and the regulations promulgated thereunder, as may be amended from time to time.

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ISRAELI SHARE AWARD PLAN

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5A          RESTRICTED SHARES

 

	 	5A.1	
Award of Restricted Shares.  Awards of Restricted Shares may be issued either alone or in addition to other Awards granted under the ISAP.  Subject to the terms and conditions of the ISAP, the Board or the Committee, at any time and from time to time, may grant Awards of Restricted Shares to Grantees and may determine, at its sole discretion, the Grantees to whom, and the time or times at which, Awards of Restricted Shares will be made, the number of Restricted Shares to be awarded, the Restricted Period and all other conditions of the Awards of Restricted Shares.

	 	5A2.	
Restricted Shares Award Agreement and Certificates. Each Award of Restricted Shares will be evidenced by an Award Agreement that will specify the number of Restricted Shares covered by the Award, the Restricted Period with respect to a Restricted Share and such other terms and conditions as the Board or the Committee, in its sole discretion, will determine. The Company may elect to cause Restricted Shares to be held through the Trustee until the restrictions on such Restricted Shares have lapsed.

	 	5A3.	
Transferability. Except as provided in this Section 5A or the Award Agreement governing any such Award, Restricted Shares may not be sold, transferred, pledged, assigned, or otherwise alienated, hypothecated or disposed of, until the end of the applicable vesting period (the “Restricted Period”).

	 	5A4.	
Other Restrictions. The Board or the Committee, in its sole discretion, may impose such other restrictions on Restricted Shares as it may deem advisable or appropriate. The Board or the Committee may set restrictions based upon continued employment or service, the achievement of specific performance objectives (Company-wide, departmental, divisional, business unit, or individual), applicable federal or state securities laws, or any other basis determined by the Board or the Committee, in its discretion.

	 	5A5.	
Removal of Restrictions. Except as otherwise provided in this Section 5A, Restricted Shares awarded under the ISAP will be released from trust (or from other applicable restrictions hereunder) as soon as practicable after the last day of the Restriction Period or at such other time as the Board or the Committee may determine. The Committee may, in its discretion, reduce or waive any vesting criteria and may accelerate the time at which any restrictions will lapse or be removed. The Board or the Committee, in its discretion, may establish procedures regarding the release of Restricted Shares from trust, as necessary or appropriate to minimize administrative burdens on the Company.

	 	5A6.	
Voting Rights. Once the Grantee has been issued a certificate or certificates for Restricted Shares or the Restricted Shares have been issued in the Grantee’s name by book-entry registration, during the Restricted Period, Grantees holding Restricted Shares granted hereunder may exercise full voting rights (either directly or by way of pass-through voting arrangements with the Trustee holding the Restricted Shares) with respect to those Restricted Shares, unless the Committee determines otherwise.

 

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	 	5A7.	
Dividends and Other Distributions.  During the Restricted Period dividends and other distributions shall be payable with respect to Restricted Shares (either directly or by way of pass-through arrangements with the Trustee holding the Restricted Shares), unless the Board or the Committee determines otherwise and subject to applicable law, provided that any such dividends and other distributions shall only be paid or distributed to the Grantee at the end of the Restriction Period and a Grantee shall not be entitled to interest with respect to any such dividends or distributions subjected to the Restricted Period. During the Restricted Period, any such dividends or distributions shall be subject to the same restrictions on transferability and forfeitability as the Restricted Shares, with respect to which they were paid, unless otherwise provided in the Award Agreement. Unless otherwise determined by the Board or the Committee at any time subject to applicable law, any distributions or dividends paid in the form of securities with respect to Restricted Shares will be subject to the same terms and conditions as the Restricted Shares with respect to which they were paid, including, without limitation, the same Restriction Period.

	 	5A8.	
Forfeiture of Restricted Shares.  On the date set forth in the Award Agreement or in any termination event specified in such Award Agreement, the Restricted Shares, for which restrictions, including the Restriction Period, have not lapsed at such time, and any associated dividends, if any, that then remain subject to forfeiture will then be forfeited automatically and will become available for grant under the ISAP.  Upon forfeiture of Restricted Shares, the Grantee shall have no further rights with respect to such Restricted Shares

	 	5A9.	
102 Award of Restricted Shares.  In the event that Awards of Restricted Shares to Employees are designated as 102 Awards, such Awards of Restricted Shares shall be subject to Section 102 of the Ordnance and the provisions set forth in this ISAP relating to 102 Awards.

6.             3(i) AWARDS

 

	 	6.1	
Awards granted pursuant to this Section are intended to constitute 3(i) Awards and are subject to the provisions of Section 3(i) of the Ordinance and the general terms and conditions specified in the ISAP, except for provisions of the ISAP applying to Options granted under a different tax law or regulations.

 

	 	6.2	
3(i) Awards may be granted only to Non-Employees.

 

	 	6.3	
3(i) Awards that shall be granted pursuant to the ISAP may be issued directly to the Non-Employee or to a Trustee. In the event that the Board or the Committee determines that 3(i) Awards or Shares issued upon the exercise Options that are 3(i) Awards shall be deposited with a Trustee, the provisions of Section 7 hereof shall apply, mutatis mutandis.

 

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7.             TRUSTEE

 

	 	7.1	
Approved 102 Awards which shall be granted under the ISAP and/or any Shares allocated or issued upon exercise of such Approved 102 Awards and/or other shares received subsequently following any realization of rights, including without limitation bonus shares, shall be allocated or issued to the Trustee and held for the benefit of the Grantees for such period of time as required by Section 102 or any regulations, rules or orders or procedures promulgated thereunder (the “Holding Period”). In the case the requirements for Approved 102 Options are not met, then the Approved 102 Awards may be treated as Unapproved 102 Awards, all in accordance with the provisions of Section 102 and regulations promulgated thereunder. 

 

	 	7.2	
Notwithstanding anything to the contrary, the Trustee shall not release any Approved 102 Award and/or Shares allocated or issued upon exercise of Approved 102 Awards prior to the full payment of the Grantee's tax liabilities arising from Approved 102 Awards, which were granted to him/her.

 

	 	7.3	
With respect to any Approved 102 Awards, subject to the provisions of Section 102 and any rules or regulation or orders or procedures promulgated thereunder, a Grantee shall not sell or release from trust any Approved 102 Award or any Share received upon the exercise of an Approved 102 Award and/or any share received subsequently following any realization of rights, including without limitation, bonus shares, until the lapse of the Holding Period required under Section 102 of the Ordinance. Notwithstanding the above, if any such sale or release occurs during the Holding Period, the sanctions under Section 102 of the Ordinance and under any rules or regulation or orders or procedures promulgated thereunder shall apply to and shall be borne by such Grantee.

 

	 	7.4	
Upon receipt of Approved 102 Award and if required by the Company and/or the Trustee, the Grantee will sign an undertaking to release the Trustee from any liability in respect of any action or decision duly taken and bona fide executed in relation with the ISAP, or any Approved 102 Award or Share granted to him/her thereunder, except in the event of negligence or willful misconduct on part of the Trustee.

 

8.            SHARES RESERVED FOR THE ISAP; RESTRICTION THEREON

 

	 	8.1	
The Company has initially reserved 900,000 (nine hundred thousand) authorized but unissued Shares, for the purposes of the ISAP and for the purposes of any other share-based compensation plans which may be adopted by the Company in the future, subject to adjustment as set forth in Section 10 below or any increase in such amount of reserved Shares, as may be determined by the Board according to the terms hereof and subject to applicable law. Any Shares which remain unissued and which are not subject to the outstanding Awards at the termination of the ISAP shall cease to be reserved for the purpose of the ISAP, but until termination of the ISAP the Company shall, at all times reserve sufficient number of Shares to meet the requirements of the ISAP. Should any Award, for any reason expire, terminate or be canceled or forfeited prior to its exercise or relinquishment in full, or prior to the lapse of its restrictions according to the applicable Award Agreement, the Shares subject to such Award may, subject to applicable law, again be subjected to an Award under the ISAP or under the Company’s other share-based compensation plans.

 

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	 	8.2	
Each Award granted pursuant to the ISAP, shall be evidenced by a written Award Agreement between the Company and the Grantee, in such form as the Board or the Committee shall from time to time approve. Each Award Agreement shall state, among other matters, the type and number of Awards granted, the type of Award granted thereunder (e.g., CGA, OIA, Unapproved 102 Award or a 3(i) Award, etc.), the Vesting Dates, the Purchase Price for Shares subject to an Option, the Expiration Date and such other terms and conditions as the Committee or the Board in its discretion may prescribe, provided that they are consistent with this ISAP and applicable law.

 

9.            PURCHASE PRICE OF OPTIONS

 

	 	9.1	
The Purchase Price of each Share subject to Options shall be determined by the Committee in its sole and absolute discretion in accordance with applicable law, subject to any guidelines as may be determined by the Board from time to time. Each Award Agreement will contain the Purchase Price determined for each Grantee of Options.

	 	9.2	
The Purchase Price for Shares subject to an Option shall be payable upon the exercise of an Option in a form satisfactory to the Committee, including without limitation, by cash or check. The Committee shall have the authority to postpone the date of payment on such terms as it may determine. Notwithstanding the foregoing, the Board may determine that the exercise of any Option(s) granted under this ISAP shall be made according to a method of exercise known as "cashless exercise", according to which method the Grantee is not required to pay the Purchase Price when exercising the Options, but simply receives such number of Shares, which total Fair Market Value equal to the total net amount of the increase in the Fair Market Value of the Shares covered under such Options Award above the Purchase Price, in Shares, according to a formula to be determined by the Board. In such event the Board, at its sole discretion and subject to applicable law, may exempt the Grantee from the payment of the par value of the Shares actually issued to him/her as a result of such exercise of Options.

	 	9.3	
The Purchase Price shall be denominated in the currency of the primary economic environment of, either the Company or the Grantee (that is the functional currency of the Company or the currency in which the Grantee is paid) as determined by the Company.

 

10.          ADJUSTMENTS

 

Upon the occurrence of any of the following described events, Awards granted under the ISAP shall be adjusted as hereafter provided:

 

	 	
10.1

	
In the event of Transaction, the Awards then outstanding under the ISAP shall be assumed or substituted for an appropriate number of shares of each class of shares or other securities of the Successor Company (or a parent or subsidiary of the Successor Company) as were distributed to the shareholders of the Company in connection and with respect to the Transaction. In the case of such assumption and/or substitution of Awards, appropriate adjustments shall be made to the Purchase Price of Options so as to reflect such action and all other terms and conditions of the Award Agreements shall remain unchanged, including but not limited to the Vesting Dates, all subject to the determination of the Committee or the Board, which determination shall be in their sole discretion and final. The Company shall notify the Grantee of the Transaction in such form and method as it deems applicable at least ten (10) days prior to the effective date of such Transaction.

 

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	 	10.2	
Notwithstanding the above and subject to any applicable law, the Board or the Committee shall have full power and authority to determine that in certain Award Agreements there shall be a clause instructing that, if in any such Transaction as described in section 9.1 above, the Successor Company (or parent or subsidiary of the Successor Company) does not agree to assume or substitute the Awards, the Vesting Dates shall be accelerated so that any unvested Award or any portion thereof shall be immediately vested as of the date which is ten (10) days prior to the effective date of the Transaction.

	 	10.3	
For the purposes of section 10.1(i) above, an Award shall be considered assumed or substituted if, following the Transaction, the Awards confers the right to purchase or receive, for each Share underlying an Award immediately prior to the Transaction, the consideration (whether shares, options, cash, or other securities or property) received in the Transaction by holders of Shares held on the effective date of the Transaction (and if such holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Transaction is not solely ordinary shares (or their equivalent) of the Successor Company or its parent or subsidiary, the Committee may, with the consent of the Successor Company, provide for the consideration to be received upon the exercise of an Option subject to an Award to be solely ordinary shares (or their equivalent) of the Successor Company or its parent or subsidiary equal in Fair Market Value to the per Share consideration received by holders of a majority of the outstanding Shares in the Transaction; and provided further that the Committee may determine, in its discretion, that in lieu of such assumption or substitution of Options for options of the Successor Company or its parent or subsidiary, such Options will be substituted for any other type of asset or property including cash which is fair under the circumstances.

	 	10.4	
If the Company is voluntarily liquidated or dissolved (i) while unexercised Options subject to an Award remain outstanding under the ISAP, the Company shall immediately notify all unexercised Option holders of such liquidation, and the Option holders shall then have ten (10) days to exercise any unexercised Vested Option held by them at that time, in accordance with the exercise procedure set forth herein. Upon the expiration of such ten-days period, all remaining outstanding Options will terminate immediately; and (ii) all Restricted Shares subject to an Award, for which restrictions, including the Restriction Period, have not lapsed at such time, and any associated dividends (if any) that then remain subject to forfeiture will then be forfeited automatically prior to the consummation of such liquidation or dissolution.

	 	10.5	
If the outstanding Shares of the Company shall at any time be changed or exchanged by declaration of a share dividend (bonus shares), share split, combination or exchange of shares, recapitalization, or any other like event by or of the Company, and as often as the same shall occur, then the number, class and kind of the Shares subject to the ISAP or subject to any Awards therefore granted, and the Purchase Prices of Options, shall be appropriately and equitably adjusted so as to maintain the proportionate number of Shares without changing the aggregate Purchase Price of Options, provided, however, that no adjustment shall be made by reason of the distribution of subscription rights (rights offering) on outstanding Shares. Without derogating from the foregoing, upon happening of any of the foregoing, the class and aggregate number of Shares issuable pursuant to the ISAP (as set forth in Section 8 hereof), in respect of which Options subject to Awards have not yet been exercised, shall be appropriately adjusted, all as will be determined by the Board whose determination shall be final.

 

		10.6	
The Grantee acknowledges that in the event that the Shares shall be registered for trading in any public market, Grantee’s rights to sell the Shares may be subject to certain limitations (including a lock-up period), as will be requested by the Company or its underwriters, and the Grantee unconditionally agrees and accepts any such limitations.

 

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11.          TERM AND EXERCISE OF OPTIONS

 

	 	11.1	
Options shall be exercised by the Grantee by giving written notice to the Company and/or to any third party designated by the Company (the “Representative”), in such form and method as may be determined by the Company and when applicable, by the Trustee in accordance with the requirements of Section 102, which exercise shall be effective upon receipt of such notice by the Company and/or the Representative and the payment of the Purchase Price, or, in the event of cashless exercise (as described in Section 9.2 above), the surrender of portion of the Shares, at the Company’s or the Representative’s principal office. The notice shall specify the number of Options being exercised.

	 	11.2	
Options, to the extent not previously exercised, shall expire forthwith upon the earlier of: (i) the date set forth in the Award Agreement; and (ii) the expiration of any extended period in any of the events set forth in section 11.5 below.

	 	11.3	
The Options may be exercised by the Grantee in whole at any time or in part from time to time, to the extent that the Options become vested and exercisable, prior to the Expiration Date, and provided that, subject to the provisions of section 11.5 below, the Grantee is employed by or providing services (including directorship services) to the Company or any of its Affiliates, at all times during the period beginning on the Date of Grant and ending upon the later of: (a) the date of exercise; or (b) the applicable term specified in section 11.5 below.

	 	11.4	
Subject to the provisions of section 11.5 below, in the event of termination of Grantee’s employment or services, with the Company or any of its Affiliates, all Options granted to such Grantee will immediately expire. A notice of termination of employment or service shall be deemed to constitute termination of employment or service. For the avoidance of doubt, in case of such termination of employment or service, the unvested portion of the Grantee’s Options shall not vest and shall not become exercisable.

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	 	11.5	
Notwithstanding anything to the contrary hereinabove and unless otherwise determined in the Grantee’s Award Agreement, an Option may be exercised after the date of termination of Grantee's employment or service with the Company or any Affiliates during an additional period of time beyond the date of such termination, but only with respect to the number of Vested Options at the time of such termination according to the Vesting Dates, if:

		(i)	
termination is due to Grantee's resignation, other than in the circumstances described in paragraph (iii) below, in which event any Vested Option still in force and unexpired may be exercised within a period of ninety (90) days after the effective date of such termination, provided that to the extent that upon termination of such ninety (90) days' period there is a lasting blackout period preventing the Grantee from exercising his/her Options, the Company's CEO or CFO may extend such ninety (90) days' period for additional limited periods until the lapse of such blackout period; or-

	 	
(ii)

	
termination is initiated by the Company without Cause, in which event any Vested Award still in force and unexpired may be exercised within a period of ninety (90) days after the effective date of such termination; or-

 

	 	
(iii)

	
termination is due to Grantee's retirement, in which event any Vested Award still in force and unexpired may be exercised within a period of ninety (90) days after the effective date of such termination; or-

	 	
(iv)

	
termination is the result of death or disability of the Grantee, in which event any Vested Award still in force and unexpired may be exercised within a period of twelve (12) months after the effective date of such termination; or –

	 	
(v)

	
prior to the date of such termination, the Committee shall authorize an extension of the terms of all or part of the Vested Awards beyond the date of such termination for a period not to exceed the period during which the Options by their terms would otherwise have been exercisable.

For avoidance of any doubt, if termination of employment or service is for Cause, any outstanding unexercised Option (whether vested or non-vested), will immediately expire and terminate, and the Grantee shall not have any right in connection to such outstanding Options.

	 	11.6	
To avoid doubt, the Grantees shall not have any of the rights or privileges of shareholders of the Company in respect of any Shares purchasable upon the exercise of any Option, nor shall they be deemed to be a class of shareholders or creditors of the Company for purpose of the operation of sections 350 and 351 of the Companies Law or any successor to such section, until registration of the Grantee as holder of such Shares in the Company’s register of shareholders upon exercise of the Option in accordance with the provisions of the ISAP, but in case of Options and Shares held by the Trustee, subject to the provisions of Section 6 of the ISAP.

	 	11.7	
Any form of Award Agreement may contain such other provisions as the Committee may, from time to time, deem advisable.

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	 	11.8	
With respect to Unapproved 102 Awards that are Options, if the Grantee ceases to be employed by the Company or any Affiliate, the Grantee shall extend to the Company and/or its Affiliate a security or guarantee for the payment of tax due at the time of sale of Shares, all in accordance with the provisions of Section 102 and the rules, regulation or orders promulgated thereunder.

12.          VESTING OF OPTIONS

 

	 	12.1	
Subject to the provisions of the ISAP, each Option subject to an Award shall vest following the Vesting Dates and for the number of Shares as shall be provided in the Award Agreement. However, no Option shall be exercisable after the Expiration Date.

	 	12.2	
An Option may be subject to such other terms and conditions on the time or times when it may be exercised, as the Committee may deem appropriate. The vesting provisions of individual Options may vary.

13.          NO RIGHT OF FIRST REFUSAL

 

Notwithstanding anything to the contrary in the Articles of Association of the Company, none of the Grantees shall have a right of first refusal in relation with any sale of Shares in the Company.

14.          DIVIDENDS

 

Subject to the provisions of Section 5A.7 with respect to Restricted Shares, with respect to all Shares issued under the ISAP (but excluding, for avoidance of any doubt, any unexercised Options), the Grantee shall be entitled to receive dividends in accordance with the quantity of such Shares, subject to applicable law and the provisions of the Company’s Articles of Association (and all amendments thereto) and subject to any applicable taxation on distribution of dividends, and when applicable subject to the provisions of Section 102 and the rules, regulations or orders promulgated thereunder.

 

15.          RESTRICTIONS ON ASSIGNABILITY AND SALE OF OPTIONS

 

	 	15.1	
No Option or any right with respect thereto, purchasable hereunder, whether fully paid or not, shall be assignable, transferable or given as collateral or any right with respect to it given to any third party whatsoever, except as specifically allowed under the ISAP, and during the lifetime of the Grantee each and all of such Grantee's rights to purchase Shares hereunder shall be exercisable only by the Grantee.

 

Any such action made directly or indirectly, for an immediate validation or for a future one, shall be void.

 

	 	15.2	
As long as the Shares are held by the Trustee on behalf of  the Grantee, all rights of the Grantee over the Shares are personal, cannot be transferred, assigned, pledged or mortgaged, other than by will or pursuant to the laws of descent and distribution.

 

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16.          EFFECTIVE DATE AND DURATION OF THE ISAP

 

The ISAP shall be effective as of the day it was adopted by the Board and shall terminate on July 23, 2021.

 

The Company shall obtain the approval of the Company’s shareholders for the adoption of this ISAP or for any amendment to this ISAP, if shareholders’ approval is necessary or desirable to comply with any applicable law including without limitation the US securities law or the securities laws of other jurisdiction applicable to Awards granted to Grantees under this ISAP, or if shareholders’ approval is required by any authority or by any governmental agencies or national securities exchanges including, without limitation, the US Securities and Exchange Commission.

 

17.          AMENDMENTS OR TERMINATION

 

The Board may at any time, and when applicable after consultation with the Trustee, amend, alter, suspend or terminate the ISAP. No amendment, alteration, suspension or termination of the ISAP shall impair the rights of any Grantee, unless mutually agreed otherwise between the Grantee and the Company, which agreement must be in writing and signed by the Grantee and the Company. Termination of the ISAP shall not affect the Committee’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the ISAP prior to the date of such termination.

 

18.          GOVERNMENT REGULATIONS

 

The ISAP, and the granting and exercise of Awards hereunder, and the obligation of the Company to sell and deliver Shares under Options subject to Awards, shall be subject to all applicable laws, rules, and regulations, whether of the State of Israel or of the United States or any other State having jurisdiction over the Company and the Grantee, including the registration of the Shares under the United States Securities Act of 1933, and the Ordinance and to such approvals by any governmental agencies or national securities exchanges as may be required. Nothing herein shall be deemed to require the Company to register the Shares under the securities laws of any jurisdiction.

 

19.          CONTINUANCE OF EMPLOYMENT OR HIRED SERVICES

 

Neither the ISAP nor the Award Agreement with the Grantee shall impose any obligation on the Company or an Affiliate thereof, to continue any Grantee in its employ or service, and nothing in the ISAP or in any Award granted pursuant thereto shall confer upon any Grantee any right to continue in the employ or service of the Company or an Affiliate thereof or restrict the right of the Company or an Affiliate thereof to terminate such employment or service at any time.

 

20.          GOVERNING LAW & JURISDICTION

 

The ISAP shall be governed by and construed and enforced in accordance with the laws of the State of Israel applicable to contracts made and to be performed therein, without giving effect to the principles of conflict of laws. The competent courts of Tel-Aviv, Israel shall have sole jurisdiction in any matters pertaining to the ISAP.

 

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21.          TAX CONSEQUENCES

 

	 	21.1	
Any tax consequences arising from the grant or exercise of any Award, from the payment for Shares covered thereby or from any other event or act (of the Company and/or its Affiliates, the Trustee or the Grantee), hereunder, shall be borne solely by the Grantee. The Company and/or its Affiliates and/or the Trustee shall withhold taxes according to the requirements under the applicable laws, rules, and regulations, including withholding taxes at source. Furthermore, the Grantee shall agree to indemnify the Company and/or its Affiliates and/or the Trustee and hold them harmless against and from any and all liability for any such tax or interest or penalty thereon, including without limitation, liabilities relating to the necessity to withhold, or to have withheld, any such tax from any payment made to the Grantee.

	 	21.2	
The Company and/or, when applicable, the Trustee shall not be required to release any Share certificate to a Grantee until all required payments have been fully made.

22.          NON-EXCLUSIVITY OF THE ISAP

 

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

 

For the avoidance of doubt, prior grant of Awards to Grantees of the Company under their employment agreements, and not in the framework of any previous option plan, shall not be deemed an approved incentive arrangement for the purpose of this Section.

 

23.          MULTIPLE AGREEMENTS

 

The terms of each Award may differ from other Awards granted under the ISAP at the same time, or at any other time. The Board may also grant more than one Award to a given Grantee during the term of the ISAP, either in addition to, or in substitution for, one or more Awards previously granted to that Grantee.

 

 

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