Document:

Exhibit 4.2A

                                 ADDENDUM NO. 1

             TO MANAGEMENT CONTRACT MADE AND SIGNED ON APRIL 1, 2003

                       MADE AND SIGNED ON FEBRUARY 8, 2006

                                     BETWEEN

     LIPMAN ELECTRONIC ENGINEERING LTD.
     Public Co. 52-003894-4, a company duly registered in Israel
     ("LIPMAN")

                                                                OF THE ONE PART:

                                       AND

     PERRY YAACOV MANAGEMENT SERVICES LTD.
     Private Co. 51-322092-1, a company duly registered in Israel
     (the "MANAGEMENT COMPANY")

                                                              OF THE OTHER PART:

WHEREAS   a management agreement was made and signed on April 1, 2003 between
          the parties (hereinafter: the "MAIN CONTRACT"), by virtue of which,
          inter alia, Mr. Yaacov Perry serves as Chairman of the Board of
          Directors of Lipman; and

WHEREAS   the First Contract Period is due to end on February 8, 2006; and

WHEREAS   the parties wish: (a) to extend the First Contract Period, with
          certain changes as specified in this Addendum No. 1, and (b) to
          establish a new option plan upon the conditions specified in this
          Addendum No. 1;

     THEREFORE, THE PARTIES HEREBY AGREE, DECLARE AND STIPULATE AS FOLLOWS:

1.   The preamble to this Addendum No. 1 forms an integral part hereof.

2.   All the terms in this Addendum No. 1 shall be given the meaning assigned to
     them in the Main Contract.

3.   This Addendum No. 1 shall be deemed an integral part of the Main Contract.

4.   All the provisions of the Main Contract, including the provisions of clause
     10 thereof, shall remain in full force, save as explicitly modified by the
     provisions of this Addendum No. 1.

                                       -1-

5.   PERIOD OF THE CONTRACT

     5.1  The First Contract Period is hereby extended for a further period of
          36 (thirty six) months, to be counted from February 8, 2006 (the
          "EXTENDED CONTRACT PERIOD").

     5.2  Either party shall be entitled to terminate the contract during the
          Extended Contract Period, without any explanation or reason, by prior
          notice of ninety (90) days to be given in writing by the one party to
          the other (the "TERMINATION NOTICE").

6.   MANAGEMENT FEE

     6.1  During the Extended Contract Period, Lipman shall pay the Management
          Company a monthly sum of 42 (forty two) thousand shekels (the "MONTHLY
          MANAGEMENT FEE").

     6.2  Statutory VAT shall be added to the Monthly Management Fee, to be paid
          by Lipman to the Management Company against receipt of a lawful tax
          invoice.

     6.3  The Monthly Management Fee (plus VAT) shall be paid every month, by
          the fifth day of the month, for the management services that were
          provided by the Management Company during the previous month.

     6.4  The Monthly Management Fee shall be linked to the increase (but not
          decrease) in the consumer price index - the general index (the
          "INDEX"), according to the "last known index" method, the base index
          being the Index published on May 15, 2003 (in respect of April 2003),
          and the new index being the last Index known on the actual payment
          date. The linked Monthly Management Fee shall be adjusted once per
          quarter throughout the Extended Contract Period.

7.   OPTION PLAN

     7.1  In addition to the Monthly Management Fee and subject to receipt of
          all the approvals required in accordance with any statutory provision,
          the Management Company shall be allotted, following the signing of
          this Addendum No. 1, 100,000 (one hundred thousand) options, each
          convertible into one ordinary share of NIS 1 nominal value, of Lipman
          (the "WARRANTS").

     7.2  The Warrants shall be deposited with a trustee whose identity shall be
          determined by agreement between Lipman and the Management Company (the
          "TRUSTEE").

                                       -2-

     7.3  The options shall be exercisable, subject to the conditions detailed
          in this clause 7, in three lots, according to the breakdown and at the
          times specified below:

          7.3.1 Starting from February 8, 2007 - 33,333 (thirty three thousand
                three hundred and thirty three) options (the "FIRST LOT");

          7.3.2 Starting from February 8, 2008 - 33, 333 (thirty three thousand
                three hundred and thirty three) options (the "SECOND LOT");

          7.3.3 Starting from February 8, 2009 - 33,334 (thirty three thousand
                three hundred and thirty four) options (the "THIRD LOT");

          7.3.4 For the avoidance of doubt: In the circumstances specified in
                paragraph 7.9.2, the Management Company shall be entitled to
                exercise the options wholly or partly at different times than
                those specified in this paragraph 7.3.

     7.4  The options are cumulative, in the sense that the Management Company
          shall be entitled to exercise each lot (or any part thereof) starting
          from when the right of exercise first vests in relation to that lot
          and up to the end of one year from when the right to exercise the
          Third Lot vests, i.e. up to February 8, 2010 (the "EXERCISE PERIOD").
          At the end of the Exercise Period the options shall lapse and shall
          not vest the Management Company with any right.

     7.5  The exercise price of each option shall be the closing price on the
          Tel Aviv Stock Exchange (the "EXCHANGE") of an ordinary share of NIS 1
          nominal value on the date when the allotment of the Warrants is
          approved by Lipman's shareholders' meeting (the "EXERCISE PRICE"). The
          options, as well as the Exercise Price, shall be subject to the
          Adjustment Rules detailed in APPENDIX B to the Main Contract.

     7.6  The options or any part thereof shall be exercised in a written notice
          of the Management Company to be delivered to Lipman (the "EXERCISE
          NOTICE"), to which shall be attached the full consideration for the
          exercise, which (subject to any adjustment to be made in accordance
          with APPENDIX B to the Main Contract), shall be the consideration
          obtained by multiplying the Exercise Price by the number of options in
          respect of which the Exercise Notice was given.

     7.7  Within fourteen (14) days from when the Management Company delivered
          to Lipman the Exercise Notice together with the consideration for the
          exercise, Lipman shall allot to the Management Company the shares the
          subject of the options that were exercised (the "EXERCISED SHARES")
          and

                                       -3-

          shall deliver to the Management Company share certificates in respect
          thereof.

     7.8  Lipman shall cause the Exercised Shares to be registered for trade on
          the Exchange and shall bear any expense or cost entailed therein. For
          the avoidance of doubt: The registration of the Exercised Shares on
          NASDAQ shall be done solely as part of a prospectus, if and to the
          extent that one is published by Lipman.

     7.9  In the event that the Main Contract lapses or is canceled (hereinafter
          jointly: "TERMINATION OF THE SERVICES"), the following provisions
          shall apply:

          7.9.1 If the Termination Notice is delivered to Lipman by the
                Management Company, the Management Company in such case shall be
                entitled only to those options for which the date of exercise
                had passed prior to the date of delivery of the Termination
                Notice.

          7.9.2 If the Termination Notice is delivered to the Management Company
                by Lipman for a cause other than any cause which enables the
                withholding of severance pay from an employee, then the
                following provisions shall apply:

               7.9.2.1 If the Termination Notice is delivered during the period
                       up to February 8, 2007 - all the options included in the
                       First Lot shall belong to the Management Company, and the
                       entitlement with respect to all the rest of the options
                       shall automatically lapse.

               7.9.2.2 If the Termination Notice is delivered after February 8,
                       2007 - the Management Company shall be entitled to
                       exercise: (a) all the options included in the First Lot
                       (if they were not exercised until then); and (b) all the
                       options included in the Second Lot, pro rata to the
                       number of months elapsed from February 8, 2007 to the end
                       of ninety (90) days from the date of delivery of the
                       Termination Notice, and the entitlement with respect to
                       all the rest of the options shall automatically lapse.

               7.9.2.3 If the Termination Notice is delivered after February 8,
                       2008 - the Management Company shall be entitled to
                       exercise: (a) all the options included in the First Lot
                       (if they were not exercised until then); and (b) all the

                                       -4-

                       options included in the Second Lot (if they were not
                       exercised until then); and (c) all the options included
                       in the Third Lot, pro rata to the number of months
                       elapsed from February 8, 2008 to the end of ninety (90)
                       days from the date of delivery of the Termination Notice,
                       and the entitlement with respect to all the rest of the
                       options shall automatically lapse.

          7.9.3 Should the Management Company wish to exercise the options to
                which it is entitled by the provisions of paragraphs 7.9.1,
                7.9.2 and 7.9.3, it shall be obligated to deliver the Exercise
                Notice within ninety (90) days from the date of delivery of the
                Termination Notice. If the Termination Notice is not delivered -
                the options shall lapse.

          7.9.4 Notwithstanding that stated in this clause 7, in the event that
                the Management Company stops providing Lipman with management
                services in accordance with the provisions of the Main Contract,
                by reason of Perry's inability to fill the position due to
                incapacity for work or death, God forbid, the right shall
                continue to vest in the Management Company to exercise all the
                options in accordance with the provisions of this clause 7, at
                the same times and upon the same conditions to which it would
                have been entitled if not for the Termination of the Services.

          7.9.5 Lipman shall make best efforts to obtain all the approvals
                required in accordance with any statutory provision for the
                allotment of the options.

     7.10 The Management Company confirms that it is aware of the restrictions
          on the sale of securities under Section 15C of the Securities Law,
          5728-1968, and under NASDAQ Rule 144.

            IN WITNESS WHEREOF THE PARTIES HAVE SET THEIR HAND HERETO
                  AT THE PLACE AND ON THE DATE SPECIFIED ABOVE:

-------------------------------------   ----------------------------------------
       PERRY YAACOV MANAGEMENT                      LIPMAN ELECTRONIC
            SERVICES LTD.                            ENGINEERING LTD.

                                       -5-Exhibit 4.7D

                                  [LIPMAN LOGO]

                       LIPMAN ELECTRONIC ENGINEERING LTD.
                            2006 SHARE INCENTIVE PLAN

     1. Purposes of the Plan. This Plan, which shall be known as the Lipman
Electronic Engineering Ltd. 2006 Share Incentive Plan, is intended to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees, Directors and
Consultants, and to promote the success of the business of the Company by
providing such persons with Awards of Options, Share Appreciation Rights and/or
Restricted Shares. Options granted under the Plan to (a) Service Providers
subject to Israeli tax law may contain such terms as will qualify them for
special tax treatment under Amended Section 102 of the Israeli Income Tax
Ordinance, or may be granted as 3(I) Options under Section 3(I) of the Ordinance
(as defined below); (b) Service Providers subject to the tax laws of the United
States may be Incentive Stock Options or Nonstatutory Stock Options (as defined
below); or (c) Employees or Service Providers subject to the tax laws of any
jurisdiction other than Israel or the United States may be granted pursuant to
the applicable tax laws of such jurisdiction; all as determined by the Board at
the time of grant.

     2. Definitions. As used in this Plan, the following definitions shall
apply:

          (a) "3(I) Option" means an Option, which is subject to taxation
pursuant to Section 3(I) of the Ordinance.

          (b) "102 Capital Gains Track" means the tax alternative set forth in
Amended Section 102(b)(2) of the Ordinance pursuant to which, a portion of the
income resulting from the sale or transfer from the Trustee of Shares derived
from Awards granted pursuant to the Plan is taxed as a capital gain.

          (c) "102 Capital Gains Track Award" means an Award qualifying for the
special tax treatment under the 102 Capital Gains Track set forth in Amended
Section 102 of the Ordinance, specifically subsection (b)(2) thereof.

          (d) "Amended Section 102" shall mean the provisions of Section 102 of
the Ordinance, as amended by the Law Amending the Income Tax Ordinance (Number
132) 2002, effective January 1, 2003.

          (e) "Applicable Laws" means the requirements relating to the creation,
existence, and administration of equity plans under Israeli corporate and
securities laws, U.S. state corporate laws, U.S. federal and state securities
laws, the Code, the Ordinance, any stock exchange or quotation system on which
the Ordinary Shares are listed or quoted and the applicable laws of any other
country or jurisdiction where Awards are granted and/or Ordinary Shares are
issued under the Plan.

          (f) "Award" means any Option, Share Appreciation Right or Restricted
Shares granted under the Plan.

          (g) "Award Agreement" means a written or electronic agreement between
the Company and a participant evidencing the terms and conditions of an
individual Award granted under the Plan. An Award Agreement is subject to the
terms and conditions of the Plan.

          (h) "Board" means the board of directors of the Company.

          (i) "Code" means the United States Internal Revenue Code of 1986, as
mended.

          (j) "Company" means Lipman Electronic Engineering Ltd., an Israeli
company, together with any Subsidiary existing from time to time.

          (k) "Consultant" means any person or corporate or other entity which
is engaged by the Company or any Parent or Subsidiary to render consulting or
advisory services to such entity.

          (l) "Director" means a member of the board of directors of the Company
or of any Subsidiary.

          (m) "Disability" means the inability of the Optionee, in the opinion
of qualified physician acceptable to the Company, to perform the major duties of
the Optionee's position with the Company because of the sickness or injury of
the Optionee.

          (n) "Employee" means any natural person who is an employee of the
Company or of any Parent or Subsidiary. An Award recipient shall not cease to be
an Employee in the case of (i) any leave of absence approved in advance by the
Company or (ii) a transfer between locations of the Company or between the
Company, its Parent, any Subsidiary, or any successor. Neither service as a
Director nor payment of a director's fee by the Company, or both, shall be
sufficient to constitute "employment" by the Company.

          (o) "Exchange Act" means the United States Securities Exchange Act of
1934, as amended.

          (p) "Fair Market Value" means, as of any date, the value of Ordinary
Shares determined as follows:

               (i) For Ordinary Shares listed on any established stock exchange
or a national market system, including without limitation the NASDAQ or the Tel
Aviv Stock Exchange, the closing sales price therefore (or the closing bid, if
no sales were reported) as quoted on such exchange or system on the date of
grant, as reported in The Wall Street Journal or such other source as the Board
deems reliable;

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

                                      -2-

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

          (q) "Incentive Stock Option" means an Option granted under U.S. tax
laws which is intended to qualify as an incentive stock option within the
meaning of Code Section 422.

          (r) "Nonstatutory Stock Option" means an Option granted under U.S. tax
laws which does not qualify as an Incentive Stock Option.

          (s) "Officer" means a person who is an officer of the Company or a
Subsidiary.

          (t) "Option" means a stock option granted pursuant to the Plan.

          (u) "Optionee" means the holder of an outstanding Award granted under
the Plan.

          (v) "Ordinance" means the Israeli Income Tax Ordinance (New Version)
1961, as amended, and the Rules.

          (w) "Ordinary Shares" means ordinary shares of Lipman Electronic
Engineering Ltd.

          (x) "Parent" means any corporation (other than the employer
corporation) in an unbroken chain of corporations ending with the employer
corporation if, at the time of the granting of the Award, each of the
corporations other than the employer corporation owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

          (y) "Plan" means this 2006 Share Incentive Plan, as the same may be
amended from time to time.

          (z) "Required Holding Period" means the requisite period prescribed by
the Ordinance, particularly Amended Section 102 thereof, or such other period as
may be required by the Israeli Income Tax Authorities, during which the Trustee
must hold an Award or the Shares acquired upon the exercise thereof, if
applicable.

          (aa) "Rules" means the rules, regulations, orders or procedures
promulgated under the Ordinance, including specifically those which are
ultimately promulgated in connection with the Law Amending the Income Tax
Ordinance (Number 132) 2002.

          (bb) "Restricted Shares" means Shares granted to a participant
pursuant to Section 13.

          (cc) "Service Provider" means an Employee, Officer, Director or
Consultant.

                                      -3-

          (dd) "Share" means an Ordinary Share, as adjusted in accordance with
Section 14 below.

          (ee) "Share Appreciation Right" or "SAR" means a right granted to a
participant under Section 12.

          (ff) "Subsidiary" means any corporation (other than the employer
corporation) in an unbroken chain of corporations beginning with the employer
corporation if, at the time of the granting of the Award, each of the
corporations other than the last corporations in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.

          (gg) "Treasury Regulations" means the most current permanent,
temporary, proposed, and proposed and temporary, regulations of the United
States Treasury Department under the Code, as amended.

          (hh) "Trustee" means a trustee nominated by the company and approved
     by the Israeli tax authorities in accordance with Section 102 of the
     Ordinance.

     3. Stock Subject to the Plan. Subject to the provisions of Section 14
hereunder, the maximum aggregate number of Shares which may be issued or sold
under this Plan is two million (2,000,000) Shares. The Shares may be authorized
but unissued, or reacquired, Ordinary Shares.

     If an Option or SAR expires or becomes unexercisable without having been
exercised in full, the Shares which were subject thereto shall become available
for future grant or sale under the Plan. However, Shares that have actually been
issued under the Plan upon exercise of an Option or SAR, shall not be returned
to the Plan and shall not become available for future distribution under this
Plan. Restricted Shares that are forfeited to, or repurchased by, the Company
prior to the lapse of the restrictions thereon shall become available for future
grant or sale under the Plan.

     4. Administration of the Plan.

          (a) Administration. The Plan shall be administered by the Board or,
subject to Applicable Laws, a committee of the Board. All references in the Plan
to the Board shall include a committee of the Board if authorized by the Board.

          (b) Powers of the Board. Subject to the provisions of the Plan, and
subject to the approval of any relevant authorities, the Board shall have the
authority in its discretion to:

               (i) determine the Fair Market Value;

               (ii) select the Service Providers to whom Awards may from time to
time be granted hereunder;

               (iii) determine the number of Shares to be covered by each such
grant hereunder and the exercise price, base price or purchase price per share,
as applicable;

                                      -4-

               (iv) approve forms of Award Agreement for use under the Plan;

               (v) determine, alter and adjust the terms and conditions of any
Award granted hereunder including without limitation to accelerate the right of
a participant to exercise in whole or in part Options or SARs granted under the
Plan, to accelerate the vesting of any Restricted Shares or to reprice the
exercise price of an Option or the base price of an SAR granted under the Plan;
and

               (vi) construe, interpret, alter, revise or otherwise adjust the
terms of the Plan and any Award Agreement as may be required by Applicable Laws
of local or foreign jurisdictions, or otherwise, and determine any other matter
which is necessary or desirable for, or incidental to, the administration of the
Plan.

          (c) Effect of Board's Decision. All decisions, determinations and
interpretations of the Board shall be final and binding on all Award recipients.

          (d) No Liability of Board. No member of the Board of Directors shall
be liable for any action or determination made in good faith with respect to the
Plan or any Award granted thereunder. Subject to the provisions of Applicable
Law, each member of the Board shall be indemnified and held harmless by the
Company against any cost or expense (including counsel fees) reasonably incurred
by him, or any liability (including any sum paid in settlement of a claim with
the approval of the Company) arising out of any act or omission to act in
connection with the Plan unless arising out of such member's own fraud or bad
faith, to the extent permitted by applicable law. Such indemnification shall be
in addition to any rights of indemnification the member may have as a director
or otherwise under the Company's Certificate of Incorporation, any agreement,
any vote of shareholders or disinterested directors, insurance policy or
otherwise.

     5. Eligibility.

          (a) With respect to Awards, which are granted subject to the
Ordinance, 102 Capital Gains Track Awards may be granted only to Employees,
Officers and Directors; Options and SARs granted to other Service Providers may
be granted pursuant to Section 3(I) of the Ordinance. Notwithstanding the
foregoing, 102 Capital Gains Track Awards may not be granted to Employees,
Officers or Directors who are "controlling shareholders", as defined in the
Ordinance. With respect to Options which are granted subject to the Code, Non
statutory Stock Options may be granted to Service Providers, and Incentive Stock
Options may be granted only to Employees.

          (b) The type of Option granted shall be identified and designated in
the Award Agreement.

          (c) Notwithstanding the designation of an Option as an Incentive Stock
Option, to the extent that the aggregate Fair Market Value of the Shares with
respect to which Incentive Stock Options are exercisable for the first time by
the Optionee during any calendar year (under all plans of the Company and any
Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Non
statutory Stock Options. For purposes of this Section 5(c), Incentive Stock
Options shall be taken into account in the order in which they were granted. The

                                      -5-

Fair Market Value of the Shares shall be determined as of the time the Option
with respect to such Shares is granted.

          (d) SARs and Restricted Shares may be granted to Service Providers.

          (e) Neither the Plan nor any Award shall confer upon any Award
recipient any right to continue the Award recipient's relationship as a Service
Provider with the Company, nor shall it be construed to impose any obligation on
the Company to continue the Award recipient's relationship with the Company as a
Service Provider, nor shall it interfere in any way with the Company's right to
terminate such relationship at any time, with or without Cause (as hereinafter
defined). The vesting of an Award pursuant to the vesting schedule set forth in
the Award Agreement is earned only by continuing as a Service Provider at the
will of the Company, not through the act of being hired, being granted an Option
or Restricted Shares or acquiring Shares. In the event that an Award Recipient
ceases to be a Service Provider with the Company, the unvested portion of his or
her Options and SARs shall not vest and shall not become exercisable and the
unvested portion of his or her Restricted Shares shall be forfeited to the
Company.

     6. Terms and Conditions of Awards

          (a) Terms and Conditions of 102 Capital Gains Track Awards.

               (i) Effectiveness of 102 Capital Gains Track Awards. In no event
shall a 102 Capital Gains Track Award be granted prior to the expiration of a
period of thirty (30) days following submission to the Israeli Tax Commissioner
of the Company's (i) election to use the Capital Gains Track pursuant to Amended
Section 102, (ii) request for approval of the Plan, and (iii) request for
approval of the Trustee.

               (ii) Delivery to Trustee; Release by Trustee. Each 102 Capital
Gains Track Award granted to an Optionee and each certificate for Shares
acquired pursuant to the exercise thereof, if applicable, shall be issued to,
and registered in the name of, a Trustee and shall be held in trust for the
benefit of the Optionee (the "Trust") for the Required Holding Period. After
termination of the Required Holding Period, the Trustee may release such 102
Capital Gains Track Award and any such Shares, provided that (A) the Trustee has
received an acknowledgment from the Israeli Income Tax Authority that the
Optionee has paid any applicable tax due pursuant to the Ordinance; (B) the
Trustee withholds any applicable tax due pursuant to the Ordinance; or (C) the
Company undertakes to the Trustee that it will deduct any applicable tax from
the salary of those Optionees who are employees or former employees of the
Company, in accordance with an approval received from the Income Tax Authority,
if so required. The Trustee shall not release any 102 Capital Gains Track Award
or Shares issued upon exercise of such Award, if applicable, prior to the full
payment of the Optionee's tax liabilities.

               (iii) Compliance with 102 Capital Gains Track. Each 102 Capital
Gains Track Award shall be subject to the terms of the 102 Capital Gains Track
of Amended Section 102, which shall be deemed an integral part of the 102
Capital Gains Track Award and which shall prevail over any term contained in the
Plan or Award Agreement which is not consistent

                                      -6-

therewith. Any provision of the 102 Capital Gains Track and any approvals by the
Income Tax Commissioner not expressly specified in the Plan or Award Agreement
which are necessary to receive or maintain any tax benefit pursuant to the 102
Capital Gains Track shall be binding on the Optionee. In addition, 102 Capital
Gains Track Awards shall be subject to the following:

                    (1) The Trustee and the Optionee granted a 102 Capital Gains
Track Award shall comply with the Ordinance, and the terms and conditions of the
Trust Agreement entered into between the Company and the Trustee. For avoidance
of doubt, it is reiterated that compliance with the Ordinance specifically
includes compliance with the Rules. Further, the Optionee agrees to execute any
and all documents which the Company or the Trustee may reasonably determine to
be necessary in order to comply with the Ordinance and, particularly, the Rules.

                    (2) Upon receipt of a 102 Capital Gains Track Award, the
Optionee shall 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
to this Plan, such Option or any shares acquired upon the exercise thereof. In
addition, the Optionee shall sign an undertaking, according which he/she is
familiar with the terms and conditions of Section 102 of the Ordinance, the
Rules, and the trust agreement signed between the Trustee and the Company, and
agrees to be bound by it, all as required under such Section 102 and the Rules.

               (iv) Method of Exercise of 102 Capital Gains Track Awards.
Exercise of a 102 Capital Gains Track Award shall be by written notice to the
Company, which must state the election to exercise the Award, the number of
Awards being exercised, or whole Shares for which the Option is being exercised,
as applicable, and such other representations and agreements as to the
Optionee's investment intent with respect to such Shares as may be required
pursuant to the provisions of the Award Agreement. The written notice must be
signed by the Optionee, and must be delivered in person, by certified or
registered mail, return receipt requested, by confirmed facsimile transmission,
or by such other means as the Company may permit, to the Chief Financial Officer
of the Company, the Controller of the Company or the legal counsel of the
Company, or other authorized representative of the Company, prior to the
termination of the Award. The exercise of a 102 Capital Gains Track Award must
be accompanied by full payment of the aggregate exercise price, if applicable,
in a form authorized by the Plan for the number of Shares being purchased. The
Company shall provide notice to the Trustee of the exercise of a 102 Capital
Gains Track Award in accordance with the requirements of Amended Section 102.

               (v) Restrictions on Transfer of Shares. Shares resulting from the
exercise of 102 Capital Gains Track Award shall not be released from the Trust
before the completion of the Required Holding Period. Notwithstanding the
foregoing, the Trustee may, pursuant to a written request, release and transfer
such Shares to a designated third party, provided that both of the following
conditions have been fulfilled prior to such transfer: (A) payment has been
rendered to the tax authorities of all taxes required to be paid upon the
release and transfer of the shares, and confirmation of such payment has been
received by the Trustee and (B) the Trustee has received written confirmation
from the Company that all requirements for such release and transfer have been
fulfilled according to the terms of the Company's corporate documents, the Plan,
the Award Agreement and any applicable law.

                                      -7-

               (vi) Meeting of Shareholders. Following the exercise of any 102
Capital Gains Track Award, the Optionee shall have all of the rights of a
shareholder; provided, however, that as long as such exercised Shares are held
by the Trustee, the voting rights at the Company's general meeting attached to
such Shares will remain with the Trustee. However, the Trustee shall not
exercise such voting rights at general meetings. The Trustee shall not be
required to notify the Optionee of any Shares held in the Trust, of any meeting
of the Company's shareholders.

          (b) Grants Made Under Section 3(i). The Board may choose to deposit
the Options or SARs granted pursuant to Section 3(i) with a trustee. In such
event, the trustee shall hold such Options or SARs in trust for the benefit of
the Optionees, until exercised by the Optionee, pursuant to the Company's
instructions from time to time. If determined by the Board and subject to the
consent of the Trustee, the Trustee shall be responsible for withholding any
taxes for which an Optionee may become liable upon the exercise of Awards.

     7. Term of Plan. The Plan shall become effective upon its approval by the
shareholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 16 hereunder.

     8. Term of Option. The term of each Option shall be stated in the Award
Agreement; provided, however, that the term shall be no more than seven (7)
years from the date of grant thereof. In the case of an Incentive Stock Option
granted to an Optionee who, at the time the Option is granted, owns stock
representing more than ten percent (10%) of the voting power of all classes of
stock of the Company or of any Parent or Subsidiary, the term of the Option
shall be five (5) years from the date of grant or such shorter term as may be
provided in the Award Agreement.

     9. Option Exercise Price and Consideration.

          (a) Unless otherwise provided by the Board, the per share exercise
price for each Share to be issued upon exercise of an Option, including the
method of payment, shall be its Fair Market Value, as determined by the Board,
but shall be subject to the following:

               (i) In the case of an Incentive Stock Option:

                    (1) granted to an Employee who at the time of such grant
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or of any Parent or Subsidiary, the exercise
price shall be no less than 110% of the Fair Market Value per Share on the date
of grant.

                    (2) Granted to an Employee other than an Employee described
in immediately preceding subsection (1), the per Share exercise price shall be
no less than 100% of the Fair Market Value per Share on the date of grant.

               (ii) Notwithstanding the foregoing, Options may be granted with a
per Share exercise price other than as required above pursuant to a merger or
other corporate transaction, as permitted by the relevant provisions of the Code
or of the Treasury Regulations.

                                      -8-

          (b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Board (and, in the case of an Incentive Stock Option, shall be determined at
the time of grant). Such consideration may consist of (1) cash, (2) check, (3)
Shares (including through withholding of Shares deliverable upon exercise of an
Option), or (4) any combination of the foregoing methods of payment. In making
its determination as to the type of consideration to accept, the Board shall
consider whether acceptance of such consideration may be reasonably expected to
benefit the Company.

     10. Exercise of Option.

          (a) Procedure for Exercise. Any Option granted hereunder shall be
exercisable according to the terms hereof at such times and under such
conditions as determined by the Board and set forth in the Award Agreement.
Options granted to Employees, Officers, Directors and Consultants shall become
exercisable at a rate determined by the Board at the date of grant. Unless the
Board provides otherwise, vesting of Options granted hereunder shall be tolled
during any unpaid leave of absence. An Option may not be exercised for a
fraction of a Share.

               (i) Exercise and Payment for Shares. An Option shall be deemed
exercised when the Company receives: (A) written or electronic notice of
exercise (in accordance with the Award Agreement) from the person entitled to
exercise the Option, and (B) full payment for the Shares with respect to which
the Option is exercised. Full payment may consist of any consideration and
method of payment authorized by the Board and permitted by the Award Agreement
and the Plan. Shares issued upon exercise of an Award shall be issued in the
name of the Optionee, the Trustee if applicable, or, if requested by the
Optionee, in the name of the Optionee and his or her spouse.

               (ii) Rights as a Shareholder. Until the Shares are issued (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) no right to vote or right to receive
dividends or any other rights as a shareholder shall exist with respect to such
Shares, notwithstanding the exercise of the Option. The Company shall issue (or
cause to be issued) such Shares promptly after the Option is exercised. No
adjustment will be made for a dividend or other right the record date for which
is prior to the date the Shares are issued, except as provided in Section 14 of
the Plan.

               (iii) Exercise of an Option in any manner shall result in a
decrease in the number of Shares thereafter available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

               (iv) Shares issued upon exercise of a 102 Capital Gains Track
Award during the required Holding Period shall be issued in the name of the
Trustee for the benefit of the Optionee. The Trustee shall have no rights to
equity participation as to the Shares held in escrow.

          (b) Termination of Relationship as a Service Provider. If an Optionee
ceases to be a Service Provider, unless due to such Optionee's death or
Disability, or unless the Optionee is terminated for "Cause", as defined below,
such Optionee may exercise his Option within such period of time as is specified
in the Award Agreement to the extent that the Option is

                                      -9-

vested on the date of termination (but in no event later than the expiration of
the term of the Option as set forth in the Award Agreement). In the absence of a
specified time in the Award Agreement, the Option shall remain exercisable for
one (1) year, following the Optionee's termination; provided, however, that
notwithstanding the above, Incentive Stock Options shall remain exercisable for
three (3) months following the Optionee's termination and not one year. If, on
the date of termination, the Optionee is not vested as to his entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his Option within the time
specified by the Board, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.

               (i) Cause. If an Optionee is terminated for Cause, then Options
which were previously granted shall not vest, and Options which had vested shall
no longer be exercisable and shall no longer be of any force or effect,
immediately upon termination of the Optionee for Cause. Unless otherwise
determined by the Board, Cause shall mean any of the following: (A) an act of
dishonesty towards the Company; (B) Optionee's conviction of a felony, unless
the Board of Directors of the Company (without the attendance or voting of the
Optionee, (if applicable) reasonably determines that such conviction will not
adversely affect the Company or any of its Subsidiaries or its reputation or the
ability of the Optionee to effectively serve the Company or any of its
Subsidiaries; (C) Optionee's serious misconduct related to the Company or any of
its Subsidiaries; or (D) Optionee's continued violations of his employment or
service duties for a period of at least 30 days after he has received a written
demand for performance from the Company which specifically sets forth the
factual basis for the Company's belief that Optionee has not substantially
performed his duties.

               (ii) For purposes of this Plan, "termination" (whether or not for
Cause) shall be deemed to occur on the earlier of the date on which the Company
or the Optionee, as the case may be, gives notice of the Optionee's cessation to
be a Service Provider, and the date on which Optionee actually effectively
ceases to be a Service Provider.

          (c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
Option within such period of time as is specified in the Award Agreement to the
extent the Option is vested on the date of termination (but in no event later
than the expiration of the term of such Option as set forth in the Award
Agreement). In the absence of a specified time in the Award Agreement, the
Option shall remain exercisable for one (1) year following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his entire Option, the Shares covered by the unvested portion of the Option
shall revert to the Plan. If, after termination, the Optionee does not exercise
his Option within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

          (d) Death of Optionee. If an Optionee dies while a Service Provider,
the Optionee's Option may be exercised within such period of time as is
specified in the Award Agreement to the extent that the Option is vested on the
date of death (but in no event later than the expiration of the term of such
Option as set forth in the Award Agreement) by the Optionee's estate or by a
person who acquires the right to exercise the Option by bequest or inheritance.
In the absence of a specified time in the Award Agreement, the Option shall
remain exercisable for one (1) year following the Optionee's termination If, at
the time of death, the Optionee is not

                                      -10-

vested as to the entire Option, the Shares covered by the unvested portion of
the Option shall immediately revert to the Plan. If the Option is not so
exercised within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

          (e) Buyout Provisions. The Board may at any time and from time to time
offer to buy out for a payment in cash or Shares, an Option previously granted,
based on such terms and conditions as the Board shall establish and communicate
to the Optionee at the time that such offer is made. No such offer shall
obligate such Optionee to relinquish his Option.

     11. Non-Transferability of Options. Options may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner whatsoever
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. The
restrictions set forth in this Section 11 shall not apply in the case of the buy
out of an Option pursuant to Section 10(e) above.

     12. Share Appreciation Rights. The Board is authorized to grant SARs to
participants on the following terms and conditions:

          (a) Right to Payment. A SAR shall confer on the participant to whom it
is granted a right to receive, upon exercise thereof, in Shares the excess of
(i) the Fair Market Value of one Share on the date of exercise over (ii) the
base price of the SAR as determined by the Board, which base price shall be not
less than the Fair Market Value of a Share on the date of grant of such SAR.

          (b) Other Terms. The Board shall determine at the date of grant or
thereafter, the time or times at which and the circumstances under which a SAR
may be exercised in whole or in part (including based on achievement of
performance goals and/or future service requirements), the method of exercise,
method of settlement, form of consideration payable in settlement, method by or
forms in which Shares will be delivered to participants, if applicable, whether
or not a SAR shall be free-standing or in tandem or combination with any other
Award, and the maximum term of an SAR, which in no event shall exceed a period
of seven (7) years from the date of grant. Unless the Board determines
otherwise, the terms and provisions of this Plan shall apply to SARs, Mutatis
Mutandis.

          (c) SARs granted to Israeli Employees shall be subject to the
provisions of Section 102 of the Ordinance and the Rules, and may be granted
pursuant to the 102 Capital Gains Track and any ruling that may be obtained from
the Israeli tax authorities this matter, as detailed in Section 6 hereof.

          (d) Non-Transferability of SARs. SARs may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner whatsoever
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the recipient, only by the recipient.

     13. Restricted Shares. The Board is authorized to grant Restricted Shares
on the following terms and conditions:

                                      -11-

          (a) Grant and Restrictions. Restricted Shares shall be subject to such
restrictions on transferability, risk of forfeiture and other restrictions, if
any, as the Board may impose, which restrictions may lapse separately or in
combination at such times, under such circumstances (including based on
achievement of performance goals and/or future service requirements), in such
installments or otherwise and under such other circumstances as the Board may
determine at the date of grant or thereafter. Except to the extent restricted
under the terms of the Plan and any Award Agreement, a participant granted
Restricted Shares shall have all of the rights of a shareholder, including the
right to vote the Restricted Shares and the right to receive dividends thereon
(subject to any mandatory reinvestment or other requirement imposed by the
Board). Unless the Board determines otherwise, the terms and provisions of this
Plan shall apply to Restricted Shares, Mutatis Mutandis.

          (b) Purchase Price. The Board shall require the payment of lawful
consideration for Restricted Shares to the extent necessary to satisfy the
requirements of Applicable Laws and may otherwise require payment of additional
consideration for Restricted Shares as it may determine.

          (c) Forfeiture. Except as otherwise determined by the Board, upon
termination of employment or service during the applicable restriction period,
Restricted Shares that are at that time subject to restrictions shall be
forfeited and reacquired by the Company; provided that the Board may provide, by
rule or regulation or in any Award Agreement, or may determine in any individual
case, that restrictions or forfeiture conditions relating to Restricted Shares
will lapse in whole or in part, including in the event of terminations resulting
from specified causes.

          (d) Certificates for Stock. Restricted Shares granted under the Plan
may be evidenced in such manner as the Board shall determine. If certificates
representing Restricted Shares are registered in the name of the participant,
the Board may require that such certificates bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such
Restricted Shares, that the Company retain physical possession of the
certificates, and that the participant deliver a stock power to the Company,
endorsed in blank, relating to the Restricted Shares.

          (e) Dividends and Splits. As a condition to the grant of an Award of
Restricted Shares, the Board may require that any dividends paid on a share of
Restricted Shares shall be either (i) paid with respect to such Restricted
Shares at the dividend payment date in cash, in kind, or in a number of shares
of unrestricted Shares having a Fair Market Value equal to the amount of such
dividends, or (ii) automatically reinvested in additional Restricted Shares or
held in kind, which shall be subject to the same terms as applied to the
original Restricted Shares to which it relates, or (iii) deferred as to payment,
either as a cash deferral or with the amount or value thereof automatically
deemed reinvested in Shares, subject to such terms as the Board shall determine.
Unless otherwise determined by the Board, Shares distributed in connection with
a split or dividend, and other property distributed as a dividend, shall be
subject to restrictions and a risk of forfeiture to the same extent as the
Restricted Shares with respect to which such Shares or other property has been
distributed.

                                      -12-

          (c) Restricted Shares granted to Israeli Employees shall be subject to
the provisions of Section 102 of the Ordinance and the Rules, and may be granted
pursuant to the 102 Capital Gains Track, as detailed in Section 6 hereof.

     14. Changes in Capitalization; Merger, Acquisition or Asset Sale.

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

          (b) Merger, Acquisition or Asset Sale. In the event of a merger of the
Company with or into another corporation or an acquisition of all or
substantially all of the shares of the Company, such that more than 50% of the
outstanding voting securities of the surviving or resulting company are owned in
the aggregate by persons or entities other than the shareholders of the Company,
or in the event of the sale of all or substantially all of the assets of the
Company (each such event, a "Transaction"), (i) each outstanding Option shall be
assumed or an equivalent option or right substituted by the successor
corporation or by a Parent or Subsidiary of the successor corporation, (ii) each
outstanding SAR shall be assumed or an equivalent share appreciation right
substituted by the successor corporation or by a Parent or Subsidiary of the
successor corporation, and (iii) each outstanding Award of Restricted Shares
shall be continued or assumed or an equivalent Award substituted by the
successor corporation or by a Parent or Subsidiary of the successor corporation.
In the event that the successor corporation refuses to assume or substitute for
the Options, SARs or Restricted Shares, then the Board may, in its sole
discretion, determine to accelerate, in full or in part, all or a portion of the
Options, SARs or Restricted Shares then outstanding. In the event that the Board
determines to fully or partly accelerate Options or SARs, then the Board shall
notify the Award recipient, in writing or electronically, that such Options or
SARs are exercisable to the extent accelerated for a period of ten (10) days
from the date of such notice, and that any unexercised Options or SARs shall
terminate upon the expiration of such period. In the event that the Board
determines to fully or partly accelerate the Restricted Shares, then the Board
shall notify the Award recipient, in writing or electronically, that such
restrictions have been removed in connection with the Restricted Shares held by
such recipient. In the event that the successor corporation refuses to assume or
substitute for the Options or SARs, any unexercised Options or SARs shall
terminate immediately prior to the closing of such transaction and any unvested
Restricted Shares may be forfeited by the Company, the successor corporation or
by a Parent or Subsidiary of the successor corporation.

                                      -13-

     15. Time of Granting Awards. The date of grant of an Award shall, for all
purposes, be the date on which the Board makes the determination granting such
Award, or such other date as is determined by the Board, as set forth in the
Award Agreement.

     16. Amendment and Termination of the Plan.

          (a) The Board may at any time amend, alter, suspend or terminate the
Plan.

          (b) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Award
recipient, unless mutually agreed otherwise between the recipient and the Board,
which agreement must be in writing and executed by the recipient and the
Company. Termination of the Plan shall not affect the Board's ability to
exercise the powers granted to it hereunder with respect to Awards granted under
the Plan prior to the date of such termination.

     17. Conditions Upon Issuance of Shares - Legal Compliance. Shares shall not
be issued pursuant to the exercise of an Option or SAR or the grant of
Restricted Shares unless the exercise of such Option or SAR or grant of
Restricted Shares and the issuance and delivery of such Shares shall comply with
Applicable Laws and shall be approved to counsel for the Company with respect to
such compliance.

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

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

     20. Shareholder Approval. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted by the Board. Such shareholder approval shall be obtained in the degree
and manner required under Applicable Laws.

     21. Information to Award Recipients. The Company shall not be required to
provide to each Award recipient copies of annual financial statements or any
other document unless, in the opinion of legal counsel, Applicable Law requires
such disclosure.

     22. Tax Consequences. Any tax consequences arising from the grant or
exercise of any Awards, from the payment for Shares covered thereby, from the
grant, vesting or disposition of Restricted Shares or from any other event or
act (whether of the Award recipient or of the Company or its Subsidiaries)
hereunder, shall be borne solely by the Award recipient. Furthermore, such Award
recipient shall agree to indemnify the Company or Subsidiary that employs the
Award recipient, and the Trustee, if applicable, 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

                                      -14-

from any payment made to the Award recipient. Except as otherwise required by
law, the Company and the Trustee, if applicable, shall not be obligated to
exercise any Options or SARs on behalf of an Award recipient or issue or release
from restriction any Restricted Shares until all tax consequences arising in
connection therewith are resolved in a manner reasonably acceptable to the
Company and, in the case of 102 Capital Gains Track Awards, the Trustee.

     23. Miscellaneous.

          (a) Rights Deriving from Employee-Employer Relationship. Any gain or
income credited or attributable to an Award recipient (or deemed as such) as a
result of the grant or exercise of an Option or SAR or the grant or vesting of
Restricted Shares will not be taken into account when calculating the basis for
entitlement of the Award recipient to any social rights or benefits, or any
other benefits deriving from an employee-employer relationship between the Award
recipient and the Company or a Subsidiary of the Company.

          (b) Multiple Agreements. The terms of each Award may differ from other
Awards granted under the Plan at the same time, or at any other time. The Board
may also grant more than one Award to a given Award recipient during the term of
the Plan, either in addition to, or in substitution for, one or more Awards
previously granted to that Award recipient. The grant of multiple Awards may be
evidenced by a single grant or multiple grants, as determined by the Board.

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

          (d) Construction. Whenever applicable in this Plan, the singular and
the plural, and the masculine, feminine and neuter shall be freely
interchangeable, as the context requires. The Section headings or titles shall
not in any way control the construction of the language herein, such headings or
titles having been inserted solely for the purpose of simplified reference.
Words such as "herein", "hereof", "hereto", "hereinafter", "hereby", and
"hereinabove" when used in this Plan refer to this Plan as a whole, unless
otherwise required by context.

          (e) Brokerage Activity; Commissions and other Expenses. The Company,
at its sole discretion, may determine that brokerage-related activity of the
Plan ("Brokerage Activity") be handled by a third party. In such a case, each
Award recipient may be required to, and if requested will, enter into an
agreement with such third party regarding the Brokerage Activity in his or her
Shares. Any reasonable commissions and/or expenses arising from the exercise of
any Options or SARs and/or any disposition of Shares shall be borne solely by
the Award recipient.

          (f) Governing Law and Jurisdiction. The Plan shall be governed,
construed and administered in accordance with the laws of the State of Israel,
without giving effect to the principles of conflicts of law thereof, but shall
be interpreted, to the extent possible, in order to

                                      -15-

maintain and preserve the tax treatment and tax qualifications pursuant to the
Ordinance, the Code and other applicable foreign tax laws. It is the intention
of the Company that Incentive Stock Options granted under the Plan qualify as
such under Section 422 of the Code. The applicable courts of Tel Aviv, Israel
shall have sole jurisdiction over all matters arising in connection with any
dispute or matter arising out of or connected with this Plan and the Awards
granted hereunder.

                                      -16-

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