Document:

Exhibit 10.2

 

RRSAT
GLOBAL COMMUNICATIONS NETWORK LTD.

 

2006
ISRAEL EQUITY INCENTIVE PLAN

 

1.                                       Purposes of the Plan. The purposes of this Israel Equity Incentive
Plan are:

 

•            to
attract and retain the best available personnel for positions of substantial responsibility,

 

•            to
provide additional incentive to Service Providers, and

 

•            to
promote our employees’ interest in the
success of the Company’s business.

 

Awards
granted under the Plan may be Options, Restricted Stock or Restricted Stock
Units, as determined by the Administrator at the time of grant.

 

Furthermore,
the Plan is designed to benefit from, and is made pursuant to, the provisions
of Section 102 of the Ordinance, with respect to Awards granted to Employees
pursuant to the Plan.

 

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

 

(a)                 “Administrator”
means the Board or any of its Committees as shall be administering the Plan, in
accordance with Section 4 of the Plan.

 

(b)                “Affiliate”
means an “employing company” as such term is defined in Section 102(a) of the
Ordinance, other than the Company itself.

 

(c)                 “Applicable
Laws” means the requirements relating to the administration of, or
otherwise affecting, equity compensation plans under the Companies Law, the
Securities Law, other applicable laws of Israel, U.S. federal and state
securities laws, any stock exchange or quotation system on which the Shares are
listed or quoted, U.S. state corporate laws, and any other country or
jurisdiction where Awards are granted under the Plan or a sub-plan or addendum
hereto.

 

(d)                “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 Participant.

 

(e)                 “Award”
means, individually or collectively, a grant under the Plan of Options,
Restricted Stock or Restricted Stock Units.

 

(f)                   “Award
Agreement” means the written or electronic agreement setting forth the
terms and provisions applicable to each Award granted under the Plan. The Award
Agreement is subject to the terms and conditions of the Plan.

 

(g)                “Awarded
Stock” means the Shares subject to an Award.

 

(h)                “Board”
means the Board of Directors of the Company.

 

 

(i)                    “Capital
Gains Award (CGA)” means an Approved 102 Award elected and designated by
the Company to qualify for capital gains tax treatment in accordance with
Section 102(b)(2) of the Ordinance.

 

(j)                    “Change
of Control” means the occurrence of any of the following events, in one or
a series of related transactions:

 

(i)                         any individual or entity, other than
the Company, a subsidiary of the Company or a Company employee benefit plan,
including any trustee of such plan acting as trustee, is or becomes the “beneficial
owner,” directly or indirectly, of securities of the Company representing fifty
percent (50%) or more of the combined voting power of the Company’s then
outstanding securities entitled to vote generally in the election of directors;
or

 

(ii)                      a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation; or

 

(iii)                   the sale or disposition by the Company
of all or substantially all the Company’s assets.

 

(k)                 “Committee”
means a Committee appointed by the Board in accordance with Section 4 of the
Plan.

 

(l)                    “Companies
Law” means the Israeli Companies Law, 5759-1999.

 

(m)              “Company”
means RRSat Global Communications Network Ltd.

 

(n)                “Consultant”
means any person, other than an Employee, engaged by the Company or any
Affiliate to render services and who is compensated for such services.

 

(o)                “Continuous
Status as a Director” means that the Director relationship is not
interrupted or terminated.

 

(p)                “Controlling
Shareholder” shall have the meaning ascribed to such term in Section 32(9)
of the Ordinance.

 

(q)                “Director”
means a member of the Board.

 

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(r)                   “Disability”
means total and permanent disability as determined by the Administrator.

 

(s)                 “Election”
means the Company’s election of the type of Approved 102 Awards as set forth in
Section 16(b)(iii).

 

(t)                   “Employee”
means any person employed by the Company or any Affiliate of the Company, and
includes Officers and Directors. A Service Provider shall not cease to be an
Employee in the case of (i) any leave of absence approved by the Company
or (ii) transfers between locations of the Company or between the Company,
any Subsidiary, or any successor.

 

(u)                “Fair
Market Value” means, as of any date, the value of Shares determined as
follows:

 

(i)                         If
the Shares are listed on any established stock exchange or a national market
system, including without limitation the Nasdaq Global Market of the National
Association of Securities Dealers, Inc. Automated Quotation (“Nasdaq”) System,
the Fair Market Value of a Share shall be the closing sales price for such
shares (or the closing bid, if no sales were reported) as quoted on such
system or exchange (or the exchange with the greatest volume of trading in
Shares) on the day of determination, as reported in The Wall
Street Journal or such other source as the Administrator deems
reliable;

 

(ii)                      If
the Shares are quoted on the Nasdaq System (but not on the Nasdaq Global Market
thereof) or are regularly quoted by a recognized securities dealer but
selling prices are not reported, the Fair Market Value of a Share 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, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable;

 

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

 

(v)                “ITA”
means the Israeli Tax Authorities.

 

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

 

(x)                  Reserved.

 

(y)                “Notice
of Grant” means a written or electronic notice evidencing certain terms and
conditions of an individual Award. The Notice of Grant is part of the Award
Agreement.

 

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(z)                  “Officer”
means, with respect to the Company and Affiliates that are Israeli companies, a
person who is a “nosei misra”
within the meaning of the Companies Law but is not a Director, and with respect
to Affiliates that are not Israeli companies means a person who is an officer
within the meaning of the applicable corporate law of the jurisdiction of
incorporation of such Affiliate.

 

(aa)           “Option”
means an option to purchase Shares granted pursuant to the Plan.

 

(bb)         “Option
Agreement” means a written or electronic agreement between the Company and
a Participant evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.

 

(cc)           “Ordinance” means the Israeli Income Tax Ordinance (New
Version), 1961 as now in effect and as hereafter amended.

 

(dd)         “Ordinary
Income Award (OIA)” means an Approved 102 Award elected and designated by
the Company to qualify for ordinary income tax treatment in accordance with
Section 102(b)(1) of the Ordinance.

 

(ee)           “Ordinary
Shares” shall mean the Ordinary Shares of the Company, NIS 0.01 nominal
value.

 

(ff)               “Participant”
means the holder of an outstanding Award granted under the Plan.

 

(gg)         “Plan”
means this 2006 Israel Equity Incentive Plan.

 

(hh)         “Restricted
Stock” means Shares granted pursuant to Section 9 of the Plan.

 

(ii)                 “Restricted
Stock Unit” means an Award granted pursuant to Section 10 of the Plan.

 

(jj)                 “Section
3(i) Award” means an Award granted to a Consultant or a Controlling
Shareholder in accordance with Section 3(i) of the Ordinance.

 

(kk)           “Section
102” means Section 102 of the Ordinance and any regulations, rules, and orders of procedures promulgated
thereunder as now in effect or as hereafter amended.

 

(ll)                 “Section
102 Shares” means Shares issued under a Section 102 Award pursuant to
Section 16(c)(i) below.

 

(mm)     “Section
102 Period” shall have the meaning ascribed to such term in Section 16(c)(i)
below.

 

(nn)         “Securities
Law” means the Israeli Securities Law, 5728–1968.

 

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

 

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(pp)         “Share”
means one Ordinary Share, as adjusted in accordance with Section 18 of the
Plan.

 

(qq)         “Trustee”
means a trustee designated by the Board and approved by the ITA, pursuant to the
requirements of Section 102 and a trust agreement to be entered into and
between the Company and such Trustee and approved by the ITA.

 

3.                                       Shares Subject to the Plan.

 

(a)                 Subject
to the provisions of  Section 18 of the
Plan, the maximum aggregate number of Shares which may be issued under the Plan
is 70 Shares. The maximum aggregate number of Shares which may be issued under
the Plan will be adjusted to reflect the Company’s split of shares, by means of
a share split and a stock dividend, in connection with the Company’s initial
public offering in accordance with Section 18 of the Plan.

 

(b)                The
Shares may be authorized but unissued, or reacquired, Shares.

 

(c)                 Any
Shares subject to Options shall be counted against the numerical limits of this
Section 3 as one Share for every Share subject thereto. Any Shares subject to
Restricted Stock or Restricted Stock Units with a per share or unit purchase
price lower than 100% of Fair Market Value on the date of grant shall be
counted against the numerical limits of this Section 3 as two Shares for
every one Share subject thereto. To the extent that a Share that was subject to
an Award that counted as two Shares against the Plan reserve pursuant to the
preceding sentence is recycled back into the Plan under the next paragraph of
this Section 3, the Plan shall be credited with two Shares.

 

(d)                If
an Award expires or becomes unexercisable without having been exercised in
full, or, with respect to Restricted Stock or Restricted Stock Units, is
forfeited to or repurchased by the Company at its original purchase price due
to such Award failing to vest, the unpurchased Shares (or for Awards other than
Options, the forfeited or repurchased shares) which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated). Shares that have actually been issued under the Plan under any
Award shall not be returned to the Plan and shall not become available for
future distribution under the Plan; provided, however, that if Shares of Restricted
Stock or Restricted Stock Units are repurchased by the Company at their
original purchase price or are forfeited to the Company due to such Awards
failing to vest, such Shares shall become available for future grant under the
Plan. Shares used to pay the exercise price of an Option shall not become
available for future grant or sale under the Plan. Shares used to satisfy tax
withholding obligations shall not become available for future grant or sale
under the Plan. To the extent an Award under the Plan is paid out in cash
rather than shares, such cash payment shall not reduce the number of Shares
available for issuance under the Plan. Any payout of Dividend Equivalents or
Performance Units, because they are payable only in cash, shall not reduce the
number of Shares available for issuance under the Plan. Conversely, any
forfeiture of Dividend Equivalents or Performance Units shall not increase the
number of Shares available for issuance under the Plan.

 

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4.                                       Administration of the Plan.

 

(a)                 Procedure.
The Plan shall be administered by (A) the Board or (B) a Committee,
which committee shall be constituted to satisfy Applicable Laws. The Plan may
be administered by different Committees with respect to different groups of
Service Providers.

 

(b)                Powers
of the Administrator. Subject to the provisions of the Plan, and in the
case of a Committee, subject to the specific duties delegated by the Board to
such Committee, the Administrator shall have the authority, in its discretion:

 

(i)                         to
determine the Fair Market Value of the Shares, in accordance with Section 2(u)
of the Plan;

 

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

 

(iii)                   to
determine whether and to what extent Awards or any combination thereof, are
granted hereunder;

 

(iv)                  to
determine the number of Shares or equivalent units to be covered by each Award
granted hereunder;

 

(v)                     to
approve forms of agreement for use under the Plan;

 

(vi)                  to
determine the terms and conditions, not inconsistent with the terms of the
Plan, of any award granted hereunder. Such terms and conditions include, but
are not limited to, the exercise price, the time or times when Options may be
exercised or other Awards vest (which may be based on performance criteria),
any vesting acceleration or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Award or Shares relating thereto, based
in each case on such factors as the Administrator, in its sole discretion,
shall determine;

 

(vii)               to
construe and interpret the terms of the Plan and Awards;

 

(viii)            to
prescribe, amend and rescind rules and regulations relating to the Plan,
including rules and regulations relating to sub-plans or Plan addendums,
established for the purpose of qualifying for preferred tax treatment (e.g.,
Section 102);

 

(ix)                    to
modify or amend each Award (subject to Section 20(c) of the Plan), including
the discretionary authority to extend the post-termination exercisability
period of Options longer than is otherwise provided for in the Plan;

 

(x)                       to
authorize any person to execute on behalf of the Company any instrument
required to effect the grant of an Award previously granted by the
Administrator;

 

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(xi)                    to
allow Participants to satisfy withholding tax obligations by electing to have
the Company and/or its Affiliates and/or the Trustee withhold taxes in
accordance with the Applicable Laws. The Fair Market Value of any Shares to be
withheld shall be determined on the date that the amount of tax to be withheld
is to be determined. All elections by a Participant to have Shares or cash
withheld for this purpose shall be made in such form and under such conditions
as the Administrator may deem necessary or advisable;

 

(xii)                 to
determine the terms and restrictions applicable to Awards;

 

(xiii)              to
determine the price per each Share to be issued under the Awards (excluding the
Option exercise price to be set in accordance with Section 8(b) below). Shares
to be issued under grants of Restricted Stock and RSUs may be issued upon
payment of their nominal value;

 

(xiv)             to
make an election as to the type of 102 Approved Award; and

 

(xv)                to
make all other determinations deemed necessary or advisable for administering
the Plan.

 

(c)                Effect
of Administrator’s Decision. The Administrator’s decisions, determinations
and interpretations shall be final and binding on all Participants and any
other holders of Awards.

 

5.                                       Eligibility. Awards may be granted to Service Providers, provided that Section 102
Awards may be granted only to Employees.

 

6.                                       No Employment Rights. Neither the Plan nor any Award shall confer upon
a Participant any right with respect to continuing the Participant’s employment
with the Company or its Affiliates, nor shall they interfere in any way with
the Participant’s right or the Company’s or Affiliate’s right, as the case may
be, to terminate such employment at any time, with or without cause or notice.

 

7.                                       Term of Plan. The Plan shall continue in effect for a term of seven (7) years
following the date upon which the Board approved the Plan in 2006.

 

8.                                       Options.

 

(a)                 Term.
The term of each Option shall be stated in the Notice of Grant; provided,
however, that the term shall be no more than seven (7) years from the date
of grant or such shorter term as may be provided in the Notice of Grant.

 

(b)                Option
Exercise Price. The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be determined by the Administrator and
shall be no less than 100% of the Fair Market Value per share on the date of
grant.

 

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(c)                 Waiting
Period and Exercise Dates. At the time an Option is granted, the
Administrator shall fix the period within which the Option may be exercised and
shall determine any conditions which must be satisfied before the Option may be
exercised. In so doing, the Administrator may specify that an Option may not be
exercised until the completion of a service period or until performance
milestones are satisfied. In any event, no Option granted hereunder shall vest
until at least six months following the Option grant date.

 

(d)                Form
of Consideration. The Administrator shall determine the acceptable form of
consideration for exercising an Option, including the method of payment. In the
case of a Section 102 Award, the Administrator shall determine the acceptable
form of consideration at the time of grant. Subject to Applicable Laws, such
consideration may consist entirely of:

 

(i)                         cash;

 

(ii)                      check;

 

(iii)                   other
Shares which (A) in the case of Shares acquired upon exercise of an
option, have been owned by the Participant for more than six months on the date
of surrender, and (B) have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which said Option
shall be exercised;

 

(iv)                  delivery
of a properly executed exercise notice together with such other documentation
as the Administrator and the broker, if applicable, shall require to effect an
exercise of the Option and delivery to the Company or Affiliate of the sale
proceeds required to pay the exercise price;

 

(v)                     any
combination of the foregoing methods of payment; or

 

(vi)                  such
other consideration and method of payment for the issuance of Shares to the
extent permitted by Applicable Laws.

 

(e)                 Exercise
of Option; Rights as a Shareholder. Any Option granted hereunder shall be
exercisable according to the terms of the Plan and at such times and under such
conditions as determined by the Administrator and set forth in the Option
Agreement.

 

An Option may not be
exercised for a fraction of a Share.

 

An
Option shall be deemed exercised when the Company receives: (i) written or
electronic notice of exercise (in accordance with the Option Agreement) from
the person entitled to exercise the Option, and (ii) 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 Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be issued in the name of the Participant, provided however that
Shares issued following the

 

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exercise of
Options granted under Section 102(b) to the Ordinance shall be issued under the
name of the Trustee for the benefit of the Participant and shall be held in
trust by the Trustee. Until the stock certificate evidencing such Shares is
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 receive
dividends or any other rights as a shareholder shall exist with respect to the
optioned stock, notwithstanding the exercise of the Option. The Company shall
issue (or cause to be issued) such stock certificate promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 18 of the Plan.

 

Exercising an Option in any manner shall decrease the
number of Shares thereafter available for sale under the Option, by the number
of Shares as to which the Option is exercised.

 

9.                                       Restricted Stock.

 

(a)                 Grant
of Restricted Stock. Subject to the terms and conditions of the Plan,
Restricted Stock may be granted to Participants at any time as shall be
determined by the Administrator, in its sole discretion. The Administrator
shall have complete discretion to determine (i) the number of Shares
subject to a Restricted Stock award granted to any Participant, and
(ii) the conditions that must be satisfied, which typically will be based
principally or solely on continued provision of services but may include a performance-based
component, upon which is conditioned the grant, vesting or issuance of
Restricted Stock; provided,
however, that no Restricted
Stock Award shall vest until at least six months following the grant date.

 

(b)                Other
Terms. The Administrator, subject to the provisions of the Plan, shall have
complete discretion to determine the terms and conditions of Restricted Stock
granted under the Plan. Restricted Stock grants shall be subject to the terms,
conditions, and restrictions determined by the Administrator at the time the
stock or the restricted stock unit is awarded. The Administrator may require
the recipient to sign a Restricted Stock Award agreement as a condition of the
award. Any certificates representing the Shares of stock awarded shall bear
such legends as shall be determined by the Administrator.

 

(c)                 Restricted
Stock Award Agreement. Each Restricted Stock grant shall be evidenced by an
agreement that shall specify the purchase price (if any) and such other terms
and conditions as the Administrator, in its sole discretion, shall determine;
provided; however, that if the Restricted Stock grant has a purchase price,
such purchase price must be paid no more than seven (7) years following the
date of grant.

 

10.                                 Restricted Stock Units.

 

(a)                 Grant.
Restricted Stock Units may be granted at any time and from time to time as
determined by the Administrator. The Administrator shall have complete
discretion to determine (i) the number of Shares subject to a Restricted
Stock Unit award granted to any Participant, and (ii) the conditions that
must be satisfied, which typically will be based principally or solely on
continued service but may include a performance-based component, upon which is
conditioned the grant or

 

9

 

vesting of Restricted
Stock Units. Restricted Stock Units shall be granted in the form of units to
acquire Shares. Each such unit shall be the equivalent of one Share for
purposes of determining the number of Shares subject to an Award. Until the
Shares are issued, no right to vote or receive dividends or any other rights as
a shareholder shall exist with respect to the units to acquire Shares.

 

(b)                Vesting
Criteria and Other Terms. The Administrator shall set vesting criteria in
its discretion, which, depending on the extent to which the criteria are met,
will determine the number of Restricted Stock Units that will be paid out to
the Participant. The Administrator may set vesting criteria based upon the
achievement of Company-wide, Affiliate-wide, business unit, or individual goals
(including, but not limited to, continued employment), or any other basis
determined by the Administrator in its discretion; provided, however, that no Restricted Unit Award shall vest
until at least six months following the grant date.

 

(c)                 Earning
Restricted Stock Units. Upon meeting the applicable vesting criteria, the
Participant shall be entitled to receive a payout of Shares as specified in the
Restricted Stock Unit Award Agreement. Notwithstanding the foregoing, at any time
after the grant of Restricted Stock Units, the Administrator, in its sole
discretion, may reduce or waive any vesting criteria that must be met to
receive a payout of Shares.

 

(d)                Form
and Timing of Payment. Payment of earned Restricted Stock Units shall be
made as soon as practicable after the date(s) set forth in the Restricted Stock
Unit Award Agreement. The Administrator shall pay earned Restricted Stock Units
in Shares.

 

(e)                 Cancellation.
On the date set forth in the Restricted Stock Unit Award Agreement, all
unearned Restricted Stock Units shall be forfeited to the Company.

 

11.                                 Reserved.

 

12.                                 Termination of Relationships, Death or Disability.

 

(a)                 Termination
of Relationship as a Service Provider. If a Participant ceases to be a
Service Provider, other than upon the Participant’s death or Disability, then
(i) in the case of an Award that is an Option, the Participant may
exercise any Options within such period of time as is specified in the Option
Agreement to the extent that 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 Option Agreement), and (ii) in the case of any Award other
than an Option, the Participant shall be entitled to the benefit conferred by
such Award during such period of time as is specified in the Award Agreement to
the extent that the Award is vested on the date of termination (but in no event
later than the expiration of the term of such Award, if any, as set forth in
the Award Agreement). In the absence of a specified time in the Award
Agreement, an Option shall remain exercisable, and the Participant shall be
entitled to the benefit conferred by an Award other than an Option, for three
months following the Participant’s termination. If, on the date of termination,
the Participant is not vested as to his or her entire Award, the Shares covered
by the unvested portion of the Award shall revert to the Plan. If, after termination,
the Participant does not

 

10

 

exercise his or her
Option, or receive the benefit conferred by an Award other than an Option,
within the time specified herein, the Award shall terminate, and the Shares
covered by such Award shall revert to the Plan.

 

(b)                Disability.
If a Participant ceases to be a Service Provider as a result of the Participant’s
Disability, then (i) in the case of an Award that is an Option, the
Participant may exercise his or her Option within such period of time as is
specified in the Option 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 Option Agreement), and (ii) in the case of
any Award other than an Option, the Participant shall be entitled to the
benefit conferred by such Award during such period of time as is specified in
the Award Agreement to the extent that the Award is vested on the date of
termination (but in no event later than the expiration of the term of such
Award, if any, as set forth in the Award Agreement). In the absence of a
specified time in the Award Agreement, an Option shall remain exercisable, and
the Participant shall be entitled to the benefit conferred by an Award other
than an Option, for twelve (12) months following the Participant’s termination
due to Disability. If, on the date of termination, the Participant is not
vested as to his or her entire Award, the Shares covered by the unvested
portion of the Award shall revert to the Plan. If, after termination, the Participant
does not exercise his or her Option, or receive the benefit conferred by an
Award other than an Option, within the time specified herein, the Award shall
terminate, and the Shares covered by such Award shall revert to the Plan.

 

(c)                 Death of Participant. If a Participant dies while a Service
Provider, then (i) in the case of an Award that is an Option, the Option
may be exercised following the Participant’s death within such period of time
as is specified in the Option Agreement to the extent the Option is vested on
the date of death (but in no event may the option be exercised later than the
expiration of the term of such Option as set forth in the Option Agreement), by
the Participant’s designated beneficiary, provided such beneficiary has been designated
prior to Participant’s death in a form acceptable to the Administrator, and
(ii) in the case of any Award other than an Option, the Participant’s
designated beneficiary, provided such beneficiary has been designated prior to
Participant’s death in a form acceptable to the Administrator, shall be
entitled to the benefit conferred by such Award during such period of time as
is specified in the Award Agreement to the extent that the Award is vested on
the date of death (but in no event later than the expiration of the term of
such Award, if any, as set forth in the Award Agreement). If no such
beneficiary has been designated by the Participant, then such Option may be
exercised by, or the benefit conferred by such Award shall be provided to, the
personal representative of the Participant’s estate or by the person(s) to whom
the Award is transferred pursuant to the Participant’s will or in accordance
with the laws of descent and distribution. In the absence of a specified time
in the Award Agreement, the Option shall remain exercisable, or the benefit conferred by such Award shall
be provided, for twelve (12) months following Participant’s death. If
the Option is not so exercised or the
benefit conferred by such Award is not provided within the time specified
herein, the Award shall terminate, and the Shares covered by such Award shall
revert to the Plan.

 

13.                        Leaves of Absence. Unless the Administrator provides otherwise or
except as otherwise required by Applicable Laws, vesting of Awards granted
hereunder

 

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shall
cease commencing on the first day of any unpaid leave of absence and shall only
recommence upon return to active service.

 

14.                     Part-Time Service. Unless the Administrator provides otherwise or except
as otherwise required by Applicable Laws, any service-based vesting of Awards
granted hereunder shall be extended on a proportionate basis in the event an
Employee transitions to a work schedule under which they are customarily
scheduled to work on less than a full-time basis, or if not on a full-time work
schedule, to a schedule requiring fewer hours of service. Such vesting shall be
proportionately re-adjusted prospectively in the event that the Employee
subsequently becomes regularly scheduled to work additional hours of service.

 

15.                     Non-Transferability of Awards. Unless determined otherwise by the
Administrator, an Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner 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. If the Administrator makes an Award
transferable, it may only be transferable for no consideration to transferees
permitted pursuant to a Form S-8 Registration Statement (such as family members
or pursuant to a settlement of marital property rights) and such Award shall
contain such additional terms and conditions as the Administrator deems
appropriate.

 

16.                     Grant of Approved 102 Awards and Non-approved 102
Awards.

 

(a)                 Participants.  Approved 102 Awards may only be granted to
Employees who are residents of the State of Israel. Except as otherwise
specifically approved by the ITA, a Controlling Shareholder or a Consultant
shall not be eligible for grant of Approved 102 Awards or Non-approved 102
Awards, and shall only be eligible for grant of Section 3(i) Awards as set
forth in Section 17.

 

(b)                Grant
of Section 102 Awards.

 

(i)                         The
Company may designate Awards granted to Employees pursuant to Section 102 as
Non-approved 102 Awards or Approved 102 Awards.

 

(ii)                      The
grant of Approved 102 Awards under the Plan shall be conditioned upon the
approval of the Plan by the ITA.

 

(iii)                   Approved
102 Awards may either be classified as Capital Gains Awards (CGAs) or Ordinary
Income Awards (OIAs). No Approved 102 Award may be granted under the Plan
unless and until the Company’s election of the type of Approved 102 Awards as
CGA or OIA granted to Employees (the “Election”)
is appropriately filed with the ITA. Such Election shall become effective beginning the first date of
grant of an Approved 102 Award and shall remain in effect until the end of the
year following the year during which Employees were

 

12

 

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 Participants who were granted such 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 Administrator from granting Employees Approved
102 Awards and Non-approved 102 Awards simultaneously.

 

(iv)                  All
Approved 102 Awards must be held in trust by a Trustee, as described in
subsection (c) below.

 

(v)                     For
the avoidance of doubt, the designation of Non-approved 102 Awards and Approved
102 Awards shall be subject to the terms and conditions of Section 102.

 

(vi)                  With
respect to Non-approved 102 Award, if the Employee ceases to be employed by the
Company or any Affiliate, the Employee 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.

 

(c)                 Trustee.

 

(i)                         All
Approved 102 Awards granted under the Plan and any Shares allocated or issued
upon exercise of such Approved 102 Awards (“Section
102 Shares”) or other shares received subsequently following any
realization of rights, including bonus shares, shall be allocated or issued to
the Trustee, and shall be held by the Trustee for the benefit of the
Participants for such period of time as required by Section 102 (the “Section 102 Period”). In case the
requirements for Approved 102 Awards are not met, then the Approved 102 Awards
shall be regarded as Non-approved 102 Awards, all in accordance with the
provisions of Section 102.

 

(ii)                      Notwithstanding
anything to the contrary, the Trustee shall not release any Section 102 Shares
or other Shares received subsequently following any realization of the
Participant’s rights prior to the full payment of the Participant’s tax
liabilities arising from the grant, exercise, release or transfer of the
Approved 102 Award and any Section 102 Shares or

 

13

 

other Shares received
subsequently following any realization of rights.

 

(iii)                   With
respect to any Approved 102 Awards, subject to the provisions of Section 102, a
Participant shall not sell or release from trust any Section 102 Shares or any
Shares received subsequently following any realization of rights, including
bonus shares, until the lapse of the Section 102 Period. Notwithstanding the
above, if any such sale or release occurs during the Section 102 Period, the
sanctions under Section 102 shall apply to, and be borne by, such Participant.

 

(iv)                  Upon
receipt of an Approved 102 Award, the Participant will sign an Award Agreement
under which the Participant will agree to be subject to the trust agreement
between the Company and the Trustee, stating, among others, that the Trustee
will be released from any liability in respect of any action or decision duly
taken and bona fide executed in relation with the Plan, or any Approved 102 Award
or Section 102 Share granted to him or her thereunder.

 

(v)                     As
long as Approved 102 Awards granted, or Section 102 Shares are held by the
Trustee, then all rights the Participant possesses over such Awards or Shares
may not be transferred, assigned, pledged or mortgaged by the Participant,
other than by will or laws of descent and distribution.

 

(vi)                  If
dividends, whether cash, property or stock dividends, are declared on Section
102 Shares held by the Trustee, such dividends shall also be subject to the
provisions of Section 102 and the provisions of this Section 16. The Section
102 Period for any such additional shares shall be equal to the Section 102
Period for the original Section 102 Shares.

 

(vii)               At
any time after the end of the Section 102 Period with respect to any Section
102 Awards or Section 102 Shares, the Participant may order (but shall not be
obligated to order) the Trustee to sell or transfer to the Participant such Section
102 Awards or Section 102

 

14

 

Shares, provided that no
securities shall be sold or transferred until all required payments have been
fully made: (i) such Participant has deposited with the Trustee an amount
of money which, in the Trustee’s opinion, is necessary to discharge such
Participant’s tax obligations with respect to such Section 102 Awards or
Section 102 Shares, or (ii) the receipt by the Trustee of an
acknowledgment from the ITA that the Participant has paid any applicable tax
due pursuant to the Ordinance, or (iii) the Company has made other
arrangements for the deduction of tax at source acceptable to the Trustee, or
(iv) upon the sale by the Trustee of any securities held in trust from the
proceeds of which the Company or the Trustee has withheld all applicable taxes
and has remitted the amount withheld to the appropriate Israeli tax
authorities, has paid the balance thereof directly to such Participant, and has
reported to such Participant the amount so withheld and paid to such tax
authorities.

 

(d)                Integration
of Section 102 and Tax Assessing Officer’s Permit.

 

With regards to Approved
102 Awards, the provisions of the Plan and the Award Agreement shall be subject
to the provisions of Section 102 of the Ordinance and the Tax Assessing Officer’s
permit, and the said provisions and permit shall be deemed an integral part of
the Plan and of the Award Agreement.

 

(e)                 Tax
Consequences.

 

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

 

(ii)                      The
Company, or where applicable, the Trustee, shall not be required to release any
share certificate to a Participant until all requirement payment have been
fully made.

 

(iii)                   Without
derogating from Section 2 above and solely for the purpose of determining the
tax liability pursuant to Section 102(b)(3) of the Ordinance, if at

 

15

 

the date of grant the
Company’s shares are listed on any established stock exchange or a national
market system or if the Company’s shares will be registered for trading within
ninety (90) days following the date of grant of the Approved 102 Award, the
Fair Market Value of the Shares at the date of grant shall be determined in
accordance with the average value of the Company’s Shares on the thirty trading
days preceding the date of grant or the thirty trading days following the date of
registration for trading, as the case may be.

 

17.                                 Grant of Section 3(i) Awards. In the event that grants are made under Section
3(i) of the Ordinance, the Company may elect to enter into an agreement with a
trustee concerning the administration of the exercise of Options, the purchase
and sale of Shares, and the arrangements for payment of or withholding of taxes
due in connection with such exercise, purchase and sale. The trust agreement
may provide that the Company will issue the Shares to such trustee for the
benefit of the Participants. The type of Section 3(i) Awards to be granted
under the Plan shall be subject to the provisions of Section 3(i) to the
Ordinance.

 

18.                                 Adjustments Upon Changes in Capitalization,
Dissolution or Liquidation or Change of Control.

 

(a)                 Changes
in Capitalization. Subject to any required action by the shareholders of
the Company, the number of shares of Ordinary Shares covered by each outstanding
Award, the number of shares of Ordinary Shares which have been authorized for
issuance under the Plan but as to which no Awards have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Award, as well as the price per Ordinary Shares covered by each such
outstanding Award 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;
provided, however, that 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
Administrator, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Ordinary Shares subject to an Award.

 

(b)                Dissolution
or Liquidation. In the event of the proposed dissolution or liquidation of
the Company, the Administrator shall notify each Participant as soon as
practicable prior to the effective date of such proposed transaction. The
Administrator in its discretion may provide for a Participant to have the right
to exercise his or her Option until ten (10) days prior to such transaction as
to all of the Awarded Stock covered thereby, including Shares as to which the
Award would not otherwise be exercisable. In addition, the Administrator may
provide that any Company repurchase option or forfeiture rights applicable to
any Award shall

 

16

 

lapse 100%, and that any
Award vesting shall accelerate 100%, provided the proposed dissolution or
liquidation takes place at the time and in the manner contemplated. To the
extent it has not been previously exercised (with respect to Options) or vested
(with respect to other Awards), an Award will terminate immediately prior to
the consummation of such proposed action.

 

(c)                 Change
of Control.

 

(i)                         Options.
In the event of a Change of Control, each outstanding Option shall be assumed
or an equivalent option substituted by the successor corporation or a parent or
Affiliate of the successor corporation. In the event that the successor
corporation refuses to assume or substitute for the Option, Participants shall
fully vest in and have the right to exercise their Options as to all of the
Awarded Stock, including Shares as to which it would not otherwise be vested or
exercisable. If an Option becomes fully vested and exercisable in lieu of
assumption or substitution in the event of a Change of Control, the
Administrator shall notify the Participant in writing or electronically that
the Option shall be fully vested and exercisable for a period of fifteen (15)
days from the date of such notice, and the Option shall terminate upon the
expiration of such period. For the purposes of this paragraph, the Option shall
be considered assumed if, following the Change of Control, the option confers
the right to purchase or receive, for each Share of Awarded Stock subject to
the Option immediately prior to the Change of Control, the consideration
(whether stock, cash, or other securities or property) received in the Change
of Control by holders of Ordinary Shares for each Share held on the effective
date of the transaction (and if holders were offered a choice of consideration,
the type of consideration chosen by the holders of a majority of the
outstanding Ordinary Shares); provided, however, that if such consideration
received in the Change of Control is not solely stock of the successor
corporation or its parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon the
exercise of the Option, for each Share of Awarded Stock subject to the Option,
to be solely stock of the successor corporation or its parent equal in fair
market value to the per share consideration received by holders of Ordinary
Shares in the Change of Control.

 

(ii)                      Restricted
Stock and Restricted Stock Units. In the event of a Change of Control, each
outstanding Restricted Stock and Restricted Stock Unit award shall be assumed
or an equivalent Restricted Stock and Restricted Stock Unit award substituted
by the successor corporation or a parent or Affiliate of the successor
corporation. In the event that

 

17

 

the successor corporation
refuses to assume or substitute for the Restricted Stock or Restricted Stock
Unit award, Participants shall fully vest in the Restricted Stock or Restricted
Stock Unit Awards including as to Shares which would not otherwise be vested. For
the purposes of this paragraph, a Restricted Stock or Restricted Stock Unit
award shall be considered assumed if, following the Change of Control, the
award confers the right to purchase or receive, for each Share subject to the
Award immediately prior to the Change of Control, the consideration (whether
stock, cash, or other securities or property) received in the Change of Control
by holders of Ordinary Shares for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Ordinary
Shares); provided, however, that if such consideration received in the Change
of Control is not solely stock of the successor corporation or its parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received, for each Share and each unit/right to acquire
a Share subject to the Award, to be solely stock of the successor corporation
or its parent equal in fair market value to the per share consideration received
by holders of Ordinary Shares in the Change of Control.

 

19.                                 Date of Grant. The date of grant of an Award shall be, for all purposes, the date on
which the Administrator makes the determination granting such Award, or such
other later date as is determined by the Administrator. Notice of the
determination shall be provided to each Participant within a reasonable time
after the date of such grant.

 

20.                        Amendment and Termination of the Plan.

 

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

 

(b)                Shareholder
Approval. The Company shall obtain shareholder approval of any Plan
amendment to the extent necessary and desirable to comply with the Applicable
Laws and in such a manner and to such a degree as is required by the Applicable
Laws.

 

(c)                 Effect
of Amendment or Termination. No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any Participant, unless
mutually agreed otherwise between the Participant and the Administrator, which
agreement must be in writing (or electronic format) and signed by the
Participant and the Company or its Affiliate.

 

21.                        Conditions Upon Issuance of Shares.

 

(a)                 Legal
Compliance. Shares shall not be issued pursuant to the exercise of an Award
unless the exercise of the Award or the issuance and delivery of

 

18

 

such Shares (or with
respect to Performance Units, the cash equivalent thereof) shall comply with
Applicable Laws and shall be further subject to the approval of counsel for the
Company with respect to such compliance.

 

(b)                Investment
Representations. As a condition to the exercise or receipt of an Award, the
Company may require the person exercising or receiving such Award to represent
and warrant at the time of any such exercise or receipt that the Shares are
being purchased only for investment and without any present intention to sell
or distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.

 

(c)                 Tax
Consequences. Any and all tax consequences arising from the grant or
exercise, or otherwise relating to, an Award or from the payment for Shares
covered thereby or from any other event or act under the Plan (whether of the
Participant or of the Company or of a Affiliate) shall be borne solely by the
Participant. The Company or its Affiliates shall withhold taxes according to
the requirements under the Applicable Laws, including withholding taxes at
source. Furthermore, the Participant shall agree to indemnify the Company and
its Affiliates, if applicable, and hold them harmless from and against any and
all liability for any tax, or interest or penalty thereon, including
liabilities relating to the necessity to withhold, or to have withheld, any tax
from any payment made to the Participant.

 

22.                        Liability of Company.

 

(a)                 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.

 

(b)                Grants
Exceeding Allotted Shares. If the Awarded Stock covered by an Award
exceeds, as of the date of grant, the number of Shares which may be issued
under the Plan without additional shareholder approval, such Award shall be
void with respect to such excess Awarded Stock, unless shareholder approval of
an amendment sufficiently increasing the number of Shares subject to the Plan
is timely obtained in accordance with Section 20(b) of the Plan.

 

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

 

19Exhibit
10.3

Translated from Hebrew

 

7th June, 2006

 

R.R.
Satellite Communications Ltd.

 

By Fax: 08-8257500

 

Re:                             Notice Pertaining To
Extending The Lease Period

 

I
respectfully respond to your correspondence dated 13/3/06 on my client’s,
Zueretz Abraham, behalf, as follows:

 

1)                                      My client confirms receipt of the notice to
extend the lease period pursuant to Section 6.4 of the lease contract which was
executed and signed between my client and you on 28/11/01 (hereinafter: “The Lease Agreement”).

 

2)                                      My client hereby gives notice that the
extension of the lease agreement is for the entire option period specified in
the agreement.

 

3)                                      I ask that you remit the renewed or extended
bank guarantee 30 days prior to the date it is to expire.

 

 

Sincerely,

 

( - )

 

Eldad Shorek, Adv.

 

cc:

 

Zueretz
Abraham

 

 

UNPROTECTED LEASE AGREEMENT (Business Structure)

 

Executed and signed in Moshav Emunim on this 28th
day of the 11th month in the year 2001

 

	
  BY:

  	
  Zueretz Abraham I.D. 001464866

  
	
   

  	
  OfNaveh Mevateach Settlement

  
	
   

  	
  (To
  be referred to below as “The Landlord”)

  

 

-On the One Part-

 

AND BETWEEN: R.R. Satellite Communications Ltd.

	
   

  	
  P.C. 51-089629-3

  
	
   

  	
  (To
  be referred to below as “The Tenant”)

  

 

-On the Second Part-

 

	
  WHEREAS:

  	
  The
  Tenant is a company that deals in satellite communications.

  
	
   

  	
   

  
	
  AND WHEREAS:

  	
  The
  Landlord is the owner of land with an area of approximately 4,400 square
  meters located at Bnei Ra’am Junction and known as Parcels 4 and 21 in Blocs
  2199 and 2604, Lot 8 C.B.P D/330 (Hereinafter:
  “The Land”) upon which a single-story building was built with an
  area of approximately 430 square meters, as specified in the lease agreement
  and drawing. Attached hereto as Appendix A
  to this agreement;

  

 

 

	
  Zueretz Signature

  	
  R.R SATELLITE

  	
   

  
	
   

  	
  COMMUNICATIONS Ltd.

  	
   

  

 

1

 

	
  AND WHEREAS:

  	
  The
  Landlord declares that his rights to the property are free and clear of any
  charges and/or pledges and/or mortgages and/or debts which could hinder
  and/or prejudice the Tenant’s rights under this agreement, to the exception
  of a mortgage in favor of Bank Discount;

  
	
   

  	
   

  
	
  AND WHEREAS:

  	
  On
  the day this agreement is signed the premises are free of any tenant entitled
  to and/or who may occupy them, to the exception of an area of approximately
  100 square meters that is leased to a milk laboratory (Hereinafter: “The Laboratory”);

  
	
   

  	
   

  
	
  AND WHEREAS:

  	
  The
  Tenant saw and inspected the premises and found it in a suitable condition
  for its needs, it is hereby declared that the condition of the premises
  building is pursuant to the itemization in the pictures attached as Appendix B to this agreement;

  
	
   

  	
   

  
	
  AND WHEREAS:

  	
  The
  Tenant is interested in leasing the land and the building from the Landlord
  by an unprotected lease pursuant to the conditions below;

  
	
   

  	
   

  
	
  AND WHEREAS:

  	
  The
  Landlord agreed to lease the land and building to the Tenant for a limited
  period and without granting the Tenant status of a protected tenant;

  
	
   

  	
   

  
	
  AND WHEREAS:

  	
  The
  Tenant declares that it did not pay the Landlord any key money or other
  premium for the premises and 

  

 

2

 

	
   

  	
  that
  accordingly the provisions of the Tenants
  Protection Law [Consolidated Version], 5732- 1972 and/or any other
  law and/or regulations pursuant thereto or repealing it will not apply to the
  lease subject-matter of this agreement;

  

 

 

Therefore It Is Declared, Stipulated And Agreed
Between The Parties As Follows:-

 

1.                           Preamble and Appendices

 

The preamble to this agreement and appendices
attached hereto constitute an integral part hereof and are considered for all
senses and purposes as a section hereof and the declarations made therein
constitute the basis of the parties engaging in this agreement.

 

1.1                     Unless stated otherwise, in any event of an
incompatibility and/or contradiction and/or ambiguity between the provisions in
this agreement and the provisions appearing in an appendix to this agreement,
the provisions of this agreement have priority and will override the provisions
of the appendix and the provisions of the appendix will be interpreted in
accordance with the provisions of this agreement.

 

2.                           The captions of the sections are solely for
the parties’ convenience and will not be used as an aid to interpret the
agreement.

 

3

 

3.                           Definitions

 

In this contract the terms
below will bear the meaning appearing alongside them as follows:

 

“The Land”
-                                                  The Lot with an area of approximately 4,400
square meters on parcel 4 in Bloc 2199 located at Bnei Ra’am Junction as
specified in the lease agreement, Appendix A
to this agreement.

 

“The Building”
-                             The building located on the lot with an area
of approximately 430 square meters, one story, and outlined on the drawing with
a red line as specified in the drawing, Appendix
A to this agreement.

 

“The Premises”
-                       The land and the building as defined above.

 

“The Index”
-                                                The Consumer Prices Index that is published
by the Central Statistics and Economic Research Bureau or any other entity
replacing it. If the publication thereof is terminated then a similar index to
be published by the Central Statistics and Economic Research Bureau or a
similar entity will replace it.

 

“The Basic Index”
-              The index to be published on 15/2/02 for the month of January 2002.

 

4

 

“Dollar”
-                                                                  An amount in NIS equal to 1 US Dollar.

 

“The Drawing”
-                              The drawing that is attached to this
agreement and marked Appendix A
together with the lease agreement.

 

“Lease Period”
-                            The period stipulated in Section 6 of this
agreement.

 

“Representative Rate”
– The known representative rate of the US Dollar as published in the
representatives rates table by the Bank of Israel on the actual day of payment
of each and every payment under the provisions of this agreement, and if the publication of the representative rate is
cancelled by the Bank of Israel and no other representative rate exists
then the average of the purchase rate and sale rate of the US Dollar for
transfers and checks in Bank Discount Ltd. (“The Bank”), and in the event of no
such publication or multiple US Dollar rates – the price in NIS that an Israeli
resident is required to pay the bank for the purpose of purchasing US Dollars
for transfers and checks.

 

5

 

4.                           The Purpose of the Lease

 

4.1                     The Tenant leases the premises for the
purpose of operating a satellite communications center and/or any other
business permitted by law.

 

4.2                     The Tenant and/or any of its managers and/or
employees are entitled to use the premises for the purpose of an office and/or
any other use they choose to make of the premises provided that the use is for
business purposes as specified above.

 

5.                           The Tenant’s Declarations

 

5.1                     The Tenant declares and confirms that it has
not paid the Landlord any key money or other premium pertaining to the premises
and/or for rights granted to the Tenant under this agreement, and that the
premises and lease under this agreement are not subject to the provisions of
the Tenants Protection Law [Consolidated
Version], 5732 – 1972, and the Tenant will not be a protected tenant
under this law and/or any other law and/or any other amendment that is added to
them or modifies them.

 

5.2                     It is further agreed that any change and/or
renovations and/or repairs and/or additions and/or investment and/or work of
any type done in the premises by and/or on behalf of the Tenant will not be
considered as key money and/or other premium and will not be considered a
material modification with respect to the Tenants Protection Law.

 

6

 

5.3                     The Tenant declares that its right to the
premises is limited only to the lease period and in accordance with the purpose
of the lease stipulated above, and pursuant only to the provisions of this
agreement.

 

5.4                     The Tenant confirms and declares that it saw
the premises and checked them with every authority including but not limited to
the environmental authority and the Israel Land Administration and that it
agrees to engage with the Landlord in this lease agreement after it has executed
all the relevant inspections in relation to the premises and that in light of
its inspections found the premises to be completely satisfactory from all
aspects and that it waives any assertion of a defect and/or impediment and/or
incompatibility with respect to the aforesaid in this agreement.

 

5.5                     The Tenant undertakes to diligently act to
obtain all the licenses and/or permits required from any authority for the
purpose of operating its business in the premises as defined in this agreement
and it will be exclusively liable to obtain such licenses including but not
limited to a license to operate the business, the aforesaid is subject to the
provisions of Section 6.2 below. It is hereby agreed and clarified that any
payment required by any such authority for the purpose of issuing a license or
permit to operate the Tenant’s business in the premises as defined in this
agreement will apply to the Tenant.

 

7

 

5.6                     The Tenant declares that it is aware that the
Landlord is leasing the premises pursuant to this agreement As Is and that it
has none nor will have no duty and/or obligation and/or responsibility with
respect to what is involved and connected with obtaining such permits and/or
licenses to operate the Tenant’s business from the premises under the
conditions of this agreement. Notwithstanding the above, the Landlord
undertakes to sign any document that is necessary to be signed by owners,
pursuant to the authorities’ demands, in order to obtain such permits and/or
licenses provided that it does not assume any expenses associated thereto.

 

5.7                     It is hereby agreed and declared that the
Tenant will be exclusively responsible for any fine and/or payment demand of
any type associated with and in connection with the operation of its business
from the premises as defined in this agreement.

 

6.                           The Lease Period

 

6.1                     The Landlord leases the premises to the
Tenant for a period of 5 years commencing on 1/1/02 and through until 31/12/06
(hereinafter: “The Lease Period”).

 

6.2                     The premises will be leased to the Tenant
whereby the area of the laboratory is free and clear of any person and object
and an adversary right of a third party on the date the lease period begins.

 

8

 

6.3                     The Tenant will be entitled to terminate this
agreement at the end of one year of the lease in any event that the licenses to
operate its business in the premises under the conditions of this agreement are
not received despite it acting diligently and continuously to obtain these
licenses by giving notice thereof, in writing, to the Landlord and this 60 days
in advance, prior to the end of the first year of the lease. Whereupon such
notice was given, this agreement and the lease period hereunder will end 60
days from the date of the notice.

 

6.4                     The Tenant will be entitled to extend the
lease period for an additional lease period of 5 years (hereinafter: “The Option Period”). Extending the lease
period for the additional lease period is contingent upon the following
conditions, all jointly:

 

6.4.1                        The Tenant gave written notice in advance of
at least 60 days prior to
the end of the lease period that is in effect upon the date the notice is
given, of its desire to extend the lease for an additional period.

 

6.4.2                        The Tenant fulfilled all the conditions in
this agreement and appendices hereto during the lease period and there were no
material breaches by it and/or repetitive breaches of this agreement.

 

6.4.3                        No debts are owed by the Tenant to the
Landlord and no legal proceedings are being conducted between the parties.

 

9

 

6.4.4                        The validity of all guarantees, securities
and insurance policies were extended by such a manner that they will be in
effect during the entire additional lease period or alternatively, other
guarantees or securities are provided instead of those which have expired with
respect to the additional lease period.

 

6.5                     All the conditions in this agreement and
appendices hereto will also apply to the additional lease period subject to
changes of the rent amount as noted in Section 7 below.

 

6.6                     The Tenant undertakes to vacate the premises
at the end of the original and/or extended agreement period all pursuant to the
terms of this agreement.

 

7.                           Rent

 

7.1                     In consideration of leasing the premises the
Tenant will pay the Landlord monthly rent of a sum that is equal to $3,500
(Three Thousand and Five Hundred US Dollars) per month (hereinafter: “The Rent”).

 

7.2                     In any event that the Landlord exercises the
option under this agreement, rent will be increased by a rate of 10% and will
stand at a sum of $3,850 per month.

 

7.3                     Rent will be paid in New Israeli Shekels and
will be calculated based on the US Dollar representative rate.

 

10

 

7.4                     Rent will be paid by the Tenant to the
Landlord each and every month and no later than on the 1st of each
month and for each month of the lease in advance whereby the first payment will
be paid on the first day of the lease period. The Landlord will sign a standing
order to make the payments pursuant to such details.

 

7.5                     Value Added Tax applicable to the rent will
be paid by the Tenant no
later than by the 14th of the month for which rent is being paid and
in addition to every rent payment as against a duly executed tax invoice.

 

7.6                     It is agreed that even if the Tenant leaves
the premises prior to the end of the lease period other than at the Landlord’s
demand, the Tenant will be charged rent and all the relevant payments
associated with using the premises during the agreement period until the end of
the original and/or option period, if exercised, pursuant to the matter at
hand.

 

8.                           Taxes and Payments

 

8.1                     All the taxes, fees, levies and payments on
the premises generally applicable to the occupier and user of the property will
apply and be paid during the lease period by the Tenant and all payments on the
premises applicable to owners will apply to the Landlord.

 

11

 

8.2                     Without derogating from the generality of the
foregoing in Section 8.1, the Tenant, during the agreement period, will also
assume the following expenses and payments:

 

8.2.1                        Ongoing payments and costs for the
consumption and operation of electricity, water, gas, telephone and such like.

 

8.2.2                        Payments of municipal rates and/or payments
to the local council and such like, any payment of tax, fees, levies, expenses
or any mandatory payment applicable and/or to become applicable in the future
to an occupier of premises, by virtue of the law and/or deriving from the use
of the premises such as fees for signs, business licenses and any other amount
and payment pertaining to licensing and permits for the premises and operation
thereof.

 

8.2.3                        Business tax if applicable.

 

8.3                     The Tenant will pay any payment forthwith
upon receiving a payment notice and pursuant to the dates stipulated in such a
notice and in the event that they are not paid in a timely manner then they
will accrue linkage payments, interest and fines on the period in arrears.

 

8.4                     If and as a result of any payment in arrears
the premises were disconnected from the water and/or electricity and/or gas

 

12

 

supply,
the Tenant will assume the reconnection expenses including but not limited to
any fines and payments deriving there from in addition to linkage differentials
and interest.

 

9.                           The Tenant’s Obligations

 

9.1                     The Tenant undertakes to abide by the
provisions of all laws applicable to maintaining and using the premises.

 

9.2                     The Tenant will act to obtain and/or renew
any licenses and permits that are necessary, if necessary pursuant to the law
for the purpose of conducting a business of the type the Tenant operates from
the premises based on the purpose of this agreement and the use thereof and
will assume all payments necessary for this purpose.

 

9.3                     The Tenant hereby undertakes to ensure that
the premises are maintained and cleaned and in a good state of repair and to
prevent any damage to the premises as a result of maliciousness, negligence,
neglect or unreasonable use of the premises.

 

9.4                     Likewise, the Tenant undertakes to
immediately repair at its expense any damage and/or malfunction caused to the
premises as a result of the Tenant’s use of the premises.

 

9.5                     If the Tenant does not repair and/or did not
repair with a reasonable time the damage and/or malfunction caused as a result
of the Tenant using the premises, then the Landlord is entitled or someone on
its behalf to enter the premises and

 

13

 

repair
the malfunction and/or damage and charge the Tenant. The Tenant undertakes to
pay the bill for such repairs within 7 days and without questioning the
standard of repair and/or the amount to be paid.

 

9.6                     The Tenant is liable toward the Landlord
and/or any person and/or entity and/or property of any type and kind for any
damage, loss, ruination and prevention of profit sustained, directly or
indirectly, due to the Tenant and/or anyone on its behalf leasing and operating
the premises during the course of the lease period and undertakes to pay and/or
compensate the Landlord and/or any other injured third party immediately upon
receiving its first written demand to do so, for any injury and/or damage and/or
loss and/or fine and/or claim and/or monetary expense caused to the premises
and/or the Landlord and/or third party and/or any property, as a result of an
act and/or omission in connection with the use of the premises by the Tenant
under this agreement. The Landlord will not be entitled to settle such a claim
with the third party or agree to pay such a claim without the Tenant’s written
consent thereto.

 

9.7                     Should the Tenant not fulfill its obligations
in Section 9.6 above, and the Landlord fulfilled such an obligation in its
place, the Tenant undertakes to reimburse the Landlord, immediately upon his
demand to do so, any such amount and/or any amount which the Landlord expended
and/or paid to a person or entity as compensation for an injury and/or loss and/or
such damage – and all in addition to the Landlord’s expenses that were

 

14

 

necessary
in order to effectuate the foregoing in this sub-section. So long as the
Landlord was not compelled by a final judgment rendered in legal proceedings or
quasi-judicial proceedings to pay such sums, the Tenant reserves the right to
defend itself against such claims and/or demands by the third party.

 

9.8                     Insurance

 

9.8.1                        In order to fulfill its obligations under
this agreement the Tenant undertakes to insure the premises and contents
thereof during the entire lease period by a complete comprehensive insurance
policy against all damages caused to the Landlord and/or any third party’s
person and/or property also to include damage from fire, burglary and/or an act
and/or omission by the Tenant and/or someone on its behalf including but not
limited to its employees, suppliers, agents and any other person on its behalf
associated with its activities in the premises for a sum of no less than one
million dollars, including but not limited to a policy covering all risks
during the course of carrying out construction work and renovations by the
Tenant if these are carried out under the conditions of this agreement.

 

9.8.2                        The Tenant will furnish the Landlord a copy
of the insurance policy by 30/1/02.

 

15

 

9.8.3                        The Tenant is liable for payment of the
relevant insurance premiums whereby both the Landlord and Tenant will be named
beneficiaries under the policy.

 

9.9                                 The Tenant will permit the Landlord and/or
its agent to visit the premises at any reasonable time following advance notice
to the Tenant and upon coordinating the visit in advance and this, inter alia, in order to inspect the premises
and the manner by which it is being used and whether it conforms with the
conditions of this agreement.

 

9.10                           It is further agreed that the Tenant will
show the Landlord, upon its demand to do so, and within a reasonable time,
receipts and proof pertaining to the payments it is obligated to pay under this
agreement.

 

9.11                           The Tenant undertakes to use the premises and
conduct its business and activities from the premises pursuant to the law,
by-laws, regulations and relevant order with respect to the use of the premises
during the entire lease period.

 

10.                     Changes to the Premises

 

10.1                           The Tenant will be entitled to carryout
construction work and/or renovations in the premises, at its discretion for the
purpose of operating its business pursuant to the conditions in this agreement
and subject to obtaining permits and/or licenses required by law.

 

16

 

10.2                           It is hereby agreed that in any event that
this lease agreement ends for any reason all the renovation and/or construction
work will be considered an integral part of the premises and will be
transferred to the complete ownership and possession of the Landlord, the
Tenant will not be entitled to any payment for such work and it hereby waives
any assertion and/or demand and/or claim of any type resulting there from, thus
in order to remove any doubt and without derogating from the generality of the
foregoing, the Tenant will be entitled to remove from the premises at the end
of this agreement period and subject to leaving the premises in its renovated
and constructed form following the work actually carried out, antennas,
electrical systems belonging to the communications center, alarm systems,
cooling and heating systems.

 

10.3                           It is hereby agreed and declared that the
Tenant will be entitled to carryout renovation and construction work in the
premises for the purpose of and without derogating from the above, the Tenant
will be entitled to make the following changes in the premises:

 

10.3.1                              Installation of electrical points as needed.

 

10.3.2                              Hanging and connecting signs, equipment,
furniture and/or accessories belonging to the Tenant in the premises.

 

10.3.3                              Any internal changes that are necessary.

 

17

 

10.3.4                              Installation of an alarm system, cooling and
heating system which the Tenant may remove and receive at the end of the lease
period under this agreement.

 

10.6                           For the sake of removing any doubt it is
agreed that any such change in the premises will be carried out pursuant to the
following conditions:

 

10.6.1                              The changes do not derogate and/or ruin
and/or harm and/or interfere with the existing external structure of the
premises.

 

10.6.2                              Any change and/or renovation and/or addition
will be at the Tenant’s expense.

 

11.                     Securities

 

11.1                           To guarantee fulfillment of all its
obligations under this agreement the Tenant, upon signing this agreement, will
deposit with the Landlord an autonomic, unconditional bank guarantee for a
period of 5 years commencing from 1.1.02, in Shekels and linked to the index
which can be paid intermittently, whereby the basic index for the purpose of
calculating the linkage differentials is the index known on 15.2.02, for a sum
equal to 12 months rent in addition to VAT, Letter of Undertaking. It is hereby
agreed that in the event that the bank guarantee cannot be issued for a period
of 5 years, it will be issued for 12 months commencing from the

 

18

 

date the lease period begins and subject to the fact that the guarantee
is renewed every 30 days prior to its expiration. Attached hereto as Appendix C to this agreement and
constituting an integral part hereof.

 

11.2                           Likewise, the Tenant undertakes to extend the
validity of the guarantee or furnish an alternative guarantee in the event that
the lease period is extended and this prior to extending the lease period and
as a condition precedent thereto. The amount of the extended or alternative
guarantee will be revised in accordance with the revised rent, whereby all the
costs involved in revising it and extending the guarantee will be assumed by
the Tenant.

 

11.3                           The Tenant hereby gives the Landlord an
irrevocable instruction that cannot be cancelled and/or modified for any
reason, to present the bank guarantee for payment and/or to take any other
legal action for the purpose of collecting any amounts owing from the Tenant
due to any breach and/or as a result of a breach of any of the Tenant’s
obligations under this agreement.

 

11.4                           Whereupon the Landlord acted pursuant to the
bank guarantee as noted in Section 11.3 above, then without derogating from any
right and/or other remedy available to the Landlord under this agreement and/or
prescribed by law – the Tenant must deposit with the Landlord a new bank
guarantee for an amount and under the conditions specified in Section 11.1
above.

 

19

 

And this in order to guarantee fulfillment of its obligations during
the rest of the lease period.

 

11.5                           At the end of the lease period and if the
Tenant fulfilled all of its obligations toward the Landlord under this
agreement, the Landlord will return the bank guarantee to the Tenant 45 days after the end of the lease
period and as against the issuance of all the documents attesting to the Tenant
not having any debts.

 

11.6                           For the sake of removing any doubt it is
clarified that exercising the bank guarantee will not derogate from any relief
and/or right and/or other remedy available to the Landlord by virtue of this
agreement and/or by law due to a breach of any of the conditions in this
agreement and the guarantee does not constitute limits and/or determine
exceptions to the Tenant’s liability toward the Landlord.

 

12.                     Vacating the Premises

 

12.1                           Immediately upon reaching the end of the
lease period and/or upon the agreement being duly rescinded, the Tenant
undertakes to vacate the premises and return the exclusive possession thereof
to the Landlord whereby the premises are in good and proper condition, clean
and painted as it was received and free and clear of any person and object in
its current condition save wear and tear deriving from regular and

 

20

 

reasonable use and whereby the premises will include all the construction
work and renovations.

 

12.2                           On the date the premises are vacated the
Tenant will furnish the Landlord confirmation from any entity and authority
attesting to the fact that the Tenant has no outstanding debts in connection
with the premises up to the date of vacating the premises.

 

12.3                           If the Tenant does not vacate the premises on
the date the lease period ends or on the date the agreement is rescinded, the
Landlord has the right to enter the premises without the need to obtain the
Tenant’s consent, while breaking the locks and replacing them and while
preserving the use of the necessary extent of force and remove all the contents
from the premises to any place the Landlord deems appropriate and this without
prejudicing any right and/or relief and/or remedy available to the Landlord by
virtue of this agreement and/or by law.

 

The
Landlord will not be liable for any damage and/or loss and/or missing contents
of any type whatsoever which may be sustained and/or is sustained to the Tenant
as a result of such actions. The Tenant will assume all the Landlord’s expenses
caused as a result of the vacating actions, including fees for storing the
contents of the premises and/or appropriate usage fees for storing the
contents.

 

21

 

12.4                           Without prejudicing any provision in this
agreement and any other remedy and right available to the Landlord under this
agreement and by law, including but not limited to any other provision in this
agreement pertaining to payment of compensation in the event that the Tenant
breaches this agreement, hence if the Tenant does not return possession of the
premises to the Landlord at the end of the lease period or after this agreement
is lawfully rescinded, the Tenant undertakes to pay the Landlord a usage fee
for the period commencing from the day the Tenant should have returned the
premises to the Landlord and until they are actually returned to the Landlord
and this at a rate of 200% of the monthly rent payments (linked to the basic index)
stipulated in this agreement at the rate on the date of payment and this in
addition to an amount in Shekels equal to $500 (Five Hundred US Dollars)
calculated pursuant to the US Dollar representative rate for each late day in
vacating the premises and this as predetermined, estimated and agreed upon
compensation for the delay in vacating the premises. The Tenant hereby waives
in advance any assertion with respect to the extent of the liquidated damages
and/or any other assertion in connection thereto. It is hereby agreed that a
delay in vacating the premises of up to 30 days will not entitle the Landlord
to the remedies specified above but rather only a delay exceeding 30 days and
subject to the conditions in this agreement.

 

22

 

12.5                           Without derogating from the foregoing, it is
hereby agreed that during the entire period commencing upon the date the Tenant
should have vacated the premises and until actually vacating them, the Tenant
is obligated to pay all the rest of the payments deriving from the provisions
of this agreement and appendices hereto without this constituting permission
for the Tenant to keep possession of the premises and without such payments
granting any right to continue to possess the premises.

 

12.6                           Without derogating from the foregoing the
Landlord has the right to sue the Tenant for any damages and expenses sustained
by the Landlord due to not vacating the premises in a timely manner, including
but not limited to legal expenses and/or any other right available to the
Landlord based on this agreement and any law.

 

12.7                           Likewise, the Landlord will be entitled to
instruct the relevant authorities to disconnect the water, gas and electricity
in the premises.

 

13.                                 Relief and Remedies Due to a
Breach of the Agreement

 

13.1                           Without derogating from any remedy available
to the parties as specified in the conditions of this agreement, the Contracts Law (Remedies for Breach of Contract) 5731 –
1971 as well as any other law pertaining to the matter will apply to
this agreement and any breach hereof.

 

23

 

13.2                           Without derogating from any remedy and other
right available to the Landlord under this agreement and by law, any delay and
or payments in arrears owing from the Tenant to the Landlord under this
agreement will obligate the Tenant to pay interest in arrears on the amount in
arrears and/or that is late at the maximum rate customary in Bank Discount Ltd.
regarding exceeding credit limits for current debit accounts.

 

13.3                           Any expense that the Landlord may have due to
collecting any amount that was not paid in a timely manner will be attributed
to the Tenant’s debt and the Tenant will be obligated to repay it.

 

13.4                           Whereupon the Tenant is late in making any
payment as noted above and does not pay it after 10 days of receiving written notice thereof, the Landlord
may present the bank guarantees to be settled and then any amount paid will be
applied, first of all on account of the collection expenses and then to the
interest and thereafter to the linkage differentials and finally on account of
the principal debt.

 

13.5                           Whereupon this agreement is duly rescinded
the Landlord may engage with any third party in a contract to re-lease the
premises and the Tenant declares and undertakes that it will not prevent by any
means such a contract to lease the premises to the third party. The foregoing
will be considered as a contract for the benefit of a third party within the
meaning thereof in the Contracts Law (General
Section) 5733 – 1973.

 

24

 

13.6                           Upon a delay in delivering possession of the
premises and not having the laboratory vacated in a timely manner this will be
considered a breach of the agreement. The Landlord will pay the Tenant a sum
equal to $1500 for each delayed month. It is hereby agreed that a delay of up
to 10 days will not be considered a delay pursuant to this section.

 

13.7                           Without derogating from any other remedy and
right available to the Landlord in the event of a material breach of any of the
conditions of this agreement by the parties, the breaching party must pay
pre-determined and agreed upon damages to the upholding party, compensation
which the parties deemed a probable result of the breach and this at an amount
equal to the monthly rent owing to the Landlord for six months rent.

 

13.8                           The foregoing in Section 13.7 is in addition
to the right granted to the Landlord to vacate and/or remove the Tenant within
14 days from giving it written notice to the Tenant’s address and entitle the
Landlord to disconnect the premises from the water, electricity, gas and
telephone infrastructure as specified in this agreement.

 

13.9                           Without derogating from the explicit
provisions in this agreement, it is hereby agreed that a breach of sections                                         
will be considered a material breach of the agreement within the meaning in The Contracts Law (Remedies for Breach of Contract)
5731 -1970.

 

25

 

13.10                     Without derogating from the above it is
clarified that the Landlord will be entitled to rescind this agreement also
upon the occurrence of one or more of the following instances:

 

13.10.1                                    Bankruptcy and/or liquidation proceedings
were initiated against the Tenant and were not cancelled within 30 days.

 

13.10.2                                    A lien was imposed upon the Tenant and/or its
property and the lien was not removed within 30 days.

 

13.10.3                                    A receiver was appointed over the Tenant’s
property and the proceedings were not canceled within 30 days.

 

14.                     Assignment of Rights

 

14.1                           The Landlord is entitled to assign its rights
to the premises and/or under this agreement to a third party, to charge them
and/or pledge them and this without the need to obtain the Tenant’s consent,
provided that such an assignment does not prejudice the Tenant’s rights under
this agreement.

 

14.2                           The Tenant will not be entitled to assign the
use of the premises and/or any other right, in whole or in part,  granted to it under this agreement to any
third party nor will it permit another to share the premises and/or any part
thereof, whether for consideration or not, by means of a sub-lease or any other
means without the Landlord’s written advance approval. The 

 

26

 

foregoing will not apply to an assignment to the owners of the Tennant
provided they sign this contract and without derogating from any of the Tenant’s
liabilities under this contract.

 

15.                     Miscellaneous

 

15.1                           Stamp duty on this agreement will be paid by
the Tenant. Each party will assume its own
attorneys fees.

 

15.2                           This agreement exhausts all the consents
between the parties and upon signing it no negotiations, warranties,
representations, undertakings and/or consents, memorandum, draft agreements and
such like will be valid if and insofar as they were executed, whether in
writing or orally, whether explicitly or impliedly, between the parties prior
to signing this agreement.

 

15.3                           No extension, reduction, waiver or not taking
any action will be valid unless in writing and signed by both parties to this
agreement.

 

15.4                           No conduct by any of the parties will be
considered a waiver of any of its rights under this agreement or by law or as a
waiver or as a consent on its part to any breach or non-fulfillment of any
condition hereof unless such a waiver, consent, rejection, change, rescission
or addendum was executed explicitly and in writing. A waiver in a specific
instance will not be seen as a waiver with respect to other

 

27

 

instances or on other occasions and such a waiver will not be analogous
in this respect.

 

15.5                           The Tenant will not be entitled at any time
to record a caveat notice or any other record at the Land Registry Office in
connection with this agreement.

 

15.6                           It is agreed between the parties that the
court in Ashdod will have exclusive jurisdiction to entertain a claim in
connection with the interpretation, performance and/or breach of this
agreement.

 

15.7                           Any notice sent by one party to the other
will be considered as if it reached its destination 72 hours of it being
delivered to be sent by registered mail, 24 hours from the time it is
transmitted if sent by facsimile or electronic mail and if hand-delivered –
upon actual delivery.

 

In Witness Hereof The Parties Have
Hereto Set Their Hands:

 

	
  (-)

  	
   

  	
  (-)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  The Landlord

  	
   

  	
  The Tenant

  	
   

  

 

 

List of Appendices:

Appendix A – Lease Agreement

Appendix B – Drawing of the lot and
building

Appendix C – Bank Guarantee

 

28

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