Document:

exhibit_4-6.htm

Exhibit 4.6

Letter of Indemnification

 

BLUEPHOENIX SOLUTIONS LTD

 

LETTER OF INDEMNIFICATION

 

Dated ________________

 

From BluePhoenix Solutions Ltd. to [_________] (the “Office Holder”)

 

Dear [_____],

 

This letter (the “Letter of Indemnification”) sets forth the terms and conditions of exemption and indemnification provided to you by Bluephoenix Solutions Ltd. (the “Company”) in respect of your service as an Office Holder of the Company ("Nos'e Misra" as such term is defined in the Companies Law, 1999 (the “Companies Law”), including your service as an Office Holder of a company controlled by the Company ("control" as defined in the Companies Law) (the "Subsidiary") to the fullest extent permitted by law. Accordingly, the Company hereby agrees as follows:

	
1. 

	
Exemption From Liability

 

The Company hereby exempts you, to the fullest extent permitted by law, from any responsibility or liability for damages caused as a result of a breach of your duty of care to the Company or to any Subsidiary, provided that in case that you serve as director of the Company, the Company shall not exempt you in advance with respect to  a breach of your duty of care in connection with a distribution, and further provided that, in no event shall you be exempt with respect to any actions listed in Section 3 below.

 

	
2. 

	
Indemnification

 

(a)           Subject to the provisions of the Companies Law and the Securities Law, 1968 (the “Securities law”), the Company hereby undertakes to indemnify you to the fullest extent permitted by the Companies Law and the Securities Law, with respect to the following liabilities, expenses and payments, provided that such liabilities, expenses and payments were incurred by you in your capacity as an Office Holder of the Company or in your capacity as an Office Holder of any Subsidiary:

 

	 	
(i) 

	
a financial obligation imposed on you in favor of another person by a court judgment, including a compromise judgment or an arbitrator’s award approved by a court of law;

 

  

  

  

 

	
  

	
(ii)

	
reasonable litigation expenses, including legal fees, incurred by you as a result of criminal inquiry or an investigation or proceeding instituted against you by a competent authority, which inquiry or investigation or proceeding has ended without the filing of an indictment and without an imposition of financial liability in lieu of a criminal proceeding, or has ended in the imposition of a financial obligation in lieu of a criminal proceeding without the filing of an indictment for an offence that does not require proof of mens rea or in connection with financial sanction (the phrases "proceeding that has ended without the filing of an indictment" and "financial obligation in lieu of a criminal proceeding" shall have the meanings ascribed to such phrases in Section 260(a)(1a) of the Companies Law);

 

	 	
(iii)

	
expenses, including reasonable litigation expenses and legal fees, incurred by you as a result of a proceeding instituted against you in relation to (A) infringements that may impose financial sanction pursuant to the provisions of Chapter H'3 of the Securities Law; or (B) administrative infringements pursuant to the provisions of Chapter H'4 of the Securities Law; or (C) infringements pursuant to the provisions of Chapter I'1 of the Securities Law;

 

	 	
(iv)

	
reasonable legal expenses, including attorney's fees, which you incurred or with which you were charged by a court of law, in a proceeding brought against you, by the Company or on its behalf or by another person, or in a criminal prosecution in which you were acquitted, or in a criminal prosecution in which you were convicted of an offense that does not require proof of mens rea (criminal intent); and

 

	
  

	
(v)

	
payments to an injured party of infringement under Section 52(54)(a)(1)(a) of the Securities Law.

 

(b)           Subject to the provisions of the Companies Law and the Securities Law, the Company undertakes to indemnify you with respect to (i) financial obligations as specified in Section 2(a)(i) above, provided, that the undertaking is limited to categories of events which, in the opinion of the Company’s Board of Directors can be foreseen, based on the Company’s actual activities at the time the undertaking to indemnify is given, and in amounts set by the Board of Directors as reasonable; and (ii) expenses, fees and payments as specified in Sections 2(a)(ii), (iii), (iv) and (v) above.

 

	
3. 

	
(a) The Company shall not indemnify or exculpate you in any of the following circumstances:

 

	
  

	
(i)

	
a breach of duty of loyalty, except, with respect to indemnification to the extent that you acted in good faith and had a reasonable basis to believe that the act would not prejudice the company;

 

  

  

  

 

	
  

	
(ii)

	
a breach of duty of care committed intentionally or recklessly, excluding a breach arising out of your negligent conduct;

 

	
  

	
(iii)

	
an act or omission committed with intent to derive illegal personal benefit; or

 

	 	
(vi) 

	
a fine, civil fine, financial sanction or levy against you.

 

(b) The Company shall not indemnify you for a proceeding instituted against you pursuant to the provisions of Chapter H'3, H'4 and I'1 under the Securities Law.

 

4.             The Company will make available to you all amounts in accordance with Section 2 above on the date on which such amounts are first payable by you and in any event not later than fifteen (15) days following receipt by the Company of your written request therefor ("Time of Indebtedness"), including with respect to any claim against you initiated by the Company or by any Subsidiary or in their right, and with respect to items referred to in Sections 2(a) (ii), (iii), (iv) and (v) above, not later than the date on which the applicable court or other competent authority renders its decision. Advances given to cover legal expenses in criminal proceedings will be repaid by you to the Company, if you are found guilty of a crime which requires proof of criminal intent. Other advances will be repaid by you to the Company if it is determined by an unappealable court judgment that you are not lawfully entitled to such indemnification. As part of the aforementioned undertaking, the Company will make available to you any security or guarantee that you may be required to post in accordance with an interim decision given by a court or an arbitrator or other competent authority, including for the purpose of substituting liens imposed on your assets.

5.             The Company will indemnify you even if at the Time of Indebtedness you are no longer an Office Holder of the Company provided that the obligations with respect to which you will be indemnified hereunder are in respect of actions taken by you, either prior to or after the date hereof, while you were an Office Holder of the Company or in respect of actions taken by you while you were an Office Holder of a Subsidiary as aforesaid, and in such capacity.

6.             The indemnification will be limited to the expenses mentioned in Section 2(a)(ii), (iii), (iv) and (v) above (pursuant and subject to Section 4 and insofar as indemnification with respect thereto is not restricted by law or by the provisions of Section 3 above) and to the matters mentioned in Section 2(a)(i) above insofar as they result from, or are connected to, events and circumstances set forth in Schedule A hereto, which are deemed by the Company's Board of Directors, based on the current activity of the Company, to be foreseeable as of the date hereof.

 

7.             The total amount of indemnification under Section 2 above that the Company undertakes towards all of the Company's Office Holders whom the Company has resolved to indemnify, jointly and in the aggregate, shall not exceed, during the course of the Company's existence, 50% (fifty percent) of the Company's net assets, measured by the balance sheet of the Company published for the end of the last fiscal year prior to the time that notice is provided to the Company.

 

  

  

  

8.             The Company will not indemnify you for any liability with respect to which you have received payment by virtue of an insurance policy or another indemnification agreement other than for amounts which are in excess of the amounts actually paid to you pursuant to any such insurance policy or other indemnity agreement (including deductible amounts not covered by insurance policies), within the limits set forth in Section 7 above.

9.             Subject to the provisions of Sections 7 and 8 above, the indemnification hereunder will, in each case, cover all sums of money that you will be obligated to pay, in those circumstances for which indemnification is permitted under the law and under this Letter of Indemnification.

 

10.           The Company will be entitled to any amount collected from a third party in connection with liabilities indemnified hereunder.

 

11.           In all indemnifiable circumstances, indemnification will be subject to the following:

(a)            You shall promptly notify the Company of any legal proceedings initiated against you and of all threatened legal proceedings without delay following your first becoming aware thereof. However, your failure to notify the Company as aforesaid shall not derogate from your right to be indemnified as provided herein (except to the extent that such failure to notify causes the Company damages). You shall deliver to the Company, or to such person as it shall advise you, without delay, all documents you receive in connection with these proceedings. Similarly, you must advise the Company on an ongoing and current basis concerning all events which you suspect may likely give rise to the initiation of legal proceedings against you in connection with your actions as an Office Holder of the Company or of any Subsidiary.

 

(b)           Other than with respect to proceedings that have been initiated against you by the Company or by any Subsidiary, or in their names, the Company shall be entitled to undertake the conduct of your defense in respect of such legal proceedings by handing over the conduct thereof to any attorney which the Company may choose for that purpose, except to an attorney who is not, upon reasonable grounds, acceptable to you. The Company shall notify you of any such decision to defend with ten (10) calendar days of receipt of notice of any such proceeding. The Company and/or the attorney as aforesaid shall be entitled, within the context of the conduct as aforesaid, to conclude such proceedings, all as it shall see fit, including by way of settlement. At the request of the Company, you shall execute all documents required to enable the Company and/or its attorney as aforesaid to conduct your defense in your name, and to represent you in all matters connected therewith, in accordance with the aforesaid. For the avoidance of doubt, in case of criminal proceedings, the Company and/or the attorneys as aforesaid will not have the right to plead guilty in your name or to agree to a plea-bargain in your name without your consent. However, the aforesaid will not prevent the Company and/or its attorneys as aforesaid, with the approval of the Company, to come to a financial arrangement with a plaintiff in a civil proceeding without your consent so long as such arrangement will not be an admittance of an occurrence not indemnifiable pursuant to this Indemnification Undertaking and/or pursuant to law. The Company shall not, without your prior written consent, consent to the entry of any judgment against you or enter into any settlement or compromise which (i) includes an admission of your fault, (ii) does not include, as an unconditional term thereof, the full release of you from all liability in respect of such proceeding or (iii) is not fully indemnifiable pursuant to this Letter of Indemnification and/or pursuant to law. This paragraph shall not apply to a proceeding brought by you under Section 11(g) below.

 

  

  

  

(c)           You will fully cooperate with the Company and/or the attorney as aforesaid, in every reasonable way, as may be required of you within the context of their conduct of such legal proceedings, including but not limited to the execution of power(s) of attorney and other documents, provided that the Company shall cover all costs incidental thereto such that you will not be required to pay the same or to finance the same yourself.

(d)           Notwithstanding the provisions of Sections 11(b) and 11(c) above, (i) if in a proceeding to which you are a party by reason of your status as an Office Holder of the Company or a Subsidiary and the named parties to any such proceeding include both you and the Company or any subsidiary of the Company, a conflict of interest or potential conflict of interest (including the availability to the Company and its subsidiary, on the one hand, and you, on the other hand, of different or inconsistent defenses or counterclaims) exists between you and the Company, or (ii) if the Company fails to assume the defense of such proceeding in a timely manner, you shall be entitled to be represented by separate legal counsel, which shall represent other persons similarly situated, of the Company's choice and reasonably acceptable to you and other person's choice, at the expense of the Company. In addition, if the Company fails to comply with any of its material obligations under this Letter of Indemnification or in the event that the Company or any other person takes any action to declare this Letter of Indemnification void or unenforceable, or institutes any action, suit or proceeding to deny or to recover from you the benefits intended to be provided to you hereunder, except with respect to such actions, suits or proceedings brought by the Company or any Subsidiary that are resolved in favor of the Company or the Subsidiary, you shall have the right to retain counsel of your choice, and reasonably acceptable to the Company and at the expense of the Company, to represent you in connection with any such matter.

 

(e)            If, in accordance with Section 11(b) (but subject to Section 11(d)), the Company has assumed the conduct of your defense, the Company will have no liability or obligation pursuant to this Letter of Indemnification or the above resolutions, to indemnify you for any legal expenses, including any legal fees, that you may expend in connection with your defense, unless (i) the Company shall not have assumed the conduct of your defense as contemplated, (ii) the Company refers the conduct of your defense to an attorney who is not, upon reasonable grounds, acceptable to you, (iii) the named parties to any such action (including any impleaded parties) include both you and the Company or any Subsidiary, and joint representation is inappropriate under applicable standards of professional conduct due to a conflict of interest between you and the Company or any Subsidiary, or (iv) the Company shall agree to such expenses in either of which events all reasonable fees and expenses of your counsel shall be borne by the Company.

 

  

  

  

 

(f)            The Company will have no liability or obligation pursuant to this Letter of Indemnification to indemnify you for any amount expended by you pursuant to any compromise or settlement agreement reached in any suit, demand or other proceeding as aforesaid without the Company’s consent to such compromise or settlement.

(g)            If required by law, the Company's authorized organs will consider the request for indemnification and the amount thereof and will determine if you are entitled to indemnification and the amount thereof in accordance with the terms herein. In the event that you make a request for payment of an amount of indemnification hereunder or a request for an advancement of indemnification expenses hereunder and the Company fails to determine your right to indemnification hereunder or fails to make such payment or advancement, you may apply to any court which has jurisdiction to enforce the Company's obligations hereunder. The Company agrees to reimburse you in full for any reasonable expenses incurred by you in connection with investigating, preparing for, litigating, defending or settling any action brought by you under the immediately preceding sentence, except where such action or any claim or counterclaim in connection therewith is resolved in favor of the Company.

12.           The Company undertakes that, subject to the mandatory limitations under applicable law, as long as it may be obligated to provide an indemnification and advance expenses under this Letter, the Company shall purchase and maintain in effect directors' and officers' liability insurance, which shall include coverage for your benefit, providing coverage in amounts as reasonably determined by the Board of Directors of the Company. The Company hereby undertakes to notify you 30 days prior to the expiration or termination of the directors' and officers' liability insurance.

 

13.           If for the validation of any of the undertakings in this Letter of Indemnification any act, resolution, approval or other procedure is required, the Company undertakes to cause them to be done or adopted in a manner which will enable the Company to fulfill all its undertakings as aforesaid.

14.           For the avoidance of doubt, it is hereby clarified that nothing contained in this Letter of Indemnification derogates from the Company's right to indemnify you post factum, in such amounts and to such extent permitted under the Companies Law.

15.           If any undertaking included in this Letter of Indemnification is held invalid or unenforceable, such invalidity or unenforceability will not affect any of the other undertakings which will remain in full force and effect. Furthermore, if such invalid or unenforceable undertaking may be modified or amended so as to be valid and enforceable as a matter of law, such undertaking will be deemed to have been modified or amended, and any competent court or arbitrator are hereby authorized to modify or amend such undertaking, so as to be valid and enforceable to the maximum extent permitted by law.

  

  

  

 

16.           This Letter of Indemnification and the agreements herein shall be governed by and construed and enforced in accordance with the laws of the State of Israel.

17.           Beginning on the effective date of this Letter of Indemnification, this Letter of Indemnification cancels any preceding letter of indemnification or arrangement for indemnification that may have been issued to you by the Company.

18.           Neither the settlement or termination of any proceeding, nor the failure of the Company to award indemnification or to determine that indemnification is payable shall create an adverse presumption that you are not entitled to indemnification hereunder. In addition, the termination of any proceeding by judgment or order (unless such judgment or order provides so specifically) or settlement, shall not create a presumption that you did not act in good faith and in a manner which you reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal action or proceeding, had reasonable cause to believe that your action was unlawful.

19.           This Letter of Indemnification shall be (a) binding upon all successors and assigns of the Company (including any transferee of all or a substantial portion of the business, stock and/or assets of the Company and any direct or indirect successor by merger or consolidation or otherwise by operation of law), and (b) binding on and shall inure to the benefit of your heirs, personal representatives, executors and administrators. This Indemnification Undertaking shall continue for your benefit and your heirs', personal representatives', executors' and administrators' benefit after you cease to be a an Office Holder of the Company.

20.           Except with respect to changes in the governing law which expand your right to be indemnified by the Company, no supplement, modification or amendment of this Letter of Indemnification shall be binding unless executed in writing by each of the parties hereto. No waiver of any of the provisions of this Letter of Indemnification shall be deemed or shall constitute a waiver of any other provisions of this Letter of Indemnification (whether or not similar), nor shall such waiver constitute a continuing waiver.

  

  

  

 

21.           This Letter of Indemnification is being issued to you pursuant to the resolutions adopted by the Audit Committee and the Board of Directors of the Company on October 10, 2011 [and by the shareholders of the Company on  [___], 2011]. The Board of Directors has determined, based on the current activity of the Company, that the total amount of indemnification stated in Section 7 is reasonable and that the events listed in Schedule A are reasonably anticipated.

Kindly sign and return the enclosed copy of this letter to acknowledge your agreement to the contents hereof.

 

Very truly yours,

 

BluePhoenix Solutions Ltd.

By: ____________________

Date: _________________

 

Agreed:

Signature: ______________________________

Name: _________________________________

Title: __________________________________

Date: __________________________________

 

  

  

  

Schedule A

 

1.           Negotiations, execution, delivery and performance of agreements on behalf of the Company and any Subsidiary including, inter alia, any claim or demand made by a customer, supplier, contractor or other third party transacting any form of business with the Company, its Subsidiaries or affiliates relating to the negotiations or performance of such transactions, representations or inducements provided in connection thereto or otherwise.

 

2.           Any claim or demand made in connection with any transaction which is not within the ordinary course of business of either the Company, its subsidiaries or affiliates, including the sale, lease or purchase of any assets or businesses.

3.           Anti-competitive acts and acts of commercial wrongdoing.

4.           Acts in regard of invasion of privacy including with respect to databases and acts in regard of slander.

5.           Any claim or demand made for actual or alleged infringement, misappropriation or misuse of any third party's intellectual property rights including, but not limited to confidential information, patents, copyrights, design rights, service marks, trade secrets, copyrights, misappropriation of ideas by the Company, its Subsidiaries or affiliates.

6.           Actions taken in connection with the intellectual property of the Company and any Subsidiary and its protection, including the registration or assertion of rights to intellectual property and the defense of claims relating thereof.

7.           Participation and/or non-participation at the Company's board meetings, bona fide expression of opinion and/or voting and/or abstention from voting at the Company's board meetings.

8.           Approval of corporate actions including the approval of the acts of the Company's management, their guidance and their supervision.

9.           Claims of failure to exercise business judgement and a reasonable level of proficiency, expertise and care in regard of the Company's business.

10.         Violations of securities laws of any jurisdiction, including without limitation, fraudulent disclosure claims, failure to comply with SEC and/or the Israeli Securities Authority and/or any stock exchange disclosure or other rules and any other claims relating to relationships with investors, shareholders and the investment community and any claims related to the Sarbanes-Oxley Act of 2002, as amended from time to time.

11.         Any claim or demand made under any securities laws or by reference thereto, or related to the failure to disclose any information in the manner or time such information is required to be disclosed pursuant to such laws, or related to inadequate or improper disclosure of information to shareholders, or prospective shareholders, or related to the purchasing, holding or disposition of securities of the Company or any other investment activity involving or affected by such securities, including any actions relating to an offer or issuance of securities of the Company or of its Subsidiaries and/or affiliates to the public by prospectus or privately by private placement, in Israel or abroad, including the details that shall be set forth in the documents in connection with execution thereof.

  

  

  

 

12.         Violations of laws requiring the Company to obtain regulatory and governmental licenses, permits and authorizations or laws related to any governmental grants in any jurisdiction.

13.         Claims in connection with publishing or providing any information, including any filings with any governmental authorities, on behalf of the Company in the circumstances required under any applicable laws.

 

14.         Any claim or demand made by employees, consultants, agents or other individuals or entities employed by or providing services to the Company relating to compensation owed to them or damages or liabilities suffered by them in connection with such employment or service.

15.         Resolutions and/or actions relating to employment matters of the Company and/or its Subsidiaries and/or affiliates.

16.         Events, pertaining to the employment conditions of employees and to the employer—employee relations, including the promotion of workers, handling pension arrangements, insurance and saving funds, options and other benefits.

  

  

  

 

17.         Any claim or demand made by any lenders or other creditors or for moneys borrowed by, or other indebtedness of, the Company, its Subsidiaries or affiliates.

18.         Any claim or demand made by any third party suffering any personal injury and/or bodily injury and/or property damage to business or personal property through any act or omission attributed to the Company, its Subsidiaries or affiliates, or their respective employees, agents or other persons acting or allegedly acting on their behalf.

19.         Any claim or demand made directly or indirectly in connection with complete or partial failure, by the Company or any Subsidiary or affiliate thereof, or their respective directors, officers and employees, to pay, report, keep applicable records or otherwise, of any foreign, federal, state, country, local, municipal or city taxes or other compulsory payments of any nature whatsoever, including without limitation, income, sales, use, transfer, excise, value added, registration, severance, stamp, occupation, customs, duties, real property, personal property, capital stock, social security, unemployment, disability, payroll or employee withholding or other withholding, including any interest, penalty or addition thereto, whether disputed or not.

20.         Any claim or demand made by purchasers, holders, lessors or other users of products or assets of the Company, or individuals treated with such products, for damages or losses related to such use or treatment, and actions in connection with the testing of products developed by the Company and/or its Subsidiaries or in connection with the distribution, sale, license or use of such products.

21.         Any administrative, regulatory or judicial actions, orders, decrees, suits, demands, demand letters, directives, claims, liens, investigations proceedings or notices of noncompliance or violation by any governmental entity or other person alleging potential responsibility or liability (including potential responsibility or liability for costs of enforcement, investigation, cleanup, governmental response, removal or remediation, for natural resources damages, property damage, personal injuries, or penalties or contribution, indemnification, cost recovery, compensation, or injunctive relief) arising out of, based on or related to (a) the presence of, release spill, emission, leaking, dumping, pouring, deposit, disposal , discharge, leaching or migration into the environment (each a "Release") or threatened Release of, or exposure to, any hazardous, toxic, explosive or radioactive substance, wastes or other substances or wastes of any nature regulated pursuant to any environmental law, at any location, whether or not owned, operated, leased or managed by the Company or any of its Subsidiaries, or (b) circumstances forming the basis of any violation of any environmental law, environmental permit, license, registration or other authorization required under applicable environmental and/or public health law.

  

  

  

 

22.         Actions in connection with the Company's development, use, sale, licensing, distribution, marketing or offer of products and/or services.

23.         Resolutions and/or actions relating to a merger of the company and/or of its Subsidiaries and/or affiliates, the issuance of shares or securities exercisable into shares of the Company, changing the share capital of the Company, formation of subsidiaries, reorganization, winding up or sale of all or part of the business, operations or shares the Company.

 

24.         Resolutions and/or actions relating to investments in the Company and/or its Subsidiaries and/or affiliated companies and/or the purchase or sale of assets, including the purchase or sale of companies and/or businesses, and/or investments in corporate or other entities and/or investments in traded securities and/or any other form of investment.

25.         Any administrative, regulatory or judicial actions, orders, decrees, suits, demands, demand letters, directives, claims, liens, investigations, proceedings or notices of noncompliance or violation by any governmental entity or other person alleging the failure to comply with any statute, law, ordinance, rule, regulation, order or decree of any of its Subsidiaries and/or affiliates, or any of their respective business operations.

26.         Actions relating to the operations and management of the Company and/or its Subsidiaries.

27.         Actions taken in connection with the approval and execution of financial reports and business reports and the representations made in connection therewith.

28.         Any claim or demand, not covered by any of the categories of events described above, which, pursuant to any applicable law, a director or officer of the Company may be held liable to any government or agency thereof, or any person or entity, in connection with actions taken by such director or officer in such capacity.exhibit_4-8.htm

Exhibit 4.8

 

BluePhoenix Solutions Ltd. 2007 Award Plan

	
1.

	
NAME

	
  

	
This plan as adopted by the Board of Directors of Blue Phoenix Solutions Ltd., (the “Company”) on July 8, 2007, and as amended from time to time, shall be known as the “BluePhoenix Solutions Ltd. 2007 Award Plan” (hereinafter referred to as the “Plan”).

	
2.

	
PURPOSE OF THE PLAN

The purposes of this Plan are to attract and retain the best available individuals for positions of substantial responsibility, and to promote the success of the Company’s business and the businesses of it subsidiaries and affiliates by aligning the financial interests of individuals providing services to the Company and its subsidiaries and affiliates with long-term shareholders value.

	
3.

	
HEADINGS AND DEFINITIONS

	
  

	
3.1

	
The section headings are intended solely for the reader’s convenience and in no event shall they constitute a basis for the interpretation of the Plan.

	
  

	
3.2

	
In this Plan, the following terms shall have the meanings set forth beside them:

 

	
“Affiliates”

	
Corporate entities who are controlled by, or under control of,  the Company;

 

	
"Approved Award"

	
An Award granted under Section 102 in accordance with the capital gains route;

 

	
 “Award”

	
A conditional right to receive an ordinary share of the Company, granted to a Participant, subject to the provisions of this Plan and the applicable Award Agreement;  

 

	
“Award Agreement”

	
A written agreement between the Company and a Participant setting forth the terms under which Awards are granted to a Participant;

 

	
 “Board”

	
The Company’s Board of Directors, or, subject to applicable law and to the Company’s Articles of Association, any committee empowered by the Board for the purpose of implementation of this Plan;

 

	
"Company"

	
BluePhoenix Solutions Ltd., a company incorporated under the laws of Israel or any Successor Company;

 

	
“Consultant”

	
Shall mean any person, except an Employee, engaged by a Group Company, in order to render services to such company, including as an advisor;    

 

 

  

  

  

 

	
 “Effective Date”

	
A date to be determined separately for each Participant, as specified in such a Participant’s Award Agreement, from which the vesting period of the Awards shall commence;

 

	
“Employee”

	
Shall mean any person, who is a common law employee of a Group Company, and who is on the payroll of such company or any officer of such company, all in accordance with Section 102;

 

	
“Expiration Date”

 

	
Ten (10) years from the Effective Date of such Award;

 

	  	  
	
“Holding Period”

 

	
The holding period provided under Section 102 in respect of the “capital gains route” or under a tax ruling received from the Israeli Tax Authority;

 

	
“Ordinance”

	
The Israeli Income Tax Ordinance [New Version], 5721-1961 and the regulations promulgated thereunder, as amended from time to time;

 

	
“Participant”

	
Shall mean an Employee of, or a Consultant to, a Group Company;  

 

	
“Purchase Price”

	
Shall mean the consideration required to be paid by a Participant upon vesting of one Award;

 

	
"Group Company"

 

	
Any member of the Group;

	
"Group"

	
The Company, its Subsidiaries and Affiliates;

 

	
“Section 102”

 

	
Section 102 of the Ordinance and the Israeli Income Tax Rules (Tax Relief in Issuance of Shares for Employees) 2003, as amended from time to time;

 

	
“Share”

	
An ordinary share of the Company (par value NIS 0.01 per share) issued upon the Vesting of an Award;

 

	
“Structural Change”

	
(a) An acquisition of all or substantially all of the Company’s assets; or

(b) A merger or spin-off or an arrangement which economically amounts to a merger or a spin-off , under which the Company is not the surviving entity; or

(c) A sale or a series of sales of ordinary shares constituting at least 50% of the Company’s capital or at least 50% of the voting power, which causes the delisting of the Company form NASDAQ Global Market;

 

	
“Subsidiary”

 

	
Any entity in which the Company holds more than 50% of the share capital, or over 50% of the voting rights;

 

 

  

2

  

 

	
“Successor Company”

	
Shall mean any entity with or into which the Company merged, or to which certain operations or certain assets of the Company were transferred, or which purchased substantially all the Company’s assets or ordinary share, provided that the Company is not the surviving entity;

 

	
“Tax”

	
Any applicable tax and other compulsory payments such as social security and health tax contributions under any applicable law;

 

	
“Termination”

 

	
(1) For an Employee, the interruption or termination of service as an Employee, and (2) for Consultants, the interruption, expiration, or termination of such person’s consulting or advisory relationship with a Group Company, or the occurrence of any termination event as set forth in such person’s Award Agreement; 

 

For the purpose of this plan the following shall not be considered as Termination (i) for an Employee- annual leave, sick leave, maternity leave, infant care leave, medical emergency leave, military leave, or any other leave of absence authorized in writing by the Board, or a transfer of an Employee from a Group Company or vice versa; and (ii) for a Consultant- any temporary interruption in such person’s availability to provide services to a Group Company, which has been authorized in writing by the engaging Company’s board prior to its commencement;

 

	
“Termination Date”

	
With regard to Employees, the earlier of (i) the date on which the employment relations between an Employee and a Group Company have been Terminated, for any reason whatsoever; or (ii) 120 days following the date on which a notice regarding such Termination was sent by a Group Company, or by the Employee, to the other party;

 

With regard to Consultants, the earlier of (i) the date of Termination of the agreement between the Consultant and a Group Company; or (ii) 120 days following the date on which a notice regarding such Termination was sent by a Group Company, or by the Consultant, to the other party;

 

Notwithstanding the foregoing, if the termination of employment or provision of services is due to, or connected with, one of the following instances, the Termination Date shall be the date on which a notice regarding such Termination was sent by a Group Company, or by the Employee or Consultant, as the case may be, to the other party. The said instances are as follows:

(i)     The Participant commits a criminal offense (whether against a Group Company or any other person or entity);

(ii)    The Participant is dishonest or breaches his fiduciary duties or duty of loyalty towards Group Company;

(iii)   The Participant intentionally or recklessly damages a Group Company’s property and/or good name and/or business;

(iv)   The Participant is grossly negligent in fulfilling his duties towards a Group Company;

(v)    The Participant deviates intentionally in a  material way from his authority and/or instructions given to him by the Group Company's competent organs

(vi)   The Participant breaches intentionally in a material way the terms of his employment or consultancy agreement, or other agreement with the Group Company.

 

	
“Transfer”

	
With respect to Awards or Shares – the sale, assignment, transfer, pledge, mortgage or granting of any right to a third party thereto;

 

	
“Trustee”

	
Any trustee appointed by the Company, in accordance with Section 102 and approved by the Israeli Tax Authority;

 

	
“Vesting Date”

	
Each date upon which the Award is converted into Shares, as determined in the Award Agreement;

  

3

  

 

	
4. 

	
ADMINISTRATION OF THE PLAN

	
  

	
 

	
  

	
4.1

	
The Board shall have the power to administer the Plan.

	
  

	
4.2

	
Subject to the provisions of the Plan, the Board shall have the authority, at its discretion: (i) to grant Awards to Participants; (ii) to determine the terms and provisions of each Award granted (which need not be identical), including, but not limited to, the number of Awards to be granted to each Participant, provisions concerning the time and the extent to which the Awards may Vest, the underlying Shares sold and the nature and duration of restrictions as to the Transferability of Awards and/or Shares; (iii) to amend, modify or supplement the terms of each outstanding Award; (iv) to interpret the Plan; (v) to prescribe, amend, and rescind rules and regulations relating to the Plan, including the form of Award Agreements; (vi) to authorize conversion or substitution under the Plan of any or all Awards or Shares and to cancel or suspend Awards, as necessary, provided the material interests of the Participants are not harmed; (vii) to accelerate or defer (with the consent of the Participant) the right of a Participant to receive Shares under any previously granted Awards; (viii) to authorize any person to execute on behalf of the Company any instrument required to effectuate the grant of an Award previously granted by the Board; and (ix) to make all other determinations deemed necessary or advisable for the administration of the Plan.

	
  

	
4.3

	
This Plan shall apply to grants of Awards made following the adoption of this Plan by the Board.

	
  

	
4.4

	
All decisions, determinations, and interpretations of the Board shall be final and binding on all Participants unless otherwise determined by the Board.

  

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 5.   

	
ELIGIBILITY

Awards may be granted to Participants and to persons who have entered into an employment or consultancy agreement with a Group Company; An Approved Award, granted under Section 102, shall only be granted to Employees who are Israeli residents for tax purposes and who at the time of grant, or immediately thereafter are not a holder of a “controlling interest” in the Company, as such term is defined in Section 32(9) of the Ordinance.

	
6.

	
SHARES RESERVED FOR THE PLAN

	
  

	
6.1

	
Subject to Section 13.1 of the Plan, the maximum aggregate number of Shares that may be subject to Awards under the Plan, subject to any adjustment made to the share capital of the Company is one million and three hundred and fifty thousand (1,350,000) ordinary shares of the Company. The Shares may be authorized but unissued ordinary shares, or reacquired ordinary shares of the Company.  If an Award should expire for any reason without having Vested in full, Shares that were subject thereto shall, unless the Plan shall have been terminated, become available for future grant under the Plan.  In addition, any Shares which are retained by the Company upon Vesting of an Award in order to satisfy the Purchase Price for such Award or any withholding taxes due with respect to such Vesting shall be treated as not issued and shall continue to be available under the Plan.

	
  

	
6.2

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

	
  

	
6.3

	
The Shares constitute part of the ordinary shares of the Company, and they shall have equal rights for all intents and purposes as the rights attached to the ordinary shares of the Company, subject to the provisions of this Plan and an Award Agreement. Any change of the Company’s Articles of Association, which may change the rights attached to the Company’s ordinary shares, shall also apply to the Shares, and the provisions hereof shall apply with the necessary modifications arising from any such change.

	
  

	
6.4

	
The grant of Awards under this Plan shall not restrict the Company in any way regarding future creation of additional and/or other classes of shares, including classes of shares, which may in any manner be preferred over the currently existing ordinary shares which are offered to Participants under this Plan. The grant of Awards under this Plan shall not entitle any Participant to receive any compensation in the event of any change of the Company’s capital.

	
7.

	
TERMS AND CONDITIONS OF THE AWARDS

	
  

	
7.1

	
Grant

	
  

	
7.1.1

	
The Board shall offer from time to time to Participants, Awards on a personal basis. A written Award Agreement between the Company and the Participant, in such form as the Board shall from time to time approve, shall evidence the Awards granted pursuant to the Plan. Each Award Agreement shall state, among other matters, the number of Awards granted, the Vesting Dates and such other terms and conditions as the Board at its discretion may prescribe, provided that they are consistent with this Plan.

  

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7.1.2

	
Approved Awards shall be subject to the Trustee’s trusteeship, as provided in Section 10 below, and to the submission of the Plan for approval by the Israeli Tax Authority.

	
  

	
7.2

	
Vesting. The Board shall set vesting criteria at its discretion, which, depending on the extent to which the criteria are met, will determine the number of Shares the Participant will receive.  The Board may set vesting criteria based upon the achievement of Company-wide, business unit, or individual goals (including, but not limited to, continued employment), or any other basis determined by the Board at its discretion. The vesting conditions and schedule shall be set in the applicable Award Agreement, however, unless otherwise determined, the Awards shall vest over 3 years in equal installments, on a yearly basis starting on the date of grant.

	
  

	
7.3

	
Earning Shares. Upon meeting the applicable vesting criteria, the Participant shall be required to pay the Purchase Price of the Vested Awards in order to be entitled to receive the amount of Shares specified in the relevant Award Agreement. The issuance of Shares shall occur as soon as practicable after the payment of the Purchase Price.

	
  

	
7.4

	
Non Transferability of Awards. Unless otherwise determined by the Board, an Award  shall not be Transferable by the Participant other than by will or by the laws of descent. Awards and/or the Shares, or rights arising therefrom, shall not be subject to mortgage, attachment or other willful encumbrance, and no power of attorney shall be issued in respect thereof, whether such enter into force immediately or at a future date.

	
  

	
7.5

	
Dilution. The Shares, being part of the ordinary share capital of the Company, shall not be protected against dilution in any manner whatsoever, unless otherwise determined by the Board.

	
  

	
7.6

	
Dividend Rights. No Participant shall have any rights to receive dividends in respect of Shares, until such Shares are issued to the Participant or the Trustee. Following the issuance of the Shares, such Shares will entitle the Participant to receive any dividend, to which other holders of ordinary shares in the Company are entitled.

	
  

	 

	
  

	
7.7

	
One Time Benefit. The Awards and Shares are extraordinary, one-time benefits granted to the Participants, and are not and shall not be deemed a salary component for any purpose whatsoever, including in connection with calculating severance compensation under any applicable law.

	
  

	
7.8

	
Fractions. An Award may not be converted into a fraction of a Share. In lieu of issuing fractional Shares, on the vesting of a fraction of an Award, the Company shall convert any such fraction of an Award, which represents a right to receive 0.5 or more of a Share, to one Share and shall extinguish any such fraction of an Award, which represents a right to receive less than 0.5 of a Share without issuing any Shares.

	
  

	
7.9

	
Term. No full or partial Vesting of an Award shall be carried out following the Expiration Date of such Award.

	
8.

	
TERMINATION OF EMPLOYMENT OR ENGAGEMENT.

	
  

	
8.1

	
Unless otherwise determined by the Board, if a Participant’s employment or engagement with a Group Company is Terminated for any reason, any Award or portion thereof that has not Vested as of the Termination Date shall immediately expire on the Termination Date.

  

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8.2

	
No Participant shall be entitled to claim against a Group Company that he or she was prevented from continuing to Vest Awards as of the Termination Date. Such Participant shall not be entitled to any compensation in respect of the Awards which would have Vested had such Participant’s employment or engagement with a Group Company not been Terminated.

	
9.

	
NO RIGHT TO EMPLOYMENT, SERVICE OR SHARES

The grant of an Award or a Share under the Plan shall impose no obligation on a Group Company to continue the employment of any Employee or the engagement with any Consultant and shall not lessen or affect the Group Company's right to Terminate the employment or service relationship of such Participant at any time and/or for any or no reason with or without cause.  No Participant or other person shall have any claim to be granted any Awards, and there is no obligation for uniformity of treatment of Participants, or holders or beneficiaries of Awards. The terms and conditions of Awards and the Board's determinations and interpretations with respect thereto need not be the same with respect to each Participant (whether or not such Participants are similarly situated).

 

Nothing contained in the Plan shall prevent the Company from adopting, adjusting or continuing in effect compensation arrangements, which may, but need not, provide for the grant of Awards or Shares.

	
10.

	
TRUST

	
  

	
10.1

	
Unless provided otherwise by the Board, Approved Awards granted under Section 102, and any Shares (including other Shares received subsequently following any realization of rights, such as bonus shares), shall be held in trust by the Trustee for the benefit of the Participant, in accordance with the provisions of Section 102.

	
  

	
10.2

	
The Approved Awards and Shares shall not be released from the trust nor shall they be sold, unless the Company and the Trustee are satisfied that the full amounts of Tax due have been paid or will be paid.

	
  

	
10.3

	
Subject to the provisions of Section 102, a Participant shall not sell or release from trust any Approved Award and/or Share received from an Approved Award and/or any Share received subsequently following any realization of rights, including without limitation, bonus shares, until the lapse of the Holding Period. Notwithstanding the above, if any such sale or release occurs during the Holding Period, the sanctions under Section 102 shall apply to and shall be borne by such Participant.

	
  

	
10.4

	
As long as the Shares are held by the Trustee for the benefit of the Participant, all rights of the Participant over the Shares cannot be Transferred other than by will or the laws of decent and distribution.

	
  

	
10.5

	
Without derogating from the aforementioned, the Board shall have the authority to determine the specific procedures and conditions of the trusteeship with the Trustee in a separate agreement between the Company and the Trustee.

  

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11.

	
ADJUSTEMENTS TO THE SHARES SUBJECT TO THE PLAN

	
  

	
11.1

	
Adjustment. If the ordinary share capital of the Company shall at any time be changed or exchanged by declaration of a stock dividend, stock split, combination or exchange of shares, recapitalization, or any other like event by or of the Company effected without receipt of consideration by the Company, and as often as the same shall occur, then the number, class and kind of the underlying Shares and the Purchase Price (if applicable) of the Awards subject to the Plan shall be appropriately and equitably adjusted so as to maintain the proportionate number of Shares, provided, however, that no adjustment shall be made by reason of the distribution of subscription rights (rights offering) on outstanding ordinary share. Upon occurrence of any of the foregoing, the class and aggregate number of underlying Shares of the Awards, issuable pursuant to the Plan, shall be appropriately adjusted by the Board, whose determination in that respect shall be final, binding, and conclusive. Except as expressly provided herein, no issuance by the Company of shares of any class, or securities convertible into shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares underlying an Award.

	
  

	
11.2

	
Changes to the Plan. The Board shall be entitled, from time to time, to update and/or change the terms of this Plan, in whole or in part, at its sole discretion, provided that in the Board’s opinion such a change shall not materially derogate from the rights attached to the Awards and/or Shares already issued under this Plan, unless mutually agreed otherwise between the Participant and the Company. The Board shall be entitled to terminate this Plan, at any time provided that such termination shall not materially affect the rights of Participants, to whom Awards have already been granted.

	
  

	
11.3

	
Structural Change. Without derogating from the Board’s general powers under the Plan to determine the treatment of the Awards and Shares upon a Structural Change, in the event of any Structural Change, the Board shall be entitled (but not obliged), at its sole discretion, to: (i) provide for an assumption or exchange of Awards and/or Shares for awards and/or shares and/or other securities or rights of the Successor Company; and/or (ii) provide for an exchange of Awards or Shares for a monetary compensation; and/or (iii) determine that all unvested Awards shall terminate on the date of such Structural Change. In the case of assumption and/or substitution of Awards, appropriate adjustments shall be made so as to reflect such action and all other terms and conditions of the Award Agreements shall remain unchanged, including but not limited to the vesting schedule, all subject to the determination of the Board, which determination shall be at its sole discretion and final. The grant of any substitutes for the Awards and/or Shares to Participants further to a Structural Change, as provided in sub-clauses (i) and (ii), shall be considered as full compliance with the terms of this Plan. The value of the exchanged Awards and/or Shares pursuant to this section 11.3 shall be determined in good faith solely by the Board and its decision shall be final and binding on all the Participants.

	
  

	
For the purposes of this section 11.3, Awards shall be considered assumed or substituted if, following the Structural Change, the Awards confer the right to purchase or receive, for each underlying Share immediately prior to the Structural Change, the consideration (whether shares, options, cash, or other securities or property) received in the Structural Change by holders of ordinary shares held on the effective date of the Structural Change (and if such holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding ordinary share capital); provided, however, that if such consideration received in the Structural Change is not solely ordinary shares (or their equivalent) of the Successor Company or its parent or subsidiary, the Board may, with the consent of the Successor Company, provide for the consideration received in the Structural Change to be solely ordinary shares (or their equivalent) of the Successor Company or its parent or subsidiary equal in value to the per Share consideration received by holders of a majority of the outstanding ordinary share capital in the Structural Change; and provided further that the Board may determine, at its discretion, that in lieu of such assumption or substitution of Awards for awards of the Successor Company or its parent or subsidiary, such Awards will be substituted for any other type of asset or property including cash which is fair under the circumstances.

  

8

  

 

	
  

	
Without derogating from the above, in the event of a sale of all or substantially all of the Company’s share capital, the Board shall be entitled, at its sole discretion, to require the Participants to sell all of their Shares on the same terms and conditions as applicable to the other shareholders selling their Company’s ordinary shares as part of the Structural Change. Each Participant acknowledges and agrees that the Board shall be entitled to authorize any one of its members to sign share transfer deeds in customary form in respect of the Shares held by such Participant and that such share transfer deed shall bind the Participant.

	
  

	
11.4

	
Liquidation. In the event of the proposed dissolution or liquidation of the Company, Awards will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Board. 

	
12.

	
TAXES AND WITHHOLDING TAX

	
  

	 

	
  

	
 12.1

	
Unless provided otherwise by the Board, Approved Awards allotted to Israeli Employees, who are not holders of “controlling interest” in the Company, as provided in Section 5 above, shall be subject to the provisions of Section 102, as shall apply from time to time, and the regulations promulgated thereunder.

Any Award, allotted to an Israeli Employee who holds a “controlling interest” in the Company, or to a non- Israeli Employee, or to a Consultant, shall not qualify for any beneficial tax arrangement under Section 102 and shall be subject to any applicable tax law.

	
  

	
12.2

	
Any Tax imposed in respect of the Awards and/or Shares, including, but not limited to, the grant of Awards, and/or the Vesting of an Award, and/or issuance of Shares, and/or the Transfer, waiver, or expiration of Awards and/or Shares, and/or the sale of Shares, shall be borne solely by the Participants, and in the event of death, by their heirs. The Group, the Trustee or anyone on their behalf shall not be required to bear the aforementioned Taxes, directly or indirectly, nor shall they be required to gross up such Tax in the Participants’ salaries or remuneration. The applicable Tax shall be deducted from the proceeds of sale of Shares or shall be paid to the Group Company or the Trustee by the Participants. Without derogating from the aforementioned, a Group Company or the Trustee shall be entitled to withhold any Taxes according to the requirements of any applicable laws, rules, and regulations.

  

9

  

 

	
  

	
12.3

	
The Company's or Trustee's obligation to deliver Shares upon Vesting of an Award or to sell or Transfer Shares is subject to payment (or provision for payment satisfactory to the Board) by the Participant of all Taxes due under any applicable law.

	
  

	
12.4

	
The Participants shall indemnify any Group Company and/or the Trustee, immediately upon request of the Group Company, for any Tax (including interest and/or fines of any type and/or linkage differentials in respect of Tax and/or withholding Tax) for which the Participant is liable under any applicable law or under the Plan, and which was paid by a Group Company or the Trustee, or which a Group Company or the Trustee are required to pay. A Group Company or the Trustee may exercise such indemnification by deducting the amount subject to indemnification from the Participants’ salaries or remunerations or proceeds of sale of any other Shares.

	
  

	
12.5

	
Should the Awards or Shares that were allotted pursuant to Section 102 be Transferred by power of a last will or under law, the provisions of Section 102 shall apply to the heirs or transferees of the deceased Participant.

	
  

	
12.6

	
In respect to Awards which are not Approved Awards, if the Participant is Terminated, the Participant shall extend to the Company a security or guarantee for the payment of Tax due at the time of sale of the Shares, if such Tax should be withheld by the Company or a Group Company according to the Ordinance or any other applicable law.

 

	
13.

	
EFFECTIVE DATE AND DURATION OF THE PLAN

	
  

	
13.1

	
The Plan shall be effective as of the day it was adopted by the Board and shall terminate at the end of ten (10) years from such day of adoption.

	
  

	
13.2

	
The Company shall obtain the approval of the Board for the adoption of this Plan or for any amendment to this Plan. The Company’s counsel notified the NASDAQ Stock Market that it follows Israeli law and practice in lieu of the requirements specified in NASDAQ Marketplace Rule requiring shareholders approval for the establishment of this plan.

	
  

	
13.3

	
Termination of the Plan shall not affect the Board’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

	
14.

	
SUCCESSORS AND ASSIGNS

The Plan and any Award granted thereafter shall be binding on all successors and assigns of the Company and a Participant, including, without limitation, the estate of such Participant and the executor, administrator or trustee of such estate, or any receiver or trustee in bankruptcy or representative of the Participant’s creditors.

	
15.

	
MISCELLANEOUS

	
  

	
15.1

	
Notices. Notices and requests regarding this Plan shall be sent in writing by registered mail or by courier to the addresses of the Company and the Participant as follows: if to the Company: 8 Maskit St., Herzlia, Israel 46120; if to the Participant - to the Participant’s address, as registered in the Company’s registries.

 

  

10

  

 

Such notices shall be deemed received at the addressee as follows: if sent by registered mail - within five (5) business days following their being deposited for mailing at a post office in any jurisdiction, and if hand-delivered - on the day of delivery.

	
  

	
15.2

	
This Plan (together with any Award Agreement) constitutes the full agreement and/or understanding between the Group and the Participants in connection with the grant of Awards to Participants. Any representation and/or promise and/or undertaking made and/or given by a Group Company or by whomsoever on their behalf, which have not been explicitly expressed herein, shall have no force and effect.

	
  

	
15.3

	
Choice of law. Unless otherwise specified in a specific Award Agreement, this Plan shall be governed by and construed in accordance with the laws of the State of Israel, without giving effect to principles of conflicts of law. The competent courts of Tel-Aviv, Israel shall have exclusive jurisdiction to hear all disputes arising in connection with this Plan.

* * * * *

Plan adopted by the Board of Directors: ____________

 

11

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