Document:

Exhibit 10.23

 

TREDEGAR CORPORATION

 

NOTICE OF STOCK UNIT AWARD

 

You have been granted the following Stock Unit Award by the Executive Compensation Committee of the Board of Directors of Tredegar Corporation ("Tredegar"): 

 

	
            Name of Participant:
 	
             
 
	
             
 	
             
 
	
            Date of Grant:
 	
             
 
	
             
 	
             
 
	
            Number of Stock Units:
 	
             
 
	
             
 	
             
 
	
            Vesting:
 	
            The requirements for earning the award and vesting in the shares of Common Stock issued in settlement of the award are set forth in the attached Stock Unit Award Terms and Conditions.
 
	
             
 	
             
 
	
            Expiration Date:
 	
            None.
 
	
             
 	
             
 
	
            Transferability:
 	
            None; other than by will or the laws of descent and distribution.
 
	
             
 	
             
 

 

In addition to the foregoing terms, your Stock Unit Award is subject to all of the terms and conditions contained in the attached Stock Unit Award Terms and Conditions which are incorporated in this Notice of Stock Unit Award by this reference.  If any provision of this Notice of Stock Unit Award is inconsistent with the aforementioned Stock Unit Award Terms and Conditions, the Stock Unit Award Terms and Conditions will control.

 

Please acknowledge your acceptance of this Stock Unit Award and the attached Stock Unit Award Terms and Conditions by signing and returning one copy of this Notice of Stock Award to Pat Thomas, Tredegar Corporation, 1100 Boulders Parkway, Richmond, Virginia, 23225.

 

	
             
 	
            TREDEGAR CORPORATION
 
	
             
 	
             
 
	
             
 	
             
 
	
             
 	
            By:_________________________________
 
	
             
 	
             
 
	
             
 	
             
 
	
             
 	
            ____________________________________
 
	
             
 	
            Participant
 
	
             
 	
             
 
	
             
 	
            Date:_______________________________
 

 

 

 

TREDEGAR CORPORATION

 

	
             
 	
            STOCK UNIT AWARD TERMS AND CONDITIONS
 

 

THESE STOCK UNIT AWARD TERMS AND CONDITIONS (“Terms and Conditions”) effective as of the ____ of ____________, 2007, govern the Stock Unit Award made by Tredegar Corporation, a Virginia corporation (the “Company”), to the participant (the “Participant”) named in the Notice of Stock Unit Award to which these Terms and Conditions are attached (the “Grant Notice”), and are made in accordance with and subject to the provisions of the Company's 2004 Equity Incentive Plan (the “Plan”).  A copy of the Plan has been made available to Participant.  All terms used in these Terms and Conditions that are defined in the Plan have the same meaning given them in the Plan.

 

1.          Grant of Stock Unit Award.  In accordance with the Plan, and effective as of the Date of Grant specified in the Grant Notice (the “Date of Grant”), the Company granted to the Participant, subject to the terms and conditions of the Plan and these Terms and Conditions, the number of Stock Units specified in the Grant Notice (the “Stock Units”).  The Participant will earn the Stock Units to the extent that the requirements of Section 2 are satisfied.  The Participant’s interest in the Stock Units that are earned in accordance with Section 2 will Vest, i.e., will become nonforfeitable, to the extent that the requirements of Section 3 are satisfied.  The Company will issue shares of Common Stock in
accordance with Section 4 in settlement of the Stock Units, if any, that the Participant earns in accordance with Section 2 and that Vest in accordance with Section 3.

 

2.          Earning Stock Units.  This Section 2 determines the number of Stock Units that the Participant earns under these Terms and Conditions.

 

(a)      Performance Criteria.  The Participant will earn Stock Units based on the EPA for calendar year 2008 as follows:

 

	
             
 	
            2008_________ EPA
 	
            Stock Units Earned
 
	
             
 	
             
 	
             
 
	
             
 	
            $            (Threshold)
 	
             
 
	
             
 	
            $            (Midpoint)
 	
             
 
	
             
 	
            $            or more (Maximum)
 	
             
 

 

If the EPA for calendar year 2008 is greater than the Threshold but less than the Midpoint, then the additional number of Stock Units earned by the Participant in excess of _____ Stock Units will be determined based on a straight line interpolation of the EPA in excess of the Threshold.  If the EPA for calendar year 2008 is greater than the Midpoint but less than the Maximum, then the additional number of Stock Units earned by the Participant in excess of _____ Stock Units will be determined based on a straight line interpolation of the EPA in excess of the Midpoint.

 

 

(b)      Effect of Termination During 2007.  Except as provided in subparagraph (e), no Stock Units will be earned if the Participant’s employment with, and service to, the Company and its Affiliates terminates or is terminated before January 1, 2008.

 

(c)      Effect of Termination During 2008.  Except as provided in subparagraphs (d) and (e), no Stock Units will be earned if the Participant’s employment with, and service to, the Company and its Affiliates terminates or is terminated before January 1, 2009.

 

(d)      Disability Termination or Death.  This subparagraph (d) applies if the Participant’s employment with, and service to, the Company and its Affiliates terminates after December 31, 2007 and before June 30, 2009, on account of the Participant’s permanent and total disability (as defined in Section 22(e)(3) of the Code) or death.  In that event, the number of Stock Units earned by the Participant shall equal the number determined in accordance with subparagraph (a) multiplied by a fraction.  The numerator of the fraction shall be the number of whole months that the Participant was employed by, or providing services to, the Company or an Affiliate during 2008 (including any period that the Participant was absent from work for illness, injury or short term
disability prior to termination of employment) and the denominator shall be twelve.

 

(e)      Change in Control.  The Participant will earn _____ Stock Units if there is a Change in Control before January 1, 2009.

 

3.          Vesting in Stock Units.  The Participant’s interest in the Stock Units that are earned in accordance with Section 2 shall Vest as provided in this Section 3.

 

(a)      Continued Employment until June 30, 2009.  The Participant’s interest in all of the Stock Units that are earned in accordance with Section 2 shall Vest on June 30, 2009, if the Participant’s employment with, and service to, the Company and its Affiliates is continuous from the Date of Grant until June 30, 2009.  

 

(b)      Disability Termination or Death.  The Participant’s interest in all of the Stock Units that are earned in accordance with Section 2 shall be Vested if the Participant’s employment with, and service to, the Company and its Affiliates is continuous from the Date of Grant until the termination of such employment on account of the Participant’s death or permanent and total disability (as defined in Section 22(e)(3) of the Code).

 

(c)      The Participant’s interest in all of the Stock Units earned pursuant to the provisions of Section 2(e) shall Vest on the Control Change Date if the Participant’s employment with the Company and its Affiliates is continuous from the Date of Grant until the Control Change Date.

 

4.           Settlement of Stock Units.  The Stock Units will be settled in accordance with this Section 4.

 

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(a)      Committee Certification.  As soon as practicable after 2008 (but no later than June 30, 2009), the Committee will determine the number of Stock Units that are earned under the provisions of Section 2 and that Vest under the provisions of Section 3.  The Committee’s determination shall be set forth in writing, as part of the minutes of a meeting of the Committee, by unanimous consent or otherwise.  Notwithstanding the preceding sentences, a written determination of the Committee shall not be required in the case of Stock Units that are earned and that Vest pursuant to the provisions of Section 2(e) and Section 3(c), respectively.

 

(b)      Issuance of Common Stock.  As soon as practicable after the Committee’s certification under subparagraph (a) (but no later than September 1, 2009), the Committee shall issue shares of Common Stock under the Plan in settlement of the Stock Units earned by the Participant.  The number of shares of Common Stock issued shall equal the number of Stock Units earned by the Participant under the provisions of Section 2 and that Vest under the provisions of Section 3.  Notwithstanding the preceding sentences, _____ shares of Common Stock shall be issued to the Participant on the Control Change Date if the Stock Units are earned pursuant to the provisions of Section 2(e).

 

(c)      Registration, etc.  Shares of Common Stock issued in settlement of the Stock Units shall be registered in the name of the Participant on the stock transfer books of the Company and may be evidenced by one or more certificates.  

 

(d)      Vesting in Common Stock.  The Participant’s interest in the shares of Common Stock issued in settlement of the Stock Units shall be immediately vested and transferable.

 

5.           Forfeiture.  Stock Units that are not earned in accordance with Section 2 shall be forfeited.  Stock Units that are earned in accordance with Section 2 but that do not Vest in accordance with Section 3 shall be forfeited.

 

6.           Nontransferability.  The Stock Units are nontransferable except by will or by the laws of descent and distribution.  

 

7.           Shareholder Rights.  The Participant shall not have any rights as a shareholder of the Company with respect to the Stock Units.  Upon the issuance of shares of Common Stock in settlement of the Stock Units, the Participant shall have all of the rights of a shareholder of the Company with respect to those shares, including the right to vote the shares and to receive, free of all restrictions, all dividends on the shares.  

 

	
             
 	
            8.
 	
            Definitions.  The following definitions shall apply to these Terms and Conditions:
 

 

 (a)         Control Change Date means the date on which a Change in Control (as defined below) occurs.  If a Change in Control occurs on account of a series of transactions, the Control Change Date is the date of the last of such transactions.

 

	
             
 	
            (b)
 	
            Change in Control means the occurrence of any of the following events:
 

 

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 (1)         any Person or group (within the meaning of Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934, as amended) (other than a Person who is not an Acquiring Person), at any time becomes the Beneficial Owner of 50% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Voting Securities"), other than (i) through an acquisition of Voting Securities directly from the Company, (ii) as a result of the Company's repurchase of Voting Securities if, thereafter, such Beneficial Owner purchases no additional Voting Securities, or (iii) pursuant to a Business Combination (as defined below) that does not
constitute a Change in Control pursuant to subparagraph 8(b)(3) below;

 

(2)     Continuing Directors cease to constitute a majority of the members of the Board other than pursuant to a Business Combination that does not constitute a Change in Control pursuant to subparagraph 8(b)(3) below;

 

(3)     consummation of a reorganization,
merger, share exchange or consolidation (a "Business Combination"), in each
case, unless immediately following such Business Combination, (i) all or
substantially all of the Persons who were the Beneficial Owners, respectively,
of the Common Stock and Voting Securities outstanding immediately prior to such
Business Combination Beneficially Own more than 80% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns the Company through one or more Subsidiaries) in
substantially the same proportions as their ownership, immediately prior to such
Business Combination, of the Common Stock and Voting Securities, as the case may
be, (ii) no Person (other than a Person who is not an Acquiring Person)
Beneficially Owns 50% or more of, respectively, the then outstanding shares of
common stock of the corporation resulting from such Business Combination or the
combined voting power of the then outstanding voting securities of such
corporation and (iii) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination are
Continuing Directors; or

 

(4)     the shareholders of the Company approve a complete liquidation or dissolution of the Company or the consummation of a sale or other disposition of all or substantially all of the assets of the Company, in each case, unless immediately following such liquidation, dissolution, sale or other disposition, (i) more than 80% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote 

 

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generally in the election of directors is then Beneficially Owned by all or substantially all of the Persons who were the Beneficial Owners, respectively, of the Common Stock and Voting Securities outstanding immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of such Common Stock and Voting Securities, as the case may be, (ii) less than 20% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then Beneficially Owned by any Person (other than any Person who is not an Acquiring Person), and (iii) at least a majority of the members of the board of directors of such corporation are
Continuing Directors immediately following such sale or disposition.

 

For purposes of the definition of Change of Control, the terms Acquiring Person, Beneficial Owner, Company, Continuing Director, and Person shall have the same definitions given them in the Rights Agreement between Tredegar Corporation and American Stock Transfer & Trust Company, dated as of June 30, 1999, as amended.

 

 (c)         EPA has the same meaning as set forth in the 2007 Incentive Plan for Executive Officers as in effect at the time the Stock Units were awarded; provided, however, that the Committee may adjust the performance criteria, the calculation of EPA or both on account of changes in generally accepted accounting principles; changes in the allocation of revenues, expenses, assets and liabilities between the Company or one or more of its business units; changes in tax law and other events or circumstances to assure that the performance criteria and calculation of EPA reflect an accurate assessment of the economic profit added of the Company or one or more of its business units.

 

9.           Withholding.  The Participant shall pay the Company any amount of taxes as may be necessary in the opinion of the Company to satisfy tax withholding required under the laws of any country, state, province, city or other jurisdiction, including but not limited to income taxes, capital gains taxes, transfer taxes, and social security contributions.  In lieu thereof, the Company shall have the right to retain, from the shares of Common Stock to be issued under Section 4, the number of shares of Common Stock with Fair Market Value equal to the minimum amount required to be withheld.  In any event, the Company shall have the right to deduct from all amounts paid to a Participant in cash (whether under the Plan or otherwise) any taxes required to be withheld. 

 

10.         No Right to Continued Employment.  The award of the Stock Units does not give Participant any right with respect to continuance of employment by the Company or an Affiliate, nor shall it interfere in any way with the right of the Company or an Affiliate to terminate his or her employment at any time.

 

11.         Change in Capital Structure.  The number of Stock Units and the performance criteria in Section 2 shall be adjusted as the Committee determines is equitably required in the event 

 

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the Company effects one or more stock dividends, stock split-ups subdivisions or consolidations of shares, other similar changes in capitalization or such other events as are described in the Plan.

 

12.         Governing Law.  These Terms and Conditions and the Grant Notice shall be governed by the laws of the Commonwealth of Virginia.

 

13.         Conflicts.  In the event of any conflict between the provisions of the Plan as in effect on the Date of Grant and the provisions of these Terms and Conditions or the Grant Notice, the provisions of the Plan shall govern.  All references herein to the Plan shall mean the plan as in effect on the Date of Grant.

 

14.         Participant Bound by Plan.  Participant hereby acknowledges that a copy of the Plan has been made available to him or her and agrees to be bound by all the terms and provisions of the Plan.

 

15.         Binding Effect.  Subject to the limitations stated above and in the Plan, these Terms and Conditions and the Grant Notice shall be binding upon Participant and his or her successors in interest and the successors of the Company.

 

 

620-F

Exhibit 4.9  

[TRANSLATED FROM
HEBREW] 

TENANCY AGREEMENT  

Made and signed on Kibbutz Shamir on 8th March 2007 

	BETWEEN:  	KIBBUTZ
SHAMIR COOPERATIVE SOCIETY, REGISTERED SOCIETY 57-000272-5  

	 	
directly
and/or through a partnership fully owned by Kibbutz Shamir  

	 	
MP Upper Galilee 12135

	 	
(hereinafter referred to as “the Kibbutz”) 

of the one part  

	AND:  	SHAMIR
OPTICAL INDUSTRY LTD, PC 51-365956-5  

	 	
and/or
a corporation under its full or partial control  

	 	
of Kibbutz Shamir, MP Upper Galilee 12135

	 	
(hereinafter
referred to as “the Company”)  

of the other part 

	WHEREAS  	the
Kibbutz has development rights pursuant to a development contract of 19th February 2006
(hereinafter referred to as “the development contract”);  

	AND WHEREAS  	 at
the end of the development period as defined in the development contract, the area on
which the premises are built will be included in the lease of the Kibbutz block pursuant
to the lease of 27th December 1990;  

	AND WHEREAS  	
      correct as at the date hereof, the Kibbutz holds about 58% of the Company's shares; 

1

	AND WHEREAS 	 there
is an understanding between the parties regarding the principles of the tenancy agreement
in connection with the premises and a loan agreement pursuant whereto the Company
undertook to provide the Kibbutz with financing for the premises’construction on the
terms and conditions approved by the Company’s general meeting on 8th August 2005
(hereinafter referred to as “the existing tenancy principles” and
“the loan agreement”, respectively);  

	AND WHEREAS 	 the
parties wish, subject to fulfillment of the suspensory conditions detailed below and the
provisions of the law, to change the outline of the transaction between them, such that
the existing tenancy principles will be changed and the loan agreement will be
terminated, all the loan monies given to the Kibbutz to date will be returned to the
Company and in lieu thereof and at the same time this tenancy agreement will take effect;  

	AND WHEREAS 	 the
parties agree that on the area of the premises the Kibbutz will construct a building
adapted to the Company’s requirements in accordance with its demands as furnished to
the Kibbutz (hereinafter referred to as “the project”).  

ACCORDINGLY, IT IS
AGREED, PROVIDED AND WARRANTED BETWEEN THE PARTIES AS FOLLOWS: 

	1.  	Recitals
and definitions  

	 	1.1 	The
recitals and appendices hereto constitute an integral part hereof.

	 	1.2	
The terms and conditions of this agreement are subject to ILA’s decisions and the
terms and conditions of the lease as defined in clause 1.4 below, and in the event of any
contradiction the terms and conditions of the lease and/or ILA’s decisions shall
prevail over the terms and conditions of this agreement.

	 	1.3	
The Company is aware that in relation to the lease, an act or omission of the Company in
the course of the tenancy shall be deemed, vis-à-vis ILA, an act or omission of the
Kibbutz. The parties agree that the Kibbutz shall be liable for all the costs and/or fines
incurred and/or imposed by ILA, and that the Kibbutz shall be exclusively liable for doing
any act required, insofar as required, by ILA in order to enable the Company to continue
the tenancy pursuant hereto. If the Company is required by ILA to relocate the plant, the
Kibbutz undertakes to bear all the costs involved in the relocation of the Company’s
activity. All the aforesaid is subject to the Company not independently approaching ILA
but the Kibbutz, in writing, in any matter relating to the contractual relationship with
ILA.

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	 	1.4 	The
definitions herein:

	 	(a) 	“the
premises” – land of an area of 10,727 square meters           as detailed
in appendix “A” hereto, with everything built and           planted
thereon, inter alia  anything permanently attached to the land,
          including, but without derogating from the generality of the aforesaid, the
          building described in appendix “B” hereto;  

	 	(b) 	“the
building” – a built up area of about 9,103 square           meters
consisting of two floors and an interim level, divided into an entrance           floor
of 4,265 square meters, an interim level of 88 square meters, another           floor
(the first floor) of 4,666 square meters and sheds of an area of 84 square
          meters as detailed in appendix “B”, which is located on the
          land described in appendix “A”;  

	 	(c) 	“ILA” – the
Israel Land Administration;  

	 	(d) 	“the
lease” – the lease between ILA and the Kibbutz of           27th December
1990;  

	 	(e) 	“the
activity” – the development, manufacture, marketing           and sale of
lenses for glasses and of polycarbonate lenses for glasses and           ancillary and
other optical industry activity.  

	2.  	The
parties’contractual relationship  

	 	
The
Kibbutz hereby undertakes to rent out the premises to the Company and the Company hereby
undertakes to take the premises on rent from the Kibbutz, on the terms and conditions and
for the period set forth herein. 

	3.  	The
tenancy period  

	 	
The
tenancy period shall commence on receipt of a Form 4 for the building and/or actual
occupation by the Company, whichever is earlier, and end on 30th November 2023
(hereinafter referred to as “the tenancy period”). 

	 	
During
the tenancy period, the Company shall have a right of reasonable use and passage in areas
of the Kibbutz that do not form part of the premises, insofar as required for the
activity. 

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	4.  	The
objects of the tenancy  

	 	         4.1 	The
 premises  are being  rented to the  Company  for the  object of  carrying  on the activity.

	 	4.2	
The Company may not use the premises or any part thereof, in any way, other than for the
objects of the tenancy as provided herein.

	5.  	The
rent  

	 	5.1	
In consideration for the tenancy, the Company shall pay the Kibbutz annual rent in a sum
equal to 10% of the actual cost to the Kibbutz of the building’s construction, as
submitted by the Kibbutz on completion of the construction and approved by the board of
directors of Shamir Special Optical Products Ltd, a fully owned subsidiary of the Company.
The elements of the construction cost are detailed in appendix
“C” hereto.

	 	
The
rent as set forth in this clause 5 is herein referred to “the rent”.  

	 	5.2	
The annual rent shall be paid in shekels at the representative rate of the dollar, as
published at 12:00 on the first day of the quarter to which the charge relates, together
with statutory VAT, in four equal payments every three months in advance, against a tax
invoice from the Kibbutz to the Company or a company under its control, as directed by the
Company.

	 	5.3	
Without derogating from any plea and/or remedy available to the Kibbutz, any payment not
made by the Company on time shall bear default interest at the rate prevailing at such
time at Bank Leumi Le-Israel Ltd in respect of default payments. For the purposes of this
clause, a default of up to seven days in any payment by the Company shall not be deemed a
payment that was not made on time.

	6.  	The
use of the premises and the Company’s liability  

	 	6.1	
The Company undertakes to keep the premises in good and standard condition as customary
with owners who worry about their property and to make, at its expense, all the repairs
required to keep them in such condition. In addition, the Company undertakes to adopt all
the legal measures required to remove trespassers and nuisances. For the purpose of
protecting the Company’s rights of possession in the property pursuant hereto against
any third party, save for the Kibbutz and ILA or anyone representing them, the Company may
act as owner of the premises. The expenses involved in the Company’s said activity
and the consequences thereof shall be borne by it alone.

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	 	6.2	
During the tenancy period, the Company alone shall be liable for compliance with the
provisions of any law in connection with the possession and use of the premises and in
connection with the premises’ construction, and for the performance of any legal duty
applicable to the Kibbutz in respect of the premises – all at its expense and without
any right to demand reimbursement of the expenses from the Kibbutz.

	 	6.3	
The Company alone shall be liable vis-à-vis the Kibbutz, and vis-à-vis any
third party, for any damage occasioned to the person or property of any person (including
the Company) and for any compensation imposed in consequence or as a result of acts and/or
omissions on the premises or in connection with the possession and use thereof, and the
Kibbutz shall not bear any liability in connection therewith.

	 	6.4	
The Company undertakes to adopt all the cautionary measures necessary to prevent fires on
the premises, in accordance with the law.

	 	6.5	
For the purpose of the provisions of any law imposing duties on the owners of land or any
liability for any act or omission, including tort liability, the Company shall be deemed
the owner and it alone shall bear all the consequences and expenses involved in
non-compliance with such provision or such act or omission.

	 	
The
Kibbutz shall notify the Company of any claim and/or demand against it or against ILA on a
cause as aforesaid. 

	 	6.6	
The Company warrants and confirms that it has read and understood the lease between the
Kibbutz and ILA concerning the premises, and it undertakes not to do any act and/or
omission likely to cause a breach of the said lease and/or likely to impose any monetary
and/or other liability on the Kibbutz vis-à-vis ILA and/or vis-à-vis any
third party.

	7.  	Taxes
and compulsory payments  

	 	7.1	
As of the commencement of the tenancy period or from the date of receiving possession of
the premises – whichever is earlier – the Company alone shall be liable for all
municipal and government taxes, rates and the various compulsory payments and loans
applicable now or in future, during the tenancy period, to the owner or occupier of the
premises pursuant to any law, save for betterment levy in relation to any building
addition made on the premises after this date, which shall be borne by the Kibbutz alone.

	 	
Notwithstanding
the aforesaid, in the event of payments as aforesaid that apply to a period longer than
the tenancy period, the Company shall pay a pro rata part of such payments in an amount
equal to the ratio between the balance of the tenancy period and the balance of the lease
period, including the period of the option given to the Kibbutz pursuant to the lease. 

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	 	7.2	
The Company undertakes to pay due value added tax on each of the payments for which it is
liable pursuant hereto, at the VAT rate on the payment date.

	 	7.3	
The Company shall duly pay, itself or through a subsidiary, the electricity, water and
telephone accounts for the premises, directly or through the Kibbutz, in the
Company’s exclusive discretion.

	8.  	Construction
and changes to the building and the premises’          development

	 	         8.1 	Improvements
to the building and development works on the premises 

	 	
With
regard to changes in the casing of the building as defined herein (herein referred to as
“improvements to the building”) and/or landscape and functional
development works on the area of the premises that do not require building permits
(hereinafter referred to as “development works”), the Company may execute
them in its discretion, subject to any law, after receiving the Kibbutz’s prior
written approval. The Company alone shall bear all the expenses directly or indirectly
deriving from the improvements to the building and/or the development works, as aforesaid. 

	 	8.2 	Additional
construction 

	 	
The
Company may not carry on any construction and/or activity on the area of the premises
(including the building) for which a building permit is required (hereinafter referred to
as “additional construction”), without the prior written consent of the
Kibbutz. The Kibbutz undertakes not to refuse such construction and changes except on
reasonable grounds and subject to the lease between the Kibbutz and ILA. The Kibbutz may
make demand of the Company to cancel and remove any change made on the premises without
its consent as aforesaid. 

	 	8.3	
The parties agree to act in good faith in order to reach a consensus concerning any
request of the Company for additional construction, including with regard to the financing
of the additional construction, the rent deriving therefrom and the terms for the payment
thereof, the Kibbutz being given a right of pre-emption to execute the construction,
provided that its offer equals the market prices for the required work.

	 	
In
any event, any addition and/or change made on the premises shall be the exclusive property
of the Kibbutz and the Company shall not have any right of whatsoever type in such
addition and/or change, save for a user right pursuant to the terms and conditions of this
agreement. 

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	9.  	Transfer
of the right of tenancy and sub-tenancy  

	 	
The
Company may not transfer the right of tenancy to another and/or sub-let the premises or
any part thereof and/or allow another the use or possession of the premises or part
thereof, directly or indirectly, and/or allow anyone else to share the premises or part
thereof and/or any right deriving from the tenancy, save for the rental of the premises on
a sub-tenancy to a third party that is under the Company’s control (at least 50%),
directly or indirectly. Notwithstanding the aforesaid, the parties agree that the Company
shall at all times remain liable for all its obligations pursuant hereto. 

	 	
The
Kibbutz may transfer its rights and obligations pursuant hereto to another, without having
to obtain the Company’s consent, subject to the terms and conditions of the lease,
and the Company undertakes, in the event of a transfer as aforesaid, to perform all its
obligations pursuant hereto vis-à-vis the transferee. The exercise of this right of
the Kibbutz is subject to the Company’s rights pursuant hereto not being prejudiced. 

	10.  	Pledge
of the contractual rights  

	 	
The
Company may not pledge or charge its rights in the premises without the prior written
consent of the Kibbutz and ILA, and subject to any law. 

	11. 	 The
rights of ILA and the Kibbutz to do acts and inspect the premises

	 	11.1	
ILA and/or anyone on its behalf or with its leave and/or the Kibbutz and/or any person on
its behalf or with its leave may enter the premises at any reasonable time for the purpose
of examining the use of the premises in accordance with the provisions of the lease and
this agreement and for the purpose of passing pipes for water, canalization, sewage and
gas, telephone or electricity pillars, and the extension of telephone or electricity lines
through, inside or above the premises and/or for other like objects. The Company shall
allow ILA and/or any person on its behalf or with its leave and/or the Kibbutz and/or any
person on its behalf or with its leave to enter the premises and perform the aforesaid
examinations and the works. The Kibbutz undertakes to compensate the Company for any
damage occasioned to it as a result of the aforesaid examinations or works.

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	 	11.2	
It is hereby expressly agreed that the examinations mentioned in clause 11.1 above shall
not be deemed knowledge of ILA and/or the Kibbutz of any breach of this agreement, or
consent to such a breach, even if they did not take any steps by reason of such breach.

	12.  	Change
of the premises’ borders and final determination of the area           thereof

	 	12.1	
The Company acknowledges that the premises’ area and borders are not final and that
there might be changes therein as a result of planning changes pursuant to the Planning
and Building Law, 5725-1965, land settlement and the like.

	 	12.2	
The Company acknowledges that in consequence of measurement for registration purposes, it
might transpire that the area of the premises is smaller or bigger than the area specified
in appendix “A” hereto.

	 	12.3	
If as a result of changes as aforesaid in clause 12.1 above there is an increase or
decrease in the area of the premises and/or there are changes in the borders thereof and
if it transpires as aforesaid in clause 12.2 above that the area of the premises is
smaller or bigger than the area specified in appendix “A” hereto, the
Company undertakes:

	 	12.3.1 	to
agree to any change in the borders and/or area of the premises as arising in consequence
of the changes mentioned in clause 12.1 above;  

	 	12.3.2 	to
agree to any determination regarding the area of the premises made in consequence of a
measurement for registration purposes as mentioned in clause 12.2 above;  

	 	12.3.3 	to
deem the premises – with the new borders and area thereof – the subject of the
tenancy and to accept possession thereof.  

	 	12.4	
If the area of the premises changes in accordance with clauses 12.1 and 12.2 above, such
that the area at the Company’s disposal pursuant hereto is reduced or increased,
appendix “A” hereto shall be amended as obliged by the change.

	13.  	Early
termination of the tenancy agreement  

	 	13.1	
This agreement shall be brought to an end if the relevant directives of ILA, as published
from time to time, so oblige.

8

	 	13.2	
Notwithstanding the aforesaid, the Company may bring this agreement to an end at any time,
provided that: (a) it finds an alternative tenant in its stead, who assumes all the
Company’s obligations pursuant hereto vis-à-vis the Kibbutz; and (b) the
Kibbutz has given its prior consent to the alternative tenant’s identity. It is
expressed that the Kibbutz may not refuse to give its consent as aforesaid, on
unreasonable grounds. If the Kibbutz refuses to give its consent, it shall give written
reasons for its refusal.

	14.  	Remedies
for breach  

	 	14.1	
Without derogating from the right to other remedies pursuant to the law and this
agreement, in respect of the agreement’s breach, the parties agree that each of the
breaches detailed below in this clause 14.1 shall be deemed a fundamental breach of the
agreement in respect of which the Kibbutz shall be entitled to terminate the agreement, by
giving written notice thereof in a registered letter:

	 	                    14.1.1 	a
breach of any of the conditions in clauses 5, 8, 9 and 10; 

	 	14.1.2 	if
the Company, without the prior written consent of the Kibbutz, changes or causes a change
in the object or designation of the tenancy or makes any use of the premises that is
inconsistent with them.  

	 	         14.2 	On
the  agreement's  termination  by the  Kibbutz,  the  Company  shall be  liable  as follows:

	 	                    14.2.1 	to
 immediately  vacate the  premises  and return  them to the  Kibbutz as
                                provided in clause 15 below; 

	 	14.2.2 	to
pay the Kibbutz all the damages and losses occasioned to it in consequence of the
agreement’s breach and termination (including damage and loss in consequence of the
property’s rental to another).  

	 	14.3	
Without derogating from the aforesaid and from any remedy and relief available to the
Kibbutz at law, the Company undertakes to indemnify the Kibbutz for any expense, loss
and/or damage borne by the Kibbutz in consequence of a breach of the provisions of clause
6.6 above by the Company.

9

	15.  	The
premises’vacation  

	 	
At
the end of the tenancy period and/or at the end of the lease period pursuant to the lease
and/or on the early termination of the lease pursuant to the lease in respect of the
premises or any part thereof by reason of the lease’s termination or for any other
reason, as the case may be, whichever is earlier, the Company shall be liable to
immediately vacate the premises, or the part in respect of which the tenancy has come to
an end, of any person and thing in a manner enabling them to be returned to the Kibbutz
and/or ILA, as the case may be, in standard condition and free of any debt, attachment,
mortgage, charge or third party rights. If the Company does not perform its aforesaid
obligations, the Kibbutz or ILA may themselves do all the said acts at the Company’s
expense and charge it for all the expenses paid by them, together with interest and
linkage from the date of the expenditure until the date of actual payment. 

	16.  	Insurance  

	 	
The
company undertakes to insure the premises, at its expense, throughout the tenancy period
and to add the Kibbutz as beneficiary under the insurance policy. 

	 	
The
insurance shall include third party insurance and fire and natural damages insurance.  

	 	
The
Company undertakes to furnish the Kibbutz, on its demand, with a copy of the insurance
policies mentioned above within 30 days of its demand. 

	17.  	Suspensory
conditions  

	 	17.1	
The validity of this agreement is conditional on receipt of the necessary approvals of the
audit committee, board of directors and general meeting of the Company with the majority
required under the Company’s articles and the Companies Law, 5759-1999 for the
following transactions: (a) the early payment of the loan given to the Kibbutz by the
Company pursuant to the loan agreement and the loan agreement’s termination; (b) the
adoption of this tenancy agreement in a manner terminating and replacing the existing
tenancy principles and any other consent, understanding and/or agreement regarding the
premises’ rental by the Company.

	 	17.2	
If the aforesaid suspensory condition is not fulfilled by 31st December 2007, this
agreement shall be null and void, and the parties shall not have any plea, claim and/or
demand in relation hereto. For the avoidance of doubt, in the event of this
agreement’s rescission as aforesaid, the relations between the parties shall be
governed by the existing tenancy principles.

10

	18.  	Arbitration  

	 	18.1	
Disputes in connection with the implementation, interpretation or any other aspect of this
agreement shall be referred exclusively for the decision of a sole arbitrator, who shall
be appointed with the parties’ consent, and in the absence of consent – by the
President of the Auditors’ Council.

	 	18.2	
The arbitrator shall be subject to the substantive law and shall be liable to give written
grounds for his decision; however, he shall not be subject to the laws of evidence and the
civil procedure.

	19.  	Miscellaneous  

	 	19.1	
The Company warrants that it has examined the premises’ plans and found them suitable
for its requirements and it hereby waives any plea of non-conformity.

	 	         19.2 	The
clause  headings  herein do not constitute  part of the agreement and shall not be
                    used in its interpretation.

	 	19.3	
The Company undertakes to indemnify the Kibbutz for any amount the Kibbutz is required to
pay any person as compensation for damage, liability for which rests, pursuant to the
provisions of this agreement and/or law, with the Company.

	 	19.4 	The
parties’ addresses: 

	 	
the Company – Kibbutz Shamir, MP Upper Galilee 12135; 

	 	
the
Kibbutz – Kibbutz Shamir, MP Upper Galilee 12135.  

	 	
As witness the hands
of the parties: 	 

	
——————————————

The Company	
——————————————

The Kibbutz

11

APPENDIX “A”  

Description of the
land 

12

APPENDIX “B”  

Shamir Special Optical Products Ltd – division of the building’s areas

	 (as approved at the meeting of the board of directors 
of Shamir Special Optical Products Ltd
of 27th December 2006) 

	Division of the building's areas	Area in Sq.M.	Comments
	Entrance floor	4,625  	  Deviation of 1.5% from nominal planning
	Interim level	88  	  Level deriving from placing Mamad [dwelling protected space] on Mamad
	First floor	4,666  	  Closure of 1,022 square meters open space
	Sheds	84  	  Will be examined in future

Entrance floor  

	Production area	3,681.2  	  Including warehouses and maintenance
	Offices	203.8  	  Laboratory offices + offices linked to Mamad "A"
	Mamadim and staircases	140  	  Including service elevator
	Lobby and services	240  	  Entrance services, dressing room and production services
	Total 	4,265   	 

First floor  

	Offices	396  	 
	Dining room + kitchen	248  	 
	Technical systems	1,450  	 
	Covered balconies	63  	  Conference room
	Open balconies	131  	  In office area not including chillers (160 square meters)
	Mamad and staircases	90  	  Without lobby stairs
	Upper lobby and services	162  	  Including stairs from entrance floor
	Open spaces for future use	2,126  	 
	Total 	4,666   	 

13

APPENDIX “C”  

Elements of the
construction cost 

“The construction
cost” for the purpose of this agreement includes the cost of planning the
premises, legal costs, direct construction costs, the project’s administration costs,
fees and licensing of the building and the infrastructure, as approved from time to time
by the project’s administration and the Company’s board of directors and/or a
corporation under its control, and as submitted on the project’s completion by the
Kibbutz and approved by the board of directors of Shamir Special Optical Products Ltd, a
fully-owned subsidiary of the Company, and less value added tax and grants actually
received from the Investment Center, if any. 

14

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