Document:

Exhibit 4.6.2

 

	

 

TRANSLATION FROM HEBREW

 

 

THE BINDING VERSION IS THE HEBREW VERSION

 

 

Amendment and Supplement no. 1 to Indenture of March 7, 2012

 

Entered into and executed in Tel Aviv, on March 7, 2012

 

	  	
Between

 

	  
	  	
Cellcom Israel Ltd.

	  
	  	
of 10 HaGavish St., Netanya

	  
	  	
Telephone: 052-9989595

	  
	  	
Fax: 098607986

	  
	  	
(The “Company”)

	  
	  	  	
of the First Part;

	  	
And:

 

	  
	
Strauss Lazar Trust Company (1992) Ltd.

	  	
of 17 Yitzchak Sade St., Tel Aviv

	  
	  	
Telephone: 03-6237777

	  
	  	
Fax: 03-5613824

	  
	  	
(The “Trustee”)

	  
	  	  	
of the Second Part;

 

 

	
Whereas

	
An Indenture was entered into between the parties with respect to Series F Debentures, Series G Debentures and debentures of other series (if and insofar as it is determined in their first offering report that the provisions hereof shall apply thereto), which adopted all of the provisions of the indenture that was entered into between the Company and Hermetic Trust (1975) Ltd. on July 14, 2011 (the “Indenture” and the “First Indenture”, respectively); and

 

	
Whereas

	
The Company published a shelf prospectus dated July 18, 2011, under which it may issue in the future, inter alia, any of the Series F to O Series Debentures and of Series 1 to 6 Debentures, in the manner described in the prospectus as aforesaid and in the Indenture (the “Prospectus” or the “Shelf Prospectus”); and

 

	
Whereas

	
The parties wish to amend existing provisions and add further provisions to the provisions of the Indenture in the manner specified herein and to fill out the details of the Series F Debentures and the Series G Debentures as well as the details of the debentures of other series (if and insofar as it is determined in the first offering report of the debentures of the other series as aforesaid that the provisions hereof shall apply thereto) with the concrete terms, following the first offering of the Debentures, which shall be offered pursuant to the Shelf Prospectus by virtue of the Shelf Offering Report and as shall be specified in the Shelf Offering Report (the “Debentures” and the “Offering Report” or the “Shelf Offering Report”, as the case may be); and

 

 

 

  

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TRANSLATION FROM HEBREW

 

 

THE BINDING VERSION IS THE HEBREW VERSION

 

 

	
Whereas

	
The parties wish to determine that the Series F Debentures and the Series G Debentures as well as the debentures of other series (if and insofar as it is determined in the first offering report of the debentures of the other series as aforesaid that the provisions hereof shall apply thereto) which shall be issued by the Company, if and insofar issued, shall be listed for trade in the Tel Aviv Stock Exchange Ltd. (“TASE”); and

 

	
Whereas

	
The parties wish that this Amendment and Supplement shall constitute an integral part of the Indenture with respect to the Debentures;

 

 

Now therefore it has been agreed, declared and stipulated between the parties as follows:

 

	
1.

	
Interpretation and Definitions

 

	
  

	
1.1.

	
The preamble hereto constitutes an integral part hereof.

 

	
  

	
1.2.

	
The division hereof into sections as well as the provision of headings to sections, were done for purposes of convenience and as reference only, and may not be used for interpretation.

 

	
  

	
1.3.

	
The terms herein which were defined in the Indenture shall have the meaning ascribed thereto in the Indenture, unless explicitly stated otherwise.

 

	
2.

	
Term of the Indenture

 

	
  

	
2.1.

	
With respect to the Series F Debentures, the Series G Debentures and with respect to the debentures of other series (if and insofar as it is determined in the first offering report of the debentures of the other series as aforesaid that the provisions hereof shall apply thereto), the Indenture, with its annexes, shall continue to apply to the parties, and the provisions of the Indenture shall continue to bind the parties verbatim, unless and only insofar explicitly modified herein.

 

	
  

	
2.2.

	
If it is not determined in the Offering Report of the debentures of the other series as aforesaid that the provisions hereof shall apply thereto, the provisions of the Indenture shall apply and this Amendment and Supplement shall have no effect with respect thereto. For the avoidance of doubt, the provisions hereof shall not apply to debentures of other series issued by the Company prior to the date hereof.

 

	
3.

	
Amendment of Section 3 of the Indenture: Expansion of existing series and issuance and allocation of Debentures and additional securities

 

In Section 3, Section 3.4 shall be added to the Indenture as follows:

 

“Notwithstanding Section 3.1 of the Indenture above, an additional issuance of additional debentures by way of a series expansion shall be performed subject to the condition that the additional issuance of the debentures as aforesaid in itself (and no other cause or circumstance that existed prior to such issuance) 

 

 

  

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TRANSLATION FROM HEBREW

 

 

THE BINDING VERSION IS THE HEBREW VERSION

 

 

does not harm the rating of the that series of debentures as being prior to the additional issuance of the such debentures. For this purpose, harm to rating shall be deemed as a downgrade from the rating of the debentures prior to such expansion to the rating of +A (or an equivalent rating) or lower. In any case of additional issuance as aforesaid, the Company shall notify the Trustee in wiring, prior to the performance of the additional issuance as aforesaid, whether an additional issuance as aforesaid complies (or does not comply, as the case may be) with the aforesaid condition. To the notice to the Trustee the Company shall attach the rating agency’s notice. The Trustee shall rely on the rating agency’s notice and shall not require an additional examination. It is clarified that the Company’s undertaking as provided in this subsection shall only apply to additional issuances of Debentures by way of series expansion and not to the issuance of other series of debentures that exist in circulation at that time by way of series expansion or to the issuance of other new securities, whether or not rated”.

 

	
4.

	
Adding Section 5.1 of the Indenture – Additional Undertakings

 

Section 5 of the Indenture shall be followed by Sections 5.1 and 5.2 of the Indenture as follows:

 

“5.1           Additional Undertakings

 

The following undertakings of the Company shall apply:

 

	
  

	
(a)

	
Negative Pledge Covenant

 

Notwithstanding Section 5 of the Indenture, the Company undertakes that for as long as the Series F Debentures, the Series G Debentures, insofar as issued (as well as debentures of other series, if and insofar as it is determined in the first offering report of the debentures of the other series as aforesaid that the provisions hereof shall apply thereto) (in this Section 5.1, the “Debentures of the Relevant Series”), were not paid-up in full, the Company shall not create and shall not agree to create in favor of any third party any pledges of any rank on its assets for securing any debt or obligation, unless it applies to the Trustee in writing prior to the creation of the pledge and notified it thereof, and: (1) the consent of the Debenture Holders is obtained in advance, by a special resolution, permitting the Company to create the pledge in favor of the third party; or, alternatively – (2) the Company creates in favor of the Debenture Holders, simultaneously with the creation of the pledge in favor of the third party, a pledge of the same kind, on the same asset and equally ranking, for securing the full debt vis-à-vis the Holders, and that this pledge shall remain in force for as long as the Debentures of the Relevant Series were not paid-up in full. The Company shall deliver to the Trustee an original attorney’s certification whereby the pledge that the Company intends to create in favor of the holders of the Debentures of the Relevant Series complies with the aforesaid condition. The Company’s undertaking 

 

 

  

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TRANSLATION FROM HEBREW

 

 

THE BINDING VERSION IS THE HEBREW VERSION

 

 

as specified in this subsection above shall be referred to as the “Negative Pledge Covenant”.

 

Notwithstanding the aforesaid, it is clarified that a Negative Pledge Covenant shall not apply to any of any following actions and pledges:

 

	
  

	
(1)

	
The creation of a fixed pledge on assets that shall be purchased by the Company in the future (the “Aforesaid Assets”), if the obligations, for the securing of which these pledges were given, were created for the purchase of the Aforesaid Assets and/or for securing loans or credit that were received thereby for the payment of loans or credit received for the purchase of the Aforesaid Assets, provided that no pledges shall be created thereby on further assets beyond the Aforesaid Assets.

 

	
  

	
(2)

	
The creation of a fixed pledge on those parts of the Company’s assets that shall be expanded, for securing loans or credit received for the expansion of those parts.

 

	
  

	
(3)

	
A pledge on assets or rights that were (or shall be) purchased while being pledge prior to the purchase thereof.

 

	
  

	
(4)

	
Setoff rights, liens, collateral granted in the framework of transactions in financial assets (derivatives and so forth), which are granted to banks or financial institutions in the regular course of business therewith, as well as transfers to hedge exposure which are regulated in the Financial Assets Agreements Law, 5766-2006.

 

	
  

	
(5)

	
A symbolic pledge (such as the pledge of a deposit in a symbolic sum for securing debentures).

 

	
  

	
(6)

	
A pledge or lien created by law.

 

	
  

	
(7)

	
A pledge on assets which were sold by the Company, the full proceeds for which having been paid prior to the date of creating the pledge, but the registration of the change of ownership thereof in the purchaser’s name has not yet been completed.

 

In the framework of the annual reporting that shall be submitted to the Trustee as specified in Section 29.3 of the Indenture, the Company shall declare its compliance with this undertaking, such declaration being signed by a senior financial officer of the Company, specifying relevant explanations (if necessary), and shall attach thereto an updated pledge printout of the Company. The Trustee shall rely on the Company’s confirmation and shall not be required to perform a further examination.

 

 

  

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TRANSLATION FROM HEBREW

 

 

THE BINDING VERSION IS THE HEBREW VERSION

 

 

Whenever the Company creates in favor of the Holders a pledge as stated in subsection (2) at the beginning of this Section 5.1(a) above, the perfection of which pledge requires registration in the Pledge Registry kept by the Registrar of Companies, the pledge shall be deemed to be lawfully registered only after the Company submitted to the Trustee all of the following documents:

 

	
  

	
(1)

	
A pledge document, pursuant to which the pledge was registered in the Trustee’s favor, bearing an original signature of the Company and an original “received” stamp of the Registrar of Companies’ office, and dated no later than twenty one (21) days after the execution date of the pledge document;

 

	
  

	
(2)

	
Notice of Mortgage and Pledge Details (Form 10), bearing an original “received” stamp of the Registrar of Companies’ office and dated no later than twenty one (21) days after the creation of the notice;

 

	
  

	
(3)

	
An original pledge registration certificate from the Registrar of Companies;

 

	
  

	
(4)

	
A pledge printout from the Registrar of Companies, pursuant to which the aforesaid pledge was registered;

 

	
  

	
(5)

	
An affidavit of a senior officer of the Company whereby the pledge does not contradict or is not contrary to the Company’s obligations towards third parties, in a language that shall be acceptable to the Trustee at its reasonable discretion;

 

	
  

	
(6)

	
A legal opinion of an attorney on the Company’s behalf, inter alia, with respect to the nature of the rights of the pledging entity in the pledged asset, the manner of registering the pledge, its term, creditor ranking, legality and exercisability and enforceability against the pledging entity under the law applicable in Israel, in a language that shall be acceptable to the Trustee at its reasonable discretion;

 

It shall be clarified that the Company’s undertakings specified in this Section 5.1 shall apply to the Series F and G Debentures only (separately), if and insofar as issued. However, the Company may notify in the shelf offering report, in the framework of which other series are offered, that all or part of the undertakings specified in this section above shall apply to that series, as shall be specified in the relevant shelf offering report.

 

	
  

	
5.2

	
Limitations on the Performance of Distribution (as defined in the Companies Law)

 

	
  

	
Notwithstanding the provisions of Section 32 of the Indenture, the Company undertakes that as long as the Series F Debentures, the Series G Debentures, insofar as issued (as well as debentures of other series, 

 

 

  

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TRANSLATION FROM HEBREW

 

 

THE BINDING VERSION IS THE HEBREW VERSION

 

 

	
  

	
if and insofar as it is determined in their first offering report that the provisions hereof shall apply thereto), were not paid-up in full, the Company shall not be authorized to perform a distribution (as this term is defined in the Companies Law), including a distribution of dividend, to its shareholders in a sum exceeding 95% of the total sum of the Company’s profits as defined in Section 302 of the Companies Law of the Company (the “Maximum Distribution Rate”) on the date of the board of directors’ resolution on such distribution. Notwithstanding the aforesaid, if the Debt to EBITDA Ratio (as this term is defined in Section 8.1.16 of the Indenture) exceeds 3.5, the Maximum Distribution Rate shall stand at 85% of the total sum of the Company’s profits as defined in Section 302 of the Companies Law and if the Debt to EBITDA Ratio (as this term is defined in Section 8.1.16 of the Indenture) exceeds 4, the Maximum Distribution Rate shall stand at 70% of the total sum of the Company’s profits as defined in Section 302 of the Companies Law.

 

It is clarified that as of the date of execution hereof, except for the aforesaid undertaking, no limitation applies to the Company with respect to the performance of a distribution (as defined in Section 302 of the Companies Law) except as follows: (1) limitations that apply to the Company pursuant to the Companies Law with respect to the performance of a distribution; (2) limitations that arise from the Company’s license to provide cellular communication services as specified in the Company’s annual statement for 2010, which was filed on form F-20 (filed with the Securities Authority on March 15, 2011 (Ref. no. 2011-02-080886)) under Item 8 – Dividend Policy. It shall be clarified that the aforesaid limitations apply to the Company in connection with the performance of a distribution as of the date of execution hereof. In this context, it shall be noted that the scope of the limitations that apply to the Company as aforesaid, including the aforesaid limitations, may be adjusted and/or modified from time to time and the Company does not undertake to update the Debenture Holders and/or the Trustee specifically of such adjustment and/or modification. It shall be further clarified that the aforesaid description of the limitations does not create in any way an obligation of the Company vis-à-vis the Debenture Holders.

 

	
5.

	
Amendment of Section 6 of the Indenture - Purchase of Debentures by the Company and/or a subsidiary of the Company and/or a corporation controlled by the Company

 

In the second paragraph, the words “a subsidiary of the Company and/or a corporation controlled by the Company” shall be followed by the words: “as well as controlling shareholders of the Company and companies controlled by them”.

 

	
6.

	
Amendment of Section 7 of the Indenture - Early Redemption

 

The Company may, at its sole discretion, subject the Series F Debentures, the Series G Debentures, insofar as issued (as well as debentures of other series, if 

 

 

  

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TRANSLATION FROM HEBREW

 

 

THE BINDING VERSION IS THE HEBREW VERSION

 

 

and insofar as it is determined in their first offering report that the provisions hereof shall apply thereto) to early redemption, pursuant to the provisions of Section 7.2 of the Indenture.

 

In Section 7.2[a] of the Indenture, the sentence ending with the words “of the Relevant Series.” shall be followed by the sentence: “with respect to the Series F Debentures, the Series G Debentures, insofar as issued (as well as debentures of other series, if and insofar as it is determined in their first offering report that this provision shall apply thereto) the minimal amount of each early redemption shall not be lower than NIS 100 million par value of the Series F Debentures or the Series G Debentures or debentures of other series, if and insofar as it is determined in their first offering report that this provision shall apply thereto”.

 

In Section 7.2[c](3) of the Indenture, the words “plus interest which will be determined in the Initial Offering Report” shall be followed by “notwithstanding the aforesaid, with respect to the Series F Debentures, the Series G Debentures, insofar as issued (as well as debentures of other series, if and insofar as it is determined in their first offering report that these provisions shall apply thereto), plus interest at an annual rate of 1%, calculated on a daily basis based on a 365-day year”.

 

	
7.

	
Amendment of Section 8 of the Indenture - Acceleration

 

	
  

	
7.1.

	
In Section 8.1.1 of the Indenture, the words “forty five (45)” shall be replaced by “twenty one (21)”.

 

	
  

	
7.2.

	
In Sections 8.1.2 to 8.1.4 of the Indenture, the words “ninety (90) Business Days” shall be replaced by “forty five (45) or thirty (30) Business Days, according to the later”.

 

	
  

	
7.3.

	
In addition to the provisions of Section 7.2 above, the following changes shall be made in Section 8.1.2 of the Indenture: (1) the words “temporary liquidator” shall be followed by the words “or a permanent liquidator”; (2) the words “by a court” shall be followed by the words “or a temporary or permanent dissolution order had been issued”; (3) the words in brackets, “except for dissolution for reasons of merger”, shall be followed by the words “as defined below”; (4) at the end of the paragraph the following definition shall be added: “In this matter – “merger” shall mean a merger that was performed after obtaining a prior approval of the Debenture Holders of the Relevant Series, unless the Company or the surviving company, as the case may be, declared vis-à-vis the Debenture Holders of the Relevant Series, including via the Trustee, at least ten (10) Business Days prior to the merger date that there is no reasonable concern that following the aforesaid merger the Company or the surviving company, as the case may be, shall be unable to perform its undertakings vis-à-vis the Debenture Holders of the Relevant Series, or in case of a merger between companies from the Cellcom Group, as this term is defined in Section 8.1.9 of the Indenture, including the Company, in which case the declaration as 

 

 

 

  

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TRANSLATION FROM HEBREW

 

 

THE BINDING VERSION IS THE HEBREW VERSION

 

 

aforesaid or a prior approval of the Debenture Holders as aforesaid shall not be required”.

 

	
  

	
7.4.

	
In addition to the provisions of Section 7.2 above, Sections 8.1.3 and 8.1.4 of the Indenture shall be modified as follows: the latter part starting with the words “and such” and ending with the words “the Debentures of the Relevant Series” shall be deleted.

 

	
  

	
7.5.

	
Section 8.1.7 of the Indenture shall be followed by Sections 8.1.8 to 8.1.20 of the Indenture as follows:

 

	
  

	
“8.1.8

	
If a third party who is a lender of the Company (except for a supplier of the Company) accelerated debts of the Company thereto and the acceleration demand was not removed or stayed within 35 days after the acceleration date and/or the Company did not pay such debts within 35 days of their acceleration. The aforesaid in this subsection shall not apply if the total cumulative sum of the debts with respect to which the right for acceleration was created and exercised does not exceed NIS 150 million.

 

	
  

	
For this matter, it shall be clarified that non-recourse loans shall not be deemed for this matter as Company’s debts as aforesaid in this section.

 

	
  

	
8.1.9

	
If Cellcom Group ceased from operating in the cellular communication area and/or ceased from holding a license for grating cellular communication services for a period exceeding 60 (sixty) days. For this matter – “Cellcom Group” shall mean the Company and companies held thereby.

 

	
  

	
8.1.10

	
If trade in Debentures of the Relevant Series on TASE was suspended by TASE pursuant to the provisions of the Fourth Part of the TASE rules, except for suspension on grounds of the emergence of unclarity as provided in the Fourth Part of TASE rules, and forty five (45) days have passed since the date of suspension, during which the grounds for the suspension of trade were not cured or removed.

 

	
  

	
8.1.11

	
If the Company performs a distribution (as defined in the Companies Law) and such distribution exceeds the Maximum Distribution Rate.

 

	
  

	
8.1.12

	
With respect to the Series F Debentures and the Series G Debentures, as the case may be, if, for a period of 60 consecutive days, the Series F Debentures or the Series G Debentures, as the case may be, are not be rated by any rating agency. This section shall apply  to Debentures of other series, insofar as their first offering report shall include a provision to this effect, subject to the provisions of Section 5A4 of the Terms and Conditions Overleaf.

 

 

  

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TRANSLATION FROM HEBREW

 

 

THE BINDING VERSION IS THE HEBREW VERSION

 

 

	
  

	
For this matter only: a “rating agency” shall mean any Israeli rating agency or any of the international rating agencies S&P or Moody’s, provided that there is at least one active rating agency in Israel at that time.

 

	
  

	
8.1.13

	
A motion was filed for a stay-of-proceedings order for the Company or such order was granted or the Company filed a motion to make a composition with its creditors pursuant to Section 350 of the Companies Law, provided that such composition undermines or is likely to undermine the Company’s solvency with respect to the Debentures, except for a case in which the motion or composition as aforesaid were filed for the purpose of merger (as this term is defined in Section 8.1.2 of the Indenture) and/or a change in the Company’s structure.

 

	
  

	
8.1.14

	
If a Sale to Another of most of the Company’s assets as defined below was performed and the Trustee’s prior written consent to such sale shall not have been received, which consent shall be given after obtaining the consent of the Debenture Holders; except for a sale whose proceeds served or are expected to serve the Company (according to its notice) for the purchase of another asset or assets with characteristics matching the Company’s business segments, as being on the date of such sale.

 

	
  

	
For this matter, a “Sale to Another” shall mean a sale to any third party (including controlling shareholders of the Company and/or to corporation controlled by them), but except for corporations from the Cellcom Group (as this term is defined in Section 8.1.9 above), provided that in case of a sale to corporations from the Cellcom Group (as this term is defined in Section 8.1.9 above), the Company declared vis-à-vis the Debenture Holders of the Relevant Series, including via the Trustee, at least ten (10) Business Days prior to the date of the sale, that there is no reasonable concern that due to such sale the Company shall be unable to perform its undertakings vis-à-vis the Debenture Holders of the Relevant Series.

 

	
  

	
8.1.15

	
In case that the Company does not publish financial statements by the expiration of 60 days after the date set for this purpose pursuant to the provisions of the law applicable thereto (and if the Company obtained an extension from a competent authority – within 60 days after the end of such extension period).

 

	
  

	
8.1.16

	
If the net debt to EBITDA ratio, net of non-recurring effects (the “Debt to EBITDA Ratio”) exceeds 5.

 

	
  

	
For this matter: “net debt” shall mean credit from banking and other corporations as well as loans from banking and other corporations as well as obligations due to Debentures, net of 

 

 

  

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cash and cash equivalents and current investments in negotiable securities; and “EBITDA” shall mean with respect to the 12-month period preceding the date of the Company’s last financial statements – earnings before depreciation and amortization, other net expenses/income, net financing expenses/income and taxes. Within three (3) Business Days from the date of publication of the Company’s financial statements, the Company shall submit to the Trustee a certification signed by a senior financial officer of the Company, in which shall be stated the ratio of net debt to EBITDA, based on the financial statements as aforesaid. The Trustee shall rely on the Company’s certification and shall not be required to perform an additional examination in this matter.

 

	
  

	
8.1.17

	
If the Company does not comply with a Debt to EBITDA Ratio (as this term is defined in Section 8.1.16 of the Indenture) that does not exceed 4.5, for the period of four consecutive quarters.

 

	
  

	
8.1.18

	
With respect to Debentures of the Relevant Series, if a merger was performed without obtaining a prior approval of the Debenture Holders of the Relevant Series, unless the Company or the surviving company, as the case may be, declared vis-à-vis the Debenture Holders of the Relevant Series, including via the Trustee, at least ten (10) Business Days prior to the merger date that there is no reasonable concern that following the aforesaid merger the Company or the surviving company, as the case may be, shall be unable to perform its undertakings vis-à-vis the Debenture Holders of the Relevant Series.

 

For the purpose of this Section 8.1.18: “merger” shall not include a merger between companies from the Cellcom Group, as this term is defined in Section 8.1.9 of the Indenture, including the Company, in which case the declaration of the Company or the surviving company as aforesaid or a prior approval of the Debenture Holders as aforesaid shall not be required.

 

	
  

	
8.1.19

	
If the Company breached its undertakings not to create pledges as set forth in Section 5.1(a) of the Indenture and did not cancel the pledges having been registered incidentally to such breach within 45 days after receiving a warning thereof from the Trustee.

 

	
  

	
8.1.20

	
Upon the occurrence of any other event which causes or is expected to cause a material deterioration in the Company’s businesses, so as to create a substantial concern of material harm to the Debenture Holders’ rights.

 

	
  

	
For this matter: an event which resulted or is expected to result in the Ratio of the Debt to EBITDA increasing to a rate which is lower than 5 shall not be deemed as a material deterioration”.

 

 

  

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TRANSLATION FROM HEBREW

 

 

THE BINDING VERSION IS THE HEBREW VERSION

 

 

Section 8.1.7 shall be modified as follows: (1) the words “If the Company shall violate or not fulfill any material condition” shall be followed by the words “or representation”; (2) the words “of the same series” shall be followed by the words “and the violation was not cured within 14 days after the Trustee gave written warning thereof”.

 

In Section 8.2[a] of the Indenture, the words “Upon the occurrence of any of the events in Sections 8.1.1 to 8.1.6 (inclusive) of the Indenture” shall be followed by the words “as well as Sections 8.1.8 to 8.1.19 (inclusive) of the Indenture”.

 

In Section 8.2[b] of the Indenture, the words “Upon the occurrence of an event as specified in Section 8.1.7 above” shall be followed by the words “as well as upon the occurrence of an event as specified in Section 8.1.20 above”..

 

	
8.

	
Amendment of Section 16 of the Indenture - Investment of Funds

 

Notwithstanding Section 16 of the Indenture, the Trustee may invest the funds in bank deposits in one of the five large banks in Israel or in government debentures only and it shall not perform investments in other securities.

 

	
9.

	
Amendment of Section 17 of the Indenture - The Company’s Undertakings vis-à-vis the Trustee

 

Section 17.8 of the Indenture shall be followed by Section 17.9 of the Indenture as follows:

 

	
  

	
“17.8

	
To provide to the Trustee reports as specified in Section 5.1 of the Indenture”.

 

At the end of the last paragraph in the section, the word “law” shall be followed by a full stop and the words “and that such transfer shall not damage a legitimate interest of the Company” shall be deleted.

 

	
10.

	
Amendment of Section 19 of the Indenture - Other Agreements

 

At the end of the paragraph, the words “in its ordinary course of business” shall be followed by the words “provided that the aforesaid engagement with the Company does not prejudice the rights of the Series F Debenture Holders and of the Series G Debenture Holders”.

 

	
11.

	
Amendment of Section 25 of the Indenture - Waivers, Settlements and/or Modifications in the Indenture

 

Section 25[a][1] of the Indenture shall be modified as follows: the word “materially” after the words “the modification does not” shall be deleted.

 

Section 25[b][1] of the Indenture shall be modified as follows: the words “in its opinion” before the words “it does not violate” shall be deleted.

 

Section 25[f] of the Indenture shall be deleted.

 

	
12.

	
Amendment of Section 28 of the Indenture - Holders Meetings

 

 

  

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THE BINDING VERSION IS THE HEBREW VERSION

 

 

In Section 28 of the Indenture the following words shall be added: “Notwithstanding the provisions of the Second Schedule of the Indenture, in case that, at the Trustee’s reasonable discretion and for reasons that shall be recorded, a discussion without the presence of the Company’s representatives is required in a part of the Holders meeting, then the Company and/or anyone on its behalf shall not participate in that part of the discussion”.

 

	
13.

	
Amendment of Section 29 of the Indenture - Reporting to the Trustee

 

In Section 29.4 of the Indenture, the words “thirty (30)” shall be replaced by “ten (10)”.

 

Section 29.5 of the Indenture shall be followed by Sections 29.6 and 29.7 of the Indenture as follows:

 

	
  

	
“29.6

	
To deliver immediately to the Trustee a notice in case that the Company learns of a breach of a material provision of the provisions of the Indenture, including a material breach of such a provision.

 

	
  

	
29.7

	
To deliver to the Trustee a notice of new pledges on the Company’s property, with respect to pledges that the Company shall register at the Registrar of Companies and/or the Registrar of Pledges.”

 

	
14.

	
Amendment of Section 31 of the Indenture - Rating

 

The following paragraphs:

 

“The Company may determine in the First Offer Report of the Relevant Series that insofar as the Debentures that shall be offered pursuant to the Offer shall be rated the Company shall act (insofar as the matter shall be within its control) to arrange that as long as Debentures of the Relevant Series are listed for trade, the Debentures of the Relevant Series shall be under rating follow-up by a rating agency.

 

	
  

	
The Company does not undertake not to replace the rating agency throughout the Debentures’ life time. In case of replacing the rating agency, the Company shall publish an immediate report concerning the replacement as aforesaid.”

 

	
  

	
Shall be replaced by the following paragraphs:

 

“The Company undertakes to arrange that, insofar as the matter shall be within its control, the Series F Debentures and the Series G Debentures, insofar as issued (as well as debentures of other series, if and insofar as it is determined in their first offering report that the provisions of this section shall apply thereto) (in this section, the “Debentures of the Relevant Series”), shall be under rating follow-up by one rating agency at least, as long as Debentures of that series are in circulation (and without derogating from the generality of the aforesaid, in this framework, inter alia, the Company undertakes to make all of the payments and deliver the required reports to a rating agency, according to the provisions of the agreement therewith). For this matter it is clarified that the transfer of the Debentures to the watch list or any similar action which is taken by the rating agency shall not be deemed as termination of the rating.

 

 

  

-15-

  

 

	

 

TRANSLATION FROM HEBREW

 

 

THE BINDING VERSION IS THE HEBREW VERSION

 

 

Without derogating from the Company’s undertaking as aforesaid, in case that the Debentures of the Relevant Series are rated by one rating agency only, and the Company of its own initiative replaces the rating agency by another (single) rating agency, the Company shall publish an immediate report specifying the reasons for replacing the rating agency, within one trading day after the occurrence of the event. It is clarified that the aforesaid does not derogate from the Company’s right to replace a rating agency at any time, at its sole discretion and as it shall deem fit. If the Debentures of the Relevant Series stop being rated (i.e. they shall not be rated by any rating agency), the Company shall immediately give the Trustee a written notice of the reasons for termination of the rating, no later than one Business Day after the date of the termination of the rating.”

 

	
15.

	
Addition of Section 4A of the Terms and Conditions Overleaf – Adjusting the Interest Rate as a Result of a Rating Change

 

Section 4 of the Terms and Conditions Overleaf shall be followed by Section 4A of the Terms and Conditions Overleaf as follows:

 

“4A.           Adjusting the Interest Rate as a Result of a Rating Change

 

With respect to Series F Debentures, Series G Debentures, if issued and if given a credit rating, the rate of the interest that these Debentures shall bear shall be adjusted due to a change in the rating of the Debentures. Insofar as Debentures of other series are issued, if and insofar as it is determined in their first offering report that the provisions of this section shall apply thereto (the “Debentures of the Additional Series”), and insofar as the Debentures of the Additional Series shall be given a credit rating, the first offering report of the Debentures of the Additional Series shall specify whether the interest rate that they bear shall be adjusted due to a change in the rating of the Debentures of the Additional Series. If the Company does not determine in the first offering report of the Debentures of the Additional Series that such adjustment is to be done, then no change shall occur in the interest rate that the Debentures of the Additional Series  shall bear as a result of a change in the rating of the Debentures of the Additional Series. The manner of adjusting the interest rate that the Debentures of the Additional Series shall bear, as aforesaid, if and insofar as it is adjusted, shall be in accordance with the mechanism described below, as specified in the first offering report of the Debentures of the Additional Series (in this section below, the Debentures of the Additional Series together with the Series F Debentures and the Series G Debentures shall be referred to as the “Debentures of the Relevant Series”, as the case may be).

 

	
  

	
4A1.

	
Insofar as the rating of the Debentures of the Relevant Series by a rating agency which shall be indicated in the first offering report or any other rating agency that shall replace it (in this section, the “Rating Agency”) shall be updated during any interest period, such that the rating that shall be determined for the Debentures of the Relevant Series shall be lower by two levels or more (the “Reduced Rating”) than the basic rating that shall be specified in the shelf offering report (or an equivalent rating that shall replace it as shall be determined by another Rating Agency, insofar as it shall replace the Rating Agency 

 

 

 

  

-16-

  

 

	

 

TRANSLATION FROM HEBREW

 

 

THE BINDING VERSION IS THE HEBREW VERSION

 

 

that was indicated in the shelf offering report) (the “Basic Rating”), the rate of the annual interest that the unpaid balance of the principal of the Debentures of the Relevant Series shall bear shall increase by 0.25% above the rate of the annual interest that the Debentures of the Relevant Series shall bear, or above the rate of the annual interest that shall be determined in a tender as published by the Company in an immediate report concerning the results of the issuance, as the case may be (the “Basic Interest”), for the period commencing on the date of the next interest (i.e. commencing immediately after the period during which the relevant change in the rating occurred) until a full payment of the unpaid balance of the principal of the Debentures of the Relevant Series or, alternatively, until the Reduced Rating increases back to the Basic Rating, according to the earlier (in which case the provisions of Section 4A6 below shall apply). It is clarified that no additional interest shall be received for the period from the downgrade of the rating until the end of the interest period during which the rating of the Debentures was updated and that the interest shall not be decreased back for the period from the date on which the raring increased back to the Basic Rating (or a higher rating) until the end of the interest period during which the rating of the Debentures was updated (for example, if the interest period is from March to September and in April of a certain year a change of rating occurs which entails the decrease or increase of interest according to the terms specified below, then no change (increase or decrease) shall occur in the interest until the end of September of that year, but only from the beginning of October of that year).

 

	
  

	
4A2.

	
The interest rate that the Debentures of the Relevant Series shall bear shall be updated also in the case of further downgrading of the rating beyond the Reduced Rating (jointly: the “Further Reduced Rating”), such that: (a) in case that the determined rating shall be one level lower than the Reduced Rating – the rate of the annual interest that the unpaid balance of the principal of the Debentures of the Relevant Series shall bear shall increase by another 0.25%, such that it shall be equal to the Basic Interest plus 0.50%; (b) in case that the determined rating shall be two levels lower than the Reduced Rating, the rate of the annual interest that the unpaid balance of the principal of the Debentures of the Relevant Series shall bear shall increase by another 0.25%, such that it shall be equal to the Basic Interest plus 0.75%; (c) in case that the determined rating shall be three or more levels lower than the Reduced Rating, the rate of the annual interest that the unpaid balance of the principal of the Debentures of the Relevant Series shall bear shall increase by another 0.25%, such that it shall be equal to the Basic Interest plus 1%.

 

	
  

	
It is clarified that in no case shall the Basic Interest be increased by more than 1% as a result of a downgrade of the rating compared to the Basic Rating.

 

	
  

	
4A3.

	
No later than one Business Day after receiving the notice of the Rating Agency concerning the downgrade of the Debentures of the Relevant Series to the Reduced Rating as defined in Section 1A4 above or the 

 

 

  

-17-

  

 

	

 

TRANSLATION FROM HEBREW

 

 

THE BINDING VERSION IS THE HEBREW VERSION

 

 

	
  

	
Further Reduced Rating, the Company shall publish an immediate report in which it shall specify: (a) the fact of the downgrade of the rating, the Reduced Rating (or the Further Reduced Rating) and the effective date of that rating of the Debentures of the Relevant Series (the “Rating Downgrade Date”); (b) the rate of the updated annual interest that the balance of the principal of the Debentures of the Relevant Series shall bear, for the period commencing on the next interest date (i.e. commencing immediately after the period during which the relevant change in the rating occurred); (c) the interest rate for the period which the balance of the principal of the Debentures of the Relevant Series shall bear with respect to the next periods, insofar as the terms of the Debentures of the Relevant Series shall determine that the interest for them be paid on more than one date each year.

 

It is clarified that in any case of change in interest as a result of change in rating as aforesaid in this section, no change shall occur in the dates of payment (principal of interest) or on the Effective Date in the Relevant Series (as defined above).

 

	
  

	
4A4.

	
In case of an update of the rating of the Debentures of the Relevant Series by the Rating Agency, in a manner that shall affect the rate of interest that the Debentures of the Relevant Series shall bear as aforesaid in this Section 4A, the Company shall notify the Trustee thereof within one Business Day from the date of publication of the immediate report as aforesaid.

 

	
  

	
4A5.

	
Insofar as the Debentures of the Relevant Series shall stop being rated for a reason dependent solely upon the Company, prior to their final payment, for a consecutive period exceeding sixty (60) days, provided that the interest rate was not increased as provided in Sections 4A1 and/or 4A2 above, it shall be determined in the first offering report of the Relevant Series of the Debentures of the Relevant Series whether the termination of the rating shall be deemed as a downgrade of the rating of the Debentures of the Relevant Series to the Reduced Rating as provided in Section 4A1 above or to another lower rating, as provided in Section 4A2 above. In this context, it shall be clarified that if it is so determined in the offering report as aforesaid, the provisions of Section 8.1.12 of the Indenture shall not apply. For this matter, and without derogating from the generality of the aforesaid, the default on payments to the Rating Agency, which the Company undertook vis-à-vis the Rating Agency to make, and the non-delivery of reasonable reports and information, which there is no legal impediment to deliver and are required by the Rating Agency in the framework of the engagement between the Company and the Rating Agency, shall be considered as reasons dependent solely upon the Company. For the avoidance of doubt, it is hereby clarified that, if the Debentures stop being rated prior to their final payment due to a reason which is not dependent upon the Company, it shall not affect the interest rate as provided in Sections 4A1 and/or 4A2 above and in any case the provisions of this Section 4A shall not apply.

 

 

  

-18-

  

 

	

 

TRANSLATION FROM HEBREW

 

 

THE BINDING VERSION IS THE HEBREW VERSION

 

 

	
  

	
It is clarified that the replacement of the Rating Agency (if and insofar as the Company decides to replace it, as provided in Section 31 of the Indenture) shall not affect the interest rate as provided in Section 4A1 and/or 4A2 above and in any case the provisions of this Section 4A shall not apply, provided that the rating given by the new Rating Agency is an equivalent rating to the rating of the current Rating Agency on the replacement date.

 

	
  

	
4A6.

	
It shall be clarified that if, after the downgrade of the rating in a manner affecting the rate of interest that the Debentures of the Relevant Series bear as aforesaid, the Rating Agency upgrades the rating of the Debentures of the Relevant Series to a higher rating that the Reduced Rating (and respectively to a higher rating than the Further Reduced Rating) (the “High Rating”), the rate of the annual interest paid by the Company to the Debenture Holders of the Relevant Series shall decrease by an annual rate of 0.25% for each level as specified in Section 4A2 above until the rating above the Reduced Rating, in which case the rate of the annual interest, which the unpaid balance of the principal of the Debentures of the Relevant Series shall bear, shall be the Basic Interest rate with no additions, for the period commencing on the beginning of the next interest period (i.e. which commences immediately after the period during which the relevant change in the rating occurred) until the full payment of the unpaid balance of the principal of the Debentures of the Relevant Series or until the change in the rating of the aforesaid Debentures pursuant to the provisions of this Section 4A. In such case, the Company shall act in accordance with the provisions of Sections 4A2 to 4A4 above, mutatis mutandis.

 

	
  

	
4A7.

	
For the avoidance of doubt, it is clarified that a change in the rating horizon of the Debentures of the Relevant Series shall not entail a change in the interest that the Debentures shall bear as aforesaid in this section.

 

	
  

	
In addition, notwithstanding the provisions of this Section 4A, the downgrade of the rating of the Debentures of the Relevant Series, which is done as part of updating the rating of all of the companies in Israel which engage in one or more of the Company’s business segments, as a result of changing the Rating Agency’s methodology only, shall not entail a change in the rate of interest that the Debentures of the Relevant Series shall bear.

 

	
  

	
4A8.

	
The Company undertook, in Section 31 of the Indenture, to arrange that, insofar as the matter shall be within its control, the Debentures of the Relevant Series shall be under rating follow-up by at least one Rating Agency, as long as Debentures of that series are in circulation (and without derogating from the generality of the aforesaid, in this framework, inter alia, the Company undertakes to make all of the payment and to submit all of the reports required for the Rating Agency, according to the provisions of the agreement therewith).

 

	
16.

	
General Terms

 

 

  

-19-

  

 

	

 

TRANSLATION FROM HEBREW

 

 

THE BINDING VERSION IS THE HEBREW VERSION

 

 

This Amendment and Supplement shall take effect subject to the issuance of the Series F Debentures, the Series G Debentures and, with respect to Debentures of other series, subject to the issuance of Debentures of other series as aforesaid (if and insofar as it is determined in the first offering report of the Debentures of the other series as aforesaid that the provisions hereof shall apply thereto), and they shall apply with respect to the relevant series as aforesaid immediately after the issuance thereof. No change shall occur in the remaining terms of the original Indenture and the schedules thereto with respect to the Series F Debentures, the Series G Debentures and with respect to other series as aforesaid.

 

	
17.

	
Applicable Law and Jurisdiction

 

	
  

	
The law that governs the Indenture with its annexes and the Debentures is the Israeli law. The courts in the city of Tel Aviv Jaffa shall have a unique and exclusive jurisdiction in any conflict regarding the Indenture and the Debentures.

 

	
18.

	
Authorization for MAGNA Reporting

 

	
  

	
By signing these Amendment and Supplement, the Trustee authorizes the Company’s authorized electronic signatories, as being, to report in its name in MAGNA of its engagement herein and its execution hereof, insofar as it is required by law.

 

 

 

 

[Signature Page to Follow]

 

  

-20-

  

 

	

 

TRANSLATION FROM HEBREW

 

 

THE BINDING VERSION IS THE HEBREW VERSION

 

 

[Signature Page]

 

 

In witness whereof the parties have hereunto set their hands:

 

 

 

	 	 	 	 
	
Cellcom Israel Ltd.

	 	
Strauss Lazar Trust Company (1992) Ltd

	 
	 	 	 	 
	
Signed by:   Yaacob Heen

                      CFO

	 	Signed by: Uri Lazar	 

 

 

 

Attorney’s Certification

 

 

I, the undersigned, Adv. Liat Menahemi Stadler, hereby certify that this Indenture was signed lawfully by the authorized signatories of Cellcom Israel Ltd., Mr. Yaacob Heen.

 

 

 

	 	 	 
	 	

Liat Menahemi Stadler, Adv.

	 

 

 

 

 

 -21-Exhibit 4.7

 

CELLCOM ISRAEL, LTD.

 

2006 SHARE INCENTIVE PLAN

 

A.  NAME AND PURPOSE

 

1.           Name:  This plan, as amended from time to time, shall be known as the “Cellcom Israel, Ltd. 2006 Share Incentive Plan”.

 

2.           Purpose: The purpose and intent of the Plan is to provide incentives to employees, directors, consultants and/or contractors of the Company and its Affiliates, by providing them with opportunities to purchase Shares, pursuant to a plan approved by the Board which is designed to enable the Company to issue options and restricted stock units, with respect to Israeli residents, pursuant to the provisions of either Section 102 or Section 3(9) of the Ordinance, as applicable, and the rules and regulations promulgated thereunder, as amended from time to time, or any other tax ruling provided by the tax authorities to the Company, as well as with respect to non-Israeli residents pursuant to the applicable law in their respective country of residence.

 

B. DEFINITIONS

 

“Adoption Date” means the Date of Grant, or any other date of commencement of vesting of an Award for the purposes of this Plan, that is determined by the Committee for a given grant of an Award

 

“Affiliate” means any company (i) that is a Controlling Shareholder (as such term is defined in Section 102 of the Ordinance) of the Company, or (ii) of which the Company is a Controlling Shareholder, or (iii) which has a Controlling Shareholder that is also a Controlling Shareholder of the Company.

 

“Awards” means Options and/or RSUs.

 

“Beneficial Grantee” means the Grantee in respect of whom, an Award held in Trust by the Trustee was granted.

 

“Board” means Board of Directors of the Company.

 

“Cessation of Employment” means the cessation of employment of a Grantee (who was an employee of the Company on the Date of Grant of any Awards to him or her), with the Company, for any reason.

 

“Committee” means the Board or a committee appointed by the Board for such purpose, if appointed.

 

“Companies Law” means the Companies Law 1999.

 

  

  

  

2

 

“Company” means Cellcom Israel, Ltd., a company organized under the laws of the State of Israel, or any Affiliate thereof, unless the context otherwise requires.

 

“Controlling Shareholders” means controlling shareholders of the Company, as such term is defined in the Ordinance.

 

“Corporate Transaction” means the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events:

 

(i)            a sale or other disposition, of all or substantially all, of the outstanding Shares of the Company; or

 

(ii)           a sale or other disposition of all or substantially all, as determined by the Board in its discretion, of the consolidated assets of the Company and its subsidiaries; or

 

(iii)          a merger, consolidation or similar transaction following which the Company is not the surviving corporation; or

 

(iv)          a merger, consolidation or similar transaction following which the Company is the surviving corporation but the Ordinary Shares of the Company outstanding immediately preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the merger, consolidation or similar transaction into other property, whether in the form of securities, cash or otherwise.

 

Whether a transaction is a “Corporate Transaction” as defined above, shall be finally and conclusively determined by the Committee in its absolute discretion.

 

“Date of Grant” means the effective date of the grant of an Award, as detailed in Section 5.1(b) hereinafter.

 

“Date of Cessation” means (i) the date on which the employee-employer relationship between the Grantee and the Company ceases to exist, or (ii) if the Grantee is a contractor or consultant - the date on which the consulting or contractor agreement between the Grantee and the Company expires, or the date on which either of the parties to such agreement sends the other notice of its intention to terminate said agreement, or (iii) if the Grantee is a director - the date on which the Grantee ceases to serve as a director of the Company.

 

“Disability” means the inability to engage in any substantial gainful occupation for which the Grantee is suited by education, training or experience, by reason of any medically determinable physical or mental impairment that is expected to result in such person’s death or to continue for a period of six (6) consecutive months or more.

 

“Exercise Date” means the actual date of exercise of Options.

 

  

  

  

3

 

“Exercise Price” means the purchase price per Exercised Share, subject to each Option, or the nominal value per Exercised Share to be paid upon the vesting of an RSU, if applicable.

 

“Exercised Shares” means Shares received upon exercise of Options (or Rights, if applicable) and/or vesting of RSUs.

 

“Grantee” means the person to whom Awards shall be granted under this Plan.

 

“IPO” means an initial public offering of Shares.

 

“Notice of Exercise” means a written notice of exercise of an Option, delivered by a Grantee to the Company.

 

“Notice of Grant” means a written notice of the grant of an Award.

 

“102 Awards” means grants of Awards to Israeli employees, directors and office holders of the Company, other than to a Controlling Shareholder, pursuant to the provisions of Section 102 of the Ordinance, the 102 Rules, and any other regulations, rulings, procedures or clarifications promulgated thereunder. Such grants of Awards may be pursuant to (i) a Taxation Route and/or (ii) Section 102(c) of the Ordinance (“102(c) Awards”).

 

“102 Rules” means the Income Tax Rules (Tax Relief in Issuance of Shares to Employees), 2003.

 

“Options” means options to purchase Shares.

 

“Ordinance” means the Israeli Income Tax Ordinance [New Version], 1961.

 

 “Plan” means this “Cellcom Israel, Ltd. 2006 Share Incentive Plan”, as amended from time to time.

 

“Representative” means any third party designated by the Company for the purpose of the exercise of the Options, as provided in Section 9.2 hereinafter.

 

“Rights” means rights issued in respect of Exercised Shares, including bonus shares but excluding cash dividends.

 

“RSUs” means Restricted Stock Units, as described in Section 13 below.

 

“Shares” means ordinary shares, nominal value of NIS 0.01 each of the Company (subject to an expected split of the Company’s shares).

 

“Taxation Route” means the capital gains route under Section 102(b)(2) of the Ordinance.

 

“3(9) Awards” means grants of Awards to Israeli consultants, contractors or Controlling Shareholders of the Company pursuant to the provisions of Section 3(9) of the Ordinance and 

 

  

  

  

4

 

the rules and regulations promulgated thereunder, or any other section of the Ordinance that will be relevant for such issuance in the future.

 

“Trust” means the holding of each Award and Exercised Shares by the Trustee in Trust for the benefit of the Beneficial Grantee.

 

“Trustee” means a trustee designated by the Committee in accordance with the provisions of Section 3.4 hereof and, with respect to 102 Awards, approved by the Israeli Tax Authority.

 

“Trust Expiration Date” means 1.1.2015, or any other date determined by the Board.

 

“Trust Period” means the period of time required under a Taxation Route for Awards and/or Exercised Shares to be held in Trust in order for the Beneficial Grantee to enjoy the tax benefits afforded under such Taxation Route, as will be applicable for such Taxation Route from time to time.

 

“Vesting Period” of an Award means, for the purpose of the Plan and its related instruments, the period between the Adoption Date and the date on which (i) an Option becomes exercisable into a Share; or (ii) an RSU is automatically vested into a Share, as applicable.

 

C.  GENERAL TERMS AND CONDITIONS OF THE PLAN

 

3. Administration:

 

3.1           The Plan will be administered by the Board or, subject to applicable law, including but not limited to the instructions of the Companies Law, by a Committee, which will consist of such number of directors of the Company as may be fixed, from time to time, by the Board. If a Committee is not appointed, the term Committee, whenever used herein, shall mean the Board. The Board shall appoint the members of the Committee, may from time to time remove members from, or add members to, the Committee and shall fill vacancies in the Committee however caused.

 

3.2           The Committee shall select one of its members as its Chairman and shall hold its meetings at such times and places, as it shall determine. Actions taken by a majority of the members of the Committee, at a meeting at which a majority of its members is present, or acts reduced to, or approved in, writing by all members of the Committee, shall be the valid acts of the Committee. The Committee may appoint a secretary, who shall keep records of its meetings and shall make such rules and regulations for the conduct of its business, as it shall deem advisable.

 

3.3           Subject to the general terms and conditions of this Plan and applicable law, the Committee shall have the full authority in its discretion, from time to time and at any time to determine (i) the Grantees under the Plan, (ii) the number of Shares subject to each Award, (iii) the time or times at which the same shall be granted, (iv) the schedule and conditions, including performance conditions, if applicable, on which such Awards may be exercised and/or 

 

  

  

  

5

 

on which such Shares shall be paid for and/or on which such RSUs may vest, and/or (v) rules and provisions, as may be necessary or appropriate to permit eligible Grantees who are not Israeli residents to participate in the Plan and/or to receive preferential tax treatment in their country of residence, with respect to the Awards granted hereunder, and/or (vi) any other matter which is necessary or desirable for, or incidental to, the administration of the Plan.

 

3.4           Furthermore, subject to the general terms and conditions of the Plan, the Ordinance, and any other applicable laws and regulations, the Committee shall have the full authority in its discretion, from time to time and at any time, to determine:

 

(a)           With respect to grants of 102 Awards pursuant to the Taxation Route the identity of the trustee who shall be granted such 102 Awards in accordance with the provisions of this Plan and the Taxation Route; and

 

(b)           With respect to the grant of 3(9) Awards - whether or not 3(9) Awards shall be granted to a trustee in accordance with the terms and conditions of this Plan, and the identity of the trustee who shall be granted such 3(9) Awards in accordance with the provisions of this Plan.

 

3.5           Notwithstanding the aforesaid, the Committee may, from time to time and at any time, grant 102(c) Awards.

 

3.6           The Committee may, from time to time, adopt such rules and regulations for carrying out the Plan, as it may deem necessary.  No member of the Board or of the Committee shall be liable for any act or determination made in good faith with respect to the Plan or any Award granted thereunder.

 

3.7           The interpretation and construction by the Committee of any provision of the Plan or of any Award thereunder shall be final and conclusive and binding on all parties who have an interest in the Plan or any Award or Share issuance thereunder, unless otherwise determined by the Board.

 

4.           Eligible Grantees:

 

4.1           The Committee, at its discretion, may grant Awards to any employee, director, consultant and/or contractor of the Company. Anything in this Plan to the contrary notwithstanding, all grants of Awards shall be authorized and implemented only in accordance with the provisions of applicable law.

 

4.2           The grant of an Award to a Grantee hereunder, shall neither entitle such Grantee to participate, nor disqualify him from participating, in any other grant of Awards pursuant to this Plan or any other incentive plan of the Company.

 

5.           Grant of Awards, Issuance of Shares, Dividends and Shareholder Rights:

 

  

  

  

6

 

5.1           Grant of Awards and Issuance of Shares.

 

(a)           Subject to the provisions of the Ordinance and applicable law (it being understood that, unless otherwise determined by the Committee, the following shall not apply to Awards granted to non Israeli Grantees),

 

(i)           All grants of Awards to Israeli employees, directors and office holders of the Company, other than to Controlling Shareholders, shall be as 102 Awards and shall be subject either to the Taxation Route or to Section 102(c) of the Ordinance; and

 

(ii)           All grants of Awards to Israeli consultants, contractors or Controlling Shareholders of the Company shall be as 3(9) Awards.

 

(b)           Subject to Sections 7.1 and 7.2 hereof, the Date of Grant shall be the date the Committee resolves to grant such Award, unless specified otherwise by the Committee in its determination relating to the grant of such Award.  The Committee shall promptly give the Grantee a Notice of Grant.

 

(c)           Trust.  In the event Awards are deposited with a Trustee, the Trustee shall hold each such Award and Exercised Shares in Trust for the benefit of the Beneficial Grantee; provided, however, that unless the Committee determines otherwise, in its sole and absolute discretion, the Trustee shall not hold any Awards in Trust following the Trust Expiration Date, all Awards held in Trust on such date shall be transferred automatically to the Grantee, and all implications, including tax implications, resulting from such transfer of Awards shall be borne solely by the Grantee.

 

In accordance with Section 102, the tax benefits afforded to 102 Awards and any Exercised Shares, in accordance with the Taxation Route, shall be contingent upon the Trustee holding such 102 Awards for the applicable Trust Period.

 

With respect to 102 Awards granted to the Trustee, the following shall apply:

 

(i)            A Grantee granted 102 Awards shall not be entitled to sell the Exercised Shares or to transfer such Exercised Shares (or such 102 Awards) from the Trust prior to the lapse of the Trust Period; and

 

(ii)            Any and all Rights shall be issued to the Trustee and held thereby until the lapse of the Trust Period, and such Rights shall be subject to the Taxation Route.

 

Notwithstanding the aforesaid, Exercised Shares or Rights may be sold or transferred, and the Trustee may release such Exercised Shares (or 102 Awards) or Rights from Trust, prior to the lapse of the Trust Period, provided however, that tax is paid or withheld in accordance with Section 102 of the Ordinance and/or the 102 Rules, and/or any 

 

  

  

  

7

 

other provision of the Ordinance and any regulation, ruling, procedure and clarification promulgated thereunder, that will be relevant from time to time.

 

All certificates representing Exercised Shares issued to the Trustee under the Plan shall be deposited with the Trustee, and shall be held by the Trustee until such time that such Shares are released from the Trust as herein provided.

 

Alternatively, in the event the Company’s Shares are listed on any stock exchange or admitted to trading on an electronic securities trading system, whether in Israel or outside of Israel, the Company shall register the Exercised Shares issued to the Trustee pursuant to the Plan, in the name of the Trustee, in accordance with any applicable laws, rules and regulations, until such time that such Shares are released from the Trust as herein provided.

 

(d)           Subject to the terms hereof, at any time after the Awards are vested, with respect to any 102 Awards or Exercised Shares held by the Trustee the following shall apply:

 

(i)           Upon the written request of any Beneficial Grantee, the Trustee shall release  from the Trust, within a reasonable period of time, the Awards granted, and/or the Exercised Shares issued, on behalf of such Beneficial Grantee, by executing and delivering to the Company such instrument(s) as the Company may require, giving due notice of such release to such Beneficial Grantee, provided, however, that the Trustee shall not so release any such Awards and/or Exercised Shares to such Beneficial Grantee unless the latter, prior to, or concurrently with, such release, provides the Trustee with evidence, satisfactory in form and substance to the Trustee, that all taxes, if any, required to be paid upon such release have, in fact, been paid.

 

(ii)           Alternatively, subject to the terms hereof, with respect to any  Exercised Shares held by the Trustee, provided the Exercised Shares are listed on a stock exchange or admitted to trading on an electronic securities trading system (such as the Nasdaq), upon the written instructions of the Beneficial Grantee to sell any Exercised Shares, the Company and/or the Trustee shall use their reasonable efforts to effect such sale within a reasonable period of time, and shall transfer such Exercised Shares to the purchaser thereof concurrently with the receipt of, or after having made suitable arrangements to secure, the payment of the proceeds of the purchase price in such transaction.  The Company and/or the Trustee, as applicable, shall withhold from such proceeds any and all taxes required to be paid in respect of such sale, shall remit the amount so withheld to the appropriate tax authorities and shall pay the balance thereof directly to the Beneficial Grantee, reporting to such Beneficial Grantee and to the Company the amount so withheld and paid to said tax authorities. In case an appropriate tax exemption or partial tax exemption certificate was provided to the Company and/or Trustee, an adequate time prior to the date in which the proceeds are to be paid, the Company and/or Trustee shall not withhold or partially withhold the taxes required, in accordance with the tax exemption certificate, as the case may be).

 

  

  

  

8

 

5.2           Guarantee. In the event a 102(c) Award is granted to a Grantee who is an employee at the time of such grant, upon  the Grantee’s Cessation of Employment, such Grantee shall provide the Company, to its full satisfaction, with a guarantee or collateral securing the future payment of all taxes required to be paid upon the sale of the Exercised Shares received upon exercise of such 102(c) Award or its vesting (if an RSU), all in accordance with the provisions of Section 102 of the Ordinance, the 102 Rules and the regulation or orders promulgated thereunder.

 

5.3           Dividend.  All Exercised Shares shall entitle the Grantee thereof to receive dividends with respect thereto. For so long as Exercised Shares deposited with the Trustee on behalf of a Beneficial Grantee are held in the Trust, the cash dividends paid or distributed with respect thereto shall be distributed directly to such Beneficial Grantee, subject to any applicable taxation on distribution of dividends, and when applicable subject to the provisions of Section 102 of the Ordinance, the 102 Rules and the regulations or orders promulgated thereunder.

 

5.4           Voting Rights; Shareholder Rights.  The holder of an Award shall have no shareholder rights with respect to the Shares subject to such Award until such person shall have exercised the Award, or the Award has vested (if an RSU), as the case may be, has paid the Exercise Price, if applicable, and has become the record holder of the applicable Exercised Shares.

 

As long as the Exercised Shares are held by the Trustee, the voting rights at the Company’s general meeting attached to such Exercised Shares will remain with the Trustee. The Trustee shall not be obligated to exercise such voting rights at general meetings, nor to notify the Grantee of any ExercisedShares held in the Trust, of any meeting of the Company’s shareholders. However, the Trustee may, at his sole discretion, empower the respective Beneficial Grantee, to vote in name and in place of the Trustee according to such Beneficial Grantee’s instructions, if provided.

 

6.           Reserved Shares: The total number of Shares that may be subject to Awards granted under this Plan shall not exceed 3,900,000 in the aggregate, subject to adjustments as provided in Section 11 hereof. All Shares under the Plan, in respect of which the right of a Grantee to purchase the same shall, for any reason, terminate, expire or otherwise cease to exist, shall again be available for grant through Awards under the Plan, and under any other plans or sub-plans, as the Committee may determine at its own discretion, from time to time, provided, however, that until termination of the Plan the Company shall at all times reserve sufficient number of unissued Shares to meet the requirements of the Plan.

 

Without derogating from the foregoing, the Committee shall have full authority in its discretion to determine that the Company may issue, for the purposes of this Plan and/or any other plans, previously issued Shares that are held by the Company, from time to time, as Dormant Shares (as such term is defined in the Companies Law).

 

  

  

  

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7.           Required Approvals; Notice of Grant; Vesting and Re-pricing:

 

7.1           The implementation of the Plan and the grant of any Award under the Plan shall be subject to the Company’s procurement of all approvals and permits required by applicable law or regulatory authorities having jurisdiction over the Plan, the Awards granted under it, and the Exercised Shares issued pursuant to it.

 

The Company shall obtain the approval of the Company’s shareholders for the adoption of this Plan or for any amendment or sub-plan adopted in the future to this Plan, if shareholders’ approval is necessary to comply with the Company's bylaws, any applicable law, rule or regulation, including without limitation the US securities laws, or the securities laws of other jurisdictions applicable to Awards granted to Grantees under this Plan, or if shareholders’ approval is required by any authority or by any governmental agencies or national securities exchanges, including without limitation the US Securities and Exchange Commission.

 

7.2           The Notice of Grant shall state, inter alia, the number of Shares subject to each Award, the vesting schedule, the dates when the Awards may be exercised or shall automatically vest into Exercised Shares (for RSUs), as applicable, their Exercise Price, if applicable, whether the Awards granted to Israeli Grantees are 102 Awards (and in particular whether the 102 Awards are granted under the Taxation Route, or as 102(c) Awards) or 3(9) Awards, and such other terms and conditions as the Committee at its discretion may prescribe, provided that they are consistent with this Plan. Each Notice of Grant evidencing a 102 Award shall, in addition, be subject to the provisions of the Ordinance applicable to such awards.

 

Furthermore, each Grantee of a 102 Award under the Taxation Route shall be required to execute a declaration stating that he or she is familiar with the provisions of Section 102 of the Ordinance and the Taxation Route, and to undertake not to sell or transfer the Awards and/or the Exercised Shares prior to the lapse of the applicable Trust Period, unless he or she pays all taxes that may arise in connection with such sale and/or transfer.

 

7.3           Term of Awards; Vesting.  Without derogating from the rights and powers of the Committee under Section 7.2 hereof and subject to Section 10 hereinafter, unless otherwise specified by the Committee, the Awards shall be for a term of six (6) years, and, unless determined otherwise by the Committee, the Vesting Period pursuant to which such Awards shall vest, shall be such that 25% of the Awards granted to a Grantee in a specific grant shall vest on each of the first, second, third and fourth anniversaries of the Adoption Date; provided, however, that no Award granted under this Plan shall vest prior to the consummation of an IPO.

 

Unless determined otherwise by the Committee, any period in which the Grantee shall not be employed by the Company, or in which the Grantee shall have taken an unpaid leave of absence, or in which the Grantee shall cease to serve as a director, consultant or contractor of the Company, shall not be included in the Vesting Period.

 

  

  

  

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7.4           Acceleration of Vesting.  Anything herein to the contrary in this Plan notwithstanding, the Committee shall have full authority, whether before of after the grant of an Award, to determine any provisions regarding the acceleration of the Vesting Period of any Award, or the cancellation of all or any portion of any outstanding restrictions with respect to any Award upon certain events or occurrences, on such terms and conditions as the Committee shall deem appropriate.

 

7.5           Repricing. Subject to applicable law, the Committee shall have full authority to, at any time and from time to time, (i) grant in its discretion to the holder of an outstanding Award, in exchange for the surrender and cancellation of such Award, a new Award having an Exercise Price lower than provided in the Award so surrendered and canceled and containing such other terms and conditions as the Committee may prescribe in accordance with the provisions of the Plan, or (ii) effectuate a decrease in the Exercise Price (see Section 8 below) of outstanding Awards.

 

8.           Exercise Price: The Exercise Price shall be determined by the Committee in its sole and absolute discretion, subject to applicable law and to guidelines adopted by the Board from time to time.

 

9.           Exercise of Options:

 

9.1           Options shall be exercisable pursuant to the terms under which they were awarded and subject to the terms and conditions of the Plan.

 

9.2           The exercise of an Option shall be made by a written Notice of Exercise delivered by the Grantee to the Company at its principal executive office, and/or to a Representative and, with respect to Options held in the Trust, to the Trustee, in such form and method as may be determined by the Company and when applicable, by the Trustee in accordance with the requirements of Section 102 of the Ordinance, specifying the number of Shares to be purchased and accompanied by the payment of the Exercise Price, at the Company’s or the Representative’s principal office, and containing such other terms and conditions as the Committee shall prescribe from time to time.

 

9.3           Notwithstanding the provisions of Section 9.2 above, and unless otherwise provided by the Board, all Options shall be exercised using the following method (the “Net Exercise”):

 

(a)           The Company shall issue to the Grantee (or to the Trustee, as applicable) a number of Shares having an aggregate Market Value (as defined below) equal to the Benefit Amount (as defined below) (the “Net Exercise Shares”);

 

For the purposes of this Section:

 

(i) The “Benefit Amount” shall mean the difference between:

 

  

  

  

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      (A)  (i) the Market Value times (ii) the number of Shares subject to the Options for which a Notice of Exercise has been delivered to the Company; and

 

      (B)  (i) the Exercise Price times (ii) the number of Shares subject to the Options for which a Notice of Exercise has been delivered to the Company.

 

            (ii) “Market Value” shall mean the closing price for a Share on the last trading day prior to the date of exercise, as reported or quoted on the Nasdaq or on any other stock market on which Shares are traded, as shall be determined by the Committee.

 

(b)           The Grantee shall not be required to pay to the Company any sum with respect to the exercise of such Options, other than a sum equal to [the aggregate nominal value of the Net Exercise Shares (which shall be paid in a manner provided in Section 9.5 below) (the “Nominal Value Sum”). However, the Company shall have the full authority in its discretion to determine at any time that the Nominal Value Sum shall not be paid and that the Company shall capitalize applicable profits or take any other action to ensure that it meets any requirement of applicable law regarding issuance of Shares for consideration that is lower than the nominal value of such Shares;

 

(c)           No fractional Shares will be issued to the Grantee and the number of Shares granted to the Grantee under the Plan shall be rounded off (upward or downward) to the nearest whole number.

 

9.4           Anything herein to the contrary notwithstanding, but without derogating from the provisions of Section 10 hereof, unless otherwise determined by the Committee, if any Option has not been exercised and the Shares subject thereto not paid for within six (6) years after the Date of Grant (or any shorter period set forth in the Notice of Grant), such Option and the right to acquire such Shares shall terminate, all interests and rights of the Grantee in and to the same shall ipso facto expire, and, in the event that in connection therewith any Options are still held in the Trust as aforesaid, the Trust with respect thereto shall ipso facto expire, and the Shares subject to such Options shall again be available for grant through Awards under the Plan (provided its term is extended, if needed), any other plans or sub-plans, as provided for in Section 6 herein, or any other incentive arrangement of the Company.

 

9.5           Each payment for Exercised Shares shall be in respect of a whole number of Shares, and shall be effected in cash or by a bank’s check payable to the order of the Company, or such other method of payment acceptable to the Company.

 

10.           Termination of Employment:

 

10.1           Employees.  In the event of a Cessation of Employment of a Grantee who was an employee at the Date of Grant, all Awards theretofore granted to such Grantee when such Grantee was an employee of the Company, unless determined otherwise by the Committee, shall terminate as follows:

 

  

  

  

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(a)           All such Awards that are not vested on the Date of Cessation shall terminate immediately.

 

(b)           If the Grantee’s cessation of employment is by reason of such Grantee's death or Disability, any Options previously granted to the Grantee (to the extent vested on the Date of Cessation) shall be exercisable by the Grantee (if applicable) or the Grantee's guardian, legal representative, estate or other person to whom the Grantee's rights are transferred by will or by laws of descent or distribution, at any time until the lapse of twelve (12) months from the Date of Cessation (but in no event after the expiration date of such Options), and shall thereafter terminate.

 

(c)           If the Grantee’s Cessation of Employment is due to any reason other than those stated in Sections 11.1(b), 11.1(d) or 11.1(e) herein, any Options previously granted to the Grantee (to the extent vested on the Date of Cessation) shall be exercisable at any time until the lapse of three (3) months from the Date of Cessation (but in no event after the expiration date of such Options), and shall thereafter terminate;

 

(d)           Notwithstanding the aforesaid, if the Grantee’s Cessation of Employment is due to (i) breach of the Grantee’s duty of loyalty towards the Company, or (ii) breach of the Grantee’s duty of care towards the Company, or (iii) the commission of any flagrant criminal offense by the Grantee, or (iv) the commission of any act of fraud, embezzlement or dishonesty towards the Company by the Grantee, or (v) any unauthorized use or disclosure by the Grantee of confidential information or trade secrets of the Company, or any substantial breach of the Grantee’s employment agreement with the Company, or (vi) any other intentional misconduct by the Grantee (by act or omission) adversely affecting the business or affairs of the Company in a material manner, or (vii) any act or omission by the Grantee which would allow for the termination of the Grantee’s employment without severance pay, according to the Severance Pay Law, 1963, any and all Options previously granted to the Grantee whether vested or not shall ipso facto expire immediately and be of no legal effect.

 

(e)           If a Grantee retires, he may, subject to the approval of the Committee, continue to enjoy such rights, if any, under the Plan and on such terms and conditions, with such limitations and subject to such requirements as the Committee in its discretion may determine.

 

(f)           Whether the Cessation of Employment of a particular Grantee is by reason of “Disability” for the purposes of paragraph 10.1(b) hereof or by virtue of “retirement” for purposes of paragraph 10.1(e) hereof, or is a termination of employment other than by reason of such Disability or retirement, or is for reasons as set forth in paragraph 10.1(d) hereof, shall be finally and conclusively determined by the Committee in its absolute discretion.

 

  

  

  

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(g)           Notwithstanding the aforesaid, under no circumstances shall any Option be exercisable after the specified expiration of the term of such Option.

 

10.2                Directors, Consultants and Contractors.  In the event that a Grantee, who is a director, consultant or contractor of the Company, ceases, for any reason, to serve as such, the provisions of Sections 10.1(a), 10.1(b), 10.1(c), 10.1(d), 10.1(f) and 10.1(g) above shall apply, mutatis mutandis.

 

10.3           Notwithstanding the foregoing provisions of this Section 10, the Committee shall have the discretion, exercisable either at the time an Option is granted or thereafter, to:

 

(a)           Extend the period of time for which the Option is to remain exercisable following the Date of Cessation to such greater period of time, as the Committee shall deem appropriate, but in no event beyond the specified expiration of the term of the Option; or

 

(b)           Permit the Option to be exercised, during the applicable exercise period following the Date of Cessation, not only with respect to the number of Shares for which such Option is exercisable on the Date of Cessation but also with respect to one or more additional installments in which the Grantee would have vested under the Option had the Grantee continued in the employ or service of the Company.

 

10.4           Notwithstanding the foregoing provisions of this Section 10, and for the avoidance of doubt, unless the Board determines otherwise, the transfer of a Grantee from the employ or service of the Company to the employ or service of an Affiliate, or from the employ or service of an Affiliate to the employ or service of the Company or another Affiliate, shall not be deemed a Cessation of Employment or termination of service for purposes hereof.

 

11.           Adjustments, Liquidation and Corporate Transaction:

 

11.1           Bonus Shares.

 

(a)           If the Company distributes bonus shares to all of its shareholders, including all holders of Shares, whose date of distribution is earlier than the Exercise Date or vesting date (for RSUs), as applicable, Shares in the number and kind that the Award holder would have been entitled to as bonus shares had he/she exercised the Options or had his/her RSUs vested, as the case may be, before the record date determining the right to receive bonus shares, will be added to the Exercised Shares to which the holder of the Awards is entitled upon exercising the Options or vesting of the RSUs, as applicable.

 

(b)           The Exercise Price of each Award will not change as a result of the addition of such bonus shares, while other terms referring to the Exercised Shares will also apply to the bonus shares added to the Exercised Shares, mutatis mutandis.

 

  

  

  

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(c)           If the Company distributes bonus shares, as described in Section (a) above, for which the record date for distribution and/or the date of distribution fall during the period in which Exercised Shares are registered in the name of the Trustee for the Beneficial Grantee, the Company will transfer to the Trustee an amount of bonus shares according to the number of Exercised Shares registered in its name at the time of distribution, and the Trustee will hold them in Trust for the Beneficial Grantees. In the event Exercised Shares have been transferred from the Trustee to a Beneficial Grantee and/or sold by the Company or the Trustee at the Beneficial Grantee’s request between the record date for distribution and the date of distribution, the Company will transfer bonus shares in respect of these Shares directly to such Beneficial Grantee. Each such Grantee will be entitled to Shares in the same number and class to which he would have been entitled, had the Shares been held by him prior to the record date for the right to receive the bonus shares.

 

11.2           Cash Dividends. If the Company distributes cash dividends with respect to all Company’s Shares issued to its shareholders, and the record date for determining the right to receive such dividends (the “Determining Date”) is earlier than the Exercise Date of the Options granted hereunder, then the Exercise Price for each Share subject to an Option not exercised prior to the Determining Date, shall be reduced by an amount equal to the gross amount of the dividend per Share distributed, calculated in the same currency as the Exercise Price according to the representative rate of exchange as of the Determining Date, if applicable. Notwithstanding the aforesaid, in the event the Company’s Shares are listed on any stock exchange or admitted to trading on an electronic securities trading system, the aforesaid reduction of the Exercise Price for each Share subject to an Option not exercised shall correspond to the reduction in the price of a Company Share as a result of such distribution as recorded by such stock exchange or electronic securities trading system. Unless determined otherwise by the Board, the Exercise Price shall not be reduced to less than the nominal value of a Share.

 

11.3           Adjustments.  Unless determined otherwise by the Committee, subject to any required action by the shareholders of the Company and/or any other required action under any applicable law, the number of Shares subject to each outstanding Award, and the number of Shares which have been authorized for issuance under the Plan but as to which no Awards have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Award, as well as the price per share of Shares subject to each such outstanding Award, shall be proportionately adjusted for any increase or decrease in the number of issued Shares resulting from a share split, reverse share split, combination or reclassification of the Shares or any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.”  Such adjustment shall be made by the Committee, whose determination in that respect shall be final, binding and conclusive.

 

  

  

  

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Except as expressly provided in this Section 12, 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 subject to an Award.

 

Except as expressly provided in this Section 11, the grant of Awards under the Plan shall in no way affect the right of the Company to distribute bonus shares, to offer rights to purchase its securities, or to distribute cash dividends.

 

11.4           Liquidation.  Unless otherwise provided by the Board, in the event of the proposed dissolution or liquidation of the Company, all outstanding Awards will terminate immediately prior to the consummation of such proposed action. In such case, the Committee may declare that any Award shall terminate as of a date fixed by the Committee and give each Grantee the right to exercise his/her Award or to allow his/her Awards to vest (for RSUs), including any Award that would not otherwise be vested (in respect of RSUs) and/or exercisable (in respect of Options).

 

11.5           Corporate Transaction.

 

(a)           In the event of a Corporate Transaction, the Vesting Period of the Awards shall be automatically and immediately accelerated so that all Awards whether vested or not shall become vested and, in respect of Options, exercisable, as of ten (10) days prior to the effective date of such Corporate Transaction and until the effective date of such Corporate Transaction. The Company will provide each Grantee with a ten (10) day advanced notice prior to the effective date of a Corporate Transaction and in case no such advance notice is possible and/or the exercise of Awards is restricted under applicable law or regulations during the ten (10) days prior to the effective date of a Corporate Transaction, the Grantee will be entitled to exercise his or her Awards after the effective date of said Corporate Transaction, allowing a ten (10) day period to do so from the later of (i) receipt of such notice, or (ii) removal of all restrictions under applicable law or regulations on the exercise of the Awards, after which any unexercised Awards shall terminate.

 

(b)           Immediately prior the consummation of the Corporate Transaction, all outstanding Awards which are not exercised until the effective date of the Corporate Transaction, shall terminate and cease to be outstanding.

 

11.6           Sale.  Subject to any provision in the Articles of Association of the Company and to the Committee’s sole and absolute discretion, in the event of sale or other disposition of all or substantially all of the outstanding share capital of the Company, each Grantee shall be obligated to participate in such sale and sell his or her Exercised Shares, provided, however, that each such Exercised Share shall be sold at a price equal to that of any other Share sold under the sale, subject to the absolute discretion of the Board.

 

  

  

  

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With respect to Exercised Shares held in Trust the following procedure will be applied:  the Trustee will transfer the Exercised Shares held in Trust and sign any document in order to effectuate the transfer of such Shares, including share transfer deeds, provided, however, that the Trustee receives a notice from the Board, specifying that: (i) all or substantially all of the issued outstanding share capital of the Company is to be sold, and therefore the Trustee is obligated to transfer the Exercised Shares held in Trust under the provisions of this Section 11.5; and (ii) the Company is obligated to withhold at source all taxes required to be paid upon release of the Exercised Shares from the Trust and to provide the Trustee with evidence, satisfactory to the Trustee, that such taxes indeed have been paid; and (iii) the Company is obligated to transfer the consideration for the Exercised Shares directly to the Grantees.

 

11.7           The grant of Awards under the Plan shall in no way affect the right of the Company to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

 

12.           Limitations on Transfer:

 

12.1           Unless determined otherwise by the Committee, no Award shall be assignable or transferable by the Grantee to whom granted otherwise than by will or the laws of descent and distribution, and an Award may be exercised, where applicable, during the lifetime of the Grantee only by such Grantee or by such Grantee's guardian or legal representative. Any assignment or transfer other than as aforesaid, shall be null and void. The terms of such Award shall be binding upon the beneficiaries, executors, administrators, heirs and successors of such Grantee.  In addition, as long as Awards and/or Exercised Shares are held by the Trustee on behalf of the Grantee, all rights of the Grantee over the Exercised Shares are personal, cannot be transferred, assigned, pledged or mortgaged, other than by will or pursuant to the laws of descent and distribution.

 

12.2           Underwriter’s Lock-up.  The Grantee’s rights to sell Exercised Shares may be subject to certain limitations (including a lock-up period), as will be requested by the Company or its underwriters, from time to time, or upon a specific occurrence, and the Grantee unconditionally agrees and accepts any such limitations.

 

12.3           Restrictions on Shares. The Committee may impose such restrictions on any Exercised Shares, as it may deem advisable, including, but not limited to, restrictions related to applicable U.S. federal securities laws, the requirements of any national securities exchange or system upon which Shares are then listed or traded, or any U.S. blue sky or state securities laws.

 

13.           Restricted Stock Units

 

13.1           Subject to the sole and absolute discretion and determination of the Committee, 

 

  

  

  

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the Committee may decide to grant under this Plan, in addition to, or instead of, any grant of Options, Restricted Stock Unit(s) (“RSU(s)”). RSUs are Options, bearing an Exercise Price of no more than the underlying Share’s nominal value.  In addition, notwithstanding anything to the contrary in Section 9.2 above, upon the lapse of the Vesting Period of an RSU, such RSU shall automatically vest into an Exercised Share of the Company and, unless otherwise determined by the Board, the Grantee shall pay to the Company its nominal value as a precondition to any issuance of such Exercised Share. However, the Company shall have the full authority in its discretion to determine at any time that the nominal value shall not be paid and that the Company shall capitalize applicable profits or take any other action to ensure that it meets any requirement of applicable law regarding issuance of shares for consideration that is lower than the nominal value of such Shares.

 

13.2           All other terms and conditions of this Plan applicable to Options, shall apply to RSUs mutatis mutandis.

 

14.           Term and Amendment of the Plan:

 

14.1           The Plan shall terminate, and no additional Awards may be granted pursuant to it, upon the earliest of (i) the expiration of ten (10) years from the date the Plan was adopted by the Board, or (ii) the termination of all outstanding Awards in connection with a Corporate Transaction. All Awards outstanding at the time of a clause (i) termination event shall continue to have full force and effect in accordance with the provisions of the Plan and the documents evidencing such Awards.

 

14.2           Subject to applicable laws and regulations, the Board in its discretion may, at any time and from time to time, amend, alter, extend or terminate the Plan, as it deems advisable. However, no amendment or modification shall adversely affect any rights and obligations with respect to Options at the time outstanding under the Plan, unless the applicable Grantee consents to such amendment or modification. In the event the Committee wishes to grant Awards to non-Israeli Grantees, the Committee may adopt, as part of this Plan and based on it, sub-plans, in order to comply with all relevant and applicable laws and regulations of the country of residence of such Grantees.

 

15.           Withholding and Tax Consequences: The Company’s obligation to deliver Exercised Shares upon the exercise or vesting of any Awards granted under the Plan shall be subject to the satisfaction of all applicable income tax and other compulsory payments withholding requirements. All tax consequences and obligations regarding any other compulsory payments arising from the grant, exercise, or vesting of any Award, from the payment for, or the subsequent disposition of, Exercised Shares subject thereto or from any other event or act (of the Company, of the Trustee or of the Grantee) hereunder, shall be borne solely by the Grantee, and the Grantee shall indemnify the Company and/or the Trustee, as applicable, and hold them harmless against and from any and all liability for any such tax or other compulsory payment, or 

 

  

  

  

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interest or penalty thereon, including without limitation, liabilities relating to the necessity to withhold, or to have withheld, any such tax or other compulsory payment from any payment made to the Grantee.

 

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

 

16.           Miscellaneous:

 

16.1           Continuance of Employment.  Neither the Plan nor the grant of an Award thereunder shall impose any obligation on the Company to continue the employment or service of any Grantee. Nothing in the Plan or in any Award granted thereunder shall confer upon any Grantee any right to continue in the employment or service of the Company for any period of specific duration, or interfere with or otherwise restrict in any way the right of the Company to terminate such employment or service at any time, for any reason, with or without cause.

 

16.2           Notwithstanding anything to the contrary in this Plan, it is hereby clarified, that any income attributed (or deemed to be attributed) to the Grantee as a result of this Plan, the grant or exercise of Awards thereunder, or the sale of Exercised Shares, shall not be taken into account for the purpose of calculating the Grantee’s eligibility for any rights deriving from the employee-employer or service provider-client relationship between the Grantee and the Company.

 

16.3           Governing Law.  The Plan and all instruments issued thereunder or in connection therewith, shall be governed by, and interpreted in accordance with, the laws of the State of Israel, excluding the choice of law rules thereof.

 

16.4           Application of Funds.  Any proceeds received by the Company from the sale of Exercised Shares pursuant to the Awards granted under the Plan shall be used for general corporate purposes of the Company.

 

16.5           Multiple Agreements.  The terms of each Award may differ from other Awards granted under the Plan at the same time, or at any other time.  The Committee may also grant more than one Award to a given Grantee during the term of the Plan, either in addition to, or in substitution for, one or more Awards previously granted to that Grantee.  The grant of multiple Awards may be evidenced by a single Notice of Grant or multiple Notices of Grant, as determined by the Committee.

 

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

 

  

  

  

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16.7                      The provisions of this Plan shall not be construed as deviating from any applicable laws, rules and regulations.

 

*****

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