Document:

caci-ex1031_345.htm

 

Exhibit 10.31

CACI INTERNATIONAL INC 2006 STOCK INCENTIVE PLAN

PERFORMANCE RESTRICTED STOCK UNIT GRANT AGREEMENT

This Performance Restricted Stock Unit Grant Agreement (the “Agreement”) is entered into by and between CACI International Inc, a Delaware corporation (the “Company” or “CACI”) and NAME (the “Grantee”), effective as of September 18, 2015 (the “Grant Date”).

Recitals

WHEREAS, the Board of Directors of the Company adopted the CACI International Inc 2006 Stock Incentive Plan, as amended and restated effective August 11, 2011 (the “Plan”);

WHEREAS, the Plan provides for Awards to key employees of the Company, or its Subsidiaries and Affiliates;

WHEREAS, the Grantee has been determined to be a key employee who is entitled to an Award under the Plan; and

WHEREAS, the Company desires to provide the Grantee the opportunity to acquire stock ownership in the Company based on the performance of the Company, in order to provide the Grantee with a direct proprietary interest in the Company and to provide the Grantee with an incentive to remain in the employ of the Company or a Subsidiary or Affiliate of the Company.

NOW, THEREFORE, the Company and the Grantee covenant and agree as follows:

	
1.
	
DEFINITIONS.

Under this Agreement, except where the context otherwise indicates, the following definitions apply:

(a)“Account” means the bookkeeping account maintained for the Grantee pursuant to Section 2.

(b)“Agreement” means this Performance Restricted Stock Unit Grant Agreement and shall include the applicable provisions of the Plan, which is hereby incorporated into and made a part of this Agreement.

(c)“Cause” means:

(1)gross negligence, willful misconduct or willful malfeasance by the Grantee in connection with the performance of any material duty for the Company or an Affiliate;

(2)the Grantee’s commission or participation in any violation of any legal requirement or obligation relating to the Company (unless the Grantee had a reasonable good faith belief that the act, omission or failure to act in question was not a violation of such legal requirement or obligation) and such violation has materially and adversely affected the Company;

(3)the Grantee’s conviction of, or plea of guilty or nolo contendere, to a crime committed during the course of his/her employment with the Company that the Committee, acting in good faith, reasonably determines is likely to have a material adverse affect on the reputation or business of the Company or a Subsidiary or Affiliate of the Company;

(4)theft, embezzlement or fraud by the Grantee in connection with the performance of his or her duties for the Company or a Subsidiary or Affiliate of the Company;

(5)a violation of any confidentiality agreement or obligation or non-compete agreement with the Company or a Subsidiary or Affiliate of the Company;

(6)a material violation of (i) the Company’s Standards of Conduct, as the same may be amended and in effect from time to time, or (ii) any other published Company policy; or

(7)the diversion or appropriation of any material business opportunity.

If the written employment agreement between the Grantee and the Company provides a different definition of “Cause” (or other term that defines conduct on the part of the Grantee that permits the Company to terminate such written employment agreement without liability to the Grantee), that definition shall control and shall be substituted for the above in applying the Plan to the Grantee.

 

 

 

 

 

(d)“Change in Control Date” shall be the date (after the Grant Date) on which a Change in Control event is legally consummated and legally binding upon the parties. 

(e)“EPS” means earnings per share of Stock calculated using fully diluted shares of Stock outstanding (i.e. including the impact of all convertible securities) from continuing operations before the cumulative effect of any change in accounting principles, as determined in accordance with GAAP and reflected in the Company’s Consolidated Statements of Operations in its filing with the Securities and Exchange Commission, but without regard to any change in accounting standards that may be required by the Financial Accounting Standards Board after the Grant Date and modified so as to exclude any Extraordinary Items of Income.

(f)“Extraordinary Items of Income” means any amount of income or gain included in the calculation of the net income of the Company that the Committee, in its discretion, but acting in good faith, determines to be unusual in nature; provided, however, in no event will the revenue or income from an acquisition be deemed to be unusual in nature, to the extent revenue or income from such acquisition is consolidated and included with revenue and income of the Company for reporting purposes.

(g)“First Year” means the period beginning September 18, 2015 and ending September 18, 2016.

(h)“First Year At Risk RSUs” means one-third (1/3) of the number of Total At Risk RSUs, rounded down to the nearest whole Performance RSU.

(i)“First Year Earned RSUs” means the Performance RSUs earned as provided in Section 3(a)(2) herein.

(j)“First Year Ending Stock Price Average” means the average of the closing prices per share of Stock during the First Year Measurement Period as reported by such registered national securities exchange on which the Stock is listed, or, if the Stock is not listed on such an exchange, as quoted on NASDAQ.

(k)“First Year Measurement Period” means the period beginning June 21, 2016 and ending September 18, 2016.

(l)“Fiscal Year” means the fiscal year of the Company, which is currently July 1 through June 30.

(m)“GAAP” means U.S. generally accepted accounting principles, consistently applied.

(n)“Good Reason Termination” means the Grantee’s Separation from Service resulting from the Grantee’s resignation following the occurrence of any of the following circumstances without the Grantee’s prior written consent:

(1)A material reduction in the Grantee’s total compensation and benefit opportunity from that in effect on the day before the Change in Control Date (other than a reduction made by the Board, acting in good faith, based upon the performance of the Grantee, or to align the compensation and benefits of the Grantee with that of comparable executives, based on market data);

(2)A substantial adverse alteration in the conditions of the Grantee’s employment from those in effect on the day before the Change in Control Date;

(3)A substantial adverse alteration in the nature or status of the Grantee’s position or responsibilities from those in effect on the day before the Change in Control Date; or

(4)A change in the geographic location of the Grantee’s job more than fifty (50) miles from the place at which such job was based on the day before the Change in Control Date.

Before the Grantee may resign for Good Reason, the Grantee must provide the Company at least thirty (30) days’ prior written notice of his intent to resign for Good Reason and specify in reasonable detail the Good Reason upon which such resignation is based.  The Company shall have a reasonable opportunity to cure any such Good Reason (that is susceptible of cure) within thirty (30) days after the Company’s receipt of such notice.  The Grantee’s delay in providing such notice shall not be deemed to be a waiver of any such Good Reason, nor does the failure to resign for one Good Reason prevent any later Good Reason resignation for a similar or different reason.

(o)“Grandfathered Executive” means an executive who, as of July 1, 2008, was age 62 or older and an employee of the Company (or a Subsidiary or Affiliate of the Company).

(p)“Grandfathered Retirement” means, in the case of a Grandfathered Executive, the date of the Grantee’s Separation from Service, on or after age 65, due to retirement following delivery of a Retirement Notice.

(q)“Grant Date” means September 18, 2015.

(r)“Involuntary Termination Without Cause” means a Separation from Service due to the Grantee’s termination of employment by the Company without Cause.

(s)“Maximum Earned RSUs” means two hundred percent (200%) of the number of Performance RSUs stated in the Performance RSU Overview.

(t)“Measurement Period” means the period that includes the First Year Measurement Period, Second Year Measurement Period, and Third Year Measurement Period and which ends on September 18, 2018.

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(u)“Performance RSU” means a bookkeeping entry that represents an amount equivalent to one share of Stock. 

(v)“Performance RSU Overview” means the Performance RSU Overview immediately following the signature lines of this Agreement.

(w)“Plan” means the CACI International Inc 2006 Stock Incentive Plan, as amended from time to time.

(x)“Retirement” means the date of the Grantee’s Separation from Service, on or after age 62, due to retirement following delivery of a Retirement Notice.  The term “Retirement” excludes a Grandfathered Retirement.

(y)“Retirement Notice” means a written notice from the Grantee to the Committee of the Grantee’s intention to have a Separation from Service due to Retirement or Grandfathered Retirement without any other employment in the information technology industry.

(z)“Second Year” means the period beginning September 19, 2016 and ending September 18, 2017.

(aa)“Second Year At Risk RSUs” means one-third (1/3) of the number of Total At Risk RSUs, rounded down to the nearest whole RSU.

(bb)“Second Year Earned RSUs” means the RSUs earned as provided in Section 3(a)(3) herein.

(cc)“Second Year Ending Stock Price Average” means the average of the closing prices per share of Stock during the Second Year Measurement Period as reported by such registered national securities exchange on which the Stock is listed, or, if the Stock is not listed on such an exchange, as quoted on NASDAQ.

(dd)“Second Year Measurement Period” means the period beginning June 21, 2017 and ending September 18, 2017.

(ee)“Separation from Service” means a Separation from Service, as defined in the Plan, of the Grantee from the Company (or a Subsidiary or Affiliate of the Company).

(ff)“Service Requirement” means the Grantee must have been in the continuous employment of the Company (or a Subsidiary or Affiliate of the Company) from the Grant Date through the applicable vesting anniversary of the Grant Date as provided in Section 3(b) without incurring a Separation from Service.

(gg)"Specified Employee" means a specified employee within the meaning of Code Section 409A(a)(2)(B)(i).

(hh)“Starting Stock Price Average” means Eighty Dollars and Seventy One Cents ($80.71), which is the average of the closing prices per share of the Stock for the 90 calendar-day period ending on the Grant Date (i.e., from June 21, 2015 through September 18, 2015) as reported by such registered national securities exchange on which the Stock is listed.

(ii)“Target Achievement Level” means the First Year Ending Stock Price Average equals the Starting Stock Price Average at the end of the First Year Measurement Period; the Second Year Ending Stock Price Average equals the Starting Stock Price Average at the end of the Second Year Measurement Period; and Third Year Ending Stock Price Average equals the Starting Stock Price Average at the end of the Third Year Measurement Period.

(jj)“Third Year” means the period beginning September 19, 2017 and ending September 18, 2018.

(kk)“Third Year At Risk RSUs” means the Total At Risk RSUs less the First Year At Risk RSUs and Second Year At Risk RSUs.

(ll)“Third Year Earned RSUs” means the RSUs earned as provided in Section 3(a)(4) herein.

(mm)“Third Year Ending Stock Price Average” means the average of the closing prices per share of Stock during the Third Year Measurement Period as reported by such registered national securities exchange on which the Stock is listed, or, if the Stock is not listed on such an exchange, as quoted on NASDAQ.

(nn)“Third Year Measurement Period” means the period beginning June 21, 2018 and ending September 18, 2018.

(oo)“Total At Risk RSUs” means the number of Performance RSUs as stated in the Performance RSU Overview.

Any capitalized term used herein that is not expressly defined in this Agreement shall have the meaning that such term has under the Plan unless otherwise provided herein.

	
2.
	
AWARD OF PERFORMANCE RSUs.

(a)Grant of Performance RSUs.  Subject to the provisions of this Agreement and pursuant to the provisions of the Plan, the Committee hereby grants to the Grantee a Performance RSU Award on the Grant Date for the targeted number of Performance RSUs stated in the Performance RSU Overview representing the number of Performance RSUs that would be tentatively earned by the Grantee upon attainment by the Company of the Target Achievement Level and the EPS condition and which would 

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vest upon the Grantee’s completion of the Service Requirement.  The Grantee shall be entitled to receive one share of Stock for each Performance RSU earned by the Grantee and vested pursuant to the terms of this Agreement.  The number of Performance RSUs to which the Grantee would be entitled if the Target Achievement Level and EPS condition is attained by the Company, and the Service Requirement fully completed, shall be credited to the Grantee’s Account as of the Grant Date.  The Grantee’s Account shall be the record of Performance RSUs granted to the Grantee hereunder and is solely for accounting purposes and shall not require a segregation of any assets of the Company.  The Grantee shall not have the rights of a stockholder with respect to any Performance RSUs credited to the Grantee’s Account until shares of Stock have been distributed to the Grantee pursuant to Section 4, and the Grantee’s name has been entered as a stockholder of record on the books of the Company with respect to such distributed shares of Stock. 

(b)Dividend Equivalents.  If on any date prior to issuance of the shares of Stock subject to the Performance RSUs, the Company shall pay any dividend on the Stock (other than a dividend payable in shares of Stock), the number of Performance RSUs that are ultimately earned by the Grantee pursuant to Section 3 shall as of the date such Performance RSUs are earned, be increased by an amount equal to:  (A) the product of the number of Performance RSUs earned by the Grantee pursuant to Section 3 (with such RSUs being treated, for purposes of this provision, as if they had been credited to the Grantee’s Account as of the record date for such dividend), multiplied by the per share amount of any dividend (or, in the case of any dividend payable in property other than cash, the per share value of such dividend, as determined in good faith by the Board of Directors of the Company), divided by (B) the Fair Market Value of a share of Stock on the payment date of such dividend.  In the case of any dividend declared on Stock which is payable in shares of Stock, the number of Performance RSUs credited to the Grantee shall be increased by a number equal to the product of (X) the aggregate number of Performance RSUs that are earned by the Grantee pursuant to Section 3 (with such RSUs being treated, for purposes of this provision, as if they had been credited to the Grantee’s Account through the related dividend record date), multiplied by (Y) the number of shares of Stock (including any fraction thereof) payable as a dividend on a share of Stock.  The Grantee shall have no right to the payment of any dividends either declared or accrued on shares of Stock subject to the Performance RSUs for any period prior to the date of issuance of the Stock.

	
3.
	
PERFORMANCE, VESTING AND OTHER RESTRICTIONS.

The Performance RSUs shall become earned and vested only upon, and to the extent of, the satisfaction of the Performance Measures (as defined in the Plan) and the completion of the employment requirements set forth below.

(a)Performance Measures.

(1)EPS Condition.  No Performance RSUs shall become tentatively earned under this Section 3(a) in the event the EPS for the fiscal year of the Company ending June 30, 2016 is less than Four Dollars ($4.00). If such  EPS condition is satisfied (i.e., if EPS for the fiscal year of the Company ending June 30, 2016 is at least $4.00), the Grantee shall, subject to satisfaction of the Performance Measures set forth in this Section 3, tentatively earn the following number of Performance RSUs:

	
 
	
(A)
	
the number of Performance RSUs granted in the Performance RSU Overview, plus or minus

	
 
	
(B)
	
the number of Performance RSUs determined  in Sections 3(a)(2), 3(a)(3), and 3(a)(4).

(2)First Year Average Stock Price Condition.  Subject to satisfying the EPS condition in  Section 3(a)(1) above,  the number of Performance RSUs in Section 3(a)(1)(A) above shall either be increased or decreased by the following number of Performance RSUs:

	
 
	
(A)
	
The First Year At Risk RSUs multiplied by the percentage, if any, (subject to the cap on increases below) by which the First Year Ending Stock Price Average exceeds the Starting Stock Price Average, or

	
 
	
(B)
	
The First Year At Risk RSUs multiplied by the percentage, if any, by which the Starting Stock Price Average exceeds the First Year Ending Stock Price Average.

(3)Second Year Average Stock Price Condition.  Subject to satisfying the EPS condition in  Section 3(a)(1) above,  the number of Performance RSUs in Section 3(a)(1)(A) above shall either be increased or decreased by the following number of Performance RSUs:

	
 
	
(A)
	
The Second Year At Risk RSUs multiplied by the percentage, if any, (subject to the cap on increases below) by which the Second Year Ending Stock Price Average exceeds the Starting Stock Price Average, or

	
 
	
(B)
	
The Second Year At Risk RSUs multiplied by the percentage, if any, by which the Starting Stock Price Average exceeds the Second Year Ending Stock Price Average.

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(4)Third Year Average Stock Price Condition.  Subject to satisfying the EPS condition in Section 3(a)(1) above, the number of Performance RSUs in Section 3(a)(1)(A) above shall either be increased or decreased by the following number of RSUs: 

	
 
	
(A)
	
The Third Year At Risk RSUs multiplied by the percentage, if any, (subject to the cap on increases below) by which the Third Year Ending Stock Price Average exceeds the Starting Stock Price Average, or

	
 
	
(B)
	
The Third Year At Risk RSUs multiplied by the percentage, if any, by which the Starting Stock Price Average exceeds the Third Year Ending Stock Price Average.

The total increase in Sections 3(a)(2)(A), 3(a)(3)(A), and 3(a)(4)(A) above shall be capped at the Maximum Earned RSUs, such that the number of Performance RSUs tentatively earned in this Agreement shall be capped at two hundred percent (200%) of the number of Performance RSUs in Section 3(a)(1)(A) above (plus any Performance RSUs earned as the result of dividend equivalents under Section 2(b)).  Therefore, any excess earned based on the First Year Average Stock Price Condition, Second Year Average Stock Price Condition, and/or Third Year Average Stock Price Condition will not result in any additional Performance RSUs being tentatively earned under this Agreement beyond the Maximum Earned RSUs.

(b)Vesting Following Measurement Period. Performance RSUs which are tentatively earned under  Section 3(a) above shall become earned and vested as follows:

(1)Completion of Service Requirement.  Except as otherwise provided in this Section 3(b),

	
 
	
(A)
	
Fifty percent (50%) of the Performance RSUs which were tentatively earned under Section 3(a) above shall become earned and vested on September 18, 2018, provided the Grantee remains in the continuous employment of the Company (or a Subsidiary or Affiliate of the Company) from the Grant Date through September 18, 2018; and

	
 
	
(B)
	
an additional fifty percent (50%) of the Performance RSUs which were tentatively earned under Section 3(a) above shall become earned and vested on September 18, 2019, provided the Grantee remains in the continuous employment of the Company (or a Subsidiary or Affiliate of the Company) from the Grant Date through September 18, 2019.

(2)Retirement; Involuntary Termination Without Cause.  Upon the Grantee’s Retirement or Involuntary Termination Without Cause following the end of the Measurement Period and prior to the fourth year anniversary of the Grant Date, then in lieu of vesting under Section 3(b)(1) above, the Grantee shall vest in the Performance RSUs tentatively earned under Section 3(a) at the rate of one forty-eighth (1/48th) of such Performance RSUs for each full month of employment with the Company (or a Subsidiary or Affiliate of the Company) completed by the Grantee following the Grant Date and prior to Retirement or Involuntary Termination Without Cause, less the number, if any, of Performance RSUs that previously vested under Section 3(b)(1) above.

(3)Grandfathered Retirement.  Upon the Grandfathered Retirement of the Grantee following the end of the Measurement Period and prior to the fourth year anniversary of the Grant Date, any Performance RSUs which had not previously become earned and vested, but which were tentatively earned under Section 3(a) above, shall become earned and vested on such date.

(4)Disability or Death.  If there is a Separation from Service of the Grantee after the end of the Measurement Period and prior to the fourth year anniversary of the Grant Date due to Disability or death, then any Performance RSUs which had not previously become earned and vested, but which were tentatively earned under Section 3(a) above, shall become earned and vested on the date of the Grantee’s Separation from Service due to Disability or death.

(5)Change in Control.  If after the end of the Measurement Period and prior to the fourth year anniversary of the Grant Date, there is a Change in Control of the Company that qualifies as a “change in ownership or control” under Treas. Regs. § 1.409A-3(i)(5) and a Good Reason Termination or Involuntary Termination Without Cause occurs during such time period, then any Performance RSUs which had not previously become earned and vested, but which were tentatively earned under Section 3(a) above, shall become earned and vested upon the date of Separation from Service due to such Good Reason Termination or Involuntary Termination Without Cause, and Sections 3(b)(1), (2), (3) and (4) above shall no longer thereafter apply.

(c)Effect of Separation from Service, Change in Control, Death or Disability During First Year.

(1)Separation from Service.  Except as provided in Sections 3(c)(2), (3), (4) and (5) below, if the Grantee incurs a Separation from Service for any reason during the First Year, all Performance RSUs shall be forfeited.

(2)Retirement; Grandfathered Retirement; Involuntary Termination Without Cause.  If the Grantee incurs a Separation from Service during the First Year due to Retirement, Grandfathered Retirement or Involuntary Termination Without Cause, the Grantee shall vest, on the date of Separation from Service, in any Performance RSUs tentatively earned under Sections 3(a)(1) and 3(a)(2) at the rate of one forty-eighth (1/48th) of such Performance RSUs for each full month of employment 

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with the Company (or a Subsidiary or Affiliate of the Company) completed by the Grantee following the Grant Date and prior to Retirement, Grandfathered Retirement or Involuntary Termination Without Cause; provided, however,  that the Total At Risk RSUs shall be used in place of the First Year At Risk RSUs. 

(3)Disability.  If the Grantee incurs a Separation from Service during the First Year due to the Grantee’s Disability, the Grantee shall become vested, on the date of Separation from Service, in the number of Performance Shares tentatively earned under Sections 3(a)(1) and 3(a)(2) above; provided, however,  that the Total At Risk RSUs shall be used in place of the First Year At Risk RSUs.

(4)Death.  If the Grantee incurs a Separation from Service during the First Year due to the Grantee’s death, the Grantee shall become vested, on the date of Separation from Service, in the number of Performance Shares tentatively earned under Sections 3(a)(1) and 3(a)(2) above; provided, however, that the Total At Risk RSUs shall be used in place of the First Year At Risk RSUs.

(5)Change in Control.  If there is a Change in Control of the Company during the First Year that qualifies as a “change in ownership or control” under Treas. Regs. § 1.409A-3(i)(5):

	
 
	
(A)
	
The Grantee shall earn two hundred percent (200%) of the number of Performance RSUs that would have been achieved at the Target Achievement Level without regard to the EPS condition in Section 3(a)(1); and

	
 
	
(B)
	
If within twenty-four (24) months after such Change in Control there is a Good Reason Termination or an Involuntary Termination Without Cause, then the Performance RSUs earned under (A) above shall become fully vested on the date of Separation from Service.

(d)Effect of Separation from Service, Change in Control, Death or Disability During Second Year.

(1)Separation from Service.  Except as provided in Sections 3(d)(2), (3), (4) and (5) below, if the Grantee incurs a Separation from Service for any reason during the Second Year, all Performance RSUs shall be forfeited.

(2)Retirement; Involuntary Termination Without Cause.  If the Grantee incurs a Separation from Service during the Second Year due to Retirement or Involuntary Termination Without Cause, the Grantee shall vest, on the date of Separation from Service, in any Performance RSUs tentatively earned under Sections 3(a)(1), 3(a)(2), and 3(a)(3) at the rate of one forty-eighth (1/48th) of such Performance RSUs for each full month of employment with the Company (or a Subsidiary or Affiliate of the Company) completed by the Grantee following the Grant Date and prior to Retirement or Involuntary Termination Without Cause; provided, however, that the sum of the Second Year At Risk RSUs and Third Year At Risk RSUs shall be used in place of the Second Year At Risk RSUs.

(3)Grandfathered Retirement.  Upon the Grandfathered Retirement of the Grantee during the Second Year, the Grantee shall become vested, on the date of Separation from Service, in the number of Performance Shares tentatively earned under Sections 3(a)(1), 3(a)(2) and 3(a)(3); provided, however,  that the sum of the Second Year At Risk RSUs and Third Year At Risk RSUs shall be used in place of the Second Year At Risk RSUs, and the First Year Ending Stock Price Average shall be used in place of the Second Year Ending Stock Price Average.

(4)Disability.  If the Grantee incurs a Separation from Service during the Second Year due to the Grantee’s Disability, the Grantee shall become vested, on the date of Separation from Service, in the number of Performance Shares tentatively earned under Sections 3(a)(1), 3(a)(2) and 3(a)(3); provided, however, that the sum of the Second Year At Risk RSUs and Third Year At Risk RSUs shall be used in place of the Second Year At Risk RSUs, and the First Year Ending Stock Price Average shall be used in place of the Second Year Ending Stock Price Average.

(5)Death.  If the Grantee incurs a Separation from Service during the Second Year due to the Grantee’s death, the Grantee shall become vested, on the date of Separation from Service,  in the number of Performance Shares tentatively earned under Sections 3(a)(1), 3(a)(2) and 3(a)(3); provided, however, that the sum of the Second Year At Risk RSUs and Third Year At Risk RSUs shall be used in place of the Second Year At Risk RSUs, and the First Year Ending Stock Price Average shall be used in place of the Second Year Ending Stock Price Average.

(6)Change in Control.  If there is a Change in Control of the Company during the Second Year that qualifies as a “change in ownership or control” under Treas. Regs. § 1.409A-3(i)(5):

	
 
	
(A)
	
The Grantee shall earn (i) the First Year Earned RSUs, plus (ii) either two hundred percent (200%) of the sum of the Second Year At Risk RSUs and Third Year At Risk RSUs, or the Maximum Earned RSUs, whichever is lower; and

	
 
	
(B)
	
If within twenty-four (24) months after such Change in Control there is a Good Reason Termination or an Involuntary Termination Without Cause, then the Performance RSUs earned under (A) above shall become fully vested on the date of Separation from Service.

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(e)Effect of Separation from Service, Change in Control, Death or Disability During Third Year. 

(1)Separation from Service.  Except as provided in Sections 3(e)(2), (3), (4) and (5) below, if the Grantee incurs a Separation from Service for any reason during the Third Year, all Performance RSUs shall be forfeited.

(2)Retirement; Involuntary Termination Without Cause.  If the Grantee incurs a Separation from Service during the Third Year due to Retirement or Involuntary Termination Without Cause, the Grantee shall vest, on the date of Separation from Service, in any Performance RSUs tentatively earned under Section 3(a) at the rate of one forty-eighth (1/48th) of such Performance RSUs for each full month of employment with the Company (or a Subsidiary or Affiliate of the Company) completed by the Grantee following the Grant Date and prior to Retirement or Involuntary Termination Without Cause.

(3)Grandfathered Retirement.  Upon the Grandfathered Retirement of the Grantee during the Third Year, the Grantee shall become vested, on the date of Separation from Service, in the number of Performance Shares tentatively earned under  Section 3(a) above; provided, however, that the Second Year Ending Stock Price Average shall be used in place of the Third Year Ending Stock Price Average.

(4)Disability.  If the Grantee incurs a Separation from Service during the Third Year due to the Grantee’s Disability, the Grantee shall become vested, on the date of Separation from Service, in the number of Performance Shares tentatively earned under Section 3(a) above; provided, however, that the Second Year Ending Stock Price Average shall be used in place of the Third Year Ending Stock Price Average.

(5)Death.  If the Grantee incurs a Separation from Service during the Third Year due to the Grantee’s death, the Grantee shall become vested, on the date of Separation from Service, in the number of Performance Shares tentatively earned under Section 3(a) above; provided, however, that the Second Year Ending Stock Price Average shall be used in place of the Third Year Ending Stock Price Average.

(6)Change in Control.  If there is a Change in Control of the Company during the Third Year that qualifies as a “change in ownership or control” under Treas. Regs. § 1.409A-3(i)(5):

	
 
	
(A)
	
The Grantee shall earn (i) the First Year Earned RSUs, plus (ii) either the Second Year Earned RSUs plus two hundred percent (200%) of the Third Year At Risk RSUs, or the Maximum Earned RSUs, whichever is lower; and

	
 
	
(B)
	
If there is a Good Reason Termination or an Involuntary Termination Without Cause, then the Performance RSUs earned under (A) above shall become fully vested on the date of Separation from Service.

(f)Examples.  Hypothetical examples of the calculations of earned and vested Performance RSUs based on certain assumptions appear in Appendices A, B, C, D and E.  Such hypothetical examples are presented solely as illustrations of the calculation methodology.

(g)Committee Determination.  The Performance Measures in Section 3(a) are evaluated independently by the Committee.  The Committee shall determine and certify the extent to which the Performance Measures have been met following the end of the Measurement Period and the number of Performance RSUs tentatively earned and the number earned and vested by the Grantee hereunder.  The Committee’s determinations shall be binding and conclusive on all parties. Performance RSUs shall not be deemed to have been tentatively earned until the Committee’s determination and certification as to the attainment of the respective Performance Measures has been completed.  The Committee may not exercise discretion to increase the amount earned or vested and/or the shares of Stock otherwise due based on the extent to which the Performance Measures are met.

(h)Employment Requirement; Forfeiture.

(1)General.  Except as otherwise provided in Sections 3(b), (c), (d), or (e), in order to become vested in (i.e., earn) Performance RSUs under the terms of this Agreement, the Performance RSUs must be tentatively earned under Section 3(a) and the Grantee must meet the Service Requirement.  The Grantee shall not be deemed to meet the Service Requirement if the Grantee incurs a Separation from Service, even if the Grantee is receiving severance in the form of salary continuation through the regular payroll system.  Any portion of the Performance RSUs which have not yet or do not become earned and vested under Section 3(b), (c), (d), or (e), as of the date Grantee incurs a Separation from Service, shall be forfeited, except to the extent otherwise provided in Sections 3(b), (c), (d), or (e).  Any Performance RSUs then credited to the Grantee’s Account which are determined by the Committee to have not been tentatively earned under Section 3(a) following the end of the Measurement Period shall be forfeited.

(2)Adjustment of Award.  In the event it is determined that a Performance RSU was paid based on incorrect financial results, the Committee will review a Performance RSU paid to the Grantee. If the amount of any payment under a Performance RSU would have been lower had the level of achievement of applicable  Performance Measures  been calculated based on the correct financial results, the Committee may, in its sole discretion,  adjust (i.e., lower) the amount of such payment so that it reflects the amount that would have been paid based on the correct financial results and, to the extent permitted by applicable law, 

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require the reimbursement of any amount paid to or received by the Grantee with respect to such Performance RSU. Additionally, payments under this Agreement are subject to recovery by the Company to the extent required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the Sarbanes-Oxley Act of 2002 and any regulations promulgated thereunder. 

(3)Forfeiture of Award and Right to Payments.

	
 
	
(A)
	
In the event that the Grantee incurs a Separation from Service due to termination by the Company for Cause then, in such event, the Grantee shall forfeit all rights to the Performance RSUs and shall repay to the Company all shares of Stock received by the Grantee with respect to such Performance RSUs or the Fair Market Value of such shares of Stock if no longer in the Grantee’s possession on or after the date of the act giving rise to the Grantee’s termination for Cause.

	
 
	
(B)
	
In the event that, following the Grantee’s Separation from Service, the Company discovers that, during the course of his/her employment with the Company, the Grantee committed an act that would have given rise to a termination for Cause, then, in such event, the Grantee shall forfeit all outstanding rights to the Performance RSUs. Further, the Grantee agrees and undertakes to repay to the Company all shares of Stock received by the Grantee or the Fair Market Value of such shares of Stock if no longer in the Grantee’s possession on or after the date of such act or violation.

	
4.
	
ISSUANCE OF SHARES.

(a)Issuance of Shares.  The Company shall establish an account for the Grantee at UBS Financial Services, Inc., or such other similar organization which provides stock administration services to the Company, and transfer into such account shares of Stock equal in number to the number of Performance RSUs that the Committee determines have become earned and vested (except for any shares of Stock which are withheld to satisfy any tax withholding requirement) as soon as practical after the earlier of the following dates (but no later than the 15th day of the third calendar month following the applicable date):

(1)The date on which the Performance RSUs have been earned and vested under Sections 3(b), (c), (d), and (e), based on the determination of the Committee;

(2)The September 30th next following the end of the First Year Measurement Period, Second Year Measurement Period, or Third Year Measurement Period  as to Performance RSUs which have been earned and vested under Section 3(c), (d), or (e), based on the determination of the Committee; provided, however, that to the extent the Performance RSUs are nonqualified deferred compensation subject to Code Section 409A, and to which an exception to Code Section 409A does not apply, any distribution to the Grantee, if the Grantee is a Specified Employee, on account of a Separation from Service shall be made within the thirty (30) day period after the first day of the seventh month following the date of Separation from Service (or, if earlier, the date of the Grantee’s death),

(3)Separation from Service following the First Year Measurement Period, Second Year Measurement Period, or Third Year Measurement Period  on account of Disability, Grandfathered Retirement, Involuntary Termination Without Cause or Retirement; provided, however, that to the extent the Performance RSUs are nonqualified deferred compensation subject to Code Section 409A, and to which an exception to Code Section 409A does not apply, any distribution to the Grantee, if the Grantee is a Specified Employee, on account of a Separation from Service shall be made  within the thirty (30) day  period after the first day of the seventh month following the date of Separation from Service (or, if earlier, the date of the Grantee’s death),

(4)Separation from Service on account of a Good Reason Termination within twenty-four (24) months after a Change in Control (provided that such Change in Control qualifies as a “change in ownership or control” under Treas. Reg. §1.409A-3(i)(5)); provided, however, that to the extent the Performance RSUs are nonqualified deferred compensation subject to Code Section 409A, and to which an exception to Code Section 409A does not apply,  any distribution to the Grantee, if the Grantee is a Specified Employee, on account of a Separation from Service shall be made within the thirty (30) day period after the first day of the seventh month following the date of Separation from Service (or, if earlier, the date of the Grantee’s death), or

(5)The date of death of the Grantee.

In the event of any amendment to this Agreement that affects the date of vesting under Section 3(b)(1) or 3(c)(2), the date of distribution under Section 4(a)(1) above shall be determined without regard to any such amendment.

Upon issuance, such shares of Stock shall be registered on the Company’s books in the name of the Grantee in full payment and satisfaction of such Performance RSUs.

(b)Transfer Restrictions.  Transfer of the shares of Stock shall be subject to the Company’s trading policies and any applicable securities laws or regulations governing transferability of shares of the Company.

- 8 -

 

(c)Securities Regulations.  No Stock shall be issued hereunder until the Company has received all necessary stockholder and regulatory approvals and has taken all necessary steps to assure compliance with federal and state securities laws or has determined to its satisfaction and the satisfaction of its counsel that an exemption from the requirements of the federal and applicable state securities laws are available. To the extent applicable, transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 under the U. S. Securities and Exchange Act of 1934. Any ambiguities or inconsistencies in the construction of this Agreement or the Plan shall be interpreted to give effect to such intention. However, to the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void to the extent permitted by law and deemed advisable by the Committee in its discretion. 

(d)Fractional Shares.  No fractional shares or scrip representing fractional shares of Stock shall be issued pursuant to this Agreement. If, upon the issuance of shares of Stock under this Agreement, the Grantee would be entitled to a fractional share of Stock, the number of shares to which the Grantee is entitled shall be rounded down to the next lower whole number.

(e)Beneficiary.

(1)The Grantee may, from time to time, designate a beneficiary or beneficiaries (who may be named contingently or successively) to whom any benefit under this Agreement is to be paid in case of the Grantee’s death before the Grantee has received all benefits to which the Grantee would have been entitled under this Agreement. Each designation of beneficiary shall revoke all prior designations by the Grantee, shall be in a form prescribed by the Committee, and will be effective only when received in writing by the Committee. The last valid beneficiary designation received shall be controlling; provided, however, that no beneficiary designation, or change or revocation thereof, shall be effective unless received prior to the Grantee’s death.

(2)If no valid and effective beneficiary designation exists at the time of the Grantee’s death, or if no designated beneficiary survives the Grantee, or if the Grantee’s beneficiary designation is invalid under the law, any benefit payable hereunder shall be made to the Grantee’s surviving spouse, if any, or if there is no such surviving spouse, to the executor or administrator of the Grantee’s estate.  If the Committee is in doubt as to the right of any person to receive payment of any benefit hereunder, the Committee may direct that the amount of such benefit be paid into a court of competent jurisdiction in an interpleader action, and such payment into court shall fully and completely discharge any liability or obligation of the Plan, CACI, the Committee, or the Board of Directors of CACI under this Agreement.

	
5.
	
MISCELLANEOUS.

(a)No Restriction on Company Authority.  The award of Performance RSUs to the Grantee pursuant to this Agreement shall not affect in any way the right or power of CACI or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in CACI’s capital structure or its business, or any merger or consolidation of CACI, or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the common stock or the rights thereof, or the dissolution or liquidation of CACI, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

(b)Adjustment of Performance RSUs.  Except as hereinbefore expressly provided, if CACI shall effect a subdivision or consolidation of shares of Stock or other capital readjustment, the payment of a stock dividend, or other increase or reduction of the number of shares of Stock outstanding, without receiving compensation therefore in money, services or property, the number and class of shares of Stock represented by the Performance RSUs granted pursuant to this Agreement and credited to the Grantee’s Account shall be appropriately adjusted by the Committee in accordance with the terms of the Plan in such a manner as to represent the same total number of Performance RSUs that the owner of an equal number of outstanding shares of Stock would own as a result of the event requiring the adjustment.

(c)No Adjustment Otherwise.  Except as hereinbefore expressly provided, the issue by CACI of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property, or for labor or services, either upon direct sale or upon the exercise of rights or warrants to subscribe therefore, or upon conversion of shares or obligations of CACI convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Stock represented by the Performance RSUs granted pursuant to this Agreement.

(d)Performance RSUs Nontransferable.  Performance RSUs are not transferable by the Grantee by means of sale, assignment, exchange, pledge, hypothecation, or otherwise.

(e)Obligation Unfunded.  The obligation of the Company with respect to Performance RSUs granted hereunder shall be interpreted solely as an unfunded contractual obligation to make payments of Stock in the manner and under the conditions prescribed under this Agreement.  Any shares or other assets set aside with respect to amounts payable under this Agreement shall be subject to the claims of the Company’s general creditors, and no person other than the Company shall, by virtue of the provisions of the Plan or this Agreement, have any interest in such assets. In no event shall any assets set aside (directly or indirectly) with respect to amounts payable under this Agreement be located or transferred outside the United States. Neither the Grantee nor any other person shall have any interest in any particular assets of the Company by reason of the right to receive a benefit under this Agreement, and the Grantee or any such other person shall have only the rights of a general unsecured creditor of the Company with respect to any rights under the Plan or this Agreement.

- 9 -

 

(f)Withholding Taxes.  The Company shall effect a withholding of shares of Stock to be issued hereunder in such number whose aggregate Fair Market Value at such time equals the total amount of any federal, state or local taxes or any applicable taxes or other withholding of any jurisdiction required by law to be withheld as a result of the issuance of the Stock in whole or in part; provided, however, that the value of the Stock withheld by the Company may not exceed the statutory minimum withholding amounts required by law.  In lieu of such deduction, the Company may permit the Grantee to make a cash payment to the Company equal to the amount required to be withheld. 

(g)Impact on Other Benefits.  The value of the Performance RSUs (either on the Grant Date or at the time, if ever, the Performance RSUs are vested) shall not be includable as compensation or earnings for purposes of any other benefit plan offered by the Company.

(h)Compliance With Code Section 409A. Notwithstanding anything herein to the contrary, no amount shall be paid earlier than the earliest date permitted under Section 409A of the Code or an exception thereto.  The terms of this Agreement are intended to comply with the provisions of Section 409A of the Code or an exception thereto and if any provision is subject to more than one interpretation or construction, such ambiguity shall be resolved in favor of the interpretation or construction which is consistent with the Agreement complying with the provisions of Section 409A or an exception thereto. CACI makes no representations as to the tax consequences of the award of Performance RSUs to the Grantee or their vesting (including, without limitation, under Section 409A of the Code, if applicable).  The Grantee understands and agrees that the Grantee is solely responsible for any and all income, employment or other taxes imposed on the Grantee with respect to the award.

(i)Right to Continued Employment.  Nothing in the Plan or this Agreement shall be construed as a contract of employment between the Company (or a Subsidiary or Affiliate of the Company) and the Grantee, or as a contractual right of the Grantee to continue in the employ of the Company (or a Subsidiary or Affiliate of the Company), or as a limitation of the right of the Company (or a Subsidiary or Affiliate of the Company) to discharge the Grantee at any time.

(j)Governing Law.  This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Delaware.

(k)Arbitration.  Any dispute between the parties hereto arising under or relating to this Agreement shall be resolved in accordance with the procedures of the American Arbitration Association.  Any resulting hearing shall be held in the Washington, DC metropolitan area.  The resolution of any dispute achieved through such arbitration shall be binding and enforceable by a court of competent jurisdiction.

(l)Successors.  This Agreement shall be binding upon and insure to the benefit of the successors, assigns and heirs of the respective parties.

(m)Headings.  Headings in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this agreement.

(n)Notices.  All notices and other communications made or given pursuant to the Agreement shall be in writing and shall be sufficiently made or given if hand delivered or mailed by first class or certified mail, addressed to the Grantee at the address contained in the records of the Company, or addressed to the Committee, care of the Company for the attention of its Secretary at its principal office or, if the receiving party consents in advance, transmitted and received via telecopy or via such other electronic transmission mechanism as may be available to the parties.

(o)Entire Agreement; Modification.  The Agreement contains the entire agreement between the parties with respect to the subject matter contained herein and may not be modified, except as provided in the Plan or in a written document signed by each of the parties hereto.

(p)Code Section 162(m).  This Performance Share Grant Agreement, to the extent the Grantee is a Covered Employee, as defined in the Plan, is intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code.  As such, this Agreement shall be subject to the restrictions set forth in Section 10(b) of the Plan.

(q)Conformity with Plan.  This Agreement is intended to conform in all respects with, and is subject to all applicable provisions of, the Plan, which is incorporated herein by reference.  Unless stated otherwise herein, capitalized terms in this Agreement shall have the same meaning as defined in the Plan.  Inconsistencies between this Agreement and the Plan shall be resolved in accordance with the terms of the Plan.  In the event of any ambiguity in the Agreement or any matters as to which the Agreement is silent, the Plan shall govern including, without limitation, the provisions thereof pursuant to which the Committee has the power, among others, to (i) interpret the Plan and Grant Agreements related thereto, (ii) prescribe, amend and rescind rules and regulations relating to the Plan, and (iii) make all other determinations deemed necessary or advisable for the administration of the Plan.  The Grantee acknowledges by signing this Agreement that he or she has reviewed a copy of the Plan.

(r)Counterparts.  This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed to be an original, and all of which together shall constitute one and the same instrument.

- 10 -

 

IN WITNESS WHEREOF, the Company has caused this Performance RSU Grant Agreement to be executed by its duly authorized officer, and the Grantee has hereunto set his or her hand and seal, on the date(s) written below.

 

	
 
	
 
	
CACI INTERNATIONAL INC

	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
 

	
 
	
 
	
 
	
J. William Koegel, Jr., General Counsel

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
Date:
	
 

	
 
	
 
	
 
	
 

	
 
	
 
	
By:
	
 

	
 
	
 
	
Name
	
 

	
 
	
 
	
 
	
 
	
 

	
 
	
 
	
 
	
Date:
	
 

	
 
	
 
	
 
	
 

 

- 11 -

 

PERFORMANCE RSU OVERVIEW

 

	
Number Performance RSUs Being Granted
	
 

	
(at the Target Achievement Level):
	
X,XXX

	
Grant Date:
	
September 18, 2015

	
 
	
 

 

 

- 12 -

 

APPENDIX A

HYPOTHETICAL PERFORMANCE SHARE EXAMPLE #1 – STOCK PRICE INCREASE

	
·
	
Situation:

	
 
	
·
	
The Grantee with 3,000 Performance RSUs (at Target Achievement Level) remains CACI employee as of September 18, 2019.

	
 
	
·
	
EPS Condition Was Met

	
 
	
·
	
Starting Stock Price Average is $80.71.

	
 
	
·
	
First Year Ending Stock Price Average is $88.78 (10% improvement from Grant Date).

	
 
	
·
	
Second Year Ending Stock Price Average is $96.85 (20% improvement from Grant Date).

	
 
	
·
	
Third Year Ending Stock Price Average is $104.92 (30% improvement from Grant Date).

	
 
	
·
	
Assume No Dividends.

	
·
	
Result

	
 
	
·
	
Number of Performance RSUs that result = 3,000 + (1,000 * 10%) + (1,000 * 20%) + (1000 * 30%) = 3,600

- 13 -

 

APPENDIX B

HYPOTHETICAL PERFORMANCE SHARE EXAMPLE #2 – STOCK PRICE DECREASE

	
·
	
Situation:

	
 
	
·
	
The Grantee with 3,000 Performance RSUs (at Target Achievement Level) remains CACI employee as of September 18, 2019.

	
 
	
·
	
EPS Condition Was Met

	
 
	
·
	
Starting Stock Price Average is $80.71.

	
 
	
·
	
First Year Ending Stock Price Average is $72.64 (10% decrease from Grant Date).

	
 
	
·
	
Second Year Ending Stock Price Average is $64.57 (20% decrease from Grant Date).

	
 
	
·
	
Third Year Ending Stock Price Average is $56.50 (30% decrease from Grant Date).

	
 
	
·
	
Assume No Dividends.

	
·
	
Result

	
 
	
·
	
Number of Performance RSUs that result = 3,000 + (1,000 * -10%) + (1,000 * -20%) + (1000 * -30%) = 2,400

- 14 -

 

APPENDIX C

HYPOTHETICAL PERFORMANCE SHARE EXAMPLE #3 – SERVICE REQUIREMENT NOT MET

	
·
	
Situation:

	
 
	
·
	
The Grantee with 3,000 Performance RSUs (at Target Achievement Level) voluntarily resigns during the Company’s fiscal year 2016.

	
·
	
Result

	
 
	
·
	
Forfeits all Performance RSUs.

	
 
	
·
	
TOTAL:  Zero (0) Performance RSUs earned and vested.

- 15 -

 

APPENDIX D

HYPOTHETICAL PERFORMANCE SHARE EXAMPLE #4 – RETIREMENT

	
·
	
Situation:

	
 
	
·
	
The Grantee with 3,000 Performance RSUs (at Target Achievement Level) turned age 62 on February 10, 2018 and has a Retirement on March 18, 2018 (i.e., after 30 full months following the Grant Date).

	
 
	
·
	
EPS Condition Was Met

	
 
	
·
	
Starting Stock Price Average is $80.71.

	
 
	
·
	
First Year Ending Stock Price Average is $88.78 (10% improvement from Grant Date).

	
 
	
·
	
Second Year Ending Stock Price Average is $96.85 (20% improvement from Grant Date).

	
 
	
·
	
Third Year Ending Stock Price Average is $104.92 (30% improvement from Grant Date).

	
 
	
·
	
Assume No Dividends.

	
·
	
Result

	
 
	
·
	
Number of Performance RSUs that result = (3,000 + (1,000 * 10%) + (1,000 * 20%) + (1,000 * 30%)) * 30/48 = 2,250 Performance RSUs earned and vested

- 16 -

 

APPENDIX E

HYPOTHETICAL PERFORMANCE SHARE EXAMPLE #5 – INVOLUNTARY SEPARATION

	
·
	
Situation:

	
 
	
·
	
The Grantee with 3,000 Performance RSUs (at Target Achievement Level) is involuntarily terminated without Cause on March 18, 2017 (i.e., after 18 full months following the Grant Date).

	
 
	
·
	
EPS Condition Was Met

	
 
	
·
	
Starting Stock Price Average is $80.71.

	
 
	
·
	
First Year Ending Stock Price Average is $88.78 (10% improvement from Grant Date).

	
 
	
·
	
Second Year Ending Stock Price Average is $96.85 (20% improvement from Grant Date).

	
 
	
·
	
Assume No Dividends.

	
·
	
Result

	
 
	
·
	
Number of Performance RSUs that result = (3,000 + (1,000 * 10%) + (2,000 * 20%)) * 18/48 = 1,313 Performance RSUs earned and vested

- 17 -Exhibit 4.3

 

RADA ELECTRONIC INDUSTRIES LTD.

(the “Company”)

2015 SHARE OPTION PLAN (the “Plan”)

 

	1.	PURPOSES OF THE PLAN

 

The purposes of this Plan are to give the Company an additional tool to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees and Directors and to promote the success of the Company (all as defined in Section 3 below).

 

	2.	TYPES OF AWARDS

 

The Plan is intended to enable the Company to issue Awards (as defined in Section 3 below) subject to Applicable Laws (as defined in Section 3 below), under varying tax regimes including without limitation (i) Share Options without a Trustee (as defined in Section 3) pursuant and subject to the provisions of Section 102 of the Israeli Income Tax Ordinance (New Version) 1961 as amended (the “Ordinance”), and any regulations, rules, orders or procedures promulgated thereunder including tax rules (Preferential Tax Treatment regarding Issuance of Shares to Employees, 2003) (“Section 102”) (such options, “Non Trustee 102 Share Options”); (ii) Share Options allocated to a Trustee under the capital gain track pursuant and subject to the provisions of Section 102 of the Ordinance (such options, “102 Capital Gain Share Options”); (iii) Share Options allocated to a Trustee under the ordinary income track pursuant and subject to the provisions of Section 102  (such options, “102 Ordinary Income Share Options”); (iv) Share Options pursuant to Section 3(9) of the Ordinance (“3(9) Share Options”);. All Non Trustee 102 Share Options, 102 Capital Gain Share Options, 102 Ordinary Income Share Options, 3(9) Share Options, as well as options issued under other tax regimes, are each referred to herein as an “Option”, and collectively the “Options”. Apart from issuance under the relevant tax regimes in the State of Israel the Plan contemplates issuances to Grantees (as defined in Section 3 below) in other jurisdictions with respect to which the Administrator (as defined in Section 3 below) is empowered to make the requisite adjustments in the Plan and set forth the relevant conditions in the Company’s agreement with the Grantee in order to comply with the requirements of the tax regimes in said jurisdictions.

 

The Plan contemplates the issuance of Awards by the Company, both as a private company and as a publicly traded company.

 

3. DEFINITIONS

 

For the purposes of this Plan, as defined below, the following terms shall have the following meanings:

		(a)	“Administrator” means the Board or any of its Committees as shall be appointed by the Board to administer the Plan, in accordance with Section 5 hereof.

 

		(b)	“Adoption Date” means the earlier of the date on which the Board adopted this Plan and the date the Plan was approved by the Company’s shareholders, if such approval is necessary under the Applicable Laws (as defined below).

 

		(c)	“Applicable Laws” means the legal requirements relating to the adoption of and/or the administration of share option plans, including under all applicable laws, rules, and regulations of the State of Israel; the rules and regulations of any stock exchange or quotation system on which the Ordinary Share is listed or quoted and the By-Laws of the Company, all as may be in effect from time to time

 

		(d)	“Award” shall mean any Option granted to a Grantee under the Plan.

 

		(e)	“Award Agreement” means a written agreement between the Company and a Grantee evidencing the terms and conditions of an individual Award grant, as further specified in Section 7.

 

		(f)	“Award Share” means the Share/s subject to an Award.

 

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

 

		(h)	“By-Laws” means the by-laws of the Company as amended from time to time and all shareholders rights agreements entered or to be entered into by the Company and its Shareholders, or among the Shareholders themselves.

		(i)	“Cause” for termination of a Grantee’s Continuous Service Status shall be considered to exist if such termination is for any of the following reasons: (i) any action by a Grantee involving willful malfeasance or a willful breach of such Grantee’s fiduciary duties in connection with such Grantee’s employment or engagement with the Company or with any Subsidiary; (ii) the conviction of a Grantee in a court of law of, or a guilty plea by the Grantee to, a felony or a fraud or any other similar act; (iii) substantial and continuing refusal or neglect by a Grantee to perform the duties requested of him or her (including without limitation, not abiding policies relating to confidentiality and reasonable workplace conduct) provided such duties are expected to be performed by a person engaged for a similar capacity (other than as a result of death, illness or other objective incapacity) which refusal or neglect continues for a period of ten days after written notice thereof is provided to the Grantee from the Company or from the respective Subsidiary; (iv) an act of moral turpitude, or any similar act, to the extent that such act causes or may cause injury to the reputation of the Company and/or to any of the Company’s Subsidiaries; (v) unauthorized use or disclosure by Grantee of any proprietary information or trade secrets of the Company or any other party to whom the Grantee owes an obligation of nondisclosure as a result of his or her relationship with the Company; (vi) any other act or omission which, in the reasonable opinion of the Company, could materially financially harm the Company and/or any of the Company’s Subsidiaries or harm the business reputation of the Company and/or any of the Company’s Subsidiaries; (vii) any other circumstance deemed by law to constitute termination for cause, including circumstances relieving an employer from the duty to pay severance pay to the Grantee; or (viii) termination of a Grantee’s employment for cause in accordance with provisions of his or her employment agreement or engagement, if any, with the Company.  The determination as to whether a Grantee is being terminated for Cause shall be made in good faith by the Company and shall be final and binding on the Grantee.  The foregoing definition does not in any way limit the Company’s ability to terminate a Grantee’s employment or consulting relationship at any time as provided in Section 6(f) below, and the term “Company” will be interpreted to include any Subsidiary as appropriate.

 

2

		(j)	“Committee” means a committee or subcommittee of directors appointed by the Board in accordance with Section 5 hereof.

 

		(k)	“Company” means RADA ELECTRONIC INDUSTRIES LTD.

 

		(l)	“Director” means any Director of the company who is a member of the Board at the relevant time.

 

		(m)	“Continuous Service Status” means the absence of any interruption or termination of service as an Employee. Continuous Service Status as an Employee shall not be considered interrupted in the case of: (i) sick leave; (ii) military leave; (iii) any other leave of absence approved by the Administrator, provided that such leave is for a period of not more than ninety (90) days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, in which case such leave shall not interrupt the Continuous Service Status despite its exceeding ninety (90) days, unless provided otherwise under law or Company policy adopted from time to time; or (iv) in the case of transfers between locations of the Company or between the Company, Subsidiaries and/or their respective successors.

 

		(n)	“Disability” is defined in Section 10(f).

 

		(o)	“Effective Date” means the date on which the Award Agreement is signed by the Company and the Grantee. The “Effective Date” of Trustee Share Options shall be the date on which such Options are allocated to the Trustee.

 

		(p)	“Employee” means any person employed by the Company or any person, including an advisor, who is engaged by the Company to render consulting or advisory services to such entity and is compensated for such services or any person who is engaged as an officer of the Company , and with regard to Trustee Share Options and Non Trustee 102 Share Options only, provided that he is not a "controlling party", as defined in section 32(9) of the Ordinance, prior to and after the issuance of the Awards. For purposes of Section 102, a director of a company is considered an Employee thereof.

 

3

		(q)	“Exercise Date” means a date on which the Grantee delivers to the Company a written notice of exercise, in accordance with Section 10 of this Plan.

 

		(r)	“Exercise Period” is defined in Section 7(d).

 

		(s)	“Exercise Price” means the amount stipulated in the Award Agreement, to be paid by the Grantee to the Company in order to exercise an Award into an Award Share of the Company.

 

		(t)	“Fair Market Value Per Share” or “Fair Market Value” of a share as of a particular date shall mean (i) the closing sales price per Share on the securities exchange on which the Shares were principally traded for the last preceding date on which there was a sale of such Shares on such exchange; (ii) if the Shares are listed on the Nasdaq National Market, the last reported price per Share on the Nasdaq National Market on the last preceding date on which there was a sale of such Shares on the Nasdaq National Market;

 

		(u)	“Grantee” means the holder of an outstanding Award granted under the Plan.

 

		(v)	“Initial Public Offering” means the initial public offering of shares of the Company.

 

		(w)	“Lock-Up Period” is defined in Section 12(c).

 

		(x)	“Merger or Acquisition” shall mean (A) the acquisition of the Company by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger or consolidation); (B) a sale of all or substantially all of the assets of the Company (including, for purposes of this Section, intellectual property rights if, in the aggregate, such rights constitute substantially all of the Company’s material assets); unless in each case, the Company’s shareholders of record as constituted immediately prior to such acquisition or sale will, immediately after such acquisition or sale (by virtue of securities issued as consideration for the Company’s acquisition or sale or otherwise) hold at least fifty percent (50%) of the voting power of the surviving or acquiring entity; or (C) more than fifty percent (50%) of the voting power of the Company is transferred to an unrelated third party pursuant to a transaction or series of related transactions; provided, however, that the issuance of equity securities solely for capital raising purposes shall not be deemed to be a “Merger or Acquisition.”

 

		(y)	“Ordinary Share” means an ordinary share of the Company.

 

		(z)	“Plan” means this RADA ELECTRONIC INDUSTRIES LTD 2015 Share Option Plan.

 

4

		(aa)	“Purchaser” means the Company (if and as permitted by law) and/or any of its Subsidiaries and/or another person or entity designated for this purpose by the Company.

 

		(bb)	“Participant” means (i) an Employee or (ii) a Director.

 

		(cc)	“Share” means a share of the Company's ordinary shares having a par value of NIS 0.015.

 

		(dd)	“Tax Event” is defined in Section 21.

 

		(ee)	“Ten Percent Shareholder” means a person who owns shares possessing more than ten percent (10%) of the total combined voting power of all classes of shares of the Company or its parent or any Subsidiary corporation.

 

		(ff)	“Trustee” means an entity appointed by the Board and approved by the Income Tax Officer to hold Trustee Share Options on behalf of the Grantee according to the conditions set forth in Section 102.

 

		(gg)	“Trustee Share Options” means all 102 Capital Gain Share Options and 102 Ordinary Income Share Options.

 

		(hh)	“Vesting Schedule” is defined in Section 7(d).

 

4.  AUTHORIZED SHARES

 

	 	
(a)

	
Awards may be granted under the Plan, subject to the provisions of this plan, for up to an aggregate of 3,000,000 Award Shares. The Award Shares may be authorized, but unissued, or reacquired Ordinary Shares.  The Awards may be granted at any time, prior to the expiration of the Plan according to Section 8(a).

 

	 	
(b)

	
In case of Trustee Share Options, such Trustee Options may be granted after the passage of thirty days (or a shorter period as and if approved by the tax authorities) following the delivery by the Company to the appropriate Israeli Income Tax Authorities of a request for approval of the Plan and the Trustee according to Section 102.

 

	 	
(c)

	
Notwithstanding the above, in case that within 90 days of delivery of the abovementioned request, the tax officer notifies the Company of its decision not to approve the Plan, the Awards that were intended to be granted as Trustee Share Options shall be deemed as Non Trustee 102 Share Options, unless otherwise instructed by the tax officer.

 

	 	
(d)

	
If an Award expires, is cancelled or otherwise becomes unexercisable without having been exercised in full, the unexercised, canceled or terminated Award Shares which were subject thereto shall (unless the Plan shall have been terminated) become available for future grant under the Plan.  In addition, any shares of Ordinary Shares which are retained by the Company upon exercise of an award in order to satisfy the exercise or purchase price for such award or any withholding taxes due with respect to such exercise or purchase shall be treated as not issued and shall continue to be available under the Plan.  Shares issued under the Plan and later repurchased by the Company pursuant to any repurchase right which the Company may have shall be available for future grant under the Plan.

 

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		(e)	The number of Shares that are subject to Awards under the Plan shall not exceed the number of Shares reserved for the grant of Awards that then remain available for issuance under the Plan.

 

5.  ADMINISTRATION

 

		(a)	Procedure. The Plan shall be administered by the Board or a Committee appointed by the Board, which Committee shall be constituted to comply with Applicable Laws. The Administrator will hold its meetings at such times and places as it may determine and will maintain written minutes of its meetings.   This Plan may be administered by different Administrators with respect to different classes of Grantees and, if permitted by Applicable Laws, the Board may authorize one or more officers to make awards under this Plan.

 

		(b)	Powers of the Administrator.  Subject to the terms and conditions of the Plan, and in the case of a Committee, the specific duties delegated by the Board to such Committee, and subject to the approval of any relevant authorities and Applicable Laws, the Administrator shall have the authority, in its discretion:

 

		(i)	to determine the Fair Market Value of the Ordinary Shares, in accordance with Section 3 hereof, provided that such determination shall be applied consistently with respect to Grantees under the Plan;

 

		(ii)	to select the Participants to whom Awards may from time to time be granted hereunder, and to grant said Participants the Awards, provided that this authority shall be granted solely to the Board, which will take into consideration the recommendation of the Committee;

 

		(iii)	to determine from time to time the type of Awards to be granted to eligible Participants under the Plan, including the determination of which Grantees and which Employees will receive Non Trustee 102 Share Options and which Employees will receive 102 Capital Gain Share Options and/or 102 Ordinary Income Share Options, and to prescribe the terms and conditions (which need not be identical) of Awards granted under the Plan to such persons;

 

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

 

		(v)	to determine the terms and conditions of any Award granted hereunder, including, without limitation, the Vesting Schedule and whether and under what circumstances an Option may be settled in cash instead of Ordinary Shares;

 

		(vi)	to exercise such powers and to perform such acts as are deemed necessary or expedient to promote the best interests of the Company with respect to the Plan, including but not limited to prescribing, amending, and rescinding any provisions related to the Plan;

 

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		(vii)	to amend any outstanding Award, subject to Section 16 hereof, and to accelerate the Vesting Schedule or extend the exercisability of any Award and, subject to Section 102, to waive conditions or restrictions on any Award, to the extent it shall deem appropriate provided that this authority shall be granted to the Board, and only subject to its prior approval to the Committee which approval shall specifically state the number and identity of Grantees which rights the Committee will be authorized to determine;

 

		(viii)	to allow Grantees to satisfy withholding tax obligations by electing to have the Company or the Trustee, if permitted under Applicable Laws, withhold from the Award Shares to be issued upon exercise of an Award that number of Award Shares having a value equal to the minimum statutory withholding amount. The value of the Award Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined.  All elections by Grantees to have Award Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable and after consultation with the Company’s counsel; and

 

		(ix)	to construe and interpret the terms of the Plan, the Award Agreements and the Awards.

 

		(c)	Effect of Administrator's Decision. All decisions, determinations and interpretations of the Administrator shall be final and binding on all Grantees. Each member of the Board and the Committee shall be indemnified and held harmless by the Company against any cost or expense (including fees of counsel) reasonably incurred by her or him, or liability (including any sum paid in settlement of a claim with the approval of the Company) arising out of any act or omission to act in connection with the Plan unless arising out of such member’s own fraud or bad faith, to the extent permitted by Applicable Laws. Such indemnification shall be in addition to any rights of indemnification the member may have as director or otherwise under the Certificate of Incorporation of the Company, any agreement or otherwise.

 

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6.  ELIGIBILITY

 

		(a)	General. Awards may be granted to Participants as defined in this Plan.

		(b)	Non Trustee 102 Share Options and Trustee Share Options may be granted only to Israeli Employee Grantees and subject to the Ordinance.

		(c)	3(9) Share Options may be granted only to Israeli Participants who are not Employees.

		(d)	Continuing Relationship. The Plan and the Award Agreements shall not confer upon any Grantee any right with respect to continuing the Grantee’s relationship as a Participant with the Company or its Subsidiary, nor shall it interfere in any way with his right or the Company's right, or the right of its Subsidiary, to terminate such relationship at any time, with or without Cause.

 

7.  AWARD AGREEMENTS.

 

A Participant will be entitled to an Award only if such Award is granted to the Participant by the Administrator and an Award Agreement is signed between the Company and him/her. Subject to the terms and conditions of the Plan, each Award Agreement shall contain provisions as the Administrator shall from time to time deem appropriate. Award Agreements need not be identical, but each Award Agreement shall include, by appropriate language, the substance of the applicable provisions set forth herein, and any such provision may be included in the Award Agreement by reference to the Plan. In the case of a conflict between the terms of any Award Agreement and the Plan, the terms of the Plan shall govern in all cases.

 

		(a)	NUMBER OF SHARES. Each Award Agreement shall state the number of Award Shares to which the Award relates.

 

		(b)	TYPE OF AWARD. Each Award Agreement shall specifically state the type of Awards granted thereunder and which of the following they constitute: Non Trustee 102 Share Options, 102 Capital Gain Share Options, 102 Ordinary Income Share Options, 3(9) Share Options.

 

		(c)	EXERCISE PRICE. Each Award Agreement shall state the Exercise Price of the Award Shares to which the Award relates, provided that such exercise price is in compliance with the company compensation plan.

 

		(d)	TERM AND VESTING OF OPTIONS. Each Award Agreement shall provide the schedule in which such Awards may be exercised (“Vesting Schedule”). The Vesting Schedule for the Award will be determined by the Administrator provided that (to the extent permitted under Applicable Law) the Administrator, in its absolute discretion, shall have the authority to accelerate the vesting of any outstanding Option at such time and under such circumstances as it, in its sole discretion, deems appropriate. Subject to the Vesting Schedule, Awards may be exercised into Award Shares during the ten (10) year period from the Adoption Date of the Plan unless otherwise determined by the Administrator (to the extent permitted under Applicable Law and this Plan) (the “Exercise Period”).

 

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		(e)	OTHER PROVISIONS. The Award Agreements evidencing Awards under the Plan shall contain such other terms and conditions not inconsistent with the Plan as the Administrator may determine.

 

8.  TERM OF THE PLAN

 

The Plan shall become effective upon the Adoption Date. The Plan shall continue in effect for a term of ten (10) years after the Adoption Date, unless sooner terminated under Section 16 of the Plan.

 

		(a)	Expiration. Unless otherwise stated in the Award Agreement, each Award shall expire on the tenth (10) anniversary of the Adoption Date.

 

		(b)	Exercise. The Awards granted will be exercisable into Award Shares of the Company according to the Vesting Schedule set forth in the Award Agreement and in this Plan.

 

		(c)	Exercise Price. The Exercise Price per Award Share subject to each Award shall be determined by the Administrator, and shall be subject to Applicable Law and the company’s compensation plan.

 

		(d)	Transfer. No Award granted hereunder shall be transferable by the Grantee other than by will or by the laws of descent and distribution.  During the Grantee’s lifetime, Awards may be exercised only by the Grantee or his guardian or legal representative. Award Shares acquired upon exercise of the Awards shall be subject to such restrictions on transfer as are generally applicable to holders of Ordinary Shares of the Company in accordance with the Company’s By-Laws and Certificate of Incorporation. Without derogating from any other provision in this Plan, it is expressly clarified that no transfer of Award Shares shall become effective unless the Grantee has delivered to the Company a written notice thereof, together with a confirmation in writing by any transferee of the Award Shares that it is bound by all terms and conditions of this Plan and the Award Agreement. In case of transfer of the Award Shares after the death of the Grantee, the transfer shall become effective only after the transferee delivers such a written confirmation. Section 102 Awards and the holders thereof shall be subject to Section 102 in the event the Awards are transferred to someone other than the original Grantee.  Furthermore, Section 102 Awards cannot be pledged, borrowed against or made subject to a lien.

 

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9.  CONDITIONS UPON ISSUANCE OF AWARD SHARES

 

	 	
(a)

	
Legal Compliance. Award Shares shall not be issued pursuant to the exercise of an Award unless the exercise of such Award, the method of payment and the issuance and delivery of such Award Shares complies with Applicable Laws and shall be subject to the approval of counsel of the Company with respect to such compliance.

	 	
(b)

	
Investment Representations. As a condition to the exercise of an Award, the Administrator may require the person exercising such Award to (1) represent and warrant at the time of any such exercise that the Award Shares are being purchased only for his own account and for investment purposes, and without any present intention to sell or distribute such Award Shares, as well as any other representation as recommended by Company counsel and approved by the Administrator, if, in the opinion of counsel for the Company, such a representation is in the best interests of the Company, and/or (2) execute a joinder to any existing agreement among the shareholders.

 

10.  METHOD OF EXERCISE

 

		(a)	Delivery of Notice. Subject to the Vesting Schedule, and subject to the conditions determined by the Administrator as set forth in the applicable Award Agreement, any Award granted under the Plan may be exercised by the Grantee by delivering to the Company on any business day (prior to expiration of the Exercise Period) a written notice stating the number of Award Shares the Grantee then desires to purchase.

		(b)	Procedure for Exercise; Rights as a Shareholder. Any Award granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and/or set forth in the Award Agreement. With respect to an Employee Grantee and unless the Administrator provides otherwise, vesting of Awards granted hereunder shall be tolled during any unpaid leave of absence other than such leave which according to the law does not impair employment continuity.

An Award shall be deemed exercised only when the Company receives: (i) written notice of exercise (in accordance with the Award Agreement) from the Grantee entitled to exercise the Award, and (ii) full payment for the Award Shares with respect to which the Award is exercised. Award Shares issued upon exercise of an Award shall be issued in the name of the Grantee or in the name of the Trustee in the case of 102 Trustee Share Options. Until the Award Shares are issued (as evidenced by the appropriate entry in the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Award Shares, notwithstanding the exercise of the Award. To avoid doubt, until the Award Shares are issued, such Grantee shall not have any right as a shareholder, including the right to vote at any meeting of the shareholders of the Company, nor shall the Grantees be deemed to be a class of shareholders or creditors of the Company. Upon the exercise of an Award, the Company shall issue (or cause to be issued) such Award Shares promptly (up to 30 days) after the Award is exercised. If any law or regulation requires the Company to take any action with respect to the Award Shares specified in such notice before the issuance thereof, then the date of their issuance shall be delayed for the period necessary to take such action.

 

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Exercise of an Award in any manner shall result in a decrease in the number of Award Shares thereafter available, for delivery under the Award, by the number of Award Shares as to which the Award is exercised.

 

		(c)	Termination of Relationship with an Employee.  Except as provided in this subsection and subsections (d) through (h), an Award may not be exercised following termination of a Grantee’s Continuous Service Status. Unless otherwise determined by the Administrator, if, on the date of termination, the Grantee is not vested as to his or her entire Award, the unvested portion shall not be exercisable and the Award Shares covered by the unvested portion of the Awards shall revert to the Plan.

 

		(d)	Dismissal. In case of dismissal of an Employee, such Employee Grantee will be eligible to exercise any vested Award within 90 days of the date of termination (but in no event later than the expiration date of the term of such Award as set forth in Section 8 or in the Award Agreement).  Additionally, the Administrator shall have the right, in its discretion, as long as the Employee was not dismissed for Cause, to accelerate any portion of the Grantee's unvested Awards, as per Section 5(b)(vii) hereof. The Board, considering the recommendations made by the Chairman of the Board and the CEO, is authorized to approve the exercise of additional unvested Options. If, after termination, the Grantee does not exercise within the time specified by the Award Agreement, the Plan or the Administrator the portion of his or her Award that had vested, the vested portion of the Award shall terminate, and the Award Shares covered by such portion shall revert to the Plan.

 

		(e)	Dismissal for Cause. In the event of termination of relationship with the Participant for Cause, the Participant’s right to exercise unvested and/or vested Awards shall terminate immediately upon such termination, and all such Awards shall be forfeited without any payment being due. In addition, the Purchaser will be entitled to repurchase, within twelve (12) months of such termination, any or all of the Award Shares resulting from the exercise of any Awards exercised prior to the date of the repurchase.  The price paid for each Award Share will be determined by the Administrator, in its sole discretion, but shall not be less than the par value of the Share.

 

		(f)	Disability of an Employee Grantee.  If an Employee Grantee ceases to be an Employee as a result of a physical or mental impairment, which has lasted or is expected to last for

a continuous period of not less than twelve months and which causes the Grantee’s total and permanent disability to engage in any substantial gainful activity (a “Disability”), the Grantee may exercise his or her Awards within six (6) months of the date of termination, to the extent the Award is vested on the date of termination, but in no event later than the expiration date of the term of such Awards as set forth in Section 8 or in the Award Agreement. In addition, the Administrator shall have the right, in its discretion, to accelerate any portion of the disabled Grantee's unvested Awards, as per Section 5(b)(vii) hereof. If, after termination, the Awards are not exercised within the time specified herein, the Award shall terminate, and the Award Shares covered by such Award shall revert to the Plan.

 

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		(g)	Death of an Employee Grantee. If an Employee Grantee dies while considered an Employee, the vested Awards and the Awards included in the next installment which have not yet vested, may be exercised within such period of time as is specified in the Award Agreement (such period to be at least six (6) months but in no event later than the expiration date of the term of such Awards as set forth in Section 8 or in the Award Agreement) by the Grantee's estate or by a person who acquires the right to exercise the Award by bequest or inheritance.  In the absence of a specified time in the Award Agreement, the Award shall remain exercisable for twelve (12) months following the Grantee’s death, unless otherwise extended by the Administrator. If the Award is not so exercised within the time specified herein, the Award shall terminate, and the Award Shares covered by such Award shall revert to the Plan.

 

		(h)	Retirement of an Employee Grantee. In the event of an Employee Grantee’s retirement, at the age of at least 60 years, he/she will be eligible to exercise, within 90 days of such retirement (but in no event later than the expiration date of the term of such Award as set forth in Section 8 or in the Award Agreement), any vested Awards.  Additionally, the Administrator shall have the right, in its discretion, to accelerate any portion of the retiring Grantee's unvested Awards, as per Section 5(b)(vii) hereof.

 

		(i)	Clauses (e) through (h) of this Section 10 shall be subject to applicable limitations under Section 102 with respect to Section 102 Awards.

 

11.  PAYMENT OF EXERCISE PRICE

 

		(a)	Payment. Payment for the Award Shares purchased pursuant to the exercise of an Option may be made in such form as shall be acceptable to the Administrator in its sole discretion and may consist entirely of (1) cash; (2) check; (3)  if, as of the date of exercise of an Option the Company then is permitting employees to engage in a “same-day sale” cashless brokered exercise program involving one or more brokers, through such a program that complies with the Applicable Laws and that ensures prompt delivery to the Company of the amount required to pay the exercise price and any applicable withholding taxes; or (4) any combination of the foregoing methods of payment.  Furthermore, with respect to Trustee Share Options, the Trustee may refuse to accept payment of the Exercise Price in any form other than cash if the Trustee considers in its reasonable discretion that acceptance of another form of consideration is likely to result in a withholding tax liability.

 

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		(b)	Notwithstanding the above, the Grantee may, at his own discretion instruct the Company in writing, as part of the Exercise Notice, that the payment for the Options will be made through “cashless exercise” mechanism (the “Cashless Notice”). In the event that the Grantee has elect to submit the Cashless Notice then the Grantee shall be entitled to receive a certificate for the number of Shares equal to the quotient obtained by dividing [(A-B)*(N)] by (A), where:

 

(A) = the average of the closing (or closing bid, if so reported) prices per Share on the five (5) Trading Days preceding the date of such election;

 

(B) = the Purchase Price; and

 

(N) = the number of shares issuable upon exercise of the Options in accordance with the terms of this Agreement.

 

The cashless exercise is not permissible under Section 102 of the Ordinance unless such cashless exercise is made pursuant to the special approval of the Israeli Income Tax Authorities.

 

12. TRUSTEE SHARE OPTIONS.

 

		(a)	Options granted pursuant to this Section 12 are intended to constitute Trustee Share Options and, subject to Section 102 of the Ordinance, the general terms and conditions specified in the Plan, except for said provisions of the Plan applying solely to Awards under a different tax law or regulation, shall apply to them.

 

		(b)	The Company may choose between granting 102 Capital Gain Share Options and 102 Ordinary Income Share Options (the “Election”). The Company can change such Election only after the passage of at least 12 months from the end of the calendar year in which the first grant was made in accordance with the previous Election. Until the Election is changed, all Trustee Share Options shall be made according to the Election.

 

		(c)	Anything herein to the contrary notwithstanding, all Trustee Share Options granted under this Plan shall be granted by the Company to a Trustee designated by the Administrator and the Trustee shall hold each such Award and the Award Shares issued upon exercise thereof in trust for the benefit of the Grantee in respect of whom such Award was granted. All certificates representing Award 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 Award Shares are released from the trust. With regard to 102 Capital Gain Share Options and 102 Ordinary Income Share Options, the Awards or the Award Shares and all rights related to them, including bonus shares, will be held by the Trustee for the period required under Section 102 or a shorter period as approved by the tax authorities (the “Lock-up Period”), under the terms set in Section 102.

 

		(d)	In accordance with Section 102, the Grantee is prohibited from selling the Awards or the Awards Shares, until the end of the Lock-up Period.

 

		(e)	Anything to the contrary herein notwithstanding, the Trustee shall not release any Awards which were not already exercised into Award Shares by the Grantee nor release any Award Shares issued upon exercise of the Award, prior to the full payment of the Exercise Price and Grantee’s tax liability arising from Options which were granted to him and/or Shares issued upon exercise of such Trustee Share Options. Prior to receipt of the Award, the Grantee will sign an undertaking to release the Trustee from any liability in respect of any action or decision duly taken and bona fide executed in relation with the Plan, or any Option granted or Share issued to him thereunder. Any bonus shares, options or any other rights received an account of a Section 102 Award shall be subject to this Section 12(e).

 

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		(f)	Trustee Share Options may only be granted to Employees of the issuing corporation or its subsidiaries (subject to approval by the tax authorities).

 

		(g)	A recipient of Trustee Share Options shall be required to (i) provide such declarations as shall be demanded by the Trustee, including, inter alia, (a) that he is not a “controlling party,” as defined in Section 32(9) of the Ordinance, prior to and after the issuance of the Trustee Share Options, (b) that he is a resident of Israel and will report to the Trustee any change in residence, and (c) that he is aware of the provisions of Section 102 and of the type of options granted to him, and (ii) undertake not to sell the Options or the Award Shares issued to the Trustee with respect thereto during the applicable Lock-up Period.

 

13.  NON TRUSTEE 102 SHARE OPTIONS

 

		(a)	Options granted pursuant to this Section 13 are intended to constitute Non Trustee 102 Share Options and shall be subject to the general terms and conditions specified in the Plan, except for said provisions of the Plan applying solely to Awards under a different tax law or regulations.

 

		(b)	Non Trustee 102 Share Options may only be granted to Employees.

 

		(c)	The Non Trustee 102 Share Options which shall be granted pursuant to the Plan may be issued to a trustee appointed by the Administrator.

 

		(d)	If the Grantee’s employment with the Company is terminated for any reason, the Grantee will be obligated to provide the Company, to its satisfaction and subject to its sole discretion, with a security or guarantee to cover any future tax obligation resulting from the disposition of the Awards or the Award Shares.

 

14.  3(9) SHARE OPTIONS.

 

		(a)	Options granted pursuant to this Section 14 are intended to constitute 3(9) Share Options and shall be subject to the general terms and conditions specified in the Plan, except for said provisions of the Plan applying solely to Awards under a different tax law or regulation.

 

		(b)	3(9) Share Options may only be granted to Israeli Participants who are not Employees.

 

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		(c)	The 3(9) Share Options which shall be granted pursuant to the Plan may be issued to a trustee nominated by the Committee or the Administrator.

 15.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER

 

		(a)	Changes in Capitalization.  Subject to any required action by the shareholders of the Company, the number of Award Shares covered by or underlying each outstanding Award and the number of Award Shares which have been authorized for issuance under the Plan but as to which no Awards have been granted or which have been returned to the Plan upon cancellation or expiration of Award(s), as well as the Exercise Price per Share of each such outstanding Award shall be appropriately adjusted for any increase or decrease in the number of issued Award Shares resulting from a share split, reverse share split, share dividend, recapitalization, combination or reclassification of the Shares, or any other like event by or of the Company, in each case effected without the need for receipt of additional consideration by the Company from the Grantee; provided, however, that the Exercise Price shall not be less than the nominal value of the Share underlying any such Options. Such adjustment shall be made by the Board, whose determination shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of any class, or securities convertible into shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Award Shares subject to an Award.

 

		(b)	Dissolution or Liquidation.  In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Grantee as soon as practicable prior to the effective date of such proposed transaction. The Grantee will have the right to exercise his or her Awards until ten (10) days prior to such transaction as to all of the Award Shares, including Award Shares which would not otherwise be vested at such time. To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action, unless otherwise determined by the Administrator.

 

		(c)	Merger or Acquisition.  In the event of a Merger or Acquisition, each outstanding Award shall be assumed or an equivalent Award substituted by the successor company or a parent or Subsidiaries of the successor company. In the case of such assumption and/or substitution of shares and/or Options, appropriate adjustments shall be made in the Exercise Price to reflect such action, and all other terms and conditions of the Award Agreements, such as the vesting dates, shall remain in force as will be determined by the Board whose determination shall be final. In the event that the successor company refuses to assume or substitute for the Award, the Grantee shall retain the right to exercise vested Awards, and the Administrator shall notify the Grantee in writing that such Awards shall be exercisable for a period not less than (15) days from the date of such notice, and the Awards shall terminate upon the expiration of such period. Should a Merger or Acquisition occur within one year of the Effective Date, such Grantee shall be eligible to exercise a proportion of such Awards as determined by the Administrator, regarding which the Administrator shall issue a similar notice with a 15-day period for exercise.

 

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The Administrator shall determine, in its discretion, the proper exchange ratio of the Awards and the fair value of such Awards for purpose of such substitution, shall be authorized to accelerate the vesting date of any or all Awards and to make all necessary adjustments in the terms of the Awards, and the substituted Awards (including, without limitation, adjustments in the Exercise Price) that are fair under the circumstances.

 

For the purposes of this Section 15(c), Awards shall be considered assumed if, following the Merger or Acquisition, the Award (or substitute Award) confers upon the

 Grantee the right to purchase or receive, for each Share of Award Shares for which the Award was exercisable immediately prior to the Merger or Acquisition, the pro rata consideration (whether shares, share options, cash, or other securities or property) received in the Merger or Acquisition by holders of Shares for each Share held on the effective date of the transaction (and if such holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Merger or Acquisition is not solely ordinary shares (or their equivalent) of the successor company or its parent, the Administrator may, with the consent of the successor company, provide for the consideration to be received upon the exercise of the Award, for each Share of Award Shares, to be solely ordinary shares (or their equivalent) of the successor company or its parent equal in fair market value to the per share consideration received by holders of a majority of the outstanding shares in the Merger or Acquisition, and provided further that the Administrator may determine, in its sole discretion, that in lieu of such assumption or substitution of Awards for awards by the acquiring corporation or its parent or Subsidiaries, such Awards will be substituted for by any other type of asset or property including cash which is fair under the circumstances.

 

16.  AMENDMENT AND TERMINATION OF THE PLAN

 

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

 

		(b)	Shareholder Approval. The Board shall obtain shareholder approval of any amendment to the Plan to the extent necessary to comply with Applicable Laws.

 

		(c)	Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall be made if the Administrator determines, at its discretion, that it will impair the legitimate rights of any Grantee, unless mutually agreed otherwise between the Grantee and the Administrator, which agreement must be in writing and signed by the Grantee and the Company. Notwithstanding the foregoing, the Board may exercise its authority under Section 15 without the consent of Grantees. Termination of the Plan shall not affect the Administrator's ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

 

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17. INABILITY TO OBTAIN AUTHORITY

 

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

 

18. RESERVATION OF SHARES

 

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

 

19. GOVERNING LAW

 

The Plan and all instruments issued thereunder or in connection therewith shall be governed by, interpreted, construed and enforced in accordance with the internal laws of the State of Israel.

 

20. JURISDICTION

 

Any disputes arising out of any other instruments shall be resolved exclusively by the appropriate court in Tel-Aviv.

 

21. TAX CONSEQUENCES

 

If the Administrator shall so require, as a condition of exercise of an Award, upon the release of Shares by the Trustee or the expiration of the Lock-up Period (each a "Tax Event"), each Grantee shall agree that, no later than the date of the Tax Event, he will pay to the Company or make arrangements satisfactory to the Administrator and the Trustee (where relevant) regarding payment of any applicable taxes of any kind required by law to be withheld or paid upon the Tax Event. To the extent approved by the Administrator and permitted by law, a withholding obligation may be satisfied by the withholding of delivery of Shares.

 

ALL TAX CONSEQUENCES WHICH MAY ARISE UNDER ANY APPLICABLE LAW FROM THE GRANT OF ANY AWARDS, OR IN THE CASE OF AN OPTION, FROM ITS EXERCISE, FROM THE SALE OR DISPOSITION OF THE SHARES OR FROM ANY OTHER ACT OF THE GRANTEE IN CONNECTION WITH THE FOREGOING, SHALL BE BORNE SOLELY BY THE GRANTEE, AND THE GRANTEE SHALL INDEMNIFY THE COMPANY AND THE TRUSTEE, AND SHALL HOLD THEM HARMLESS AGAINST AND FROM ANY LIABILITY FOR ANY SUCH TAX OR PENALTY, INTEREST OR INDEXATION THEREON OR THEREUPON.

 

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 With respect to Trustee Share Options, the Trustee shall hold such Trustee Share Options throughout their existence, and shall hold the Award Shares until the earlier of their sale and payment of all applicable taxes by the Grantees but in no event shall the Trustee release the Award Shares before the Lock-Up Period has elapsed. While holding the Award Shares, the Trustee will be responsible for transferring to the Grantees any notice provided by the Company to its shareholders. Subject to fulfillment of all their obligations and to the Proxy, Grantees will be entitled to instruct the Trustee to act on their behalf in utilizing the rights of their Award Shares and the Trustee shall be obligated thereto.

 

22.  PROVISIONS FOR FOREIGN PARTICIPANTS

 

The Board may, without amending the Plan, modify Awards granted to participants who are foreign nationals or employed outside Israel to recognize differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefits or other matters.

 

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23.  NON-EXCLUSIVITY OF PLAN

 

This Plan shall not be construed as creating any limitations on the power of the Board or the Committee to adopt such other incentive arrangements as either may deem desirable, including without limitation, the granting of share options otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

 

   Adopted by the Board of Directors on May 25, 2015.

 

 

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