Document:

EX-10.5

 

Exhibit 10.5

THE LAMSON & SESSIONS CO.

DEFERRED COMPENSATION PLAN

FOR NON-EMPLOYEE DIRECTORS

(POST-2004)

ARTICLE I

PURPOSE OF THE PLAN

     The Lamson & Sessions Co. (the “Company”), hereby adopts The Lamson & Sessions Co. Deferred
Compensation Plan for Non-Employee Directors (Post-2004) (the “Plan”), effective January 1, 2005
(the “Effective Date”). The Plan was formed as a result of a spin-off of the portion of The Lamson
& Sessions Co. Deferred Compensation Plan for Non-Employee Directors (as amended and restated as of
April 30, 2004) (the “Prior Plan”) that was attributable to the deferrals and contributions made by
or on behalf of those active and terminated participants in the Prior Plan attributable to services
performed on or after January 1, 2005. The Plan is a successor plan to the Prior Plan.

     The purpose of The Lamson & Sessions Co. Deferred Compensation Plan for Non-employee Directors
(Post-2004) is to provide any Director of the Company with the option to defer receipt of the
compensation payable to him or her for services as a Director on and after January 1, 2005 and to
help build loyalty to the Company through increased investment in Company stock.

ARTICLE II

DEFINITIONS

     As used herein, the following words shall have the meanings stated after them unless otherwise
specifically provided:

     2.1 “Change in Control” shall be deemed to have occurred if any of the following
events shall occur, and if such event constitutes a change in the ownership or control of the
Company, or in the ownership of a substantial portion of the assets of the Company (for purposes of
Section 409A of the Code):

     (i) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 15% (20%, effective May
5, 2005) or more of either: (A) the then-outstanding shares of common stock of the
Company (the “Company Stock”) or (B) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in the
election of directors (“Voting Stock”); provided, however, that for purposes of this
subsection (i), the following acquisitions shall not constitute a Change in Control:
(1) any acquisition directly from the Company, (2) any acquisition by the Company,
(3) any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any subsidiary of the Company, or (4) any acquisition
by any Person pursuant to a transaction which complies with clauses (A), (B) and (C)
of subsection (iii) of this Section 2.1.

 

 

     (ii) Individuals who, as of the date hereof, constitute the Board of
Directors of the Company (the “Incumbent Board”) cease for any reason (other than
death or disability) to constitute at least a majority of the Board of Directors of
the Company; provided, however, that any individual becoming a director subsequent
to the date hereof whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (either by a specific vote or by approval of the
proxy statement of the Company in which such person is named as a nominee for
director, without objection to such nomination) shall be considered as though such
individual were a member of the Incumbent Board, but excluding for this purpose, any
such individual whose initial assumption of office occurs as a result of an actual
or threatened election contest (within the meaning of Rule 14a-11 of the Exchange
Act) with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board of Directors of the Company; or

     (iii) Consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the Company
(a “Business Combination”), in each case, unless, following such Business
Combination, (A) all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Company Common Stock and Voting Stock
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of, respectively, the then-outstanding shares of common
stock and the combined voting power of the then-outstanding voting securities
entitled to vote generally in the election of directors, as the case may be, of the
entity resulting from such Business Combination (including, without limitation, an
entity which as a result of such transaction owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions relative to each other as their
ownership, immediately prior to such Business Combination, of the Company Common
Stock and Voting Stock of the Company, as the case may be, (B) no Person (excluding
any entity resulting from such Business Combination or any employee benefit plan (or
related trust) sponsored or maintained by the Company or such entity resulting from
such Business Combination) beneficially owns, directly or indirectly, 15% (20%,
effective May 5, 2005) or more of, respectively, the then-outstanding shares of
common stock of the entity resulting from such Business Combination, or the combined
voting power of the then-outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business Combination and (C) at
least a majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent Board at the
time of the execution of the initial agreement, or of the action of the Board of
Directors of the Company, providing for such Business Combination; or

     (iv) Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.

     2.2 “Committee” shall mean the Governance, Nominating and Compensation Committee of
the Company’s Board of Directors.

     2.3 “Company” shall mean The Lamson & Sessions Co.

     2.4 “Director” shall mean any non-employee director of the Company.

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     2.5 “Trust Agreement” shall mean the Trust Agreement dated as of February 28, 1991,
as amended, entered into between the Company and the Trustee in connection with the Plan.

     2.6 “Trustee” shall mean National City Bank, any corporate successor to a majority
of its trust business, or any successor Trustee hereunder.

ARTICLE III

ELECTIONS BY DIRECTORS

     3.1 ELECTION TO DEFER. No later than June 30 of any year, a Director may elect to
defer payment of the compensation payable to him or her for future services as a Director
commencing January 1 of the following year. If a Director initially becomes a Director after the
beginning of any calendar year, the Director may elect to defer payment of the compensation payable
to him or her for future services as a Director. Such election must be made within thirty days
after he or she initially becomes a Director and shall be made on an election form specified by the
Committee (“Election Form”). Once an election becomes effective pursuant to this Article, the
election shall be irrevocable and remain in effect until the electing Director is no longer a
director of the Company.

     3.2 EFFECTIVENESS OF ELECTIONS. Initial elections shall be effective six months
after the delivery of an Election Form to the Committee except for elections made prior to the
original effective date of this Plan, January 1, 1991. Subject to the provisions of Article V,
amounts deferred pursuant to such elections shall be distributed at the time and in the manner set
forth in such election. Subject to the terms of Section 3.3 below, amendments to Election Forms
permitted under the Plan shall be effective immediately after the delivery of the amended Election
Form to the Committee and shall apply to all compensation payable for services as a Director after
any such amendment was made.

     3.3 AMENDMENT AND TERMINATION OF ELECTIONS. A Director may terminate or amend his
or her election to defer payments of compensation in a written notice delivered to the Committee on
or before December 31 of the calendar year preceding the calendar year as of which the amendment is
to take effect. Either a termination or amendment shall be permitted only one time after the
initial election becomes effective and shall apply to all compensation payable for services as a
Director commencing as of the calendar year after such amendment or termination was made.
Notwithstanding the foregoing, all Directors shall be given the opportunity to amend Election Forms
in connection with any amendment of the Plan and, if a Director chooses to so amend his or her
Election Form, such amendment will be effective immediately and shall apply to all compensation
payable for services as a Director commencing as of the calendar year after any such amendment was
made and any such amendment will not count as a Director’s only permitted amendment pursuant to the
second sentence of this Section 3.3. Amendments which serve only to change the beneficiary
designation shall be permitted at any time and as often as necessary. Amounts credited to a
Director’s account pursuant to Section 4.2 hereof prior to the effective date of any termination or
amendment shall not be affected thereby and shall be paid at the time and in the manner specified
in the election form in effect when the deferral occurred.

ARTICLE IV

ACCOUNTS AND INVESTMENTS

     4.1 CONTRIBUTIONS. The Company shall transfer an amount equal to one hundred
percent (100%) of the compensation deferred pursuant to this Plan to the Trustee if the Director
elects to have such compensation invested in Company stock. Such transfer shall be made within
thirty

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days after such deferred amounts would otherwise have been paid to the Director. A 25% match
of the amount of the compensation deferred will be issued to the Director in Restricted Shares (as
such term is defined in the Company’s 1998 Incentive Equity Plan, as amended (the “1998 Plan”)).
Such Restricted Shares will be issued under the 1998 Plan and subject to the terms and conditions
set forth in the 1998 Plan. The Restricted Shares shall be issued at the same time the deferred
amounts are paid to the Trustee.

     4.2 ESTABLISHMENT OF ACCOUNTS. The Trustee shall establish a separate “Deferred
Compensation Account” for any Director who defers compensation pursuant to the Plan. Amounts
deferred by each Director shall be paid in cash to the Trustee by the Company and credited to such
Director’s Deferred Compensation Account.

     4.3 ADJUSTMENT OF ACCOUNTS. As of December 31 of each year and on such other dates
as the Committee directs, the fair market value of the assets of the Trust allocated to all
Deferred Compensation Accounts (the “Trust Fund”) shall be determined by the Trustee.

     4.4 INVESTMENT OF ASSETS. The assets of the Trust Fund shall be held by the Trustee
in the name of the Trust. As amounts are received by the Trustee, it shall invest the funds
pursuant to the Trust Agreement. If any applicable law or regulation prohibits the Company from
directing the Trustee to invest the funds in Company stock upon receipt of the funds by the
Trustee, the Company will direct the Trustee to hold the funds in a money market fund until such
funds can be invested in Company stock.

     4.5 ASSETS HELD IN CASH. The Trustee may, in its sole discretion, maintain in cash
such amounts as it deems necessary. Amounts maintained in cash by the Trustee shall be kept to a
minimum consistent with the duties and obligations of the Trustee as set forth in the Trust
Agreement and shall not be required to be invested at interest.

ARTICLE V

PAYMENT OF ACCOUNTS

     5.1 TIME OF PAYMENT. Distribution of a Director’s account shall commence upon the
earliest of: (i) within thirty days after the date the Director attains either age fifty-five, age
sixty, age sixty-five, age seventy, or, if the Director is still serving on the Board at age
seventy, the date of his or her termination as a Director due to resignation, retirement, death or
otherwise, as specified by the Director on the Election Form, (ii) within thirty days after the
Director’s termination as a Director due to resignation, retirement, death or otherwise or (iii)
within thirty days after the date of an occurrence of a Change in Control.

     5.2 METHOD OF DISTRIBUTION. Each deferred Compensation Account shall be distributed
to the Director either in a lump sum or in equal annual installments over a period of not more than
ten years as specified in each Director’s Election Form. Deferred Compensation Accounts shall be
distributed in kind.

     5.3 HARDSHIP DISTRIBUTIONS. Prior to the time a Director’s account becomes payable,
the Committee, in its sole discretion, may elect to distribute all or a portion of a Director’s
account in the event such Director requests a distribution on account of severe financial hardship.
For purposes of this Plan, severe financial hardship shall be deemed to exist in the event the
Committee determines that a Director needs a distribution to meet immediate and heavy financial
needs resulting from a sudden or unexpected illness or accident of the Director, his spouse or his
dependent (as defined in Section 152(a) of the Internal Revenue Code), loss of the Director’s
property due to casualty, or other

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similar extraordinary and unforeseeable circumstances arising as a result of events beyond the
control of the Director. A distribution based on financial hardship shall not exceed the amount
required to meet the immediate financial need created by the hardship.

     5.4 DESIGNATION OF BENEFICIARY. Upon the death of a Director, his or her account
shall be paid to the beneficiary or beneficiaries designated by him or her. If there is no
designated beneficiary, or no designated beneficiary surviving at a Director’s death, payment of a
Director’s account shall be made to his or her estate. Beneficiary designations shall be made in
writing. A Director may designate a new beneficiary or beneficiaries at any time by notifying the
Committee.

     5.5 TAXES. In the event any taxes are required by law to be withheld or paid from
any payments made pursuant to the Plan, the Trustee shall deduct such amounts from such payments
and shall transmit the withheld amounts to the appropriate taxing authority.

ARTICLE VI

CREDITORS AND INSOLVENCY

     6.1 CLAIMS OF THE COMPANY’S CREDITORS. All assets held in trust pursuant to the
provisions of this Plan, and any payment to be made by the Trustee pursuant to the terms and
conditions of the Trust, shall be subject to the claims of general creditors of the Company,
including judgment creditors and bankruptcy creditors. The rights of a Director or his or her
beneficiaries to any assets of the Trust Fund shall be shall be no greater than the rights of an
unsecured creditor of the Company.

     6.2 NOTIFICATION OF INSOLVENCY. In the event the Company becomes insolvent, the
Board of Directors of the Company and the chief executive officer of the Company shall immediately
notify the Trustee of that fact. The Trustee shall not make any payments from the Trust Fund to
any Director or any beneficiary under the Plan after such notification is received or at any time
after the Trustee has knowledge of such insolvency. Under any such circumstance, the Trustee shall
deliver any property held in the Trust Fund only as a court of competent jurisdiction may direct to
satisfy the claims of the Company’s creditors. For purposes of this Plan, the Company shall be
deemed to be insolvent if the Company is subject to a pending voluntary or involuntary proceeding
as a debtor under the United States Bankruptcy Code, as amended, or is unable to pay its debts as
they mature.

ARTICLE VII

ADMINISTRATION

     7.1 AUTHORIZATION OF COMMITTEE. The Board of Directors of the Company shall
delegate to the Committee the authority to administer the Plan.

     7.2 POWERS OF THE COMMITTEE. The Committee shall administer the Plan and resolve
all questions of interpretation arising under the Plan with the help of legal counsel, if
necessary. Whenever directions, designations, applications, requests or other notices are to be
given by a Director under the Plan, they shall be filed with the Committee. The Committee shall
have no discretion with respect to Plan contributions or distributions but shall act in an
administrative capacity only.

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ARTICLE VIII

MISCELLANEOUS

     8.1 TERM OF PLAN. The Company reserves the right to amend or terminate the Plan at
any time; provided, however, that no amendment or termination shall affect the rights of Directors
to amounts previously credited to their accounts pursuant to Section 4.2. The Trust shall remain
in effect until such time as the entire corpus of the Trust Fund has been distributed pursuant to
the terms of the Plan.

     8.2 ASSIGNMENT. No right or interest of any Director (or any person claiming
through or under such Director) other than the surviving spouse of such Director after he or she is
deceased in any, benefit or payment herefrom shall be assignable or transferable in any manner or
be subject to alienation, anticipation, sale, pledge, encumbrance or other legal process or in any
manner be liable for or subject to the debts or liabilities of such Director.

     In addition, a Director or beneficiary shall have no rights against or security interest in
the assets of the Trust Fund and shall have only the Company’s unsecured promise to pay benefits.
All assets of the Trust Fund shall remain subject to the claims of the Company’s general creditors.

     8.3 TAXES. This Plan is intended to be treated as an unfunded deferred compensation
plan under the Internal Revenue Code. It is the intention of the Company that the amounts deferred
pursuant to this Plan shall not be included in the gross income of the Directors or their
beneficiaries until such time as the deferred amounts are distributed from the Plan. If, at any
time, it is determined that amounts deferred pursuant to the Plan are currently taxable to the
Directors or their beneficiaries, the Trust shall terminate and any amounts held in the Trust Fund
shall be distributed immediately to the Directors or their beneficiaries. Notwithstanding the
foregoing, the Company shall not be obligated to guarantee any particular tax result for a
Participant with respect to any income recognized by the Participant in connection herewith, and
the Participant shall be responsible for any taxes imposed on the Participant in connection
herewith.

     8.4 COMPLIANCE WITH SECTION 409A OF THE CODE. It is intended that this Plan comply
with the provisions of Section 409A of the Code. The Plan shall be administered in a manner
consistent with this intent, and any provision that would cause the Plan to fail to satisfy Section
409A of the Code shall have no force and effect until amended to comply with Section 409A of the
Code (which amendment may be retroactive to the extent permitted by Section 409A of the Code and
may be made by the Company without the consent of individual Directors).

     8.5 EFFECTIVE DATE OF PLAN. The Prior Plan was originally effective as of January
1, 1991, and was amended as of October 18, 2001, amended and restated as of February 19, 2004 and
amended and restated as of April 30, 2004. This Plan was formed this 15th day of February, 2007 as
a result of a spin-off from the Prior Plan, effective January 1, 2005.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	THE LAMSON & SESSIONS CO.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Date:
	 	February 15, 2007	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:	 	/s/ James J. Abel	 	 
	 

	 	 	 	 	 	 	 	 

	 	 
	 

	 	 	 	 	 	Title:	 	James J. Abel 
Executive Vice President,
Treasurer,
 Secretary and Chief Financial Officer	 	 
	 

	 	 	 	 	 	 	 	 

	 	 

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Exhibit
4.4

LUMENIS LTD.

 

2007 SHARE INCENTIVE PLAN 

 

 

Adopted: January 30, 2007

 

 

 

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LUMENIS LTD.

2007 SHARE INCENTIVE PLAN

 

Unless otherwise defined, terms used herein shall have the meaning ascribed to them in Section 2
hereof.

	1.	 	PURPOSE; TYPES OF AWARDS; CONSTRUCTION.

	 	1.1.	 	Purpose. The purpose of this 2007 Share Incentive
Plan (as amended, the “Plan”) is to afford an incentive to employees,
directors, officers, consultants, advisors, suppliers and any other
person or entity whose services are considered valuable
(collectively, the “Service Providers”) to Lumenis Ltd., an Israeli
company (the “Company”), or any Affiliate of the Company, which now
exists or hereafter is organized or acquired by the Company, to
continue as Service Providers, to increase their efforts on behalf of
the Company or Affiliate and to promote the success of the Company’s
business, by providing such Service Providers with opportunities to
acquire a proprietary interest in the Company by the issuance of
Ordinary Shares of the Company, and the grant of options to purchase
Shares, restricted Shares awards (“Restricted Shares”) and other
Share-based Awards pursuant to the Plan.
	 
	 	1.2.	 	Types of Awards. The Plan is intended to enable the
Company to issue Awards under varying tax regimes, including, without
limitation:

	 	(i)	 	pursuant and subject to the provisions of Section 102 of
the Israeli Income Tax Ordinance (New Version) 1961, as amended from time to
time (the “Ordinance”) and any regulations, rules, orders or procedures
promulgated thereunder, including without limitation the Income Tax Rules
(Tax Benefits in Stock Issuance to Employees) 5763-2003 (the “Rules”) or such
other rules published by the Income Tax Authorities (the “ITA”) (such Awards,
“102 Awards”). 102 Awards may either be granted to a Trustee or without a
trustee;
	 
	 	(ii)	 	pursuant to Section 3(9) of the Ordinance (such Awards,
“3(9) Awards”);
	 
	 	(iii)	 	Incentive Stock Options within the meaning of Section 422
of the Code, or the corresponding provision of any subsequently enacted
United States federal tax statute, as amended from time to time, to be
granted to Service Providers who are deemed to be residents of the U.S. for
purposes of taxation;
	 
	 	(iv)	 	Nonqualified Stock Options to be granted to Service
Providers who are deemed to be residents of the U.S. for purposes of
taxation; and
	 
	 	(v)	 	other stock-based Awards pursuant to Section 12 hereof.

 

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	 	 	 	In addition to the issuance of Awards under the relevant tax regimes in
the United States of America and the State of Israel, the Plan
contemplates issuances to Grantees in other jurisdictions with respect to
which the Committee 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
any such jurisdictions.
	 
	 	 	 	The Plan contemplates the issuance of Awards by the Company, both as a
private company and as a publicly traded company.
	 
	 	1.3.	 	Construction. To the extent any provision herein
conflicts with the conditions of any relevant tax law or regulation
which are relied upon for tax relief in respect of a particular Award
to a Grantee, the provisions of such law or regulation shall prevail
over those of the Plan and the Committee is empowered hereunder to
interpret and enforce the said prevailing provisions.

	2.	 	DEFINITIONS.

	 	2.1.	 	Terms Generally. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms. The words
“include”, “includes” and “including” shall be deemed to be followed
by the phrase “without limitation”. Unless the context requires
otherwise (i) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time
amended, restated, supplemented or otherwise modified (subject to any
restrictions on such amendments, restatements, supplements or
modifications set forth therein or herein), (ii) references to any
law, constitution, statute, treaty, regulation, rule or ordinance,
including any section or other part thereof shall refer to that it as
amended from time to time and shall include any successor law, (iii)
reference to a person shall means an individual, partnership,
corporation, limited liability company, association, trust,
unincorporated organization, or a government or agency or political
subdivision thereof, (iv) the words “herein”, “hereof” and
“hereunder”, and words of similar import, shall be construed to refer
to this Plan in its entirety and not to any particular provision
hereof and (v) all references herein to Sections shall be construed
to refer to Sections to this Agreement.
	 
	 	2.2.	 	Defined Terms. The following terms shall have the
meanings ascribed to them in this Section 2:

	 	2.2.1.	 	“Affiliate” shall mean an affiliate of, or
person affiliated with, a specified person or
company or other trade or business that
directly, or indirectly through one or more
intermediaries, controls, is controlled by or is
under common control with such person
within the meaning of Rule 405 of
Regulation C under the Securities Act,

 

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	 	 	 	including, without limitation, any
Subsidiary. For the purpose of Options
granted pursuant to Section 102 shall mean
also an “employing company” within the
meaning of Section 102(a) of the
Ordinance.

	 	2.2.2.	 	“Applicable Law” shall mean any applicable
law, rule, regulation, statute, pronouncement,
policy, interpretation, judgment, order or
decree of any federal, provincial, state or
local governmental, regulatory or adjudicative
authority or agency, of any jurisdiction, and
the rules and regulations of any stock exchange
or trading system on which the Shares are then
traded or listed.
	 
	 	2.2.3.	 	“Award” shall mean any Restricted Share,
Option or any other Share-based award, granted
to a Grantee under the Plan and any share issued
pursuant to the exercise thereof.
	 
	 	2.2.4.	 	“Board” shall mean the Board of Directors of
the Company.
	 
	 	2.2.5.	 	“Code” shall mean the United States Internal
Revenue Code of 1986, as amended.
	 
	 	2.2.6.	 	“Committee” shall mean a committee established
by the Board to administer the Plan, subject to
Section 3.1.
	 
	 	2.2.7.	 	“Companies Law” shall mean the Israel
Companies Law-1999 and the regulations
promulgated thereunder, all as amended from time
to time.
	 
	 	2.2.8.	 	“Controlling Shareholder” shall have the
meaning set forth in Section 32(9) of the
Ordinance.
	 
	 	2.2.9.	 	“Disability” shall mean (i) the inability of a
Grantee to engage in any substantial gainful
activity by reason of any medically determinable
physical or mental impairment which can be
expected to result in death or which has lasted
or can be expected to last for a continuous
period of not less than 12 months, as determined
by a medical doctor satisfactory to the
Committee or, if applicable, (ii) as “permanent
and total disability” as defined in Section
22(e)(3) of
the Code, as amended from time to time.
	 
	 	2.2.10.	 	“Employee” shall mean a person who is

 

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	 	 	 	employed by the Company or any of its
Affiliates, including, for the purpose of
Section 102, an individual who is serving as an
“office holder” as defined under the Companies
Law, but excluding any Controlling Shareholder.

	 	2.2.11.	 	“Exercise Period” shall mean the period,
commencing on the date of grant of an Option,
during which an Option shall be exercisable,
subject to any vesting provisions thereof and
the termination provisions hereof.
	 
	 	2.2.12.	 	“Exercise Price” shall mean the exercise
price for each Share covered by an Option.
	 
	 	2.2.13.	 	“Fair Market Value” per share as of a
particular date shall mean (i) the closing sales
price per Share on the securities exchange on
which the Shares are principally traded for the
last preceding date on which there was a sale of
such Shares on such exchange; or (ii) if the
Shares are listed on Nasdaq, the last reported
price per Share on Nasdaq on the last preceding
date on which there was a sale of such Share on
Nasdaq; or (iii) if the Shares are then traded
in an over-the-counter market, the last reported
price per Share on such market on the last
preceding date on which there was a sale of such
Share, or if such price is not available, the
average of the closing bid and asked prices for
the Shares in such over-the-counter market for
the last preceding date on which there was a
sale of such Shares in such market; (iv) if the
Shares are not then listed on a securities
exchange or market or traded in an
over-the-counter market, such value as the
Committee, in its sole discretion, shall
determine which determination shall be
conclusive and binding on all parties, and shall
be made after such consultations with outside
legal, accounting and other experts as the
Committee may deem advisable. The Committee may
maintain a written record of its method of
determining such value. If the Shares are listed
or quoted on more than one established stock
exchange or national market system, the
Committee shall determine the appropriate
exchange or
system for the purpose of determination of
Fair Market Value.

 

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	 	2.2.14.	 	“Grantee” shall mean a person who receives a
grant of Award under the Plan, and who at the
time of grant is a Service Provider of the
Company or any Affiliate thereof.
	 
	 	2.2.15.	 	“Non-Employee” shall mean a consultant,
adviser, service provider, Controlling
Shareholder or any other person who is not an
Employee.
	 
	 	2.2.16.	 	“Nonqualified Stock Option” shall mean any
Option granted to Service Provider who is deemed
to be residents of the U.S. for purposes of
taxation, which Option is not designated as, or
does not meet the conditions for, an Incentive
Stock Option.
	 
	 	2.2.17.	 	“Options” shall mean all options to purchase
Shares granted as 102 Awards, 3(9) Awards,
Incentive Stock Options and Non-Qualified Stock
Options, as well as options to purchase Shares
issued under other tax regimes.
	 
	 	2.2.18.	 	“Ordinance” shall mean the Israeli Income Tax
Ordinance (New Version) 1961, and the
regulations promulgated thereunder, all as
amended from time to time.
	 
	 	2.2.19.	 	“Parent” shall mean any company (other than
the Company), which now exists or is hereafter
organized, (i) in an unbroken chain of companies
ending with the Company if, at the time of
granting an Award, each of the companies (other
than the Company) owns stock possessing fifty
percent (50%) or more of the total combined
voting power of all classes of stock in one of
the other companies in such chain, or, if
applicable, (ii) as defined in Section 424(e) of
the Code.
	 
	 	2.2.20.	 	“Retirement” shall mean a Grantee’s
retirement pursuant to applicable law or in
accordance with the terms of any tax-qualified
retirement plan maintained by the Company or any
of its affiliates in which the Grantee
participates.
	 
	 	2.2.21.	 	“Securities Act” shall mean Securities Act of
1933, as amended.
	 
	 	2.2.22.	 	“Shares” shall mean Ordinary Shares, par
value NIS 0.10 of the Company, or shares of such
other class of shares of the Company as shall be
designated by the Board in respect of the
relevant Award.

 

 - 7 - 

	 	2.2.23.	 	“Subsidiary” shall mean any company (other
than the Company), which now exists or is
hereafter organized or acquired by the Company,
(i) in an unbroken chain of companies beginning
with the Company if, at the time of granting an
Award, each of the companies other than the last
company in the unbroken chain owns stock
possessing fifty percent (50%) or more of the
total combined voting power of all classes of
stock in one of the other companies in such
chain, or, if applicable, (ii) as defined in
Section 424(f) of the Code.
	 
	 	2.2.24.	 	“Ten Percent Shareholder” shall mean a
Grantee who, at the time an Incentive Stock
Option is granted, owns shares possessing more
than ten percent (10%) of the total combined
voting power of all classes of shares of the
Company or any Parent or Subsidiary.
	 
	 	2.2.25.	 	“Trustee” shall mean the trustee appointed by
the Committee or the Board, as the case may be,
to hold the respective Options and/or Shares
(and, in relation with 102 Awards, approved by
the Israeli tax authorities), if so appointed.

	 	2.3.	 	Other Defined Terms. The following terms shall have
the meanings ascribed to them in the Sections set forth below:

	 	 	 	 	 
	Term	 	Section
	102 Awards
	 	 	1.2	(i)
	102 Capital Gains Track Options
	 	 	9.1	 
	102 Non-Trustee Options
	 	 	9.2	 
	102 Ordinary Income Track Options
	 	 	9.1	 
	102 Trustee Options
	 	 	9.1	 
	3(9) Awards
	 	 1.2(ii)
	Cause
	 	 	6.6.3	 
	Company
	 	 	1.1	 
	Effective Date
	 	 	25.1	 
	Election
	 	 	9.2	 
	Eligible 102 Grantees
	 	 	4.2	 
	ISO Shares
	 	 	8.3	 
	ITA
	 	 	1.2	(i)
	Market Stand-Off
	 	 	17	 
	Merger/Sale
	 	 	14.2	 
	Option Agreement
	 	 	6	 

 

 - 8 - 

	 	 	 	 	 
	Term	 	Section
	Ordinance
	 	 	1.2	(i)
	Plan
	 	 	1.1	 
	Required Holding Period
	 	 	9.4	 
	Restricted Period
	 	 	11.4	 
	Restricted Share Agreement
	 	 	11	 
	Restricted Share Unit Agreement
	 	 	12.1	 
	Restricted Shares
	 	 	1.1	 
	RSU
	 	 	12.1	 
	Rules
	 	 	1.2	(i)
	Service Provider(s)
	 	 	1.1	 
	Successor Corporation
	 	 	14.2.1	 
	Withholding Obligations
	 	 	18.3	 

	3.	 	ADMINISTRATION.

	 	3.1.	 	To the extent permitted under Applicable Law and the
Memorandum of Association, Articles of Association and any other
governing document of the Company, the Plan shall be administered by
the Committee. However, in the event that the Board does not create
a committee to administer the Plan, the Plan shall be administered by
the Board in its entirety. In the event that an action necessary for
the administration of the Plan is required under law to be taken by
the Board, then such action shall be so taken by the Board. In any
such event, all references herein to the Committee shall be construed
as references to the Board.
	 
	 	3.2.	 	The Committee shall consist of two or more directors of the
Company, as determined by the Board. The Board shall appoint the
members of the Committee, may from time to time remove members from,
or add members to, the Committee, and shall fill vacancies in the
Committee however caused, provided that the composition of the
Committee shall at all times be in compliance with any mandatory
requirements of Applicable Law. The Committee may select one of its
members as its Chairman and shall hold its meetings at such times and
places as it shall determine. The Committee may appoint a Secretary,
who shall keep records of its meetings and shall make such rules and
regulations for the conduct of its business, as it shall deem
advisable and subject to requirements of Applicable Law.
	 
	 	3.3.	 	Subject to the terms and conditions of this Plan and any
mandatory provisions of Applicable Law, and in addition to the
Committee’s powers contained elsewhere in this Plan, the Committee
shall have full authority in its discretion, from time to time and at
any time, to determine any of the following, or to recommend to the
Board any of the following if it is not authorized to take such
action according to Applicable Law:

	 	(i)	 	eligible Grantees,
	 
	 	(ii)	 	grants of Awards and setting the
terms and provisions of option agreements (which
need not 

 

 - 9 - 

	 	 	 	be identical) and any other agreements or
instruments under which Awards are made, including,
but not limited to, the number of Shares underlying
each Award,

	 	(iii)	 	the time or times at which
Awards shall be granted,
	 
	 	(iv)	 	the schedule and conditions on
which Awards may be exercised,
	 
	 	(v)	 	the Exercise Price,
	 
	 	(vi)	 	to interpret the Plan,
	 
	 	(vii)	 	prescribe, amend and rescind
rules and regulations relating to and for carrying
out the Plan, as it may deem appropriate,
	 
	 	(viii)	 	the Fair Market Value of the Shares,
	 
	 	(ix)	 	the tax track (capital gains,
ordinary income track or any other track available
under the Section 102 of the Ordinance) for the
purpose of 102 Awards, and
	 
	 	(x)	 	any other matter which is
necessary or desirable for, or incidental to, the
administration of the Plan and any Award
thereunder.

	 	3.4.	 	Grants of Awards shall be made pursuant to written notice to
Grantees setting forth the terms of the Award. Such notice shall
designate the type of Award as one of the following: (i) a 102 Award
granted to a Trustee (either as a 102 Award (capital gain track) with
Trustee or a 102 Award (ordinary income track) with Trustee), (ii) a
102 Award without a 102 Trustee, (iii) a 3(9) Award, (iv) Incentive
Stock Option, (v) Nonqualified Stock Option, or (vi) any other type
of Award.
	 
	 	3.5.	 	Subject to the mandatory provisions of Applicable Law, the
grant of any Award, whether by the Committee or the Board, shall be
deemed to include an authorization of the issuance of Shares upon the
due exercise thereof.
	 
	 	3.6.	 	The authority granted hereunder includes the authority to
modify Awards to eligible individuals who are foreign nationals or
are individuals who are employed outside Israel to recognize
differences in local law, tax policy or custom, in order to
effectuate the purposes of the Plan but without amending the Plan.
The Committee shall have the authority to grant, in its discretion,
to the holder of an outstanding Award, in exchange for the surrender
and
cancellation of such Award, a new Award having an exercise price
lower than provided in the Award so surrendered and canceled and
containing such other terms and conditions as the Committee may
prescribe in accordance with the provisions of the Plan or to
set a 

 

 - 10 - 

	 	 	 	new exercise price for the same Award lower than that
previously provided in the Award.

	 	3.7.	 	All decisions, determination and interpretations of the
Committee shall be final and binding on all Grantees of any Awards
under this Plan, unless otherwise determined by the Board. No member
of the Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan or any
Award granted hereunder.

	4.	 	ELIGIBILITY.

	 	4.1.	 	Awards may be granted to Service Providers of the Company and
any Affiliate thereof, taking into account the qualification under
each tax regime pursuant to which such Awards are granted. A person
who has been granted an Award hereunder may be granted additional
Awards, if the Committee shall so determine, subject to the
limitations herein. In determining the persons to whom Awards shall
be granted and the number of Shares to be covered by each Award, the
Committee shall take into account the duties of the respective
persons, their present and potential contributions to the success of
the Company and such other factors as the Committee shall deem
relevant in connection with accomplishing the purpose of the Plan.
	 
	 	4.2.	 	Subject to Applicable Law, 102 Awards may not be granted to
Controlling Shareholders and may only be granted to Employees,
including officers and directors, of the Company or any Affiliate
thereof, who are Israeli residents (“Eligible 102 Grantees”). Awards
to Eligible 102 Grantees in Israel shall be 102 Awards. Eligible 102
Grantees may receive only 102 Awards, which may either be grants to a
Trustee or grants under Section 102 without a trustee. Unless
otherwise permitted by the Ordinance and the Rules, no 102 Awards to
a Trustee may be granted until the expiration of thirty (30) days
after the requisite filings under the Ordinance and the Rules have
been appropriately made with the ITA.
	 
	 	4.3.	 	Subject to Applicable Law, Non-Employees who are Israeli
residents and are not Eligible 102 Grantees may only be granted 3(9)
Awards under this Plan.
	 
	 	4.4.	 	The maximum number of Awards that may be granted to any
Grantee shall be such number that will represent, at the time of
grant of such Awards, not more than 10% of the then issued and
outstanding share capital of the Company.

	5.	 	SHARES.
	 
	 	 	The initial number of Shares reserved for the grant of Awards under the Plan shall
be
ten million (10,000,000) Shares. The class of said Shares shall be designated by the
Board with respect to each Award and the notice of grant shall reflect such
designation. Any share underlying an Award granted hereunder which has expired, or
was cancelled or terminated or forfeited for any reason without having been
exercised, shall be automatically, and without any further action on the part of the
Company or 

 

 - 11 - 

	 	 	any Grantee, returned to the “pool” of reserved Shares hereunder and
shall again be available for grant for the purposes of this Plan (unless this Plan
shall have been terminated) or unless the Board determines otherwise. The Board may,
subject to any other approvals required under any Applicable Law, increase or
decrease the number of Shares to be reserved under the Plan. Such Shares may, in
whole or in part, be authorized but unissued Shares, or Shares that shall have been
or may be reacquired by the Company (to the extent permitted pursuant to the
Companies Law) or by a trustee appointed by the Board under the relevant provisions
of the Ordinance, the Companies Law or any equivalent provision. Any Shares which
are not subject to outstanding options at the termination of the Plan shall cease to
be reserved for the purpose of the Plan, but until termination of the Plan, the
Company shall at all times reserve a sufficient number of Shares to meet the
requirements of the Plan.

	6.	 	TERMS AND CONDITIONS OF OPTIONS.
	 
	 	 	Each Option granted pursuant to the Plan shall be evidenced by a written agreement
between the Company and the Grantee or a written notice delivered by the Company and
accepted by the Grantee (the “Option Agreement”), in such form and containing such
terms and conditions as the Committee shall from time to time approve, which Option
Agreement shall comply with and be subject to the following terms and conditions,
unless otherwise specifically provided in such Option Agreement or the terms
referred to in Sections 9 and 10 below. For purposes of interpreting this Section 6,
a director’s service as a member of the Board or the services of an officer, as the
case may be, shall be deemed to be employment with the Company or its Subsidiary or
Affiliate.

	 	6.1.	 	Number of Shares. Each Option Agreement shall state
the number of Shares covered by the Option.
	 
	 	6.2.	 	Type of Option. Each Option Agreement shall
specifically state the type of Option granted thereunder and whether
it constitutes a Incentive Stock Option, Nonqualified Stock Option,
102 Option Award and the relevant track, 3(9) Option Award, or
otherwise.
	 
	 	6.3.	 	Exercise Price. Each Option Agreement shall state the
Exercise Price, which, in the case of an Incentive Stock Option,
shall not be less than one hundred percent (100%) of the Fair Market
Value of the Shares covered by the Option on the date of grant or
such other amount as may be required pursuant to the Code. In the
case of any other Option, the per share Exercise Price shall be equal
to the amount determined by the Committee. In the case of an
Incentive Stock Option granted to any Ten-Percent Shareholder, the
Exercise Price shall be no less than 110% of the Fair Market Value of
the Shares covered by the Option on the date of grant. In no event
shall the Exercise Price of an Option be less than the par value of
the shares for which such Option is exercisable. Subject to Section 3
and to the foregoing, the Committee may reduce the Exercise Price of
any outstanding Option. The Exercise Price shall also be subject
to adjustment as provided in Section 14 hereof.
	 
	 	6.4.	 	Manner of Exercise. An Option may be exercised, as to
any or all Shares as to which the Option has become exercisable, by
written notice delivered in person or by mail to the Vice President –
Human Resources of the Company or to such other person as determined
by the Committee, specifying the number of Shares 

 

 - 12 - 

	 	 	 	with respect to
which the Option is being exercised, accompanied by payment of the
Exercise Price for such Shares in the manner specified in the
following sentence. The Exercise Price shall be paid in full with
respect to each Share, at the time of exercise, either in (i) cash,
(ii) if the Company’s shares are publicly traded, all or part of the
Exercise Price and any withholding taxes may be paid by the delivery
(on a form prescribed by the Company) of an irrevocable direction to
a securities broker approved by the Company to sell Shares and to
deliver all or part of the sales proceeds to the Company or the
Trustee, (iii) if the Company’s shares are publicly traded, all or
part of the Exercise Price and any withholding taxes may be paid by
the delivery (on a form prescribed by the Company) of an irrevocable
direction to pledge Shares to a securities broker or lender approved
by the Company, as security for a loan, and to deliver all or part of
the loan proceeds to the Company or the Trustee, or (iv) in such
other manner as the Committee shall determine, which may include
procedures for cashless exercise.

	 	6.5.	 	Term and Vesting of Options. Each Option Agreement
shall provide the vesting schedule for the Option as determined by
the Committee. To the extent permitted under Applicable Law, the
Committee shall have the authority to determine the vesting schedule
and accelerate the vesting of any outstanding Option at such time and
under such circumstances as it, in its sole discretion, deems
appropriate. Unless otherwise resolved by the Committee and stated in
the Option Agreement, and subject to Sections 6.6 and 6.7 hereof,
Options shall vest and become exercisable under the following
schedule: twenty-five percent (25%) of the Shares covered by the
Option, on the first anniversary of the date on which such Option is
granted, provided that the Grantee remains continuously employed by
or in the service of the Company or its Subsidiary or Affiliate for
that one year, and six and one-quarter percent (6.25%) of the Shares
covered by the Option at the end of each subsequent quarter, provided
that the Grantee remains continuously employed by or in the service
of the Company or its Subsidiary or Affiliate for that quarter, over
the course of the following three (3) years of continued employment
by or service for the Company or its Subsidiary or Affiliate. The
Option Agreement may contain performance goals and measurements, and
the provisions with respect to any Option need not be the same as the
provisions with respect to any other Option. The Exercise Period of
an Option will be seven (7) years from the date of grant of the
Option unless otherwise determined by the Committee, but subject to
the vesting provisions described above and the early termination
provisions set forth in Sections 6.6 and 6.7 hereof; provided,
however, that in the case of an Incentive Stock Option granted to a
Ten Percent Shareholder, such Exercise Period
shall not exceed five (5) years from the date of grant of such
Option. At the expiration of the Exercise Period, all
unexercised Options shall become null and void.

 

 - 13 - 

	 	6.6.	 	Termination.

	 	6.6.1.	 	Except as provided in this Section 6.6 and in
Section 6.7 hereof, an Option may not be
exercised unless the Grantee is then in the
employ of or maintaining a director, officer,
consultant, advisor or supplier relationship
with the Company or a Subsidiary or Affiliate
thereof or, in the case of an Incentive Stock
Option, a company or a parent or subsidiary
company of such company issuing or assuming the
Option in a transaction to which Section 424(a)
of the Code applies, and unless the Grantee has
remained continuously so employed or in the
director, officer, supplier, consultant, or
advisor relationship since the date of grant of
the Option. In the event that the employment or
director, officer or consultant, advisor or
supplier relationship of a Grantee shall
terminate (other than by reason of death,
Disability or Retirement), all Options of such
Grantee that are vested and exercisable at the
time of such termination may, unless earlier
terminated in accordance with their terms, be
exercised within up to ninety (90) days after
the date of such termination (or such different
period as the Committee shall prescribe);
provided, however, that if the Company (or the
Subsidiary or Affiliate, when applicable) shall
terminate the Grantee’s employment or service
for Cause (as defined below) or if following the
Grantee’s termination of employment,
circumstances arise or are discovered with
respect to the Grantee that would have
constituted Cause for termination of his or her
employment or service, all Options theretofore
granted to such Grantee (whether vested or not)
shall, to the extent not theretofore exercised,
terminate on the date of such termination (or on
which such circumstance arise or are discovered,
as the case may be) unless otherwise determined
by the Committee.
	 
	 	6.6.2.	 	In the case of a Grantee whose principal
employer is a Subsidiary or Affiliate, the
Grantee’s employment shall also be deemed
terminated for purposes of this Section
6.6 as of the date on which such principal
employer ceases to be a Subsidiary or
Affiliate. Notwithstanding anything to the
contrary, the Committee, in its absolute
discretion may, on such terms and

 

 - 14 - 

	 	 	 	conditions as it may determine
appropriate, extend the periods for which
the Options held by any individual may
continue to vest and be exercisable;
provided, that such Options may lose their
status as Incentive Stock Options under
applicable law and be deemed Nonqualified
Stock Options in the event that the period
of vesting and/or exercisability of any
option is extended beyond the later of:
(i) one hundred and eighty (180) days
after the date of cessation of employment
or performance of services; or (ii) the
applicable period under Section 6.7 below.

	 	6.6.3.	 	For purposes of this Plan, the term “Cause”
shall mean any of the following: (a) fraud,
embezzlement or felony or similar act by the
Grantee; (b) an act of moral turpitude by the
Grantee, or any similar act, to the extent that
such act causes significant injury to the
reputation, business or business relationship of
the Company (or a Subsidiary or Affiliate, when
applicable); (c) any material breach by the
Grantee of an agreement between the Company or
any Subsidiary or Affiliate and the Grantee
(including material breach of confidentiality,
non-competition or non-solicitation covenants);
or (f) any circumstances that constitute grounds
for termination for cause under the Grantee’s
employment, consulting or service agreement with
the Company or Subsidiary or Affiliate, to the
extent applicable.

	 	6.7.	 	Death, Disability or Retirement of Grantee. If a
Grantee shall die while employed by, or performing service for, the
Company or a Subsidiary, or within the three (3) months period after
the date of termination of such Grantee’s employment or service (or
within such different period as the Committee may have provided
pursuant to Section 6.6 hereof), or if the Grantee’s employment or
service shall terminate by reason of Disability, all Options
theretofore granted to such Grantee may (to the extent otherwise
vested and exercisable and unless earlier terminated in accordance
with their terms), be exercised by the Grantee or by the Grantee’s
estate or by a person who acquired the right to exercise such Options
by bequest or inheritance or otherwise by result of death or
Disability of the Grantee, at any time within one (1) year after the
death or Disability
of the Grantee (or such different period as the Committee shall
prescribe). In the event that an Option granted hereunder shall
be exercised by the legal representatives of a deceased or
former Grantee, written notice of such exercise shall be
accompanied by a certified copy of letters testamentary or
equivalent proof of the right of such legal representative to
exercise such Option. In the event that the employment or
service 

 

 - 15 - 

	 	 	 	of a Grantee shall terminate on account of such
Grantee’s Retirement, all Options of such Grantee that are
exercisable at the time of such Retirement may, unless earlier
terminated in accordance with their terms, be exercised at any
time within the three (3) month period after the date of such
Retirement (or such different period as the Committee shall
prescribe).

	 	6.8.	 	Suspension of Vesting. Unless the Board of Directors
or the Committee provides otherwise, vesting of Options granted
hereunder shall be suspended during any unpaid leave of absence,
other than in the case of any (a) leave of absence which was
pre-approved by the Company, or (b) transfers between locations of
the Company or between the Company, any Affiliate, or any respective
successor thereof.
	 
	 	6.9.	 	Voting Proxy. Until immediately after the earlier of
the Company’s Shares being listed for trading on any stock exchange
or quotation system or the consummation of a Merger/Sale, the right
to vote any Shares acquired under this Plan pursuant to an Award
shall, unless otherwise determined by the Committee, be given by the
Grantee, pursuant to an irrevocable proxy, to the person or persons
designated by the Board. All Awards granted hereunder shall be
conditioned upon the execution of such irrevocable proxy. So long as
any such Shares are held by a Trustee, such Shares shall be voted by
the Trustee, and unless the Trustee is directed otherwise by the
Board, such Shares shall be voted in the same proportion as the
result of the shareholder vote at the shareholders meeting or written
consent in respect of which the Shares held by the Trustee are being
voted. Any irrevocable proxy granted pursuant hereto shall be of no
force or effect immediately after the earlier of listing of the
Shares for trading on any stock exchange or quotation system or the
consummation of a Merger/Sale.
	 
	 	6.10.	 	Other Provisions. The Option Agreement evidencing
Awards under the Plan shall contain such other terms and conditions
not inconsistent with the Plan as the Committee may determine, at or
after the date of grant, including without limitation, provisions in
connection with the restrictions on transferring the Awards, which
shall be binding upon the Grantees and other terms and conditions as
the Committee shall deem appropriate.

	7.	 	NONQUALIFIED STOCK OPTIONS.

Options granted pursuant to this Section 7 are intended to constitute Nonqualified
Stock Options and shall be subject to the general terms and conditions specified in
Section 6 hereof and other provisions of the Plan, except for any provisions of the
Plan applying
to Options under a different tax laws or regulations.

	8.	 	INCENTIVE STOCK OPTIONS.

Options granted pursuant to this Section 8 are intended to constitute Incentive
Stock Options and shall be granted subject to the following special terms and
conditions, the general terms and conditions specified in Section 6 hereof and other
provisions of the Plan, except for any provisions of the Plan applying to Options
under a different tax laws or regulations:

 

 - 16 - 

	 	8.1.	 	Value of Shares. The aggregate Fair Market Value
(determined as of the date the Incentive Stock Option is granted) of
the Shares with respect to which all Incentive Stock Options granted
under this Plan and all other option plans of any Subsidiary or
Affiliate become exercisable for the first time by each Grantee
during any calendar year shall not exceed one hundred thousand United
States dollars ($100,000) with respect to such Grantee. To the
extent that the aggregate Fair Market Value of Shares with respect to
which the Incentive Stock Options are exercisable for the first time
by any Grantee during any calendar years exceeds one hundred thousand
United States dollars ($100,000), such Options shall be treated as
Nonqualified Stock Options. The foregoing shall be applied by taking
options into account in the order in which they were granted, with
the Fair Market Value of any Share to be determined at the time of
the grant of the Option. In the event the foregoing results in the
portion of an Incentive Stock Option exceeding the one hundred
thousand United States dollars ($100,000) limitation, only such
excess shall be treated as a Nonqualified Stock Option.
	 
	 	8.2.	 	Ten Percent Shareholder. In the case of an Incentive
Stock Option granted to a Ten Percent Shareholder, (i) the Exercise
Price shall not be less than one hundred and ten percent (110%) of
the Fair Market Value of the Shares on the date of grant of such
Incentive Stock Option, and (ii) the Exercise Period shall not exceed
five (5) years from the date of grant of such Incentive Stock Option.
	 
	 	8.3.	 	Incentive Stock Option Lock-Up Period. No disposition
of Shares received pursuant to the exercise of Incentive Stock
Options (“ISO Shares”), shall be made by the Grantee within 2 years
from the date of grant, nor within 1 year after the transfer of such
ISO Shares to him. To the extent that the Grantee violates the
aforementioned limitations, the Incentive Stock Options shall be
deemed to be Nonqualified Stock Options.
	 
	 	8.4.	 	Approval. The status of any ISO Shares shall be
subject to approval of the Plan by the Company’s shareholders, such
approval to be provided 12 months before or after the date of
adoption of the Plan by the Board of Directors.
	 
	 	8.5.	 	Exercise Following Termination. Notwithstanding
anything else in this Plan to the contrary, Incentive Stock Options
that are not exercised within ninety (90) days following termination
of Grantee’s employment in the Company or its Affiliates and
Subsidiaries, or
within one year in case of termination of Grantee’s employment
in the Company or its Affiliates and Subsidiaries due to a
disability (within the meaning of section 22(e)(3) of the Code),
shall be deemed to be Nonqualified Stock Options.
	 
	 	8.6.	 	Adjustments to Incentive Stock Options. Any Option
Agreement providing for the grant of Incentive Stock Options shall
indicate that adjustments made pursuant to the Plan with respect to
Incentive Stock Options could constitute a “modification” of such
Incentive Stock Options (as that term is defined in Section 424(h) of
the Code) or could cause adverse tax consequences for the holder of
such 

 

 - 17 - 

	 	 	 	Incentive Stock Options and that the holder should consult with
his or her tax advisor regarding the consequences of such
“modification” on his or her income tax treatment with respect to the
Incentive Stock Option.

	 	8.7.	 	Notice to Company of Disqualifying Disposition. Each
Grantee who receives an Incentive Stock Option must agree to notify
the Company in writing immediately after the Grantee makes a
Disqualifying Disposition of any ISO Shares. A “Disqualifying
Disposition” is any disposition (including any sale) of such ISO
Shares before the later of (i) two years after the date the Grantee
was granted the Incentive Stock Option, or (ii) one year after the
date the Grantee acquired Shares by exercising the Incentive Stock
Option. If the Grantee dies before such ISO Shares are sold, these
holding period requirements do not apply and no disposition of the
ISO Shares will be deemed a Disqualifying Disposition.

	9.	 	102 OPTION AWARDS.

	 	9.1.	 	Options granted pursuant to this Section 9 are intended to be
granted pursuant to Section 102 of the Ordinance pursuant to either
(a) Section 102(b)(2) thereof as capital gains track options (“102
Capital Gains Track Options”), or (b) Section 102(b)(1) thereof as
ordinary income track options (“102 Ordinary Income Track Options”;
together with 102 Capital Gains Track Options, “102 Trustee
Options”). 102 Trustee Options shall be granted subject to the
following special terms and conditions contained in this Section 9,
the general terms and conditions specified in Section 6 hereof and
other provisions of the Plan, except for any provisions of the Plan
applying to Options under a different tax laws or regulations.
	 
	 	9.2.	 	The Company may grant only one type of 102 Trustee Option at
any given time to all Grantees who are to be granted 102 Trustee
Options pursuant to this Plan, and shall file an election with the
ITA regarding the type of 102 Trustee Option it elects to grant
before the date of grant of any 102 Trustee Options (the “Election”).
Such Election shall also apply to any bonus shares received by any
Grantee as a result of holding the 102 Trustee Options. The Company
may change the type of 102 Trustee Option that it elects to grant
only after the passage of at least 12 months from the end of the year
in which the first grant was made in accordance with the
previous Election, or as otherwise provided by Applicable Law.
Any Election shall not prevent the Company from granting
Options, pursuant to Section 102(c) of the Ordinance without a
Trustee (“102 Non-Trustee Options”).
	 
	 	9.3.	 	Each 102 Trustee Option will be deemed granted on the date
stated in a written notice to be provided by the Company, provided
that on or before such date (i) the Company has provided such notice
to the Trustee and (ii) the Grantee has signed all documents required
pursuant to Applicable Law and under the Plan.

 

 - 18 - 

	 	9.4.	 	Each 102 Trustee Option, each Share issued pursuant to the
exercise of any 102 Trustee Option, and any rights granted
thereunder, including, without limitation, bonus shares, shall be
allotted and issued to and registered in the name of the Trustee and
shall be held in trust for the benefit of the Grantee for a period of
not less than the requisite period prescribed by the Ordinance and
the Rules or such longer period as set by the Committee (the
“Required Holding Period”). In the event that the requirements under
Section 102 to qualify an Option as a 102 Trustee Option are not met,
then the Option may be treated as a 102 Non-Trustee Option, all in
accordance with the provisions of Section 102 and the Rules. After
termination of the Required Holding Period, the Trustee may release
such 102 Trustee Option and any such Shares, provided that (i) the
Trustee has received an acknowledgment from the ITA that the Grantee
has paid any applicable taxes due pursuant to the Ordinance or (ii)
the Trustee and/or the Company and/or its Affiliate withholds any
applicable taxes due pursuant to the Ordinance arising from the 102
Trustee Options and/or any Shares allotted or issued upon exercise of
such 102 Trustee Options. The Trustee shall not release any 102
Trustee Options or Shares issued upon exercise thereof prior to the
payment in full of the Grantee’s tax liabilities arising from such
102 Trustee Options and/or Shares or the withholding referred to in
(ii) above.
	 
	 	9.5.	 	Each 102 Trustee Option shall be subject to the relevant
terms of the Ordinance and the Rules, which shall be deemed an
integral part of the 102 Trustee Option and shall prevail over any
term contained in the Plan or Option Agreement which is not
consistent therewith. Any provision of the Ordinance, the Rules and
any approvals by the Income Tax Commissioner not expressly specified
in this Plan or Option Agreement which, as determined by the
Committee, are necessary to receive or maintain any tax benefit
pursuant to Section 102 shall be binding on the Grantee. The Grantee
granted a 102 Trustee Option shall comply with the Ordinance and the
terms and conditions of the Trust Agreement entered into between the
Company and the Trustee. The Grantee agrees to execute any and all
documents, which the Company and/or its Affiliates and/or the Trustee
may reasonably determine to be necessary in order to comply with the
Ordinance and the Rules.
	 
	 	9.6.	 	During the Required Holding Period, the Grantee shall not
release from trust or sell, assign, transfer or give as collateral,
the Shares
issuable upon the exercise of a 102 Trustee Option and/or any
securities issued or distributed with respect thereto, until the
expiration of the Required Holding Period. Notwithstanding the
above, if any such sale or release occurs during the Required
Holding Period it will result in adverse tax consequences to the
Grantee under Section 102 of the Ordinance and the Rules, which
shall apply to and shall be borne solely by such Grantee.
Subject to the foregoing, the Trustee may, pursuant to a written
request from the Grantee, release 

 

 - 19 - 

	 	 	 	and transfer such Shares to a
designated third party, provided that both of the following
conditions have been fulfilled prior to such release or
transfer: (i) payment has been made to the ITA of all taxes
required to be paid upon the release and transfer of the Shares,
and confirmation of such payment has been received by the
Trustee and (ii) the Trustee has received written confirmation
from the Company that all requirements for such release and
transfer have been fulfilled according to the terms of the
Company’s corporate documents, the Plan, the Option Agreement
and any Applicable Law.

	 	9.7.	 	If a 102 Trustee Option is exercised during the Required
Holding Period, the Shares issued upon such exercise shall be issued
in the name of the Trustee for the benefit of the Grantee. If such
102 Trustee Option is exercised after the expiration of the Required
Holding Period, the Shares issued upon such exercise shall, at the
election of the Grantee, either (i) be issued in the name of the
Trustee, or (ii) be issued to the Grantee, provided that the Grantee
first complies with all applicable provisions of the Plan and all
taxes with respect thereto shall have been fully paid to the ITA.
	 
	 	9.8.	 	The foregoing provisions of this Section 9 relating to 102
Trustee Options shall not apply with respect to 102 Non-Trustee
Options, which shall, however, be subject to the relevant provisions
of Section 102 and the Rules.
	 
	 	9.9.	 	Upon receipt of a 102 Trustee Option, the Grantee will sign
an undertaking to release the Trustee from any liability with respect
to any action or decision duly taken and executed in good faith by
the Trustee in relation to the Plan, or any 102 Trustee Option or
Share granted to such Grantee thereunder.

	10.	 	3(9) OPTION AWARD.

	 	10.1.	 	Options granted pursuant to this Section 10 are intended to
constitute 3(9) Option Award and shall be granted subject to the
general terms and conditions specified in Section 6 hereof and other
provisions of the Plan, except for any provisions of the Plan
applying to Options under a different tax laws or regulations.
	 
	 	10.2.	 	To the extent required by the Ordinance or the ITA or
otherwise deemed by the Committee prudent or advisable, the 3(9)
Option Awards granted pursuant to the Plan shall be issued to a
Trustee nominated by the Committee in accordance with the provisions
of the Ordinance. In such event, the Trustee shall hold such Options
in
trust, until exercised by the Grantee, pursuant to the Company’s
instructions from time to time as set forth in a trust
agreement, which will be entered into between the Company and
the Trustee. If determined by the Board of Directors or the
Committee, and subject to such trust agreement the Trustee shall
be responsible for withholding any taxes to which a Grantee may
become liable upon the exercise of Options.

	11.	 	RESTRICTED SHARES.
	 
	 	 	The Committee may award Restricted Shares to any eligible Grantee, including under
Section 102 of the Ordinance. Each Award of Restricted Shares under the Plan shall
be evidenced by a written agreement between the Company and the Grantee (the
“Restricted Share Agreement”), in such form as the Committee shall from time to 

 

 - 20 - 

	 	 	time
approve. The Restricted Share Agreement shall comply with and be subject to the
following terms and conditions, unless otherwise specifically provided in such
Agreement:

	 	11.1.	 	Number of Shares. Each Restricted Share Agreement
shall state the number of Shares covered by an Award.
	 
	 	11.2.	 	Purchase Price. Each Restricted Share Agreement may
state an amount of purchase price to be paid by the Grantee in
consideration for the issuance of the Restricted Shares and the terms
of payment thereof, which may include, payment by issuance of
promissory notes or other evidence of indebtedness on such terms and
conditions as determined by the Committee.
	 
	 	11.3.	 	Vesting. Each Restricted Share Agreement shall
provide the vesting schedule for the Restricted Shares as determined
by the Committee, provided that (to the extent permitted under
Applicable Law) the Committee shall have the authority to determine
the vesting schedule and accelerate the vesting of any outstanding
Restricted Share at such time and under such circumstances as it, in
its sole discretion, deems appropriate. Unless otherwise resolved by
the Committee and stated in the Restricted Share Agreement,
Restricted Shares shall vest in the same vesting schedule as set
forth in Section 6.5 hereof.
	 
	 	11.4.	 	Restrictions. Restricted Shares may not be sold,
assigned, transferred, pledged, hypothecated or otherwise disposed
of, except by will or the laws of descent and distribution, for such
period as the Committee shall determine from the date on which the
Award is granted (the “Restricted Period”). The Committee may also
impose such additional or alternative restrictions and conditions on
the Restricted Shares, as it deems appropriate, including the
satisfaction of performance criteria. Such performance criteria may
include, but are not limited to, sales, earnings before interest and
taxes, return on investment, earnings per share, any combination of
the foregoing or rate of growth of any of the foregoing, as
determined by the Committee. Certificates for shares issued pursuant
to Restricted Share Awards shall bear an appropriate legend referring
to such restrictions, and any attempt to dispose of any such shares
in contravention of such restrictions shall be null
and void and without effect. Such certificates may, if so
determined by the Committee, be held in escrow by an escrow
agent appointed by the Committee, or, if a Restricted Share
Award is made pursuant to Section 102, by the Trustee. In
determining the Restricted Period of an Award the Committee may
provide that the foregoing restrictions shall lapse with respect
to specified percentages of the awarded Restricted Shares on
successive anniversaries of the date of such Award. To the
extent required by the Ordinance or the ITA, the Restricted
Shares issued pursuant to Section 102 of the Ordinance shall be
issued to the Trustee in accordance with the provisions of the
Ordinance and the Restricted Shares shall be held for the
benefit of the Grantee for such period as may be required by the
Ordinance.
	 
	 	11.5.	 	Adjustment of Performance Goals. The Committee may
adjust 

 

 - 21 - 

	 	 	 	performance goals to take into account changes in law and
accounting and tax rules and to make such adjustments as the
Committee deems necessary or appropriate to reflect the inclusion or
the exclusion of the impact of extraordinary or unusual items, events
or circumstances.

	 	11.6.	 	Forfeiture. Subject to such exceptions as may be
determined by the Committee, if the Grantee’s continuous employment
with the Company or any Subsidiary or Affiliate shall terminate for
any reason prior to the expiration of the vesting date or Restricted
Period of an Award or prior to the payment in full of the purchase
price of any Restricted Shares with respect to which the vesting date
or the Restricted Period has expired, any shares remaining subject to
vesting or restrictions (after taking into account the provisions of
Section 11.8) or with respect to which the purchase price has not
been paid in full, shall thereupon be forfeited and shall be deemed
transferred to, and reacquired by, or cancelled by, as the case may
be, the Company or a Subsidiary at no cost to the Company or
Subsidiary, subject to all Applicable Laws. Upon forfeiture of
Restricted Shares, the Grantee shall have no further rights with
respect to such Restricted Shares.
	 
	 	11.7.	 	Ownership. During the Restricted Period the Grantee
shall possess all incidents of ownership of such Restricted Shares,
subject to Section 6.9 and Section 11.4, including the right to
receive dividends with respect to such shares. All distributions, if
any, received by a Grantee with respect to Restricted Shares as a
result of any stock split, stock dividend, combination of shares, or
other similar transaction shall be subject to the restrictions
applicable to the original Award.
	 
	 	11.8.	 	Accelerated Lapse of Restrictions. Promptly after
the occurrence of any Merger/Sale and subject to Section 14.3, all
restrictions then outstanding with respect to Restricted Shares
awarded hereunder shall automatically expire and be of no further
force and effect. The Committee shall have the authority (and the
Agreement may so provide) to cancel all or any portion of any
outstanding restrictions prior to the expiration of the Restricted
Period with respect to any
or all of the Restricted Shares awarded with respect to any or
all Grantees on such terms and conditions as the Committee shall
deem appropriate.

	12.	 	RESTRICTED SHARE UNITS.

	 	12.1.	 	A Restricted Share Unit (an “RSU”) is an Award covering a
number of Shares that is settled by issuance of those Shares. An RSU
may be awarded to any eligible Grantee, including under Section 102
of the Ordinance. Each grant of RSUs under the Plan shall be
evidenced by a written agreement between the Company and the Grantee
(the “Restricted Share Unit Agreement”), in such form as the
Committee shall from time to time approve. Such RSUs shall be subject
to all applicable terms of the Plan and may be subject to any other
terms that are not inconsistent with the Plan. The provisions of the
various Restricted Share Unit Agreements entered into under the Plan
need not be identical.

 

 - 22 - 

	 	 	 	RSUs may be granted in consideration of a
reduction in the recipient’s other compensation.

	 	12.2.	 	Other than the par value of the Shares, no payment of cash
shall be required as consideration for RSUs. RSUs may or may not be
subject to vesting. Vesting shall occur, in full or in installments,
upon satisfaction of the conditions specified in the Restricted Share
Unit Agreement.
	 
	 	12.3.	 	Without limitation of Section 6.9, no voting or dividend
rights as a shareholder shall exist prior to the actual issuance of
Shares in the name of the Grantee. Notwithstanding anything else in
this Plan (as may be amended from time to time) to the contrary,
unless otherwise specified by the Committee, each RSU shall be for a
term of seven (7) years. Each Restricted Share Unit Agreement shall
specify its term and any conditions on the time or times for
settlement, and provide for expiration prior to the end of its term
in the event of termination of employment or service providing to the
Company, and may provide for earlier settlement in the event of the
Grantee’s death, Disability or other events.
	 
	 	12.4.	 	Settlement of vested RSUs shall be made in the form of
Shares. Distribution to a Grantee of an amount (or amounts) from
settlement of vested RSUs can be deferred to a date after settlement
as determined by the Committee. The amount of a deferred distribution
may be increased by an interest factor or by dividend equivalents.
Until the grant of RSUs is settled, the number of such RSUs shall be
subject to adjustment pursuant hereto.

	13.	 	OTHER SHARE OR SHARE-BASED AWARDS.
	 
	 	 	The Committee may grant other Awards under the Plan pursuant to which Shares (which
may, but need not, be Restricted Shares pursuant to Section 11 hereof), cash or a
combination thereof, are or may in the future be acquired or received, or Awards
denominated in stock units, including units valued on the basis of measures other
than market value. The Committee may also grant stock appreciation rights without
the
grant of an accompanying option, which rights shall permit the Grantees to receive,
at the time of any exercise of such rights, cash equal to the amount by which the
Fair Market Value of all Shares in respect to which the right was granted exceeds
the exercise price thereof. The Committee may, and it is hereby deemed to be an
Award under the terms of the Plan, grant to Grantees (including employees) the
opportunity to purchase Shares of the Company in connection with any public
offerings of the Company’s securities. Such other Share based Awards may be granted
alone, in addition to, or in tandem with any Award of any type granted under the
plan and must be consistent with the purposes of the Plan.
	 
	14.	 	EFFECT OF CERTAIN CHANGES.

	 	14.1.	 	General. In the event of a subdivision of the
outstanding share capital of the Company, any payment of a stock
dividend (distribution of bonus shares), a recapitalization, a
reorganization (which may include a combination or exchange of
shares), a consolidation, a stock split, a reverse stock split, a
spin-off or other corporate divestiture or division, a
reclassification or other similar occurrence, the Committee shall
make such adjustments as 

 

 - 23 - 

	 	 	 	determined by the Committee to be
appropriate in order to adjust (i) the number of Shares available for
grants of Awards, (ii) the number of Shares covered by outstanding
Awards, and (iii) the exercise price per share covered by any Award;
provided, however, that any fractional shares resulting from such
adjustment shall be rounded down to the nearest whole share and that
the Company shall have no obligation to make any cash or other
payment with respect to such fractional shares.

	 	14.2.	 	Merger and Sale of Company. In the event of (i) a
sale of all or substantially all of the assets of the Company; or
(ii) a sale (including an exchange) of all or substantially all of
the shares of the Company; (iii) a merger, consolidation,
amalgamation or like transaction of the Company with or into another
corporation; (iv) a scheme of arrangement for the purpose of
effecting such sale, merger or amalgamation; or (v) such other
transaction that is determined by the Committee to be a transaction
having a similar effect (all such transactions being herein referred
to as a “Merger/Sale”), then, without the Grantee’s consent and
action:

	 	14.2.1.	 	The Committee in its sole and absolute
discretion may cause that any Award then
outstanding shall be assumed or an equivalent
Award shall be substituted by such successor
corporation of the Merger/Sale or any parent or
Affiliate thereof as determined by the Board is
its discretion (the “Successor Corporation”),
under substantially the same terms as the Award;
	 
	 	 	 	For the purposes of this Section 14.2.1, the Award shall be
considered assumed if, following a Merger/Sale, the Award
confers on the holder thereof the right to purchase or receive,
for
each Share underlying an Award immediately prior to the
Merger/Sale, either (i) the consideration (whether stock, cash,
or other securities or property) distributed to or received by
holders of Shares in the Merger/Sale for each Share held on the
effective date of the Merger/Sale (and if holders were offered
a choice of consideration, the type of consideration chosen by
the holders of a majority of the outstanding Shares), which may
be subject to vesting and other terms as determined by the
Committee in its discretion, or (ii) regardless of the
consideration received by the holders of Shares in the
Merger/Sale, solely shares (or their equivalent) of the
Successor Corporation at a value to be determined by the
Committee in its discretion, which may be subject to vesting
and other terms as determined by the Committee in its
discretion. The foregoing shall not limit the Committee
authority to determine, in its sole discretion, that in lieu of
such assumption or substitution of Awards for Awards of the
Successor Corporation, such Award will be substituted for any
other type of asset or property, including under Section 14.2.2
hereunder.
	 
	 	14.2.2.	 	In the event that the Successor Corporation

 

 - 24 - 

	 	 	 	does not agree to assume the Award or to
substitute an equivalent Award, then the
Committee may (but shall not be obligated to),
in lieu of such assumption or substitution of
the Award and in its sole discretion, (i)
provide for the Grantee to have the right to
exercise the Award, or otherwise for the
acceleration of vesting of such Award, as to all
or part of the Shares, including Shares covered
by the Award which would not otherwise be
exercisable or vested, under such terms and
conditions as the Committee shall determine,
including the cancellation of all unexercised
Awards upon closing of the Merger/Sale; and/or
(ii) provide for the cancellation of each
outstanding Award at the closing of such
Merger/Sale, and payment to the Grantee of an
amount in cash as determined by the Committee to
be fair in the circumstances, subject to such
terms and conditions as determined by the
Committee.

	 	14.2.3.	 	Notwithstanding the foregoing, in the event
of a Merger/Sale, the Committee may determine,
in its sole discretion, that upon completion of
such Merger/Sale, the terms of any Award be
otherwise amended, modified or terminated, as
the Committee shall deem in good faith to be
appropriate, and if an Option Award, that the
Option Award shall confer the right to purchase
or receive any other security or asset, or any
combination
thereof, or that its terms be otherwise
amended, modified or terminated, as the
Committee shall deem in good faith to be
appropriate. Neither the authorities and
powers of the Committee under this Section
14.2.2, nor the exercise or implementation
thereof, shall (i) be restricted or
limited in any way by any adverse
consequences (tax or otherwise) that may
result to any holder of an Award, and (ii)
as, inter alia, being a feature of the
Award upon its grant, be deemed to
constitute a change or an amendment of the
rights of such holder under this Plan, nor
shall any such adverse consequences (as
well as any adverse tax consequences that
may result from any tax ruling or other
approval or determination of any relevant
tax authority) be deemed to constitute a
change or an amendment of the rights of
such holder under this Plan.

	 	14.3.	 	Reservation of Rights. Except as expressly provided
in this Section 

 

 - 25 - 

	 	 	 	14, the Grantee of an Award hereunder shall have no
rights by reason of any subdivision or consolidation of shares of any
class or the payment of any stock dividend (bonus shares), any other
increase or decrease in the number of shares of any class or by
reason of any dissolution, liquidation, Merger/Sale, or
consolidation, divestiture or spin-off of assets or shares of another
company. Any issue by the Company of shares of any class, or
securities convertible into shares of stock of any class, shall not
affect, and no adjustment by reason thereof shall be made with
respect to, the number, type or price of shares subject to an Award.
The grant of an Award pursuant to the Plan shall not affect in any
way the right of power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or
business structures or to merge or to consolidate or to dissolve,
liquidate or sell, or transfer all or part of its business or assets
or engage in any similar transactions.

	15.	 	NON-TRANSFERABILITY OF AWARDS; SURVIVING BENEFICIARY.

	 	15.1.	 	All Awards granted under the Plan shall not be transferable
otherwise than by will or by the laws of descent and distribution.
Awards may be exercised or otherwise realized, during the lifetime of
the Grantee, only by the Grantee or by his guardian or legal
representative, to the extent provided for herein. Any transfer of an
Award not permitted hereunder (including transfers pursuant to any
decree of divorce, dissolution or separate maintenance, any property
settlement, any separation agreement or any other agreement with a
spouse) and any grant of any interest in any Award to, or creation in
any way of any interest in any Award by, any party other than the
Grantee shall be null and void and shall not confer upon any party or
person, other than the Grantee, any rights. A Grantee may file
with the Committee a written designation of a beneficiary on
such form as may be prescribed by the Committee and may, from
time to time, amend or revoke such designation. If no designated
beneficiary survives the Grantee, the executor or administrator
of the Grantee’s estate shall be deemed to be the Grantee’s
beneficiary. Notwithstanding the forgoing, upon the request of
the Grantee and subject to Applicable Law the Committee, at its
sole discretion, may permit to transfer the Award to a family
trust.
	 
	 	15.2.	 	As long as the Shares are held by the Trustee in favor of
the Grantee, all rights possessed by the Grantee over the Shares are
personal, and may not be transferred, assigned, pledged or mortgaged,
other than by will or laws of descent and distribution.

	16.	 	CONDITIONS UPON ISSUANCE OF SHARES 

	 	16.1.	 	Legal Compliance. Shares shall not be issued
pursuant to the exercise of an Award, unless the exercise of such
Award and the issuance and delivery of such Shares shall comply with
Applicable Laws as determined by counsel to the Company. The
inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company’s
counsel to be necessary to the lawful issuance and sale of any Shares

 

 - 26 - 

	 	 	 	hereunder, shall relieve the Company of any liability in respect of
the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.

	 	16.2.	 	Investment Representations. As a condition to the
exercise of an Award, the Company may require the person exercising
such Award, to make representations and warranties as may be
required under applicable securities laws if, in the opinion of
counsel for the Company, such representations are required, all in
form and content specified by the Company.

	17.	 	MARKET STAND-OFF

	 	17.1.	 	In connection with any underwritten public offering by the
Company of its equity securities pursuant to an effective
registration statement filed under the United States Securities Act
of 1933, as amended or equivalent law in another jurisdiction, the
Grantee shall not directly or indirectly, without the prior written
consent of the Company or its underwriters, (i) lend, offer, pledge,
sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or
warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any Shares acquired under this Plan or any securities of
the Company (whether or not such Shares acquired under this Plan), or
(ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of
ownership of the Shares acquired under this Plan, whether any such
transaction described in clause (i) or (ii) above is to be settled by
delivery of Shares acquired under this Plan or such other securities,
in cash or otherwise. Such restriction (the “Market Stand-Off”)
shall be in effect for such period of time following the
effective date of the registration statement relating to such
offering, as may be requested by the Company or such
underwriters, however in any event, such period shall not exceed
180 days (in the case of the Company’s first underwritten
offering of its Shares) following the effective date of such
registration statement; or 90 days (in the case of a
registration statement thereafter).
	 
	 	17.2.	 	In the event of a subdivision of the outstanding share
capital of the Company, the declaration and payment of a stock
dividend (distribution of bonus shares), the declaration and payment
of an extraordinary dividend payable in a form other than stock, a
recapitalization, a reorganization (which may include a combination
or exchange of shares or a similar transaction affecting the
Company’s outstanding securities without receipt of consideration), a
consolidation, a stock split, a spin-off or other corporate
divestiture or division, a reclassification or other similar
occurrence, an adjustment in conversion ratio, any new, substituted
or additional securities which are by reason of such transaction
distributed with respect to any Shares subject to the Market
Stand-Off, or into which such Shares thereby become convertible,
shall immediately be subject to the Market Stand-Off.
	 
	 	17.3.	 	In order to enforce the Market Stand-Off, the Company may
impose stop-transfer instructions with respect to the Shares 

 

 - 27 - 

	 	 	 	acquired
under this Plan until the end of the applicable stand-off period.

	 	17.4.	 	The underwriters in connection with a registration statement
so filed are intended to be third party beneficiaries of this Section
17 and shall have the right, power and authority to enforce the
provisions hereof as though they were a party hereto.

	18.	 	AGREEMENT BY GRANTEE REGARDING TAXES.

	 	18.1.	 	If the Committee shall so require, as a condition of
exercise of an Award, the release of Shares by the Trustee or the
expiration of the Restricted Period, a Grantee shall agree that, no
later than the date of such occurrence, he will pay to the Company or
make arrangements satisfactory to the Committee and the Trustee (if
applicable) regarding payment of any applicable taxes of any kind
required by Applicable Law to be withheld or paid.
	 
	 	18.2.	 	ALL TAX CONSEQUENCES UNDER ANY APPLICABLE LAW WHICH MAY
ARISE FROM THE GRANT OF ANY AWARDS OR THE EXERCISE THEREOF, THE SALE
OR DISPOSITION OF ANY SHARES GRANTED HEREUNDER OR ISSUED UPON
EXERCISE OF ANY AWARD OR FROM ANY OTHER ACTION OF THE GRANTEE IN
CONNECTION WITH THE FOREGOING SHALL BE BORNE AND PAID SOLELY BY THE
GRANTEE, AND THE GRANTEE SHALL INDEMNIFY THE COMPANY, ITS
SUBSIDIARIES AND AFFILIATES AND THE TRUSTEE, AND SHALL HOLD THEM
HARMLESS AGAINST AND FROM ANY LIABILITY
FOR ANY SUCH TAX OR PENALTY, INTEREST OR INDEXATION THEREON.
EACH GRANTEE AGREES TO, AND UNDERTAKES TO COMPLY WITH, ANY
RULING, SETTLEMENT, CLOSING AGREEMENT OR OTHER SIMILAR AGREEMENT
OR ARRANGEMENT WITH ANY TAX AUTHORITY IN CONNECTION WITH THE
FOREGOING WHICH IS APPROVED BY THE COMPANY.
	 
	 	 	 	THE GRANTEE IS ADVISED TO CONSULT WITH A TAX ADVISOR WITH RESPECT TO THE
TAX CONSEQUENCES OF RECEIVING OR EXERCISING AWARDS HEREUNDER. THE COMPANY
DOES NOT ASSUME ANY RESPONSIBILITY TO ADVISE THE GRANTEE ON SUCH MATTERS,
WHICH SHALL REMAIN SOLELY THE RESPONSIBILITY OF THE GRANTEE.
	 
	 	18.3.	 	The Company or any Subsidiary or Affiliate may take such
action as it may deem necessary or appropriate, in its discretion,
for the purpose of or in connection with withholding of any taxes
which the Company or any Subsidiary or Affiliate is required by any
Applicable Law to withhold in connection with any Awards
(collectively, “Withholding Obligations”). Such actions may include,
without limitation, (i) requiring a Grantees to remit to the Company
in cash an amount sufficient to satisfy such Withholding Obligations;
(ii) subject to Applicable Law, allowing the Grantees to provide
Shares to the Company, in an amount that at such time, reflects a
value that the Committee determines to be sufficient to 

 

 - 28 - 

	 	 	 	satisfy such
Withholding Obligations; (iii) withholding Shares otherwise issuable
upon the exercise of an Award at a value which is determined by the
Committee to be sufficient to satisfy such Withholding Obligations;
or (iv) any combination of the foregoing. The Company shall not be
obligated to allow the exercise of any Award by or on behalf of a
Grantee until all tax consequences arising from the exercise of such
Award are resolved in a manner acceptable to the Company.

	 	18.4.	 	Each Grantee shall notify the Company in writing promptly
and in any event within ten (10) days after the date on which such
Grantee first obtains knowledge of any tax bureau inquiry, audit,
assertion, determination, investigation, or question relating in any
manner to the Awards granted or received hereunder or Shares issued
thereunder and shall continuously inform the Company of any
developments, proceedings, discussions and negotiations relating to
such matter, and shall allow the Company and its representatives to
participate in any proceedings and discussions concerning such
matters. Upon request, a Grantee shall provide to the Company any
information or document relating to any matter described in the
preceding sentence, which the Company, in its discretion, requires.
	 
	 	18.5.	 	With respect to 102 Non-Trustee Options, if the Grantee
ceases to be employed by the Company or any Affiliate, the Grantee
shall extend to the Company and/or its Affiliate with whom the
Grantee is employed a security or guarantee for the payment of taxes
due at the time of sale of Shares, all in accordance with the
provisions of
Section 102 of the Ordinance and the Rules.

	19.	 	RIGHTS AS A STOCKHOLDER; VOTING AND DIVIDENDS.

	 	19.1.	 	Subject to Section 11.7, a Grantee shall have no rights as a
shareholder of the Company with respect to any Shares covered by the
Award until the date of the issuance of a share certificate to the
Grantee for such Shares. In the case of 102 Option Awards or 3(9)
Option Awards (if such Share Options are being held by a Trustee), a
the Trustee shall have no rights as a shareholder of the Company with
respect to any Shares covered by such Award until the date of the
issuance of a share certificate to the Grantee for such Shares for
the Grantee’s benefit, and the Grantee shall have no rights as a
shareholder of the Company with respect to any Shares covered by the
Award until the date of the release of such Shares from the Trustee
to the Grantee and the issuance of a share certificate to the Grantee
for such Shares. No adjustment shall be made for dividends (ordinary
or extraordinary, whether in cash, securities or other property) or
distribution of other rights for which the record date is prior to
the date such share certificate is issued, except as provided in
Section 14 hereof.
	 
	 	19.2.	 	With respect to all Shares issued in the form of Awards
hereunder or upon the exercise of Awards hereunder, any and all
voting rights attached to such Shares shall be subject to Section
6.9, and the Grantee shall be entitled to receive dividends
distributed with respect to such Shares, subject to the provisions of
the Company’s 

 

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	 	 	 	Articles of Association, as amended from time to time,
and subject to any Applicable Law.

	 	19.3.	 	The Company may, but shall not be obligated to, register or
qualify the sale of Shares under any applicable securities law or any
other applicable law.

	20.	 	NO REPRESENTATION BY COMPANY.
	 
	 	 	By granting the Awards, the Company is not, and shall not be deemed as, granting any
representation or warranties to the Grantee regarding the Company, its business
affairs, its prospects or the future value of its Shares.
	 
	21.	 	NO RETENTION RIGHTS.
	 
	 	 	Nothing in the Plan or in any Award granted or agreement entered into pursuant
hereto shall confer upon any Grantee the right to continue in the employ of, or be
in a consultant, advisor, director, officer or supplier relationship with, the
Company or any Subsidiary or Affiliate or to be entitled to any remuneration or
benefits not set forth in the Plan or such agreement or to interfere with or limit
in any way the right of the Company or any such Subsidiary or Affiliate to terminate
such Grantee’s employment or service. Awards granted under the Plan shall not be
affected by any change in duties or position of a Grantee as long as such Grantee
continues to be employed by, or be in a consultant, advisor, director, officer or
supplier relationship with, the Company or any Subsidiary or Affiliate.
	 
	22.	 	PERIOD DURING WHICH AWARDS MAY BE GRANTED.
	 
	 	 	Awards may be granted pursuant to the Plan from time to time within a period of ten
(10) years from the Effective Date. From the tenth (10th) anniversary of
the Effective Date no grants of Awards may be made and the Plan shall continue to be
in full force and effect solely with respect to such Awards that remain outstanding.
The Plan shall terminate at such time at such time after the tenth (10th)
anniversary of the Effective Date that no Awards remain outstanding.
	 
	23.	 	TERM OF AWARD
	 
	 	 	Anything herein to the contrary notwithstanding, but without derogating from the
provisions of Sections 6.6, 6.7 or 8.2 hereof, if any Award, or any part thereof,
has not been exercised and the Shares covered thereby not paid for within the term
of the Award as determined by the Committee, which in any event shall not exceed ten
(10) years after the date on which the Award was granted, as set forth in the Notice
of Grant in the Grantee’s Award, such Award, or such part thereof, and the right to
acquire such Shares shall terminate, and all interests and rights of the Grantee in
and to the same shall expire. In the case of Shares held by a Trustee, the Grantee
shall elect whether to release such Shares from trust or sell the Shares and upon
such release or sale such trust shall expire.
	 
	24.	 	AMENDMENT AND TERMINATION OF THE PLAN.
	 
	 	 	The Board at any time and from time to time may suspend, terminate, modify or amend
the Plan, whether retroactively or prospectively; provided, however, that, unless
otherwise determined by the Board, an amendment which requires shareholder approval
in order for the Plan to continue to comply with any Applicable Law shall not be
effective unless approved by the requisite vote of shareholders, and provided

 

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	 	 	further that except as provided herein, no suspension, termination, modification or
amendment of the Plan may adversely affect any Award previously granted, unless the
written consent of the respective Grantee is obtained.

	25.	 	APPROVAL.

	 	25.1.	 	The Plan shall take effect upon its adoption by the Board
(the “Effective Date”), except that solely with respect to grants of
Incentive Stock Options the Plan shall also be subject to approval
within one year of the Effective Date, by a majority of the votes
cast on the proposal at a meeting or a written consent of
shareholders. Failure to obtain approval by the shareholders shall
not in any way derogate from the valid and binding effect of any
grant of an Award, which is not an Incentive Stock Option. Upon
approval of the Plan by the shareholders of the Company as set forth
above, all Incentive Stock Options granted under the Plan on or after
the Effective Date shall be fully effective as if the shareholders of
the Company had approved the Plan on the Effective Date.
Notwithstanding the foregoing, in the event that approval of the Plan
by the shareholders of the Company is required under Applicable Law,
in connection with the application of certain tax treatment or
pursuant to applicable stock exchange rules or regulations or
otherwise, such approval shall be obtained within the time required
under the Applicable Law.
	 
	 	25.2.	 	The 102 Awards are subject to the approval, if required, of
the ITA and receipt by the Company of all approvals thereof.

	26.	 	RULES PARTICULAR TO SPECIFIC COUNTRIES 
	 
	 	 	Notwithstanding anything herein to the contrary, the terms and conditions of the Plan may be
amended with respect to a particular country by means of an appendix to the Plan, and to the
extent that the terms and conditions set forth in any appendix conflict with any provisions
of the Plan, the provisions of the appendix shall govern. Terms and conditions set forth in
the Appendix shall apply only to Award granted to a Grantee under the jurisdiction of the
specific country that is the subject of the appendix and shall not apply to Awards issued to
a Grantee not under the jurisdiction of such country. The adoption of any such appendix
shall be subject to the approval of the Board of Directors or Committee, and if required in
connection with the application of certain tax treatment, pursuant to applicable stock
exchange rules or regulations or otherwise, then also the approval of the shareholders of
the Company at the required majority.
	 
	27.	 	GOVERNING LAW; JURISDICTION.
	 
	 	 	The Plan and all determinations made and actions taken pursuant hereto shall be
governed by the laws of the State of Israel, except with respect to matters that are
subject to tax laws, regulations and rules in any specific jurisdiction, which shall
be governed by the respective laws, regulations and rules of such jurisdiction.
Certain definitions, which refer to laws other than the laws of such jurisdiction,
shall be construed in accordance with such other laws. The competent courts located
in Tel-Aviv-Jaffa, Israel shall have exclusive jurisdiction over any dispute arising
out of or in connection with this Plan and any Award granted hereunder, and by
signing any agreement relating to an Award hereunder each Grantee irrevocably
submits to such exclusive jurisdiction.

 

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	28.	 	NON-EXCLUSIVITY OF THE PLAN.
	 
	 	 	Neither the adoption of the Plan by the Board nor the submission of the Plan to
shareholders of the Company for approval (to the extent required under Applicable
Law), shall be construed as creating any limitations on the power or authority of
the Board to adopt such other or additional incentive or other compensation
arrangements of whatever nature as the Board may deem necessary or desirable or
preclude or limit the continuation of any other plan, practice or arrangement for
the payment of compensation or fringe benefits to employees generally, or to any
class or group of employees, which the Company or any Subsidiary now has lawfully
put into effect, including, without limitation, any retirement, pension, savings and
stock purchase plan, insurance, death and disability benefits and executive
short-term or long-term incentive plans.
	 
	29.	 	MISCELLANEOUS.

	 	29.1.	 	Additional Terms. Each Award awarded under the Plan
may contain such other terms and conditions not inconsistent with the
Plan as may be determined by the Committee, in its sole discretion.
	 
	 	29.2.	 	Severability. If any provision of the Plan or any
Award Agreement shall be determined to be illegal or unenforceable by
any court of law in any jurisdiction, the remaining provisions hereof
and thereof
shall be severable and enforceable in accordance with their
terms, and all provisions shall remain enforceable in any other
jurisdiction. In addition, if any particular provision
contained in this Agreement shall for any reason be held to be
excessively broad as to duration, geographic scope, activity or
subject, it shall be construed by limiting and reducing such
provision as to such characteristic so that the provision is
enforceable to fullest extent compatible with the applicable law
as it shall then appear.
	 
	 	29.3.	 	Captions and Titles. The use of captions and titles
in this Plan or any Option Agreement, Restricted Share Agreement or
other Award related agreement is for the convenience of reference
only and shall not affect the meaning of any provision of the Plan or
such agreement.

*   *   *

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