Document:

Exhibit 4.1

 

SECOND AMENDED AND RESTATED

 CERTIFICATE OF
INCORPORATION

OF

ADVANCED LIFE SCIENCES HOLDINGS, INC.

 

ONE. Pursuant to
Sections 242 and 245 of the General Corporation Law of the State of
Delaware (the “DGCL”), this
Second Amended and Restated Certificate of Incorporation restates and
integrates and further amends the provisions of the Certificate of
Incorporation of the Corporation as heretofore supplemented or amended.

 

TWO. The text of the First
Amended and Restated Certificate of Incorporation as heretofore amended or
supplemented is hereby restated and further amended to read in its entirety as
follows:

 

ARTICLE 1

Name

 

The name of the corporation
is Advanced Life Sciences Holdings, Inc. (the “Corporation”).

 

ARTICLE 2

Registered Office and Registered Agent

 

The address of the
Corporation’s registered office in the State of Delaware is 1209 Orange Street,
Wilmington, DE 1980l, in the County of New Castle. The name of its registered
agent at such address is The Corporation Trust Company.

 

ARTICLE 3

Purpose

 

The purpose of the
Corporation is to engage in any lawful act or activity for which corporations
may be organized under the DGCL.

 

ARTICLE 4

Capital Stock

 

4.1    Amount.    The
Corporation has the authority to issue One Hundred Twenty-Five Million
(125,000,000) shares of capital stock (“Stock”).

 

4.2    Preferred Stock.    The
Corporation has the authority to issue up to Five Million (5,000,000) of the
initial One Hundred Twenty-Five Million (125,000,000) shares as a separate and
single class of shares known as “Preferred Stock,” which shall have $0.01 par
value per share. The Preferred Stock may be issued from time to time in one or
more series. The Board of Directors is hereby expressly authorized to provide
for the issue of all of any of the shares of the Preferred Stock in one or more
series, and to fix the number of shares and to determine or alter for each such
series, such voting powers, full or limited, or no voting powers, and such
designation, preferences, and relative, participating, optional, or other
rights and such qualifications, limitations, or restrictions thereof, as shall
be stated and expressed in the resolution or resolutions adopted by the Board
of Directors providing for the issuance of such shares and as may be permitted
by the DGCL. The Board of Directors is also expressly authorized to increase or
decrease the number of shares of any series subsequent to the issuance of
shares of that series, but not below the number of shares of such series then
outstanding. In case the number of shares of any series shall be decreased in
accordance with the foregoing sentence, the shares constituting such decrease
shall resume  the status
that they had prior to the adoption of the resolution originally fixing the
number of shares of

 

 

such series. The number of authorized shares
of Preferred Stock may be increased or decreased (but not below the number of
shares thereof then outstanding) by the affirmative vote of the holders of a
majority of the Common Stock, without a vote of the holders of the Preferred
Stock, or of any series thereof, unless a vote of any such holders is required
pursuant to the terms of any certificate of designation filed with respect to
any series of Preferred Stock.

 

4.3    Common Stock.    Of
the One Hundred Twenty-Five Million (125,000,000) shares the Corporation has
authority to issue, One Hundred Twenty Million (120,000,000) shares will
constitute a separate class of shares known as “Common Stock,” which shall have
$0.01 par value per share.

 

4.4   The
following is a description of the relative powers, preferences and
participating, optional or other special rights, and the qualifications,
limitations or restrictions of the Common Stock.

 

(a)   Voting.    At every
meeting of the stockholders of the Corporation in connection with the election
of directors and all other matters submitted to a vote of stockholders, every
holder of Common Stock is entitled to one vote in person or by proxy for each
share of Common Stock registered in the name of the holder on the transfer
books of the Corporation. Except as otherwise required by law, the holders of
Common Stock shall vote together as a single class, subject to any right that
may be conferred upon holders of Preferred Stock to vote together with holders
of Common Stock on all matters submitted to a vote of stockholders of the
Corporation.

 

(b)   Dividends and Other Distributions.    Subject
to the rights of the holders of Preferred Stock, holders of Common Stock are
entitled to receive such dividends and other distributions in cash, stock of
any corporation (other than Common Stock) or property of the Corporation as may
be declared thereon by the Board of Directors from time to time out of assets
or funds of the Corporation legally available therefor, and shall share equally
on a per share basis in all such dividends and other distributions.

 

(c)   Liquidation, Dissolution and Winding Up.    In
the event of any liquidation, dissolution or winding up of the affairs of the
Corporation, whether voluntary or involuntary, after payment in full of the
amounts required to be paid to the holders of Preferred Stock, the remaining
assets and funds of the Corporation are distributed pro rata to the holders of
shares of Common Stock. For purposes of this subsection (c), the voluntary
sale, conveyance, lease, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the assets of
the Corporation or a consolidation or merger of the Corporation with one or
more other corporations (whether or not the Corporation is the corporation
surviving the consolidation or merger) shall not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary.

 

(d)   Reorganizations and Consolidations.    In
case of any reorganization or any consolidation of the Corporation with one or
more other corporations or a merger of the Corporation with another
corporation, each holder of a share of Common Stock is entitled to receive with
respect to that share the same kind and amount of shares of stock and other
securities and property (including cash) receivable upon the reorganization,
consolidation or merger by any other holder of Common Stock.

 

4.5   The
number of authorized shares of Stock may be increased or decreased (but not
below the number of shares thereof then outstanding) by the affirmative vote of
the holders of a majority of the votes entitled to be cast by the holders of
the Common Stock, irrespective of the provisions of Section 242(b)(2) of
DGCL or any corresponding provision hereinafter enacted.

 

4.6   No
holder of Stock of the Corporation has any preemptive or preferential right of
subscription to any shares of any class of Stock of the Corporation whether now
or hereafter authorized, or to any obligation convertible into stock of the
Corporation, or any right of subscription therefor, other than such

 

 

rights, if any, as the Board of Directors in its discretion from time
to time determines.

 

ARTICLE 5

Board of Directors

 

5.1   The
business and affairs of the Corporation are managed by or under the direction
of a Board of Directors. The number of directors of the Corporation
constituting the whole board are fixed in the manner provided in the by-laws.
The election of directors need not be by ballot.

 

5.2   The
directors are divided into three classes, Class I, Class II and Class III.
The initial term of office of the Class I, Class II and Class III
directors expired at the annual meeting of stockholders in 2006, 2007, and
2008, respectively. The number of directors are apportioned among the classes
by the Board of Directors so as to maintain the number of directors in each
class as nearly equal as reasonably possible, and any additional director of
any class elected to fill a vacancy resulting from an increase in such class shall
hold office for a term that shall coincide with the remaining term of that
class. At each annual meeting of stockholders, successors to the class of
directors whose term expires at that annual meeting are elected for a
three-year term. In no case will a decrease in the number of directors shorten
the term of any incumbent director even though such decrease may result in an
inequality of the classes until the expiration of such term. A director shall
hold office until the annual meeting of the year in which his or her term
expires and until his or her successor are elected and shall qualify, subject, however, 
to prior death, resignation, retirement or removal from office. Except
as required by law or the provisions of this Second Amended and Restated Certificate
of Incorporation, all vacancies on the Board of Directors and newly created
directorships are filled by the Board of Directors. Any director elected to
fill a vacancy not resulting from an increase in the number of directors shall
have the same remaining term as that of his or her predecessor. Notwithstanding
anything to the contrary contained in this Second Amended and Restated
Certificate of Incorporation, the affirmative vote of the holders of a majority
of the voting power of the shares entitled to vote generally in the election of
directors are required to amend, alter or repeal, or to adopt any provision
inconsistent with, this Article 5.

 

5.3   Notwithstanding
the foregoing, whenever the holders of any one or more classes or series of
Preferred Stock issued by the Corporation have the right, voting separately by
class or series, to elect directors at an annual or special meeting of
stockholders, the election, term of office, filling of vacancies and other
features of such directorship are governed by the terms of this Second Amended
and Restated Certificate of Incorporation and any resolutions of the Board of
Directors applicable thereto, and such directors so elected shall not be
divided into classes pursuant to this Article 5.

 

5.4   Subject
to the rights of the holders of any classes or series of Preferred Stock, any
director, or the entire Board of Directors, may be removed from office at any
time, but only for cause and only by the affirmative vote of the holders of a
majority of the voting power of all the shares of the Corporation entitled to
vote for the election of directors.

 

ARTICLE 6

Amendment of By-laws

 

In furtherance and not in
limitation of the powers conferred by the laws of the State of Delaware, the
Board of Directors expressly is authorized to make, alter, amend and repeal the
by-laws of the Corporation, in any manner not inconsistent with the laws of the
State of Delaware or this Second Amended and Restated Certificate of
Incorporation, subject to the power of the stockholders of the Corporation to
amend, alter or repeal any by-laws made by the Board of Directors.

 

 

ARTICLE 7

Stockholder Meetings

 

Subject to the rights of the
holders of Preferred Stock, any action required or permitted to be taken by the
stockholders of the Corporation must be effected at a duly called annual or
special meeting of such holders and may not be effected by any consent in
writing by such holders. Subject to the rights of the holders of Preferred
Stock, special meetings of stockholders of the Corporation may be called only
by the Chairman of the Board or by the Board of Directors pursuant to a
resolution.  Business transacted at any
special meeting of stockholders are confined to the purpose or purposes of the
meeting as stated in the notice of the meeting. Notwithstanding anything
contained in this Second Amended and Restated Certificate of Incorporation to
the contrary, any amendment to or deletion of this Article 7 shall require
the affirmative vote of the holders of a majority of the voting power of all
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors.

 

ARTICLE 8

Limitation of Liability

 

A director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (a) for any breach of the director’s duty of loyalty
to the Corporation or its stockholders, (b) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (c) under Section 174 of the DGCL or (d) for any transaction
from which the director derived an improper personal benefit. If DGCL is
amended after approval of this Article by the stockholders to authorize
the further elimination or limitation of the liability of directors, then the
liability of directors are eliminated or limited to the full extent authorized
by the DGCL, as so amended.

 

ARTICLE 9

Amendment of Certificate

 

Subject to the provisions of
this Second Amended and Restated Certificate of Incorporation, the Corporation
reserves the right to amend, alter, change or repeal any provision contained in
this Second Amended and Restated Certificate of Incorporation, in the manner
now or hereafter prescribed by statute, and all rights conferred upon
stockholders in this Second Amended and Restated Certificate of Incorporation
are granted subject to this reservation.

 

THREE. This Second Amended
and Restated Certificate of Incorporation has been duly approved by the Board
of the Corporation.

 

FOUR. This Second Amended
and Restated Certificate of Incorporation was approved by the holders of the
requisite number of shares of said corporation in accordance with Section 228
of the General Corporation Law. This Second Amended and Restated Certificate of
Incorporation has been duly adopted in accordance with the provisions of
Sections 242 and 245 of the DGCL by the stockholders of the Corporation.

 

 

IN WITNESS WHEREOF, the undersigned
incorporator has executed this certificate as of the 1st day of April,
2009.

 

	
   

  	
  /s/ Michael T. Flavin

  
	
   

  	
   

  
	
   

  	
  Michael T. Flavinex41.htm

    
      
        

      

       

      Exhibit
4.1

       

      XFONE, INC.

    

    

    2007 STOCK INCENTIVE
PLAN

    

    1.Purpose

    

    The Xfone, Inc. 2007 Stock Incentive
Plan is intended to promote the best interests of the Corporation, and its
stockholders by (i) assisting the Corporation and its Affiliates in the
recruitment and/or retention of persons with ability and initiative, (ii)
providing an incentive to such persons to contribute to the growth and success
of the Corporation’s businesses by affording such persons equity participation
in the Corporation, and (iii) associating the interests of such persons with
those of the Corporation and its Affiliates and stockholders.

    

    2.Definitions

    

    As used in this Plan the following
definitions shall apply:

    

    A. “Affiliate” means (i)
any Subsidiary of the Corporation, (ii) any Parent of the Corporation, (iii) any
corporation, or trade or business (including, without limitation, a partnership,
limited liability company or other entity) which is directly or indirectly
controlled fifty percent (50%) or more (whether by ownership of stock, assets or
an equivalent ownership interest or voting interest) by the Corporation or one
of its Affiliates, (iv) any other entity in which the Corporation or any of its
Affiliates has a material equity interest and which is designated as an
“Affiliate” by resolution of the Committee; and (v) any executive officer,
director or ten percent (10%) shareholder of the Corporation;

    

    B. “Award” means any
Option or Stock Award granted hereunder.

    

    C. “Board” means the
Board of Directors of the Corporation.

    

    D. “Code” means the
Internal Revenue Code of 1986, and any amendments thereto.

    

    E. “Committee” means the
Board or any Committee of the Board to which the Board has delegated any
responsibility for the implementation, interpretation or administration of this
Plan.

    

    F. “Common Stock” means
the common stock, $0.001 par value, of the Corporation.

    

    G. “Consultant” means any
natural person performing consulting or advisory services for the Corporation or
any Affiliate.

    

    H. “Corporation” means
Xfone, Inc., a Nevada corporation.

    

    I. “Corporation Law”
means the Nevada Revised Statutes.

    

    
      
        
        

      

      
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    J. “Date of Grant” means
the date that the Committee approves an Option grant; provided, that all terms
of such grant, including the amount of shares subject to the grant, exercise
price and vesting are defined at such time.

    

    K. “Deferral Period”
means the period of time during which Deferred Shares are subject to deferral
limitations under Section 7.D of this Plan.

    

    L. “Deferred Shares”
means an award pursuant to Section 7.D of this Plan of the right to receive
shares of Common Stock at the end of a specified Deferral Period.

    

    M. “Director” means a
member of the Board.

    

    N. “Eligible Person”
means an employee of the Corporation or an Affiliate (including a corporation
that becomes an Affiliate after the adoption of this Plan), a Director or a
Consultant to the Corporation or an Affiliate (including a corporation that
becomes an Affiliate after the adoption of this Plan).

    

    O. “Exchange Act” means
the Securities Exchange Act of 1934, as amended.

    

    P. “Fair Market Price”
means, on any given date, the current fair market price of the shares of Common
Stock as determined as follows:

    

    (i) If
the Common Stock is traded on a national securities exchange, including the
American Stock Exchange, the closing price for the day of determination as
quoted on such market or exchange, whichever is the primary market or exchange
for trading of the Common Stock (provided that the Common Stock continues to be
listed on the American Stock Exchange it shall be deemed to be the primary
market or exchange) or if no trading occurs on such date, the last day on which
trading occurred, or such other appropriate date as determined by the Committee
in its discretion, as reported by such market or exchange or such other source
as the Committee deems reliable;

    

    (ii) If
the Common Stock is regularly quoted by a recognized securities dealer but
selling prices are not reported, its Fair Market Price shall be the
mean between the high and the low asked prices for the Common Stock for the day
of determination; or

    

    (iii) In
the absence of an established market for the Common Stock, Fair Market
Price shall be
determined by the Committee in good faith.

    

    Q. “Family Member” means
a parent, child, spouse or sibling.

    

    R. “Incentive Stock
Option” means an Option (or portion thereof) intended to qualify for
special tax treatment under Section 422 of the Code.

    

    S. “Nonqualified Stock
Option” means an Option (or portion thereof) which is not intended or
does not for any reason qualify as an Incentive Stock Option.

    

    T. “Option” means any
option to purchase shares of Common Stock granted under this Plan.

    

    
      
        
        

      

      
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    U. “Parent” means any
corporation (other than the Corporation) in an unbroken chain of corporations
ending with the Corporation if each of the corporations (other than the
Corporation) owns stock possessing of at least fifty percent (50%) of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

    

    V. “Participant” means an
Eligible Person who (i) is selected by the Committee or a delegated officer of
the Corporation to receive an Award and (ii) is party to an agreement setting
forth the terms of the Award, as appropriate.

    

    W. “Performance
Agreement” means an agreement described in Section 8 of this
Plan.

    

    X. “Performance
Objectives” means the performance objectives established by the Committee
pursuant to this Plan for Participants who have received grants of Stock Awards.
Performance Objectives may be described in terms of Corporation-wide objectives
or objectives that are related to the performance of the individual Participant
or the Affiliate, division, department or function within the Corporation or
Affiliate in which the Participant is employed or has responsibility. Any
Performance Objectives applicable to Awards to the extent that such an Award is
intended to qualify as “Performance Based Compensation” under Section 162(m) of
the Code shall be limited to specified levels of or increases in the
Corporation’s or a business unit’s return on equity, earnings per share, total
earnings, earnings growth, return on capital, return on assets, economic value
added, earnings before interest and taxes, earnings before interest, taxes,
depreciation and amortization, sales growth, gross margin return on investment,
increase in the Fair Market Price of the shares,  net operating
profit, cash flow (including, but not limited to, operating cash flow and free
cash flow), cash flow return on investments (which equals net cash flow divided
by total capital), internal rate of return, increase in net present value or
expense targets. The Awards intended to qualify as “Performance Based
Compensation” under Section 162(m) of the Code shall be pre-established in
accordance with applicable regulations under Section 162(m) of the Code and the
determination of attainment of such goals shall be made by the Committee. If the
Committee determines that a change in the business, operations, corporate
structure or capital structure of the Corporation (including an event described
in Section 9), or the manner in which it conducts its business, or other events
or circumstances render the Performance Objectives unsuitable, the Committee may
modify such Performance Objectives or the related minimum acceptable level of
achievement, in whole or in part, as the Committee deems appropriate and
equitable; provided, however, that no such modification shall be made to an
Award intended to qualify as “Performance Based Compensation” under Section
162(m) of the Code unless the Committee determines that such modification will
not result in loss of such qualification or the Committee determines that loss
of such qualification is in the best interests of the Corporation.

    

    Y. “Performance Period”
means a period of time established under Section 8 of this Plan within which the
Performance Objectives relating to a Stock Award are to be
achieved.

    

    Z. “Performance Share”
means a an award pursuant to Section 8 of this Plan of the right to receive
shares of Common Stock upon the achievement of specified Performance
Objectives.

    

    AA. “Plan” means this
Xfone, Inc. 2007 Stock Incentive Plan.

    

    BB. “Repricing” means,
other than in connection with an event described in Section 9 of this Plan, (i)
lowering the exercise price of an Option or Stock Appreciation Right after it
has been granted or (ii) canceling an Option or Stock Appreciation Right at a
time when the exercise price exceeds the then Fair Market Price of the Common
Stock in exchange for another Option or Stock Award.

    

    CC. “Restricted Stock
Award” means an award of Common Stock under Section 7.B.

    

    DD. “Securities Act”
means the Securities Act of 1933, as amended.

    

    EE. “Stock Award” means a
Stock Bonus Award, Restricted Stock Award, Stock Appreciation Right, Deferred
Shares, or Performance Shares.

    

    
      
        
        

      

      
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    FF. “Stock Bonus Award”
means an award of Common Stock under Section 7.A.

    

    GG. “Stock Appreciation
Right” means an award of a right of the Participant under Section 7.C to
receive a payment in cash or shares of Common Stock (or a combination thereof)
based on the increase in Fair Market Price of the shares of Common Stock covered
by the award between the date of grant of such award and the Fair Market Price
of the Common Stock on the date of exercise of such Stock Appreciation
Right.

    

    HH. “Stock Award
Agreement” means a written agreement between the Corporation and a
Participant setting forth the specific terms and conditions of a Stock Award
granted to the Participant under Section 7. Each Stock Award Agreement shall be
subject to the terms and conditions of this Plan and shall include such terms
and conditions as the Committee shall authorize.

    

    II. “Stock Option
Agreement” means a written agreement between the Corporation and a
Participant setting forth the specific terms and conditions of an Option granted
to the Participant. Each Stock Option Agreement shall be subject to the terms
and conditions of this Plan and shall include such terms and conditions as the
Committee shall authorize.

    

    JJ. “Subsidiary” means any
corporation (other than the Corporation) in an unbroken chain of corporations
beginning with the Corporation if each of the corporations (other than the last
corporation in the unbroken chain) owns stock possessing at least fifty percent
(50%) of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

    

    KK. “Ten Percent Owner”
means any Eligible Person owning at the time an Option is granted more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Corporation or of a Parent or Subsidiary. An individual shall, in accordance
with Section 424(d) of the Code, be considered to own any voting stock owned
(directly or indirectly) by or for such Eligible Person’s brothers, sisters,
spouse, ancestors and lineal descendants and any voting stock owned (directly or
indirectly) by or for a corporation, partnership, estate or trust shall be
considered as being owned proportionately by or for its stockholders, partners,
or beneficiaries.

    

    3. implementation. interpetation and
Administration

    

    A. Delegation to Board
Committee. The Board shall have the sole authority to implement and/or
interpret and/or administer this Plan unless the Board delegates all or any
portion of its authority to implement and/or interpret and/or administer this
Plan to a committee of the Board. To the extent not prohibited by the Articles
of Incorporation or Bylaws of the Corporation, the Board may delegate all or a
portion of its authority to implement and/or interpret and/or administer this
Plan to a committee of the Board appointed by the Board and constituted in
compliance with the applicable Corporation Law. Such committee shall consist of
two (2) or more Directors who are (i) Non-Employee Directors (within the meaning
of Rule 16b-3 under the Exchange Act) for purposes of exercising administrative
authority with respect to Awards granted to Eligible Persons who are subject to
Section 16 of the Exchange Act; (ii) to the extent required by the rules of the
market on which the Corporation’s shares are traded or the exchange on which the
Corporation’ shares are listed, “independent” within the meaning of such rules;
and (iii) at such times as an Award under this Plan by the Corporation is
subject to Section 162(m) of the Code (to the extent relief from the limitation
of Section 162(m) of the Code is sought with respect to Awards and
administration of the Awards by a committee of “outside directors” is required
to receive such relief) “outside directors” within the meaning of Section 162(m)
of the Code.

    

    B. Delegation to
Officers. The Committee may delegate to one or more officers of the
Corporation the authority to grant Awards to Eligible Persons who are not
Directors or executive officers of the Corporation or its Affiliates; provided
that the Committee shall have fixed the total number of shares of Common Stock
that may be subject to such Awards. No officer holding such a delegation is
authorized to grant Awards to himself or herself or to any Family Member. In
addition to the Committee, the officer or officers to whom the Committee has
delegated the authority to grant Awards shall have all powers delegated to the
Committee with respect to such Awards.

    

    C. Powers of the
Committee. Subject to the provisions of this Plan, and in the case of a
committee appointed by the Board, the specific duties delegated to such
committee, the Committee (and the officers to whom the Committee has delegated
such authority) shall have the authority:

    

    
      
        
        

      

      
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    (i) To
construe and interpret all provisions of this Plan and all Stock Option
Agreements, Stock Award Agreements, Performance Agreements, or any other
agreements under this Plan.

    

    (ii) To
determine the Fair Market Price of Common Stock in the absence of an established
market for the Common Stock.

    

    (iii) To
select the Eligible Persons to whom Awards are granted from time to time
hereunder, upon the recommendation of the Corporation’s management.

    

    (iv) To
determine the number of shares of Common Stock covered by an Award; to determine
whether an Option shall be an Incentive Stock Option or Nonqualified Stock
Option; and to determine such other terms and conditions, not inconsistent with
the terms of this Plan, of each such Award. Such terms and conditions include,
but are not limited to, the exercise price of an Option, purchase price of
Common Stock subject to a Stock Award, the time or times when Options or Stock
Awards may be exercised or Common Stock issued thereunder, the right of the
Corporation to repurchase Common Stock issued pursuant to the exercise of an
Option or a Stock Award and other restrictions or limitations (in addition to
those contained in this Plan) on the forfeitability or transferability of
Options, Stock Awards or Common Stock issued upon exercise of an Option or
pursuant to a Stock Award. Such terms may include conditions which shall be
determined by the Committee and need not be uniform with respect to
Participants.

    

    (v) To
accelerate the time at which any Option or Stock Award may be exercised, or the
time at which a Stock Award or Common Stock issued under this Plan may become
transferable or non-forfeitable.

    

    (vi) To
determine whether and under what circumstances an Option may be settled in cash,
shares of Common Stock or other property under Section 6.I instead of Common
Stock.

    (vii) To
waive, amend, cancel, extend, renew, accept the surrender of, modify or
accelerate the vesting of or lapse of restrictions on all or any portion of an
outstanding Award. Except as otherwise provided by this Plan, the Stock Option
Agreement, Stock Award Agreement or Performance Agreement or as required to
comply with applicable law, regulation or rule, no amendment, cancellation or
modification shall, without a Participant’s consent, adversely affect any rights
of the Participant; provided, however, that (x) an amendment or modification
that may cause an Incentive Stock Option to become a Nonqualified Stock Option
shall not be treated as adversely affecting the rights of the Participant and
(y) any other amendment or modification of any Stock Option Agreement, Stock
Award Agreement or Performance Agreement that does not, in the opinion of the
Committee, adversely affect any rights of any Participant, shall not require
such Participant’s consent. Notwithstanding the foregoing, the restrictions on
the Repricing of Options and Stock Appreciation Rights, as set forth in this
Plan, may not be waived.

    

    (viii) To
prescribe the form of Stock Option Agreements, Stock Award Agreements,
Performance Agreements, or any other agreements under this Plan; to adopt
policies and procedures for the exercise of Options or Stock Awards, including
the satisfaction of withholding obligations; to adopt, amend, and rescind
policies and procedures pertaining to the administration of this Plan; and to
make all other determinations necessary or advisable for the administration of
this Plan. Except for the due execution of the award agreement by both the
Corporation and the Participant, the Award’s effectiveness will not be dependent
on any signature unless specifically so provided in the award
agreement.

    

    The
express grant in this Plan of any specific power to the Committee shall not be
construed as limiting any general power or authority of the Committee; provided
that the Committee may not exercise any right or power expressly reserved to the
Board. Any decision made, or action taken, by the Committee or in connection
with the implementation, interpretation and administration of this Plan shall be
final, conclusive and binding on all persons or entities having an interest in
this Plan.

    

    
      
        
        

      

      
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    4.Eligibility

    

    A. Eligibility for
Awards. Awards, other than Incentive Stock Options, may be granted to any
Eligible Person selected by the Committee, upon the recommendation of the
Corporation’s management. Incentive Stock Options may be granted only to
employees of the Corporation or a Parent or a Subsidiary, upon the
recommendation of the Corporation’s management.

    

    B. Eligibility of
Consultants. A Consultant shall be an Eligible Person only if the offer
or sale of the Corporation’s securities would be eligible for registration on
Form S-8 Registration Statement (or any successor form) because of the identity
and nature of the service provided by such Consultant, unless the Corporation
determines that an offer or sale of the Corporation’s securities to such
Consultant will satisfy another exemption from the registration under the
Securities Act and complies with the securities laws of all other jurisdictions
applicable to such offer or sale.  Awards to Consultants shall be
granted upon the recommendation of the Corporation’s management.

    

    C. Substitution Awards.
The Committee may make Awards under this Plan by assumption, in substitution or
replacement of performance shares, phantom shares, stock awards, stock options,
stock appreciation rights or similar awards granted by another entity (including
an Affiliate) in connection with a merger, consolidation, acquisition of
property or stock or similar transaction. Notwithstanding any provision of this
Plan (other than the maximum number of shares of Common Stock that may be issued
under this Plan), the terms of such assumed, substituted, or replaced Awards
shall be as the Committee, in its discretion, determines is
appropriate.

    

    5.Common Stock Subject to
Plan

    

    A. Share Reserve and
Limitations on Grants. The maximum aggregate number of shares of Common
Stock that may be (i) issued under this Plan pursuant to the exercise of
Options, (ii) issued pursuant to Stock Awards shall be eight million
(8,000,000). The number of shares of Common Stock subject to this Plan shall be
subject to adjustment as provided in Section 9.  Subject to adjustment
as provided in Section 9 and notwithstanding any provision hereto to the
contrary, shares subject to this Plan shall include shares forfeited in a prior
year as provided herein.  No single Participant may receive more than
twenty-five percent (25%) of the total shares awarded in any single year. 

    

    B. Reversion of Shares.
If an Option or Stock Award is terminated, expires or becomes unexercisable, in
whole or in part, for any reason, the unissued or unpurchased shares of Common
Stock (or shares subject to an unexercised Stock Appreciation Right) which were
subject thereto shall become available for future grant under this Plan. Shares
of Common Stock that have been actually issued under this Plan shall not be
returned to the share reserve for future grants under this Plan; except that
shares of Common Stock issued pursuant to a Stock Award which are forfeited to
the Corporation or repurchased by the Corporation at the original purchase price
of such shares, shall be returned to the share reserve for future grant under
this Plan.

    

    C. Source of Shares.
Common Stock issued under this Plan may be shares of authorized and unissued
Common Stock or shares of previously issued Common Stock that have been
reacquired by the Corporation.

    

    6.Options

    

    A. Award. In accordance
with the provisions of Section 4, the Committee will designate each Eligible
Person to whom an Option is to be granted, upon the recommendation of the
Corporation’s management, and will specify the number of shares of Common Stock
covered by such Option. The Stock Option Agreement shall specify whether the
Option is an Incentive Stock Option or Nonqualified Stock Option, the exercise
price of the such Option, the vesting schedule applicable to such Option, the
expiration date of such Option, events of termination of such Option, and any
other terms of such Option. The terms and conditions of Stock Option Agreements
may change from time to time and need not be uniform with respect to
Participants, and the terms and conditions of separate Options need not be
identical. No Option that is intended to be an Incentive Stock Option shall be
invalid for failure to qualify as an Incentive Stock Option but instead shall be
deemed a Nonqualified Stock Option.

    

    B. Option Price. The
exercise price per share for Common Stock subject to an Option shall be
determined by the Committee, but shall comply with the following:

    

    
      
        
        

      

      
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    (i) The
exercise price per share for Common Stock subject to an Option shall not be less
than one hundred percent (100%) of the Fair Market Price on the Date of
Grant.

    

    (ii) The
exercise price per share for Common Stock subject to an Incentive Stock Option
granted to a Participant who is deemed to be a Ten Percent Owner on the date
such option is granted, shall not be less than one hundred ten percent (110%) of
the Fair Market Price on the Date of Grant.

    

    C. Maximum Option
Period. Unless a shorter period is provided by the Stock Option
Agreement, the maximum period during which an Option may be exercised shall be
seven (7) years from the Date of Grant of such Option. In the case of an
Incentive Stock Option that is granted to a Participant who is or is deemed to
be a Ten Percent Owner on the Date of Grant, such Option shall not be
exercisable after the expiration of five (5) years from the Date of
Grant.

    

    D. Maximum Value of Options
which are Incentive Stock Options. To the extent that the aggregate Fair
Market Price of the Common Stock with respect to which Incentive Stock Options
granted to any Participant are exercisable for the first time during any
calendar year (under all stock option plans of the Corporation or any Parent or
Subsidiary) exceeds $100,000 (or such other amount provided in Section 422 of
the Code), the Options shall not be deemed to be Incentive Stock Options. For
purposes of this section, the Fair Market Price of the Common Stock will be
determined as of the time the Incentive Stock Option with respect to the Common
Stock is granted. This section will be applied by taking Incentive Stock Options
into account in the order in which they are granted.

    

    E. Nontransferability.
Options granted under this Plan which are intended to be Incentive Stock Options
shall be nontransferable except by will or by the laws of descent and
distribution and during the lifetime of the Participant shall be exercisable by
only the Participant to whom the Incentive Stock Option is granted. Except to
the extent transferability of a Nonqualified Stock Option is provided for in the
Stock Option Agreement or is approved by the Committee, during the lifetime of
the Participant to whom the Nonqualified Stock Option is granted, such Option
may be exercised only by the Participant. If the Stock Option Agreement so
provides or the Committee so approves, a Nonqualified Stock Option may be
transferred by a Participant through a gift or domestic relations order to the
Participant’s Family Members to the extent in compliance with applicable
securities laws and regulations and provided that such transfer is not a
transfer for value (within the meaning of applicable securities laws and
regulations). The holder of a Nonqualified Stock Option transferred pursuant to
this section shall be bound by the same terms and conditions that governed the
Option during the period that it was held by the Participant. No right or
interest of a Participant in any Option shall be liable for, or subject to, any
lien, obligation, or liability of such Participant, unless such obligation is to
the Corporation itself or to an Affiliate.

    

    F. Vesting. Options will
vest as provided in the Stock Option Agreement. The Stock Option Agreement shall
provide for specific vesting provisions.

    

    G. Termination. Options
will terminate as provided in the Stock Option Agreement. The Stock Option
Agreement shall provide for specific events of termination.

    

    H. Exercise. Subject to
the provisions of this Plan and the applicable Stock Option Agreement, an Option
may be exercised to the extent vested in whole at any time or in part from time
to time at such times and in compliance with such requirements as the Committee
shall determine. A partial exercise of an Option shall not affect the right to
exercise the Option from time to time in accordance with this Plan and the
applicable Stock Option Agreement with respect to the remaining shares subject
to the Option. The Participant may face certain restrictions on his/her/its
ability to exercise Options and/or sell underlying shares when such Participant
is potentially in possession of insider information. The Corporation will make
the Participant aware of any formal insider trading policy it adopts, and the
provisions of such insider trading policy (including any amendments thereto)
shall be binding upon the Participant.

    

    I. Payment. Unless
otherwise provided by the Stock Option Agreement, payment of the exercise price
for an Option shall be made in cash or a cash equivalent acceptable to the
Committee or if the Common Stock is traded on an established securities market,
by payment of the exercise price by a broker-dealer or by the Option holder with
cash advanced by the broker-dealer if the exercise notice is accompanied by the
Option holder’s written irrevocable instructions to deliver the Common Stock
acquired upon exercise of the Option to the broker-dealer or by delivery of the
Common Stock to the broker-dealer with an irrevocable commitment by the
broker-dealer to forward the exercise price to the Corporation. With the consent
of the Committee, payment of all or a part of the exercise price of an Option
may also be made (i) by surrender to the Corporation (or delivery to the
Corporation of a properly executed form of attestation of ownership) of shares
of Common Stock that have been held for such period prior to the date of
exercise as is necessary to avoid adverse accounting treatment to the
Corporation, or (ii) any other method acceptable to the Committee, including
without limitation, the withholding of shares receivable upon settlement of the
option in payment of the exercise price. If Common Stock is used to pay all or
part of the exercise price, the sum of the cash or cash equivalent and the Fair
Market Price (determined as of the date of exercise) of the shares surrendered
must not be less than the Option price of the shares for which the Option is
being exercised.

    

    
      
        
        

      

      
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    J. Stockholder Rights.
No Participant shall have any rights as a stockholder with respect to shares
subject to an Option until the date of exercise of such Option and the
certificate for shares of Common Stock to be received on exercise of such Option
has been issued by the Corporation.

    

    K. Disposition and Stock
Certificate Legends for Incentive Stock Option Shares. A Participant
shall notify the Corporation of any sale or other disposition of Common Stock
acquired pursuant to an Incentive Stock Option if such sale or disposition
occurs (i) within two years of the grant of an Option or (ii) within one year of
the issuance of the Common Stock to the Participant. Such notice shall be in
writing and directed to the Chief Financial Officer of the Corporation or in
his/her absence, the Chief Executive Officer. The Corporation may require that
certificates evidencing shares of Common Stock purchased upon the exercise of
Incentive Stock Option issued under this Plan be endorsed with a legend in
substantially the following form:

    

    THE
SHARES EVIDENCED BY THIS CERTIFICATE MAY NOT BE SOLD OR TRANSFERRED PRIOR TO
___, 20___, IN THE ABSENCE OF A WRITTEN STATEMENT FROM THE CORPORATION TO THE
EFFECT THAT THE CORPORATION IS AWARE OF THE FACTS OF SUCH SALE OR
TRANSFER.

    

    The blank contained in this legend
shall be filled in with the date that is the later of (i) one year and one day
after the date of the exercise of such Incentive Stock Option or (ii) two years
and one day after the grant of such Incentive Stock Option.

    L. No Repricing. In no
event shall the Committee permit a Repricing of any Option without the approval
of the stockholders of the Corporation.

    

    7.Stock Awards

    

    A. Stock Bonus Awards.
Stock Bonus Awards shall be granted by the Committee upon the recommendation of
the Corporation’s management. Each Stock Award Agreement for a Stock Bonus Award
shall be in such form and shall contain such terms and conditions (including
provisions relating to consideration, vesting, reacquisition of shares following
termination, and transferability of shares) as the Committee shall deem
appropriate. The terms and conditions of Stock Award Agreements for Stock Bonus
Awards may change from time to time and need not be uniform with respect to
Participants, and the terms and conditions of separate Stock Bonus Awards need
not be identical.

    

    B. Restricted Stock
Awards. Restricted Stock Awards shall be granted by the Committee upon
the recommendation of the Corporation’s management. Each Stock Award Agreement
for a Restricted Stock Award shall be in such form and shall contain such terms
and conditions (including provisions relating to purchase price, consideration,
vesting, reacquisition of shares following termination, and transferability of
shares) as the Committee shall deem appropriate. The terms and conditions of the
Stock Award Agreements for Restricted Stock Awards may change from time to time
and need not be uniform with respect to Participants, and the terms and
conditions of separate Restricted Stock Awards need not be identical. Vesting of
any grant of Restricted Stock Awards may be further conditioned upon the
attainment of Performance Objectives established by the Committee in accordance
with the applicable provisions of Section 8 of this Plan regarding Performance
Shares.

    

    C. Stock Appreciation
Rights. Stock Awards for Stock Appreciation Rights shall be granted by
the Committee upon the recommendation of the Corporation’s
management.  Each Stock Award Agreement for Stock Appreciation Rights
shall be in such form and shall contain such terms and conditions (including
provisions relating to vesting, reacquisition of shares following termination,
and transferability of shares) as the Committee shall deem appropriate. The
terms and conditions of Stock Award Agreements for Stock Appreciation Rights may
change from time to time and need not be uniform with respect to Participants,
and the terms and conditions of separate Stock Appreciation Rights need not be
identical. No Stock Appreciation Right shall be exercisable after the expiration
of seven (7) years from the date such Stock Appreciation Right is granted. The
base price per share for each share of Common Stock covered by an award of Stock
Appreciation Rights shall not be less than one hundred percent (100%) of the
Fair Market Price of a share of Common Stock on the date of grant. In no event
shall the Committee permit a Repricing of any Stock Appreciation Right without
the approval of the stockholders of the Corporation. The Participant shall not
have any rights as a stockholder with respect to the shares of Common Stock
covered by an award of Stock Appreciation Rights and shall not have any right to
vote such shares until the exercise of the Stock Appreciation
Right.  If the payment made to reflect the increase in Fair Market
Price is made in shares of Common Stock then the Participant will have all
rights as a stockholder with respect to such shares.

    
      
        
        

      

      
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    D. Deferred Shares. The
Committee may authorize grants of Deferred Shares to Participants upon the
recommendation of the Corporation’s management, and upon such terms and
conditions as the Committee may determine in accordance with the following
provisions:

    

    (i) Each
grant shall constitute the agreement by the Corporation to issue or transfer
shares of Common Stock to the Participant in the future in consideration of the
performance of services, subject to the fulfillment during the Deferral Period
of such conditions as the Committee may specify.

    

    (ii) Each
grant may be made without additional consideration from the Participant or in
consideration of a payment by the Participant that is less than the Fair Market
Price on the date of grant.

    

    (iii)
Each grant shall provide that the Deferred Shares covered thereby shall be
subject to a Deferral Period, which shall be fixed by the Committee on the date
of grant, and any grant or sale may provide for the earlier termination of such
period in the event of a change in control of the Corporation or other similar
transaction or event.

    

    (iv)
During the Deferral Period, the Participant shall not have any right to transfer
any rights under the subject Award, shall not have any rights of ownership in
the Deferred Shares and shall not have any right to vote such shares, but the
Committee may on or after the date of grant, authorize the payment of dividend
or other distribution equivalents on such shares in cash or additional shares on
a current, deferred or contingent basis.

    

    (v) Any
grant, or the vesting thereof, may be further conditioned upon the attainment of
Performance Objectives established by the Committee in accordance with the
applicable provisions of Section 8 of this Plan regarding Performance
Shares.

    

    (vi) Each
grant shall be evidenced by an agreement delivered to and accepted by the
Participant and containing such terms and provisions as the Committee may
determine consistent with this Plan. The terms and conditions of the agreements
for Deferred Shares may change from time to time and need not be uniform with
respect to Participants, and the terms and conditions of separate Deferred
Shares need not be identical.

    

    8.Performance
Shares

    

    A. The Committee may authorize grants
of Performance Shares upon the recommendation of the Corporation’s management,
which shall become payable to the Participant upon the achievement of specified
Performance Objectives, upon such terms and conditions as the Committee may
determine in accordance with the following provisions:

    

    (i) Each
grant shall specify the number of Performance Shares to which it pertains, which
may be subject to adjustment to reflect changes in compensation or other
factors.

    

    (ii) The
Performance Period with respect to each Performance Share shall commence on the
date established by the Committee and may be subject to earlier termination in
the event of a change in control of the Corporation or similar transaction or
event.

    

    (iii)
Each grant shall specify the Performance Objectives that are to be achieved by
the Participant.

    

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    (iv) Each
grant may specify in respect of the specified Performance Objectives a minimum
acceptable level of achievement below which no payment will be made and may set
forth a formula for determining the amount of any payment to be made if
performance is at or above such minimum acceptable level but falls short of the
maximum achievement of the specified Performance Objectives.

    

    (v) Each
grant shall specify the time and manner of payment of Performance Shares that
shall have been earned, and any grant may specify that any such amount may be
paid by the Corporation in cash, shares of Common Stock or any combination
thereof and may either grant to the Participant or reserve to the Committee the
right to elect among those alternatives.

    

    (vi) Any
grant of Performance Shares may specify that the amount payable with respect
thereto may not exceed a maximum specified by the Committee on the date of
grant.

    

    (vii) Any
grant of Performance Shares may provide for the payment to the Participant of
dividend or other distribution equivalents thereon in cash or additional shares
of Common Stock on a current, deferred or contingent basis.

    

    (viii) If
provided in the terms of the grant and subject to the requirements of Section
162(m) of the Code (in the case of awards intended to qualify for exception
therefrom), the Committee may adjust Performance Objectives and the related
minimum acceptable level of achievement if, in the sole judgment of the
Committee, events or transactions have occurred after the date of grant that are
unrelated to the performance of the Participant and result in distortion of the
Performance Objectives or the related minimum acceptable level of
achievement.

    

    (ix) Each
grant shall be evidenced by an agreement that shall be delivered to and accepted
by the Participant, which shall state that the Performance Shares are subject to
all of the terms and conditions of this Plan and such other terms and provisions
as the Committee may determine consistent with this Plan. The terms and
conditions of the agreements for Performance Shares may change from time to time
and need not be uniform with respect to Participants, and the terms and
conditions of separate Performance Shares need not be identical.

    

    (x) Until
the achievement of the Performance Objectives and the resulting issuance of the
Performance Shares, the Participant shall not have any rights as a stockholder
in the Performance Shares and shall not have any right to vote such shares, but
the Committee may on or after the date of grant, authorize the payment of
dividend or other distribution equivalents on such shares in cash or additional
shares on a current, deferred or contingent basis.

    

    9.Changes in Capital
Structure

    

    A. No Limitations of
Rights. The existence of outstanding Awards shall not affect in any way
the right or power of the Corporation or its stockholders to make or authorize
any or all adjustments, recapitalizations, reorganizations or other changes in
the Corporation’s capital structure or its business, or any merger or
consolidation of the Corporation, or any issuance of bonds, debentures,
preferred or prior preference stock ahead of or affecting the Common Stock or
the rights thereof, or the dissolution or liquidation of the Corporation, or any
sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or
otherwise.

    

    B. Changes in
Capitalization. If the Corporation shall effect a subdivision or
consolidation of shares or other capital readjustment, the payment of a stock
dividend, or other increase or reduction of the number of shares of the Common
Stock outstanding, without receiving consideration therefore in money, services
or property, then (i) the number, class, and per share price of shares of Common
Stock subject to outstanding Options and other Awards hereunder and (ii) the
number and class of shares then reserved for issuance under this Plan and the
maximum number of shares for which Awards may be granted to a Participant during
a specified time period shall be appropriately and proportionately adjusted. The
conversion of convertible securities of the Corporation shall not be treated as
effected “without receiving consideration.” The Committee shall make such
adjustments, and its determinations shall be final, binding and
conclusive.

    
      
        
        

      

      
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    C. Merger, Consolidation or
Asset Sale. If the Corporation is merged or consolidated with another
entity or sells or otherwise disposes of substantially all of its assets to
another entity while Options or Stock Awards remain outstanding under this Plan,
unless provisions are made in connection with such transaction for the
continuance of this Plan and/or the assumption or substitution of such Options
or Stock Awards with new options or stock awards covering the stock of the
successor entity, or parent or subsidiary thereof, with appropriate adjustments
as to the number and kind of shares and prices, then all outstanding Options and
Stock Awards which have not been continued, assumed or for which a substituted
award has not been granted shall, whether or not vested or then exercisable,
unless otherwise specified in the Stock Option Agreement or Stock Award
Agreement, terminate immediately as of the effective date of any such merger,
consolidation or sale.

    

    D. Limitation on
Adjustment. Except as previously expressly provided, neither the issuance
by the Corporation of shares of stock of any class, or securities convertible
into shares of stock of any class, for cash or property, or for labor or
services either upon direct sale or upon the exercise of rights or warrants to
subscribe therefore, or upon conversion of shares or obligations of the
Corporation convertible into such shares or other securities, nor the increase
or decrease of the number of authorized shares of stock, nor the addition or
deletion of classes of stock, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number, class or price of shares of Common
Stock then subject to outstanding Options or Stock Awards.

    

    10.Withholding of
Taxes

    

    The Corporation or an Affiliate
(including through its brokers or agents) shall have the right, before any
certificate for any Common Stock is delivered, to deduct or withhold from any
payment owed to a Participant any amount that is necessary in order to satisfy
any withholding requirement that the Corporation or Affiliate in good faith
believes is imposed upon it in connection with U.S. (or any other country’s)
federal, state, or local taxes, including transfer taxes, as a result of the
issuance of, or lapse of restrictions on, such Common Stock, or otherwise
require such Participant to make provision for payment of any such withholding
amount. Subject to such conditions as may be established by the Committee, the
Committee may permit a Participant to (i) have Common Stock otherwise issuable
under an Option or Stock Award withheld to the extent necessary to comply with
minimum statutory withholding rate requirements, (ii) tender back to the
Corporation shares of Common Stock received pursuant to an Option or Stock Award
to the extent necessary to comply with minimum statutory withholding rate
requirements for supplemental income, (iii) deliver to the Corporation
previously acquired Common Stock, (iv) have funds withheld from payments of
wages, salary, fee or other cash compensation due the Participant, (v) pay the
Corporation or its Affiliate in cash, in order to satisfy part or all of the
obligations for any taxes required to be withheld or otherwise deducted and paid
by the Corporation or its Affiliate with respect to the Option or Stock Award;
or (vi) establish a 10b5-1 trading plan for withheld stock designed to
facilitate the sale of stock in connection with the vesting of such shares, the
proceeds of which shall be utilized to make all applicable withholding payments
in a manner to be coordinated by the Corporation’s Chief Financial
Officer.

    

    11.Compliance with Law and Approval of
Regulatory Bodies

    

    A. General Requirements.
No Option or Stock Award shall be exercisable, no Common Stock shall be issued,
no certificates for shares of Common Stock shall be delivered, and no payment
shall be made under this Plan except in compliance with all applicable federal
and state laws and regulations (including, without limitation, withholding tax
requirements), any listing agreement to which the Corporation is a party, and
the rules of all domestic stock exchanges or quotation systems on which the
Corporation’s shares may be listed, including but not limited to the American
Stock Exchange and the Tel Aviv Stock Exchange.  The Corporation shall
have the right to rely on an opinion of its counsel as to such compliance. In
the absence of an effective and current registration statement on an appropriate
form under the Securities Act, or a specific exemption from the registration
requirements of the Securities Act, shares of Common Stock issued under this
Plan shall be restricted shares. Any share certificate issued to evidence Common
Stock when a Stock Award is granted or for which an Option is exercised may bear
such restrictive legends and statements as the Committee may deem advisable to
assure compliance with federal and state laws and regulations. No Option or
Stock Award shall be exercisable, no Stock Award shall be granted, no Common
Stock shall be issued, no certificate for shares shall be delivered, and no
payment shall be made under this Plan until the Corporation has obtained such
consent or approval as the Committee may deem advisable from regulatory bodies
having jurisdiction over such matters.

    

    
      
        
        

      

      
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    B. Participant
Representations. The Committee may require that a Participant, as a
condition to receipt or exercise of a particular award, execute and deliver to
the Corporation a written statement, in form satisfactory to the Committee, in
which the Participant represents and warrants that the shares are being acquired
for such Participant’s own account, for investment only and not with a view to
the resale or distribution thereof. The Participant shall, at the request of the
Committee, be required to represent and warrant in writing that any subsequent
resale or distribution of shares of Common Stock by the Participant shall be
made only pursuant to either (i) a registration statement on an appropriate form
under the Securities Act, which registration statement has become effective and
is current with regard to the shares being sold, or (ii) a specific exemption
from the registration requirements of the Securities Act, but in claiming such
exemption the Participant shall, prior to any offer of sale or sale of such
shares, obtain a prior favorable written opinion of counsel, in form and
substance satisfactory to counsel for the Corporation, as to the application of
such exemption thereto.

    

    12.General
Provisions

    

    A. Effect on Employment and
Service. Neither the adoption of this Plan, its operation, nor any
documents describing or referring to this Plan (or any part thereof) shall (i)
confer upon any individual any right to continue in the employ or service of the
Corporation or an Affiliate, (ii) in any way affect any right and power of the
Corporation or an Affiliate to change an individual’s duties or terminate the
employment or service of any individual at any time with or without assigning a
reason therefore or (iii) except to the extent the Committee grants an Option or
Stock Award to such individual, confer on any individual the right to
participate in the benefits of this Plan.

    

    B. Use of Proceeds. The
proceeds received by the Corporation from the sale of Common Stock pursuant to
this Plan shall be used for working capital and/or investment in equipment
and/or acquisitions and/or business development.

    

    C. Unfunded Plan. This
Plan, insofar as it provides for grants, shall be unfunded, and the Corporation
shall not be required to segregate any assets that may at any time be
represented by grants under this Plan. Any liability of the Corporation to any
Participant with respect to any grant under this Plan shall be based solely upon
any contractual obligations that may be created pursuant to this Plan. No such
obligation of the Corporation shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Corporation.

    

    D. Rules of
Construction. Headings are given to the Sections of this Plan solely as a
convenience to facilitate reference. The reference to any statute, regulation,
or other provision of law shall be construed to refer to any amendment to or
successor of such provision of law.

    

    E. Choice of Law. This
Plan and all Stock Option Agreements, Stock Award Agreements, and Performance
Agreements (or any other agreements) entered into under this Plan shall be
interpreted under the Corporation Law excluding (to the greatest extent
permissible by law) any rule of law that would cause the application of the laws
of any jurisdiction other than the Corporation Law.

    

    F. Fractional Shares.
The Corporation shall not be required to issue fractional shares pursuant to
this Plan. The Committee may provide for elimination of fractional shares or the
settlement of such fraction shares in cash.

    

    G. Foreign Employees. In
order to facilitate the making of any grant or combination of grants under this
Plan, the Committee may provide for such special terms for Awards to
Participants who are foreign nationals, or who are employed by the Corporation
or any Affiliate outside of the United States, as the Committee may consider
necessary or appropriate to accommodate differences in local law, tax policy or
custom. Moreover, the Committee may approve such supplements to, or amendments,
restatements or alternative versions of, this Plan as it may consider necessary
or appropriate for such purposes without thereby affecting the terms of this
Plan, as then in effect, unless this Plan could have been amended to eliminate
such inconsistency without further approval by the stockholders of the
Corporation.

    

    
      
        
        

      

      
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    13.Amendment and
Termination

    

    The Committee may amend or terminate
this Plan from time to time; provided, however, that stockholder approval shall
be required for any amendment that (i) increases the aggregate number of shares
of Common Stock that may be issued under this Plan, except as contemplated by
Section 5.A or Section 9.B; (ii) changes the class of Participants eligible to
receive Incentive Stock Options; (iii) modifies the restrictions on Repricings
set forth in this Plan; or (iv) is required by the terms of any applicable law,
regulation or rule, including the rules of any market on which the Corporation
shares are traded or exchange on which the Corporation shares are listed. Except
as specifically permitted by this Plan, Stock Option Agreement or Stock Award
Agreement or as required to comply with applicable law, regulation or rule, no
amendment shall, without a Participant’s consent, adversely affect any rights of
such Participant under any Option or Stock Award outstanding at the time such
amendment is made; provided, however, that an amendment that may cause an
Incentive Stock Option to become a Nonqualified Stock Option shall not be
treated as adversely affecting the rights of the Participant. Any amendment
requiring stockholder approval shall be approved by the stockholders of the
Corporation within twelve (12) months of the date such amendment is adopted by
the Committee.

    

    14.Effective Date of Plan; Duration of
Plan

    

    A. This Plan shall be effective upon
adoption by the Board, subject to approval within twelve (12) months by the
stockholders of the Corporation. Unless and until this Plan has been approved by
the stockholders of the Corporation, no Option or Stock Award may be exercised,
and no shares of Common Stock may be issued under this Plan. In the event that
the stockholders of the Corporation shall not approve this Plan within such
twelve (12) month period, this Plan and any previously granted Options or Stock
Awards shall terminate.

    

    B. Unless previously terminated, this
Plan will terminate ten (10) years after the date this Plan is adopted by the
Board, except that Awards that are granted under this Plan prior to its
termination will continue to be administered under the terms of this Plan until
the Awards terminate, expire or are exercised.

    

    

    IN WITNESS WHEREOF, the
Corporation has caused this Plan to be executed by a duly authorized officer as
of the date of adoption of this Plan by the Board.

    

    Xfone,
Inc.

    

    /s/ Guy Nissenson

    By:           ________________________

    Guy
Nissenson

    President
and CEO

     

    Date of
adoption: October 28,
2007

     

    
      
        
        

      

      
        -13-

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