Document:

Verisity Ltd. 2000 Israeli Share Option Plan

 EXHIBIT 10.46 
  
 VERISITY LTD. 
  
  
 THE VERISITY LTD. 2000 
 ISRAELI SHARE OPTION PLAN 
 MAY 2004 AMENDMENT 
  

	1.	NAME 

  
 This Plan, as amended from time to time, shall be known as the Verisity Ltd. 2000 Israeli Share Option Plan, May 2004 Amendment (the “ISOP”). (as amended April 19, 2004, effective May 27,
2004.). 
  

	2.	PURPOSE OF THE ISOP 

  
 The ISOP is intended to provide an incentive to retain, in the employ of Verisity Ltd. (the “Company”) and its Affiliates (as defined
below), persons of training, experience, and ability, to attract new employees, directors, consultants and advisors whose services are considered valuable, to encourage the sense of proprietorship of such persons, and to stimulate the active
interest of such persons in the development and financial success of the Company by providing them with opportunities to purchase shares in the Company, pursuant to the ISOP approved by the board of directors of the Company (the
“Board”). 
  
 Due to changes in Section 102 of
the Ordinance (as defined below) which became effective January 1, 2003, the Company amended this ISOP (which was originally adopted by the Company on December 12, 2000), effective as of January 1, 2003 (the “January 2003
Amendment”), in order to comply with the terms and conditions of the revised Section 102 (subject to the provisions of Section 15.2 below regarding Options that were granted by the Company on or before December 31, 2002). 
  

	3.	DEFINITIONS 

  
 For purposes of the ISOP and related documents, including the Option Agreement, the following definitions shall apply: 
  
 3.1 “Affiliate” means any “employing company” within the meaning of Section 102(a) of the Ordinance. 
  
 3.2 “Approved 102 Option” means an Option granted pursuant
to Section 102(b) of the Ordinance and held in trust by a Trustee for the benefit of the Optionee. 
  
 3.3 “Capital Gain Option” and “CGO” as defined in Section 6.4 below. 
  
 3.4 “Controlling Shareholder” shall have the meaning
ascribed to it in Section 32(9) of the Ordinance. 
  
 3.5
“Date of Grant” means, the date of grant of an Option, as determined by the Board and set forth in the Optionee’s Option Agreement. 
  

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 3.6 “Employee” means a person who is employed by the Company or its Affiliates,
including an individual who is serving as a director or an office holder, but excluding Controlling Shareholder. 
  
 3.7 “ITA” means the Israeli Tax Authorities. 
  
 3.8 “Non-Employee” means a consultant, adviser, service provider, Controlling Shareholder or any other person who is not an Employee.

  
 3.9 “Ordinary Income Option” and
“OIO” as defined in Section 6.5 below. 
  
 3.10
“Option” means an option to purchase one or more Shares (as defined below) of the Company pursuant to the ISOP. 
  
 3.11 “102 Option” means any Option granted to Employees pursuant to Section 102 of the Ordinance. 
  
 3.12 “3(i) Option” means an Option granted pursuant to
Section 3(i) of the Ordinance to any person who is Non- Employee. 
  
 3.13 “Ordinance” means the Israeli Income Tax Ordinance [New Version] 1961 as now in effect or as hereafter amended. 
  
 3.14 “Section 102” means section 102 of the Ordinance as now in effect or as hereafter amended and any regulations, rules, orders or
procedures promulgated thereunder. 
  
 3.15 “Unapproved
102 Option” means an Option granted pursuant to Section 102(c) of the Ordinance and not held in trust by a Trustee. 
  

	4.	ADMINISTRATION OF THE ISOP 

  
 The Board or a share option committee appointed and maintained by the Board for such purpose (the “Committee”) shall have the power to
administer the ISOP. Notwithstanding the above, the Board shall have residual authority if no Committee shall be constituted or if such Committee shall cease to operate for any reason whatsoever. The Board or such Committee shall be referred to
herein as the “Administrator”. 
  
 The Committee
shall consist of such number of members (not less than two (2) in number, of whom at least one will be an External Director if and to the extent required under any applicable law including without limitation the Israeli Companies Law, 5759 –
1999 (the “Companies Law”)) as may be fixed by the Board. The Committee shall select one of its members as its chairman (“the Chairman”) and shall hold its meetings at such times and places as the Chairman shall
determine. The Committee shall keep records of its meetings and shall make such rules and regulations for the conduct of its business as it shall deem advisable. 
  
 No member of the Administrator shall be prevented from receiving Options under the ISOP by virtue of his or her service as a
member, unless otherwise specified herein. 
  
 To the extent
permitted under any applicable law, the Administrator shall have full power and authority (i) to designate participants (the “Optionees”); (ii) to determine the terms and provisions of any respective Option Agreement (which need not
be identical) including, but not limited to, the number of Shares to be covered by each Option, the vesting periods in respect thereof including but without limitation provisions concerning the time or times when and the extent to which the Options
may be exercised and the nature and duration of restrictions as to transferability; (iii) to accelerate the right of an Optionee to exercise, in whole or in part, any previously granted Option; (iv) to interpret the provisions and supervise the
administration of the 
  

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 ISOP; (v) to determine the Fair Market Value (as defined below) of the Shares (as defined below); (vi) to
make an election as to the type of Approved 102 Option; (vii) to designate the type of Options; (viii) to determine any other matter which is necessary or desirable for, or incidental to administration of the ISOP; and (ix) to appoint in its
absolute discretion the Trustee and replace it at any time in the future. 
  
 The Committee shall not be entitled to grant Options to the Optionees however, it will be authorized to issue shares underlying Options which have been granted by the Board and duly exercised pursuant to the
provisions hereof all in accordance with Section 112(a)(5) of the Companies Law. 
  
 The Administrator shall have the authority to grant, in its discretion, to the holder of an outstanding Option, in exchange for the surrender and cancellation of such Option, a new Option having a purchase price equal
to, lower than or higher than the Purchase Price provided in the Option so surrendered and canceled, and containing such other terms and conditions as the Administrator may prescribe in accordance with the provisions of the ISOP. 
  
 All decisions and selections made by the Administrator pursuant to the
provisions of the ISOP shall be made by a majority of its members except that no member of the Administrator shall vote on, or be counted for quorum purposes, with respect to any proposed action of the Administrator relating to any Option to be
granted to that member. Notwithstanding the above, any decision signed or agreed to in writing or by telex or facsimile by all of the members of the Administrator, who are authorized to make such decision shall be valid for every purpose as a
resolution adopted at the Administrator’s meeting that was duly convened and held. 
  
 The interpretation and construction by the Administrator of any provision of the ISOP or of any Option Agreement thereunder shall be final and conclusive unless otherwise determined by the Board. 
  
 Subject to the Company’s Articles of Association and the Company’s
decision, and to all approvals legally required, including but not limited to the provisions of the Companies Law, each member of the Administrator shall be indemnified and held harmless by the Company against any cost or expense (including counsel
fees) reasonably incurred by him, or any liability (including any sum paid in settlement of a claim with the approval of the Company) arising out of any act or omission to act in connection with the ISOP, unless arising out of such member’s own
fraud or bad faith, to the extent permitted by applicable law. Such indemnification shall be in addition to any rights of indemnification the member may have as a director or otherwise under the Company’s Articles of Association, any agreement,
any vote of shareholders or disinterested directors, insurance policy or otherwise. 
  
 “Fair Market Value” means, with respect to the Shares and as of the date that is relevant to such determination, the market price per share of such Shares determined by the Administrator as follows:

  

	 	(a)	if the Shares are traded on a share exchange on the date in question, then the Fair Market Value will be equal to the closing price reported by the applicable composite-transactions
report for such date. 

  

	 	(b)	if the Shares are traded over-the-counter on the date in question and are classified as a national market issue, then the Fair Market Value will be equal to the last-transaction
price on the Nasdaq National Market; 

  

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	 	(c)	if the Shares are traded over-the-counter on the date in question but are not classified as a national market issue, then the Fair Market Value will be equal to the mean between the
last reported representative bid and asked prices quoted by Nasdaq for such date; and 

  

	 	(d)	if none of the foregoing provisions is applicable, then the Fair Market Value will be determined by the Administrator in good faith on such basis as it deems appropriate.

  
 With respect to CGO only and without derogating
from the terms and conditions specified in items (a), (b), (c) and (d) above, solely for the purpose of determining the tax liability pursuant to Section 102(b)(3) of the Ordinance, if at the Date of Grant the Company’s shares are listed on any
established stock exchange or a national market system or if the Company’s shares will be registered for trading within ninety (90) days following the Date of Grant, the Fair Market Value of a Share at the Date of Grant shall be determined in
accordance with the average value of the Company’s shares on the thirty (30) trading days preceding the Date of Grant or on the thirty (30) trading days following the date of registration for trading, as the case may be. 
  

	5.	DESIGNATION OF PARTICIPANTS 

  

	 	5.1	The persons eligible for participation in the ISOP as Optionees shall include any Employees and/or Non-Employees of the Company or of any Affiliate; provided, however, that (i)
Employees may only be granted 102 Options; (ii) Non-Employees may only be granted 3(i) Options; and (iii) Controlling Shareholders may only be granted 3(i) Options. The grant of an Option hereunder shall neither entitle the Optionee to participate
nor disqualify him from participating in any other grant of Options pursuant to the ISOP or any other option or stock plan of the Company or any of its affiliates. 

  

	 	5.2	Anything in the ISOP to the contrary notwithstanding, all grants of Options to directors and office holders shall be authorized and implemented in accordance with the provisions of
any applicable law, including but not limited to the provisions of the Companies Law or any successor act or regulation, as in effect from time to time. 

  

	6.	DESIGNATION OF OPTIONS PURSUANT TO SECTION 102 

  

	 	6.1	The Company may designate Options granted to Employees pursuant to Section 102 as Unapproved 102 Options or Approved 102 Options. 

  

	 	6.2	The grant of Approved 102 Options shall be made under this ISOP adopted by the Board as described in Section 15 below, and shall be conditioned upon the approval of this ISOP by the
ITA. 

  

	 	6.3	Approved 102 Option may either be classified, at the Administrator’s absolute discretion, as Capital Gain Option or Ordinary Income Option. 

  

	 	6.4	Approved 102 Option elected and designated by the Company to qualify under the capital gain tax treatment in accordance with the provisions of Section 102(b)(2) shall be referred to
herein as CGO. 

  

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	 	6.5	Approved 102 Option elected and designated by the Company to qualify under the ordinary income tax treatment in accordance with the provisions of Section 102(b)(1) shall be referred
to herein as OIO. 

  

	 	6.6	The Company’s election of the type of Approved 102 Options as CGO or OIO granted to Employees (the “Election”), shall be appropriately filed with the ITA
before the Date of Grant of an Approved 102 Option. Such Election shall become effective beginning the first Date of Grant of an Approved 102 Option under this ISOP and shall remain in effect until the end of the year following the year during which
the Company first granted Approved 102 Options. The Election shall obligate the Company to grant only the type of Approved 102 Option it has elected, and shall apply to all Optionees who were granted Approved 102 Options during the period
indicated herein, all in accordance with the provisions of Section 102(g) of the Ordinance. For the avoidance of doubt, such Election shall not prevent the Company from granting Unapproved 102 Options and/or Options under Section 3(i) of the
Ordinance, simultaneously. For the removal of doubt, it is hereby clarified that the Administrator may change the Company’s Election in accordance with the provisions of Section 102, and the Optionees, or any of them, shall not be deemed to
have acquired or otherwise be vested with any rights in respect to any Election made by the Company and/or the change thereof. Furthermore, a grant to an Optionee of an Option as CGO or OIO does not obligate the Company to grant to such Optionee, at
any time in the future, Approved 102 Option(s) (to the extent the Company will grant such Optionee future option(s)) of the same type (i.e. CGO or OIO, as the case may be), and the Company shall be entitled to change, in its absolute discretion and
subject to the provisions of Section 102, the type of Option(s) (including but without limitation Unapproved 102 Option) to be granted (if and to the extent granted) to such Optionee. 

  

	 	6.7	All Approved 102 Options must be held in trust by a Trustee, as described in Section 7 below. 

  

	 	6.8	For the avoidance of doubt, the designation of Unapproved 102 Options and Approved 102 Options shall be subject to the terms and conditions set forth in Section 102 and the
regulations promulgated thereunder. 

  

	 	6.9	With regards to Approved 102 Options, the provisions of the ISOP and/or the Option Agreement shall be subject to the provisions of Section 102 and the Tax Assessing Officer’s
permit. In this respect, and without derogating from the authority conferred upon the Administrator pursuant to Section 16.1 below, the Administrator may amend any provision of this ISOP such that it will comply with Section 102 and/or the said
permit, to the extent the Administrator deems necessary in order to receive and/or to keep in effect any tax benefit pursuant to Section 102. The Administrator shall be entitled, but not obligated, to determine, in its absolute discretion, that such
an amendment shall be considered binding upon the Company and the Optionees retroactively, from the date in which it is required in order to receive and/or to keep in effect any tax benefit pursuant to Section 102. 

  

	7.	TRUSTEE 

  

	 	7.1	Approved 102 Options which shall be granted under the ISOP and/or any Shares issued upon exercise of such Approved 102 Options and/or other shares received subsequently following
any realization of rights, including without 

  

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	 	  	limitation bonus shares, and, to the extent required under the provisions of Section 102, all other rights conferred by the Shares, shall be allocated or issued to a Trustee
nominated by the Administrator, and approved by the ITA in accordance with the provisions of Section 102(a) (the “Trustee”) and held for the benefit of the Optionees for such period of time as required by Section 102 (the
“Holding Period”) and subject to the same tax treatment, to which the Approved 102 Options from which they have resulted are subject. In the case the requirements for Approved 102 Options are not met, then the Approved 102 Options
shall be treated as Unapproved 102 Options, all in accordance with the provisions of Section 102 and regulations promulgated thereunder. 

  

	 	7.2	Anything to the contrary notwithstanding, the Trustee shall not release any Approved 102 Options which were not already exercised into Shares by the Optionee or release any Shares
issued upon exercise of Approved 102 Options prior to the full payment of the Optionee’s tax liabilities arising from Approved 102 Options which were granted to the Optionee and/or any Shares issued upon exercise of such Options.

  

	 	7.3	Subject to the provisions of Section 102, an Optionee shall not be entitled to sell or release from trust any Share received upon the exercise of an Approved 102 Option and/or any
share received subsequently following any realization of rights, including without limitation, bonus shares, until the lapse of the Holding Period required under Section 102. 

  

	 	7.4	Upon receipt of the Approved 102 Option, the Optionee will sign an undertaking to release the Trustee from any liability in respect of any action or decision duly taken and bona
fide executed in relation with the ISOP, or any Approved 102 Option or Share granted to the Optionee thereunder. 

  

	8.	SHARES RESERVED FOR THE ISOP; RESTRICTION THEREON 

  

	 	8.1	The Company has reserved ONE MILLION FIVE HUNDRED NINETY SIX THOUSAND
SEVEN HUNDRED AND THIRTY FOUR (1,596,734) authorized but unissued Ordinary Shares of NIS 0.01 par value each of the Company (the
“Shares”) for the purposes of the ISOP, subject to adjustment as set forth in Section 10 below. Any of such Shares which may remain unissued and which are not subject to outstanding Options at the termination of the ISOP shall cease
to be reserved for the purpose of the ISOP. Until termination of the ISOP the Company shall at all times reserve sufficient number of Shares to meet the requirements of the ISOP. Should any Option for any reason expire or be canceled prior to its
exercise or relinquishment in full, the Shares therefore subject to such Option may again be subject to an Option under the ISOP. 

  

	 	8.2	Each Option granted pursuant to the ISOP, shall be evidenced by a written agreement between the Company and the Optionee (the “Option Agreement”), in such form as
the Administrator shall from time to time approve. Each Option Agreement shall state, inter alia, the number of Shares to which the Option relates, the Purchase Price thereof and the type of Option granted thereunder (whether a CGO, OIO,
Unapproved 102 Option or a 3(i) Option). 

  

	 	8.3	All Shares issued upon exercise of the Options in compliance with the terms and conditions of the ISOP as well as the terms and conditions of the Option Agreement pursuant to which
the Options were granted shall entitle the holder thereof to receive dividends and other distributions thereon, subject always to the provisions of Section 7.1 above. 

  

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	 	8.4	If in connection with any public offering of securities of the Company, the stock exchange regulations and/or any applicable law so provide and/or the Administrator so resolve
and/or the underwriter or underwriters managing such offering so requests, then each Optionee who purchased Shares hereunder upon exercise of Options will agree to not sell or otherwise transfer any such Shares (other than Shares included in such
underwriting) without the prior written consent of such underwriter, for such period of time as may be requested by the underwriter commencing on the effective date of the registration statement filed in connection with such offering.

  

	9.	PURCHASE PRICE 

  

	 	9.1	The purchase price of each Share subject to an Option or any portion thereof shall be determined by the Administrator in its sole and absolute discretion in accordance with
applicable law, subject to any guidelines as may be determined by the Board from time to time (the “Purchase Price”). 

  

	 	9.2	The Purchase Price shall be payable upon the exercise of the Option in a form satisfactory to the Administrator, including without limitation, by cash or cheque or any other form of
payment approved by the Administrator in its sole and absolute discretion, to the extent permissible under any applicable law. The Administrator shall have the authority to postpone the date of payment on such terms as it may determine.

  

	10.	ADJUSTMENTS 

  
 Except as otherwise provided in the Option Agreement, upon the occurrence of any of the following events, Optionee’s rights to purchase Shares under
the ISOP shall be adjusted as hereafter provided: 
  

	 	10.1	In the event of: (a) the sale of all or substantially all of the assets of the Company to any person or entity that, prior to such sale, did not control, was not under common
control with, or was not controlled by, the Company, or (b) a merger or consolidation or other reorganization in which the Company is not the surviving entity or becomes owned entirely by another entity, unless at least fifty percent (50%) of the
outstanding voting securities of the surviving or parent corporation, as the case may be, immediately following such transaction are beneficially held by such persons and entities in the same proportions as such persons and entities beneficially
held the outstanding voting securities of the Company immediately prior to such transaction, or (c) the sale or other change of beneficial ownership of the outstanding voting securities of the Company such that any person or group becomes the
beneficial owner of more than 50% of the outstanding voting securities of the Company ( “Change of Control Transaction”) while unexercised Options remain outstanding under the ISOP, then the Company shall endeavor to cause the
successor entity in such transaction either to assume all the outstanding Options as of the consummation of such transaction (the “Closing”), or to issue (or cause to be issued) in substitution thereof comparable options of such
successor entity (or of its parent or subsidiary). If the successor entity is unwilling to either assume such Options or grant comparable options in substitution of such Options, on terms that are acceptable to the Company as determined by the Board
in the exercise of its discretion, then: 

  

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	 	(i)	with respect to each outstanding Option, that portion of the Option which remains unvested that either (x) would have become vested over the 12-month period immediately following
the Closing, or (y) represents 50% of the unvested portion of the Option as of the Closing, whichever portion is smaller, will become vested immediately prior to such Closing; and 

  

	 	(ii)	the Board may cancel all outstanding Options, and terminate this Plan, effective as of the Closing, provided that it shall notify all Optionees of the proposed Change of Control
Transaction a reasonable amount of time prior to the Closing so that the Optionee will be given the opportunity to exercise the vested portion of his or her Option (after giving effect to the acceleration of such vesting under clause (i) above)
prior to the Closing. 

  

	 	10.2	The number of Shares subject to the ISOP, the number of Shares available under Options and the Purchase Price shall be adjusted as determined by the Board in its sole discretion
from time to time to reflect adjustments in the number of Shares arising as a result of subdivisions, share dividends, bonus shares, consolidations or reclassifications of the Shares or other relevant changes in the authorized or issued share
capital of the Company. No such adjustments will be required by reason of the issuance or sale by the Company for cash or other consideration of additional Shares or securities convertible into or exchangeable for Shares. No fractional Shares may be
purchased or issued hereunder. If an Optionee is entitled to purchase a fraction of a Share pursuant to an outstanding Option, such entitlement shall be rounded down to the nearest whole number. 

  

	 	10.3	Notwithstanding the above, no adjustment shall be made if the Company proposes to issue or sell any securities to all of its then current shareholders, and each Optionee shall be
deemed for purposes of such issuance or offer to sell to be a shareholder of that number of Option Shares that may be acquired by the Optionee pursuant to vested Options held by such Optionee (in addition to any Option Shares or other Shares
actually held of record by such Optionee). 

  

	11.	TERM AND EXERCISE OF OPTIONS 

  

	 	11.1	Options shall be exercised by the Optionee by giving written notice to the Company, in such form and method as may be determined by the Administrator, which exercise shall be
effective upon receipt of such notice by the Company at its principal office. The notice shall specify the number of Shares with respect to which the Option is being exercised and it shall be accompanied by any further assurances and/or undertaking
as the Administrator may require to ensure that the transaction complies in all respects with the requirements of any applicable law. The above notice will be signed by the person exercising the Option and, subject to Section 9.2 above, it will be
accompanied by full payment of the corresponding Purchase Price. 

  

	 	11.2	Each Option shall be exercisable following the vesting dates, subject to the provisions of the ISOP and for the number of Shares as shall be provided in the Option Agreement.
However no Option shall be exercisable after the expiration date, as defined for each Optionee in the Optionee’s Option Agreement (the “Expiration Date”), subject always to Section 11.6 below. 

  

	 	11.3	An Option shall not be transferable by an Optionee other than by will or laws of descent and distribution, and during an Optionee’s lifetime shall be exercisable only by that
Optionee. 

  

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	 	11.4	The Options may be exercised by the Optionee in whole at any time or in part from time to time, to the extent that the Options become vested and exercisable, prior to the Expiration
Date, and provided that the number of Shares purchased under the exercised Option will be no less than 100 Shares, without regard to adjustments to the number of shares subject to the Option pursuant to Section 10, or, if less, all of the remaining
Shares subject to the Option, and provided further that subject to the provisions of Section 11.6 below and unless the Administrator resolves otherwise, the Optionee is an employee or director, consultant or advisor of the Company or any of its
Affiliates, at all times during the period beginning with the granting of the Option and ending upon the date of exercise. 

  

	 	11.5	Subject to the provisions of Section 11.6 below, in the event of termination of Optionee’s employment with or performance of services for or on behalf of the Company or any of
its Affiliates, all Options granted to the Optionee will immediately expire. A notice of termination of employment or services shall be deemed to constitute termination of employment or services. 

  

	 	11.6	Notwithstanding anything to the contrary hereinabove, an Option may be exercised after the date of termination of Optionee’s employment with or performance of services for or
on behalf of the Company or any of its Affiliates during an additional period of time beyond the date of such termination, but only with respect to the number of Options already vested at the time of such termination according to the vesting periods
of the Options set forth in the Optionee’s Option agreement, if: 

  

	 	(i)	Termination is without Cause (as defined below), in which event any Options still in force and unexpired may be exercised within a period of 30 (thirty) days from the date of such
termination; 

  

	 	(ii)	Termination is the result of death or disability of the Optionee, in which event any Options still in force and unexpired may be exercised within a period of 6 (six) months from the
date of termination; or 

  

	 	(iii)	Prior to the date of such termination, the Administrator shall authorize an extension of the terms of all or part of the Options beyond the date of such termination for a period not
to exceed the period during which the Options by their terms would otherwise have been exercisable. 

  
 The term “Cause” shall mean a termination by the Company and/or any of its Affiliates of the Optionee’s employment or services (or
if the Optionee is a Director, removal of him or her from the Board by action of the shareholders or, if permitted by applicable law and the Articles of Association of the Company, the other Directors), in connection with the good faith
determination of the Board (or of the Company’s shareholders if the Optionee is a Director and the removal of him or her from the Board is by action of the shareholders, but in either case excluding the vote of the subject individual if he or
she is a Director or a shareholder) that the Optionee has engaged in any acts involving dishonesty or moral turpitude or in any acts that materially and adversely affect the business, affairs or reputation of the Company or any of its Affiliates.

  

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	 	11.7	To avoid doubt, the holders of Options shall not have any of the rights or privileges of shareholders of the Company in respect of any Shares purchasable upon the exercise of any
Options, nor shall they be deemed to be a class of shareholders or creditors of the Company for the purpose of the operation of Sections 350 and 351 of the Companies Law or any successor to such Sections, until registration of the Optionee as holder
of such Shares in the Company’s register of members upon exercise of the Options in accordance with the provisions of the ISOP. 

  

	 	11.8	Any form of Option Agreement authorized by the ISOP may contain such other provisions as the Administrator may, from time to time, deem advisable. Without limiting the foregoing,
the Administrator may, with the consent of the Optionee, from time to time, cancel all or any portion of any Option then subject to exercise, and the Company’s obligation in respect of such Option may be discharged by (i) payment to the
Optionee of an amount in cash equal to the excess, if any, of the Fair Market Value of the Shares at the date of such cancellation subject to the portion of the Option so canceled over the aggregate Purchase Price of such Shares, or (ii) the
issuance or transfer to the Optionee of Shares of the Company with a Fair Market Value at the date of such transfer equal to any such excess, or (iii) a combination of cash and shares with a combined value equal to any such excess, all as determined
by the Administrator in its sole discretion. 

  

	 	11.9	With respect to Unapproved 102 Option, if the Optionee ceases to be employed by the Company or any Affiliate, then, to the extent required under the provisions of Section 102, the
Optionee shall extend to the Company a security or guarantee for the payment of tax due at the time of sale of Shares. 

  

	12.	VESTING OF OPTIONS 

  
 Except as otherwise provided in the Option Agreement, the Option initially will be deemed an entirely unvested Option, but portions of the Option will
become a vested Option on the following schedule: 
  

	 	12.1	twenty-five percent (25%) will become a vested Option as of the first anniversary of the Date of Grant set forth in the Optionee’s Option Agreement; and

  

	 	12.2	two and one-twelfth percent (2-1/12%) of the Option will become vested as of the end of each month thereafter, subject to section 11.5 above and provided that additional vesting
will be suspended during any period while the Optionee is on a leave of absence from the Company, as determined by the Administrator. 

  

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	13.	DIVIDENDS; NO SOCIAL BENEFITS 

  

	 	13.1	With respect to all Shares (in contrary to unexercised Options) issued upon the exercise of Options purchased by the Optionee and held by the Optionee or by the Trustee, as the case
may be, the Optionee shall be entitled to receive dividends in accordance with the quantity of such Shares, and subject to any applicable taxation on distribution of dividends and to the provisions of Section 7.1 above. 

  

	 	13.2	During the period in which Shares issued to the Trustee on behalf of an Optionee are held by the Trustee, the cash dividends paid with respect thereto shall be paid to the Optionee,
subject always to the provisions of Section 7.1 above. 

  

	 	13.3	The income attributed to the Optionee as a result of the grant of the Options hereunder and/or the exercise of the Shares, their transfer in his or her name or their sale and in all
respects relating thereto, shall not be taken into account when computing the basis of the Optionee’s entitlement to any social benefits. Without derogating from the generality of the above, that income shall not be taken into account in
computing mangers insurance, vocational studies fund, provident funds, severance pay, holiday pay and the like. If the Company is legally obliged to take any of the above into account, as income which is to be attributed to the Optionee, the
Optionee will indemnify the Company in respect of any expense sustained by it in such respect. 

  

	14.	ASSIGNABILITY AND SALE OF OPTIONS 

  
 No Option shall be assignable, transferable or given as collateral or any right with respect to it shall be given to any third party whatsoever, and any
such action made directly or indirectly, for an immediate validation or for a future one, shall be void. During the lifetime of the Optionee each and all of such Optionee’s rights to purchase Shares hereunder shall be exercisable only by the
Optionee. 
  
 As long as the Shares are held by the Trustee in
favor of the Optionee, than all rights the last possesses over the Shares are personal, can not be transferred, assigned, pledged or mortgaged, other than by will or laws of descent and distribution. 
  

	15.	EFFECTIVE DATE OF ISOP AND TERM OF THE ISOP 

  

	 	15.1	The ISOP shall be effective as of the day it was adopted by the Board and shall terminate at the end of ten years from such day of adoption, if not terminated under Section 16 below
prior to such date, after which no more Options may be granted under the ISOP, although all outstanding Options granted prior to such termination will remain subject to the provisions of the ISOP, and no such termination of the ISOP will result in
the expiration or termination of any such Option prior to the expiration or early termination of the applicable Option term. 

  

	 	15.2	Notwithstanding the above, all Options that were granted on or before December 31, 2002, shall be subject to the terms and conditions of this ISOP as these were in force immediately
prior to January 1, 2003, i.e. the effective date of the January 2003 Amendment, provided however, that the above will not in any way limit or restrict the authority conferred upon the Administrator 

  

	 2000 ISOP (aa 2004) 
	 Exhibit 10.46.doc 

 -12- 
  

	 	  	pursuant to Section 16.1 below to amend, alter, suspend, cancel or terminate the ISOP or any part thereof and to do all other acts and things that the Administrator is otherwise
authorized to do hereunder. 

  

	16.	AMENDMENTS OR TERMINATION 

  

	 	16.1	The Administrator may at any time, amend, alter, suspend, cancel or terminate the ISOP or any part thereof, replace and/or determine further provisions and sub-plans in addition to
the ISOP, determine any other plan in lieu of the ISOP and determine any provision and do anything in connection with the ISOP. 

  

	 	16.2	No amendment, alteration, suspension or termination of the ISOP shall impair the rights of any Optionee with respect to an outstanding Option, unless mutually agreed otherwise
between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the ISOP shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with
respect to Options granted under the ISOP prior to the date of such termination. 

  

	 	16.3	No Options may be granted under the ISOP while the ISOP is suspended or after it is terminated. 

  

	17.	GOVERNMENT REGULATIONS 

  
 The ISOP, and the granting and exercise of Options hereunder, and the obligation of the Company to sell and deliver Shares under such Options, shall be
subject to all applicable laws, rules, and regulations of the State of Israel and to such approvals by any governmental agencies or national securities exchanges as may be required. Nothing herein shall be deemed to require the Company to register
the Shares under the securities law of any jurisdiction. 
  

	18.	CONTINUANCE OF EMPLOYMENT OR HIRED SERVICES 

  
 Neither the ISOP nor the Option Agreement with the Optionee shall impose any obligation on the Company or an Affiliate thereof, to continue any Optionee
in its employ, or the hiring by the Company of the Optionee’s services and nothing in the ISOP or in any Option granted pursuant thereto shall confer upon any Optionee any right to continue in the employ or service of the Company or an
Affiliate thereof or restrict the right of the Company or an Affiliate thereof to terminate such employment or service hiring at any time. 
  

	19.	GOVERNING LAW & JURISDICTION 

  
 The ISOP shall be governed by and construed and enforced in accordance with the laws of the State of Israel applicable to contracts made and to be
performed therein, without giving effect to the principles of conflict of laws. The competent courts of Tel-Aviv, Israel shall have sole jurisdiction in any matters pertaining to the ISOP. 
  

	 2000 ISOP (aa 2004) 
	 Exhibit 10.46.doc 

 -13- 
  

	20.	TAX CONSEQUENCES 

  
 Any tax consequences arising from the grant or exercise of any Option, from the payment for Shares covered thereby or from any other event or act (of the
Company and/or its Affiliates, or the Optionee) hereunder shall be borne solely by the Optionee. The Company and/or its Affiliates and/or the Trustee shall withhold taxes according to the requirements under the applicable laws, rules, and
regulations, including withholding taxes at source. Furthermore, to the extent permitted by applicable law, the Optionee shall agree to indemnify the Company and/or its Affiliates and/or the Trustee and hold them harmless against and from any and
all liability for any such tax or interest or penalty thereon, including without limitation, liabilities relating to the necessity to withhold, or to have withheld, any such tax from any payment made to the Optionee. 
  
 The Administrator and/or the Trustee shall not be required to transfer any
Shares and/or to release any Share certificate to an Optionee until all required payments have been fully made. 
  

	21.	NON-EXCLUSIVITY OF THE ISOP 

  
 The adoption of the ISOP by the Board shall not be construed as amending, modifying or rescinding any previously approved incentive arrangements or as
creating any limitations on the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of stock Options otherwise then under the ISOP, and such arrangements may be either
applicable generally or only in specific cases. 
  
 For the
avoidance of doubt, prior grant of options to Optionees of the Company under their employment or services agreements, and not in the framework of any previous option plan, shall not be deemed an approved incentive arrangement for the purpose of this
Section. 
  
 In addition, for the avoidance of doubt, the grant
of Options to the Optionees shall not prejudice any previous grant (within the framework of previously approved incentive arrangements) of Options to the Optionee. 
  

	22.	MULTIPLE AGREEMENTS 

  
 The terms of each Option may differ from other Options granted under the ISOP at the same time, or at any other time. The Administrator may also grant
more than one Option to a given Optionee during the term of the ISOP, either in addition to, or in substitution for, one or more Options previously granted to that Optionee. 
  

	23.	THE STATUS OF THE AGREEMENT 

  
 Any interpretation of the Option Agreements will be made in accordance with the ISOP but in the event there is any contradiction between the provisions of
an Option Agreement and the ISOP, the provisions of the Option Agreement will prevail. 
  

	 2000 ISOP (aa 2004) 
	 Exhibit 10.46.doc 

 EXHIBIT B 
  
 Terms of the Options 
  

 

			
	Name of the Optionee:	  	 
		
	Date of Grant:	  	 
		
	Designation:	  	 •   ̈ Approved 102 Option:
 •  Capital Gain Option (CGO)
 ̈; or
 •  Ordinary Income Option (OIO)  ̈
 •   ̈ Unapproved 102 Option
 •   ̈ 3(i) Option

		
	1. Number of Options granted:	  	

	2. Price per Share:	  	

	3. Vesting Schedule:	  	

		
	 % of Options

	  	 Vesting Date

	25 %	  	1 year from                         
		
	2.0833 %	  	End of each month, starting from the 13th month from
                        
	
	all subject to the employment or services of the Optionee with the Company through the entire respective Vesting Date, as per the above.
		
	 4. Expiration Date:
	  	10 years from the Date of Grant

  

 Verisity Ltd. 
  
  

 the Optionee 
  

	 2000 ISOP (aa 2004) 
	 Exhibit 10.46.doc 

 -15- 
  

 EXHIBIT C 
  
 NOTICE OF EXERCISE OF OPTION 
 Verisity Ltd. 
  
 To the General Manager of Verisity
Ltd.                                        
                                        
                                 Dated:
                         
  
 The undersigned, the holder of an Option to purchase ordinary shares of Verisity Ltd. (the “Company”), hereby irrevocably elects to exercise the purchase
rights represented by such Option, and to purchase thereunder              ordinary shares of the Company (the “Shares”), 

	_____  (*)  	herewith makes payment of NIS
                                 therefor in the form of a check made payable to
the Company, or 

  

	_____  (*)  	hereby requests that the Company and/or its brokers will deduct payment of NIS
                     therefore from the proceeds received in the sale of the Shares, pursuant to the broker’s form, a copy of which is
attached hereto (the “Broker’s Form”), 

 * – mark appropriate election 

 
 and requests that 
  

	_____  (**)  	the certificates for such Shares which are not sold as per the Broker’s Form (either residual Shares if some of the Shares are sold, or all of the Shares if none of the Shares
are sold) be issued in the name of and delivered to the undersigned at the address set forth below, or 

  

	_____  (**)  	the Shares which are not sold as per the Broker’s Form (either residual Shares, if some of the Shares are sold, or all of the Shares, if none of the Shares is sold) will be
deposited in brokerage account the details of which are specified in the Broker’s Form. 

 ** – mark appropriate
election 
  
 The undersigned acknowledges that the issuance and delivery of the
certificates for the Shares or the deposit of the Shares in brokerage account as per the above is subject to, inter alia, the payment by the undersigned of all taxes due in connection with the purchase of said Shares. 
  
 The undersigned further acknowledges that the Shares being purchased by him or her are
subject to substantial restrictions on sale or transfer set forth in the Company’s Articles of Association and in the Company’s (check one or specify other) __ 1997, __ 1999, X 2000 Israeli Share Option Plan (the
“Plan”) and agrees to be bound by the terms and conditions of said Plan and the corresponding Option Agreement entered into by and between the Company and the undersigned on
             (Date of Grant or Grant Date, reported sometimes as “Option Date”). 
  

					
	 	 	 	 	 Address:
  
  

	 (signature)
  
  
	 	 	 	 
	 	 	 	 	
 (if address is blank, Company will use the most recent address officially on file with the Company)
25\5\?270\

	 Print name
  
  
	 	 	 	 

  

	 2000 ISOP (aa 2004) 
	 Exhibit 10.46.doc 

 EXHIBIT D 
  
 Trust Agreement between the Company and the Trustee 
  
 397\27\5\? 
  

	 2000 ISOP (aa 2004) 
	 Exhibit 10.46.doc1998 Management Share Incentive Plan

 Exhibit 10(i) 
  
 MINE SAFETY APPLIANCES COMPANY 
  
 1998 MANAGEMENT SHARE INCENTIVE PLAN 
 (As Amended March 10, 1999) 
  
 Section 1.
Purpose. 
  
 The purpose of the 1998 Management Share
Incentive Plan of Mine Safety Appliances Company (the “Plan”) is to benefit the Company’s shareholders by encouraging high levels of performance by individuals whose performance is a key element in achieving the Company’s
continued success by rewarding the creation of shareholder value, and to enable the Company to recruit, reward, retain and motivate employees to work as a team to achieve the Company’s goals. 
  
 Section 2. Definitions in Last Section. 
  
 For purposes of the Plan, capitalized terms, unless defined where the
respective term first appears in this Plan, shall have the meanings given in the last Section hereof. 
  
 Section 3. Eligibility. 
  
 Awards may be granted only to Employees who are designated as Participants from time to time by the Committee. The Committee shall determine which Employees shall be Participants, the types of Awards to be made to Participants and the
terms, conditions and limitations applicable to the Awards. 
  
 Section 4.
Awards. 
  
 Awards may include, but are not limited to, those
described in this Section 4. The Committee may grant Awards singly, in tandem or in combination with other Awards, as the Committee may in its sole discretion determine; provided that Stock Options may not be granted in tandem with Incentive Stock
Options. Subject to the other provisions of this Plan, Awards may also be granted in combination or in tandem with, in replacement of, or as alternatives to, grants or rights under this Plan and any other employee benefit or compensation plan of the
Company. 
  
 4.1 Stock Options 
  
 A Stock Option is a right to purchase a specified number of Shares at a
specified price during such specified time as the Committee shall determine. 
  

	(a)	Options granted may be either of a type that complies with the requirements of incentive stock options as defined in Section 422 of the Code (“Incentive Stock Options”) or
of a type that does not comply with such requirements (“Non-Qualified Stock Options”). The requirements imposed by the Code and the regulations thereunder for qualification as an Incentive Stock Option, whether or not specified in this
Plan, shall be deemed incorporated within any Award Agreement pertaining to an Incentive Stock Option. 

  

	(b)	The exercise price per Share of any Stock Option which is intended to be an Incentive Stock Option shall be no less than the Fair Market Value per Share subject to the option on the
date the Stock Option is granted, except that in the case of an Incentive Stock Option granted to an Employee who, immediately prior to such grant, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes
of stock of the Company or any subsidiary (a “Ten Percent Employee”), the exercise price per Share shall not be less than one hundred ten percent (110%) of such Fair Market Value per Share on the date the Incentive Stock Option is granted.
For purposes of this Section 4.1(b), an individual (i) shall be considered as owning not only shares of stock owned individually but also all shares of stock that are at the time owned, directly or indirectly, by or for the spouse, ancestors, lineal
descendants and brothers and sisters (whether by the whole or half blood) of such individual and (ii) shall be considered as owning proportionately any shares owned, directly or indirectly, by or for any corporation, partnership, estate or trust in
which such individual is a shareholder, partner or beneficiary. 

  

 1 

	(c)	The term of any Stock Option which is intended to be an Incentive Stock Option shall not be greater than ten years from its date of grant, except that in the case of a Ten Percent
Employee, such term shall not be greater than five years. 

  

	(d)	A Stock Option may be exercised, in whole or in part, by giving written notice of exercise to the Company, specifying the number of Shares to be purchased. 

 

	(e)	The exercise price of the Stock Option may be paid in cash or, at the discretion of the Committee, may also be paid by the tender of Stock already owned by the Participant, or
through a combination of cash and Stock, or through such other means the Committee determines are consistent with the Plan’s purpose and applicable law. No fractional Shares will be issued or accepted. 

  

	(f)	Notwithstanding any other provision contained in the Plan or in any Award Agreement, but subject to the possible exercise of the Committee’s discretion contemplated in the last
sentence of this Section 4.1(f), the aggregate Fair Market Value on the date of grant, of the Shares with respect to which Incentive Stock Options are exercisable for the first time by an Employee during any calendar year under all plans of the
corporation employing such Employee, any parent or subsidiary corporation of such corporation and any predecessor corporation of any such corporation shall not exceed $100,000. If the date on which one or more of such Incentive Stock Options could
first be exercised would be accelerated pursuant to any provision of the Plan or any Award Agreement, and the acceleration of such exercise date would result in a violation of the restriction set forth in the preceding sentence, then,
notwithstanding any such provision, but subject to the provisions of the next succeeding sentence, the exercise dates of such Incentive Stock Options shall be accelerated only to the date or dates, if any, that do not result in a violation of such
restriction and, in such event, the exercise dates of the Incentive Stock Options with the lowest option prices shall be accelerated to the earliest such dates. The Committee may, in its discretion, authorize the acceleration of the exercise date of
one or more Incentive Stock Options even if such acceleration would violate the $100,000 restriction set forth in the first sentence of this paragraph and even if such Incentive Stock Options are thereby converted in whole or in part to
Non-Qualified Stock Options. 

  
 4.2 Stock
Appreciation Rights 
  
 A Stock Appreciation Right is a right
to receive, upon surrender of the right, an amount payable in cash and/or Shares under such terms and conditions as the Committee shall determine. 
  

	(a)	A Stock Appreciation Right may be granted in tandem with part or all of (or in addition to, or completely independent of) a Stock Option or any other Award under this Plan. A Stock
Appreciation Right issued in tandem with a Stock Option may be granted at the time of grant of the related Stock Option or at any time thereafter during the term of the Stock Option; provided, however, that a Stock Appreciation Right issued in
tandem with an Incentive Stock Option can only be granted at the time of grant of the Incentive Stock Option. 

  

	(b)	The amount payable in cash and/or Shares with respect to each right shall be equal in value to a percentage (including up to 100%) of the amount by which the Fair Market Value per
Share on the exercise date exceeds the Fair Market Value per Share on the date of grant of the Stock Appreciation Right. The applicable percentage shall be established by the Committee. The Award Agreement may state whether the amount payable is to
be paid wholly in cash, wholly in Shares or partly in each; if the Award Agreement does not so state the manner of payment, the Committee shall determine such manner of payment at the time of payment. The amount payable in Shares, if any, is
determined with reference to the Fair Market Value per Share on the date of exercise. 

  

	(c)	Stock Appreciation Rights issued in tandem with Stock Options shall be exercisable only to the extent that the Stock Options to which they relate are exercisable. Upon exercise of
the tandem Stock Appreciation Right, and to the extent of such exercise, the Participant’s underlying Stock Option shall automatically terminate. Similarly, upon the exercise of the tandem Stock Option, and to the extent of such exercise, the
Participant’s related Stock Appreciation Right shall automatically terminate. 

  

 2 

	(d)	Notwithstanding any other provision of this Plan to the contrary, with respect to a Stock Appreciation Right granted in connection with an Incentive Stock Option: (i) the Stock
Appreciation Right will expire no later than the expiration of the underlying Incentive Stock Option; (ii) the value of the payout with respect to the Stock Appreciation Right may be for no more than one hundred percent (100%) of the difference
between the exercise price of the underlying Incentive Stock Option and the Fair Market Value of the Shares subject to the underlying Incentive Stock Option at the time the Stock Appreciation Right is exercised; and (iii) the Stock Appreciation
Right may be exercised only when the Fair Market Value of the Shares subject to the Incentive Stock Option exceeds the per Share exercise price of the Incentive Stock Option. 

  
 4.3 Restricted Stock 
  
 Restricted Stock is Stock that is issued to a Participant and is subject to
such terms, conditions and restrictions as the Committee deems appropriate, which may include, but are not limited to, restrictions upon the sale, assignment, transfer or other disposition of the Restricted Stock and the requirement of forfeiture of
the Restricted Stock upon termination of employment under certain specified conditions. The Committee may provide for the lapse of any such term or condition or waive any term or condition based on such factors or criteria as the Committee may
determine. Subject to the restrictions stated in this Section 4.3 and in the applicable Award Agreement, the Participant shall have, with respect to Awards of Restricted Stock, all of the rights of a shareholder of the Company, including the right
to vote the Restricted Stock and the right to receive any cash dividends on such Stock. Unless otherwise determined by the Committee, dividends or other distributions on Restricted Stock which are paid in Shares or other securities or property shall
be held subject to the same terms, conditions and restrictions as the Restricted Stock on which they are paid. 
  
 4.4 Performance Awards 
  
 Performance Awards may be granted under this Plan from time to time based on such terms and conditions as the Committee deems appropriate; provided that
such Awards shall not be inconsistent with the terms and purposes of this Plan. Performance Awards are Awards the payment or vesting of which is contingent upon the achievement of specified levels of performance under specified Performance Criteria
during a specified Performance Period by the Company, a subsidiary or subsidiaries, any branch, department or other portion thereof or the Participant individually, as determined by the Committee at the time the Performance Award is granted.
Performance Awards may be in the form of performance units, performance shares and such other forms of Performance Awards as the Committee shall determine. The maximum amount that may be paid in cash or in Fair Market Value (determined as of the
date of payment or vesting) of Shares or other securities under all Performance Awards under the Plan paid to any one Participant during a calendar year shall in no event exceed $200,000. 
  
 4.5 Other Awards 
  
 The Committee may from time to time grant Stock, other Stock-based and non-Stock-based Awards under the Plan (singly, in tandem or in combination with
other Awards), including without limitation those Awards pursuant to which Shares are or may in the future be acquired, Awards denominated in Stock units, securities convertible into Stock, phantom securities, dividend equivalents and cash. The
Committee shall determine the terms and conditions of such other Stock, Stock-based and non-Stock-based Awards, provided that such Awards shall not be inconsistent with the terms and purposes of this Plan. 
  
 Section 5. Award Agreements. 
  
 Each Award under this Plan shall be evidenced by an Award Agreement setting
forth the number of Shares or other securities, Stock Appreciation Rights, or units subject to the Award, if any, and such other terms and conditions applicable to the Award (and not inconsistent with this Plan) as are determined by the Committee.

  

 3 

	(a)	Award Agreements shall include the following terms: 

  

	 	(i)	Non-assignability: A provision that the relevant Award shall not be assigned, pledged or otherwise transferred except by will or by the laws of descent and distribution and
that during the lifetime of a Participant, the Award shall be exercised only by such Participant or by the Participant’s guardian or legal representative; provided, however, that, in the Committee’s discretion, and except in the case of
Incentive Stock Options, an Award Agreement may expressly provide for specifically limited transferability. 

  

	 	(ii)	Termination of Employment: A provision describing the treatment of an Award in the event of the Retirement, Disability, death or other termination of a Participant’s
employment with the Company, including but not limited to terms relating to the vesting, time for exercise, forfeiture or cancellation of an Award in such circumstances. 

  

	 	(iii)	Rights as Shareholder: A provision that a Participant shall have no rights as a shareholder with respect to any securities covered by an Award until the date the Participant
becomes the holder of record. Except as provided in Section 8 hereof, no adjustment shall be made for dividends or other rights, unless the Award Agreement specifically requires such adjustment, in which case, grants of dividend equivalents or
similar rights shall not be considered to be a grant of any other shareholder right. 

  

	 	(iv)	Withholding: A provision requiring the withholding of applicable taxes required by law from all amounts paid in satisfaction of an Award to a Participant. In the case of an
Award paid in cash, the withholding obligation shall be satisfied by withholding the applicable amount and paying the net amount in cash to the Participant. In the case of Awards paid in Shares or other securities of the Company, (i) a Participant
may satisfy the withholding obligation by paying the amount of any taxes in cash, (ii) with the approval of the Committee (or, in the case of deduction, by the unilateral action of the Committee), Shares or other securities may be deducted by the
Company from the payment or delivered to the Company by the Participant to satisfy the obligation in full or in part as long as such withholding or delivery of Shares or other securities does not violate any applicable laws, rules or regulations of
federal, state or local authorities. The number of Shares or other securities to be deducted or delivered shall be determined by reference to the Fair Market Value of such Shares or securities on the applicable date. 

  

	(b)	Award Agreements may include such other terms as are necessary and appropriate to effect an Award to the Participant, including but not limited to (i) the term of the Award, (ii)
vesting provisions, (iii) deferrals, (iv) any requirements for continued employment with the Company, (v) any other restrictions or conditions (including performance requirements) on the Award and the method by which restrictions or conditions
lapse, (vi) the effect upon the Award of a Change in Control, (vii) the price, amount or value of Awards, (viii) such Participant’s permitted transferees, if any, (ix) all Shares issued or issuable to such Participant in connection with an
Award in the event of such Participant’s termination of employment, and (x) any other terms and conditions which the Committee shall deem necessary and desirable. 

  
 Section 6. Shares of Stock Subject to the Plan. 
  

	(a)	Subject to the adjustment provisions of Section 8 hereof, the maximum aggregate number of Shares which may be granted pursuant to the Plan is 600,000 Shares.

  

	(b)	Any Shares which are subject to any unexercised or undistributed portion of any terminated, expired, exchanged or forfeited Award (or Awards settled in cash in lieu of Shares) shall
become available for grant pursuant to new Awards. 

  

	(c)	The Committee may make such additional rules for determining the number of Shares granted under the Plan as it deems necessary or appropriate. 

  

	(d)	The Stock which may be issued pursuant to an Award under the Plan may be treasury Stock or authorized but unissued Stock or Stock acquired, subsequently or in anticipation of the
transaction, in the open market or otherwise to satisfy the requirements of the Plan, or any combination of such Stock. 

  

 4 

	(e)	Subject to the adjustment provisions of Section 8 hereof, the maximum aggregate number of Shares available for grants of Stock Options or Stock Appreciation Rights to any one
Participant under the Plan shall not exceed 300,000 Shares. The limitation in the preceding sentence shall be interpreted and applied in a manner consistent with Section 162(m) of the Code. 

  
 Section 7. Administration. 
  

	(a)	The Plan and all Awards granted pursuant thereto shall be administered by the Committee so that, insofar as is possible and practicable, transactions with respect to Awards under
the Plan shall be exempt from Section 16(b) of the Exchange Act. A majority of the members of the Committee shall constitute a quorum. The vote of a majority of a quorum (or the unanimous consent in writing of the members of the Committee) shall
constitute action by the Committee. 

  

	(b)	The Committee shall periodically determine the Participants in the Plan and the nature, amount, pricing, timing, and other terms of Awards to be made to such individuals.

  

	(c)	The Committee shall have the power to interpret and administer the Plan. All questions of interpretation with respect to the Plan, the number of Shares or other securities, Stock
Appreciation Rights, or units granted, and the terms of any Award Agreements shall be determined by the Committee, and its determination shall be final and conclusive upon all parties in interest. In the event of any conflict between an Award
Agreement and the Plan, the terms of the Plan shall govern. 

  

	(d)	The Committee may delegate to the officers or employees of the Company the authority to execute and deliver such instruments and documents, to do all such ministerial acts and
things, and to take all such other ministerial steps deemed necessary, advisable or convenient for the effective administration of the Plan in accordance with its terms and purpose. 

  

	(e)	Notwithstanding the foregoing provisions of this Section 7, no power given the Committee herein shall be used after a Change in Control to affect detrimentally the rights of any
Participant with respect to any Awards hereunder which are outstanding immediately prior to the Change in Control. 

  
 Section 8. Equitable Adjustments. 
  
 Subject to any required action by the Company’s shareholders, upon the occurrence of any event which affects the Shares in such a way that an
adjustment of outstanding Awards is appropriate in order to prevent the dilution or enlargement of rights under the Awards (including, without limitation, any extraordinary dividend or other distribution (whether in cash or in kind),
recapitalization, stock split, reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, or share exchange, or other similar corporate transaction or event), the Committee shall make appropriate equitable adjustments,
which may include, without limitation, adjustments to any or all of the number and kind of Shares (or other securities) which may thereafter be issued in connection with such outstanding Awards and adjustments to any exercise price specified in the
outstanding Awards and shall also make appropriate equitable adjustments to the number and kind of Shares (or other securities) authorized by or to be granted under the Plan. 
  
 Section 9. Change in Control. 
  
 Notwithstanding any other provision of the Plan to the contrary, and unless the applicable Award Agreement shall otherwise provide, immediately prior to
any Change in Control of the Company, (i) all Stock Options and freestanding Stock Appreciation Rights which are then outstanding hereunder shall become fully vested and exercisable, (ii) all restrictions with respect to Shares of Restricted Stock
which are then outstanding hereunder shall lapse, and such Shares shall be fully vested and nonforfeitable, and (iii) with respect to all Performance Awards which are then outstanding hereunder, all uncompleted Performance Periods shall be deemed to
have been completed, the target level of performance set forth with respect to each Performance Criterion under such Performance Awards shall be deemed to have been attained and a pro rata portion (based on the ratio of (i) the 

  

 5 

 
number of full and partial months which have elapsed from the beginning of the Performance Period through the Change in Control to (ii) the number of months
originally contained in the Performance Period) of each such Performance Award shall become payable to the respective Participant, with the remainder of each such Performance Award being cancelled for no value. 
  
 Section 10. Rights of Employees. 
  

	(a)	Status as an eligible Employee shall not be construed as a commitment that any Award will be made under the Plan to such eligible Employee or to eligible Employees generally.

  

	(b)	Nothing contained in the Plan (or in any other documents related to this Plan or to any Award) shall confer upon any Employee or Participant any right to continue in the employ of
the Company or any of its subsidiaries or constitute any contract or limit in any way the right of the Company or any subsidiary to change such person’s compensation or other benefits or to terminate the employment of such person with or
without cause. 

  
 Section 11. Compliance with Applicable Legal
Requirements. 
  
 Awards shall be subject to the requirement
that if at any time the Committee shall determine, in its discretion, that the listing, registration or qualification of the Shares subject to the Awards upon any securities exchange or under any state or federal securities or other law or
regulation, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition to or in connection with the granting of the Awards or the issuance or purchase of Shares thereunder, no Awards may be granted or
exercised, in whole or in part, unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. The holders of such Awards will supply the Company
with such certificates, representations and information as the Company shall request and shall otherwise cooperate with the Company in obtaining such listing, registration, qualification, consent or approval. 
  
 Section 12. Amendment and Termination. 
  
 The Board may at any time amend, suspend or terminate the Plan. The
Committee may at any time alter or amend any or all Award Agreements under the Plan to the extent permitted by law. However, no such action by the Board or by the Committee shall impair the rights of Participants under outstanding Awards without the
consent of the Participants affected thereby. Further, the Board shall not amend the Plan without the approval of the Company’s shareholders to the extent such approval is required by law, agreement or the rules of any exchange upon which the
Stock shall be listed (or if the Stock shall be admitted to quotation on the National Association of Securities Dealers Automated Quotation (“NASDAQ”) System, the rules of NASDAQ). 
  
 Section 13. Unfunded Plan. 
  
 The Plan shall be unfunded. Neither the Company nor the Board shall be
required to segregate any assets that may at any time be represented by Awards made pursuant to the Plan. Neither the Company, the Committee, nor the Board shall be deemed to be a trustee of any amounts to be paid under the Plan. 
  
 Section 14. Limits of Liability. 
  

	(a)	Any liability of the Company to any Participant with respect to an Award shall be based solely upon contractual obligations created by the Plan and the Award Agreement.

  

	(b)	Neither the Company nor any member of the Board or of the Committee, nor any other person participating in any determination of any question under the Plan, or in the
interpretation, administration or application of the Plan, shall have any liability to any party for any action taken or not taken, in good faith under the Plan. 

  

 6 

 Section 15. Effective Date and Duration of the Plan. 
  
 The Plan shall become effective upon its adoption by the Board (the
“Effective Date”); provided, however, that the grant of any Award shall be subject to and contingent upon obtaining the approval of this Plan by the Company’s shareholders within twelve (12) months after the date the Plan is adopted
by the Board. Subject to obtaining such approval, the Committee shall have authority to grant Awards hereunder from the Effective Date until the tenth (10th) anniversary of the Effective Date, subject to the ability of the Board to terminate the
Plan (as provided in Section 12 hereof. 
  
 Section 16. 1987 Management Share Incentive Plan. 
  
 Outstanding grants of options, Restricted Stock and all other outstanding awards under the Company’s 1987 Management
Share Incentive Plan shall continue to be subject to, and administered in accordance with, the terms of that plan. 
  
 Section 18. Definitions. 
  
 For purposes of the Plan, the following terms, as used herein, shall have the respective meanings specified: 
  

	(a)	“Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act. 

  

	(b)	“Award” or “Awards” means an award granted pursuant to Section 4 hereof. 

  

	(c)	“Award Agreement” means an agreement described in Section 5 hereof entered into between the Company and a Participant, setting forth the terms, conditions and any
limitations applicable to the Award granted to the Participant. 

  

	(d)	“Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act. 

  

	(e)	“Beneficiary” means a person or persons designated by a Participant (if the terms of the relevant Award Agreement permit such a designation) to receive, in the event of
death, any unpaid portion of an Award held by the Participant. Any Participant so permitted by an Award Agreement may, subject to such limitations as may be prescribed by the Committee, designate one or more persons primarily or contingently as
beneficiaries in writing upon forms supplied by and delivered to the Company, and may revoke such designations in writing. If a Participant having a right to designate a beneficiary under an Award Agreement fails effectively to designate a
beneficiary, then the Award will be paid in the following order of priority: 

  
 (I) Surviving spouse; 
  
 (II)
Surviving children in equal shares; or 
  
 (III) To the estate of
the Participant. 
  

	(f)	“Board” means the Board of Directors of the Company as it may be comprised from time to time. 

  

	(g)	A “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs of this Section 18(g) shall have occurred:

  
 (I) any Person is or becomes the Beneficial
Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates) representing thirty percent (30%) or more of the
combined voting power of the Company’s then outstanding securities, excluding any Person who becomes such a Beneficial Owner in connection with a transaction described in clause (i) of paragraph (III) below; or 
  
 (II) the following individuals cease for any reason to constitute a majority
of the number of directors then serving: individuals who, on March 11, 1998, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest,
including but not limited to a consent solicitation, relating to the election of directors of the 

  

 7 

 
Company) whose appointment or election by the Board or nomination for election by the Company’s shareholders was approved or recommended by a vote of at
least two-thirds (2/3) of the directors then still in office who either were directors on March 11, 1998 or whose appointment, election or nomination for election was previously so approved or recommended; or 
  
 (III) there is consummated a merger or consolidation of the Company or any
direct or indirect subsidiary of the Company with any other corporation, other than (i) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior to such merger or consolidation continuing to
represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof), in combination with the ownership of any trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any subsidiary of the Company, at least fifty-one percent (51%) of the combined voting power of the securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or
consolidation, or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company
representing thirty percent (30%) or more of the combined voting power of the Company’s then outstanding securities; or 
  
 (IV) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company or there is consummated an agreement for the
sale or disposition by the Company of all or substantially all of the Company’s assets, other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity, at least fifty-one percent (51%) of
the combined voting power of the voting securities of which are owned by shareholders of the Company in substantially the same proportions as their ownership of the Company immediately prior to such sale. 
  
 Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the Stock of the Company immediately prior to such transaction or series of transactions continue to
have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of the Company immediately following such transaction or series of transactions. 
  

	(h)	“Code” means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute. References to specified provisions of the Code shall also include
any successor provisions. 

  

	(i)	“Committee” means a committee of the Board appointed to administer the Plan (which committee may also be the Compensation Committee of the Board). The Committee shall be
composed of two or more directors as appointed from time to time to serve by the Board. If for any reason a Committee shall not have been appointed by the Board, the Board shall serve as such Committee. 

  

	(j)	“Company” means Mine Safety Appliances Company, a Pennsylvania corporation, or any successor corporation (except that Company shall not mean any successor corporation
thereto in determining under Section 18(g) hereof whether or not any Change in Control of the Company has occurred). 

  

	(k)	“Disability” shall mean the inability, in the opinion of the Committee, of a Participant, because of an injury or sickness, to work at a reasonable occupation which is
available with the Company or at any gainful occupation to which the Participant is or may become fitted, except that in the case of Incentive Stock Options, Disability shall mean permanent and total disability as defined in Section 422(e)(3) of the
Code. 

  

	(1)	“Employee” means any individual who is an employee of the Company or any Participating Subsidiary. 

  

	(m)	“Exchange Act” means the Securities Exchange Act of 1934, as amended and in effect from time to time, or any successor statute. 

  

	(n)	“Fair Market Value” of a Share, unless otherwise provided in the applicable Award Agreement, means: 

  
 (I) If the Stock is admitted to trading on one or more national securities
exchanges, 
  

 8 

	 	(A)	the average of the reported highest and lowest sale prices per Share as reported on the reporting system selected by the Committee on the relevant date; or 

 

	 	(B)	in the absence of reported sales on that date, the average of the reported highest and lowest sales prices per Share on the last previous day for which there was a reported sale; or

  
 (II) If the Stock is not admitted to trading on
any national securities exchange, but is admitted to quotation on the NASDAQ System and has been designated as a NASDAQ National Market (“NNM”) security, 
  

	 	(A)	the average of the reported highest and lowest sale prices per Share as reported on NASDAQ on the relevant date; or 

  

	 	(B)	in the absence of reported sales on that date, the average of the reported highest and lowest sales prices per Share on the last previous day for which there was a reported sale; or

  
 (III) If the Stock is not admitted to trading
on any national securities exchange, but is admitted to quotation on NASDAQ as a NASDAQ SmallCap Market security (and has not been designated as a NNM security), the average of the highest bid and lowest asked prices per Share on the relevant date;
or 
  
 (IV) If the preceding clauses (I), (II) and (III) do not
apply, the Fair Market Value determined by the Committee, using such criteria as it shall determine, in good faith and in its sole discretion, to be appropriate for such valuation. 
  

	(o)	“Participant” means an Employee who has been designated by the Committee to receive an Award Pursuant to this Plan. 

  

	(p)	“Participating Subsidiary” means a subsidiary of the Company, of which the Company beneficially owns (whether at the date of adoption of this Plan or at a later date),
directly or indirectly, more than 50% of the aggregate voting power of all outstanding classes and series of stock. 

  

	(q)	“Performance Award” means an Award which is granted pursuant to Section 4.4 hereof and is contingent upon the performance of all or a portion of the Company and/or its
subsidiaries and/or which is contingent upon the individual performance of the Participant to whom it is granted. 

  

	(r)	“Performance Criteria” means one or more preestablished, objective measures of performance during a Performance Period by the Company, a subsidiary or subsidiaries, any
department or other portion thereof or the Participant individually, selected by the Committee in its discretion to determine whether a Performance Award has been earned in whole or in part. Performance Criteria may be based on earnings or earnings
per share; earnings before interest and taxes; return on equity, assets or investment; sales, gross profits or expenses; or stock price. Performance Criteria based on such performance measures may be based either on the level of performance of the
Company, subsidiary or portion thereof under such measure for the Performance Period and/or upon a comparison of such performance with the performance under such measure during a prior period or with the performance of a peer group of corporations
selected or defined by the Committee at the time of making a Performance Award. The Committee may in its discretion also determine to use other objective performance measures as Performance Criteria. 

  

	(s)	“Performance Period” means an accounting period of the Company or a subsidiary of not less than one year, as determined by the Committee in its discretion.

  

	(t)	 “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such
term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities
pursuant to an offering of such securities, (iv) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of Stock of the Company or (v) any individual or entity
[including the trustees (in such capacity) of any such entity which is a trust] which is directly or 

  

 9 

	 	 
indirectly, the Beneficial Owner of securities of the Company representing five percent (5%) or more of the combined voting power of the Company’s then
outstanding securities immediately before the Effective Date or any Affiliate of any such individual or entity, including, for purposes of this Section 18(t), any of the following: (A) any trust (including the trustees thereof in such capacity)
established by or for the benefit of any such individual; (B) any charitable foundation (whether a trust or a corporation, including the trustees or directors thereof in such capacity) established by any such individual; (C) any spouse of any such
individual; (D) the ancestors (and spouses) and lineal descendants (and spouses) of such individual and such spouse; (E) the brothers and sisters (whether by the whole or half blood or by adoption) of either such individual or such spouse; or (F)
the lineal descendants (and their spouses) of such brothers and sisters. 

  

	(u)	“Restricted Stock” means Shares which have certain restrictions attached to the ownership thereof, which may be issued under Section 4.3. 

  
 Amended March 10, 1999 Board of Directors Meeting 
  

	(v)	“Retirement” means retirement under any retirement plan of the Company or a Participating Subsidiary. 

  

	(w)	“Share” means a share of Stock. 

  

	(x)	“Stock” means the Common Stock, without par value, of the Company, or, in the event that the outstanding Common Stock is hereafter changed into, or exchanged for,
different stock or securities, such other stock or securities. 

  

	(y)	“Stock Appreciation Right” means a right, the value of which is determined relative to the appreciation in value of Shares, which may be issued under Section 4.2.

  

	(z)	“Stock Option” means a right to purchase Shares granted pursuant to Section 4.1 and includes Incentive Stock Options and Non-Qualified Stock Options as defined in Section
4.1 

  

 10

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