Document:

TRACEGUARD TECHNOLOGIES, INC.

                  2006 GLOBAL STOCK INCENTIVE COMPENSATION PLAN

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TraceGuard Technologies, Inc.

                                TABLE OF CONTENTS

1.  PURPOSE OF THE GLOBAL PLAN ...........................................3

2.  DEFINITIONS ..........................................................3

3.  ADMINISTRATION OF THE GLOBAL PLAN ....................................5

4.  DESIGNATION OF PARTICIPANTS ..........................................6

5.  SHARES RESERVED FOR THE GLOBAL PLAN ..................................6

6.  PURCHASE PRICE .......................................................7

7.  RESTRICTED STOCK .....................................................7

8.  RESTRICTED STOCK UNITS ...............................................8

9. RESTRICTIONS ON ASSIGNABILITY AND SALE OF AWARDS .....................10

10. ADJUSTMENTS .........................................................10

11. TERM AND EXERCISE OF AWARDS .........................................11

12.  PUCHASE FOR INVESTMENT .............................................12

13.  DIVIDENDS ..........................................................13

14.  EFFECTIVE DATE AND DURATION OF THE GLOBAL PLAN .....................13

15.  AMENDMENTS OR TERMINATION ..........................................13

16.  GOVERNMENT REGULATIONS .............................................13

17.  CONTINUANCE OF EMPLOYMENT/SERVICE ..................................14

18.  GOVERNING LAW AND JURISDICTION .....................................14

19.  TAX CONSEQUENCES ...................................................14

20.  NON-EXCLUSIVITY OF THE GLOBAL PLAN .................................14

21.  MULTIPLE AGREEMENTS ................................................15

22.  RULES PARTICULAR TO SPECIFIC COUNTRIES .............................15

23. ANNEX A - ISRAEL ....................................................16

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This  plan,  as  amended  from  time to time,  shall be known as the  TraceGuard
Technologies,  Inc. 2006 Global Stock Incentive  Compensation  Plan (the "Global
Plan" or the "Plan").

1.    PURPOSE OF THE GLOBAL PLAN

      The Global Plan has been established by TraceGuard Technologies, Inc. (the
      "Company")  to (i)  attract  and  retain  highly  professional  employees,
      consultants  and  independent  agents;  (ii) motivate  Holders (as defined
      below), by means of appropriate  incentives,  to achieve long-range goals;
      (iii) further align Holders'  interests with those of the Company's  other
      shareholders  through  compensation  that is based on the Company's common
      stock; and thereby promote the long-term financial interest of the Company
      and the Related Companies (as defined below).

      The Plan (together with its  appendices) is intended to enable the Company
      to issue Awards (as defined below) under varying tax regimes,  in order to
      comply with the statutory  requirements  of the tax regimes in any various
      jurisdictions.

2.    DEFINITIONS

      For  purposes  of  interpreting  the  Global  Plan and  related  documents
      (including  the  Award  Agreement  and  its  appendices),   the  following
      definitions  shall  apply,  provided  that  in the  event  that a term  is
      separately defined in an individual Award Agreement, such definition shall
      supersede the definition contained in this Section 2:

      2.1.  "Award" means an award of Restricted Stock or Restricted Stock Units
            under  the  Plan or any  right  with  respect  thereto,  purchasable
            hereunder, whether fully paid or not.

      2.2.  "Award  Agreement"  means the agreement  evidencing  the grant of an
            Award, including any amendments thereto.

      2.3.  "Board" means the Board of Directors of the Company.

      2.4.  "Cause" means (i) conviction of any felony involving moral turpitude
            or  affecting  the  Company or its  affiliates;  (ii) any refusal to
            carry out a reasonable  directive of the Company's  Chief  Executive
            Officer, Board or the Holder's direct supervisor, which involves the
            business of the Company or its  affiliates  and was capable of being
            lawfully  performed;  (iii)  embezzlement of funds of the Company or
            its affiliates;  (iv) any breach of the Holder's fiduciary duties or
            duties of care of the Company or its affiliates;  including  without
            limitation disclosure of confidential  information of the Company or
            its  affiliates;  and (v) any conduct  (other  than  conduct in good
            faith)   reasonably   determined  by  the  Board  to  be  materially
            detrimental to the Company or its affiliates.

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      2.5.  "Chairman" means the Chairman of the Committee.

      2.6.  "Code" means the Internal  Revenue Code of 1986, as now in effect or
            as hereafter amended.

      2.7.  "Committee" means a committee of the Board,  designated from time to
            time by the  resolution  of the Board,  consisting of such number of
            directors  as  required  under   applicable  law  and   regulations,
            including the Exchange Act.

      2.8.  "Company"   means   TraceGuard   Technologies,   Inc.,   a   company
            incorporated under the laws of the State of Nevada.

      2.9.  "Date of Grant" means the date determined by the Board or authorized
            Committee as set forth in the Award Agreement.

      2.10. "Employee"  means a person  who is  employed  by the  Company or any
            Related Company.

      2.11. "Exchange  Act" means the United States  Securities  Exchange Act of
            1934,  as  amended,  and  the  rules  and  regulations   promulgated
            thereunder.

      2.12. "Expiration  Date" means the date upon which an Award shall  expire,
            as set forth in Section 11.2 of the Global Plan.

      2.13. "Fair  Market  Value"  means as of any  date,  the  value of a Share
            determined as follows:

            2.13.1. If the Shares are listed on any  established  stock exchange
                  or a national market system,  including without limitation the
                  Tel Aviv Stock Exchange,  the NASDAQ National Market System or
                  the NASDAQ SmallCap Market or the OTCBB, the Fair Market Value
                  shall be the last  reported sale price for such Shares (or the
                  highest closing bid, if no sales were reported),  as quoted on
                  such exchange or system for the last market  trading day prior
                  to time of  determination,  as  reported  in The  Wall  Street
                  Journal, or such other source as the Board deems reliable;

            2.13.2. If the Shares are regularly quoted by one or more recognized
                  securities dealers,  but selling prices are not reported,  the
                  Fair Market  Value  shall be the mean  between the highest bid
                  and lowest  asked  prices  for the  Shares on the last  market
                  trading day prior to the day of determination; or

            2.13.3. In the absence of an established  market for the Shares, the
                  Fair Market Value thereof shall be determined in good faith by
                  the Board.

      2.14. "Holder" means an individual to whom an Award is made.

      2.15. "Purchase Price" means the price for each Award.

      2.16. "Related Company" means any company during any period in which it is
            a "parent  corporation"  (as that term is defined in Code ss.424(e))
            with respect to the Company or a "subsidiary  corporation"  (as that
            term is  defined in Code  ss.424(f))  with  respect  to the  Company
            and/or  with  respect to 102 Awards  shall  also  include  any other
            "employing company" as defined in Section 102 of the Ordinance.

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      2.17. "Restricted Stock" means Shares awarded under Section 7 of the Plan.

      2.18. "Restricted  Stock  Units"  means an Award  which may be settled for
            cash, Shares or other securities under Section_8 of the Plan.

      2.19. "Restriction  Period"  means  the  period  during  which  Shares  of
            Restricted  Stock or Restricted Stock Units awarded under Sections 7
            or 8 of the Plan are subject to forfeiture.

      2.20. "Service  Provider"  means a director,  consultant or adviser of the
            Company or any Related  Company,  or any other  person who is not an
            Employee.

      2.21. "Share" means a share of Common Stock,  US$0.001 par value, each, of
            the Company.

      2.22. "Successor  Company"  means any  entity  into  which the  Company is
            merged to or by which the Company is acquired.

      2.23. "Transaction" means (i) merger, acquisition or reorganization of the
            Company with one or more other  entities in which the Company is not
            the surviving entity, (ii) a sale of all or substantially all of the
            assets or shares of the Company to another entity.

      2.24. "Vested  Award"  means any  Award,  which has  already  been  vested
            according to the Vesting Dates.

      2.25. "Vesting  Dates"  means,  as  determined  by the Board or authorized
            Committee,  the date as of which the  Holder  shall be  entitled  to
            exercise  Awards or part of the Awards as set forth in Section 11 of
            the Global Plan.

3.    ADMINISTRATION OF THE GLOBAL PLAN

      3.1.  The Board shall have the power to administer the Global Plan. To the
            extent  permitted  under  applicable law, the Board may delegate its
            powers under the Global Plan, or any part thereof, to the Committee,
            in which case,  any  reference  to the Board in the Global Plan with
            respect to the rights so  delegated  shall be construed as reference
            to the Committee.  Notwithstanding  the  foregoing,  the Board shall
            automatically  have residual  authority (i) if no Committee shall be
            constituted,  (ii) with respect to rights not delegated by the Board
            to the Committee,  or (iii) if such Committee shall cease to operate
            for any reason whatsoever.

      3.2.  The Committee, if appointed,  shall select one of its members as its
            Chairman and shall hold its meetings at such times and places as the
            Chairman and the Board 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  and in
            accordance with the requirements of applicable law.

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      3.3.  The  Committee  shall have full power and  authority  subject to the
            approval of the Board to the extent  required  under  applicable law
            (and subject further to applicable laws): (i) to designate  Holders;
            (ii) to  determine  the terms and  provisions  of  respective  Award
            Agreements (which need not be identical) including,  but not limited
            to,  the  number  and kind of Shares to be  covered  by each  Award,
            provisions concerning the time or times when and the extent to which
            the  Awards  may  be  exercised  and  the  nature  and  duration  of
            restrictions  as to  transferability  or  restrictions  constituting
            substantial  risk of forfeiture;  (iii) to accelerate the right of a
            Holder to  exercise,  in whole or in part,  any  previously  granted
            Award;   (iv)  to  interpret  the   provisions   and  supervise  the
            administration  of the Global Plan; (v) to determine the Fair Market
            Value of the Shares;  (vi) to determine  the  Purchase  Price of the
            Award  (vii) to  designate  the type of  Awards to be  granted  to a
            Holder;  (viii) to determine  any other matter which is necessary or
            desirable  for, or incidental to, the  administration  of the Global
            Plan;  (ix) to  determine  whether,  to what  extent  and under what
            circumstances  an  Award  may  be  exchanged  for  Shares  or  other
            securities , or some combination  thereof; (x) to determine whether,
            to what  extent  and under what  circumstances  an Award is made and
            operates in tandem with other  Awards  made  hereunder;  and (xi) to
            establish terms and conditions of Awards as the Committee determines
            to be necessary or appropriate to conform to applicable requirements
            or practices of any specific jurisdiction.

      3.4.  Subject to the Company's  incorporation  documents  and  Committee's
            charter (if any), all  resolutions  and selections made by the Board
            or the Committee pursuant to the provisions of the Global Plan shall
            be  made  by  a  majority  of  its  members   subject  to  statutory
            limitations related to conflict of interest. Any resolutions reduced
            to writing  shall be executed in accordance  with the  provisions of
            the Company's incorporation  documents, as the same may be in effect
            from time to time and applicable law.

      3.5.  The   interpretation  and  construction  by  the  Board  and/or  the
            Committee (as  applicable) of any provision of the Global Plan or of
            any Award Agreement  thereunder shall be final and conclusive unless
            otherwise determined by the Board.

4.    DESIGNATION OF PARTICIPANTS

      The persons  eligible for  participation  in the Global Plan shall include
      Employees and/or Service Providers.  The grant of an Award hereunder shall
      neither  entitle the Holder to participate  nor disqualify him or her from
      participating in, any other grant of Awards pursuant to the Global Plan or
      any other option or share plan of the Company or any of its affiliates.

5.    SHARES RESERVED FOR THE GLOBAL PLAN

      5.1.  The  Company  has  reserved  a total  of  2,300,000  authorized  but
            unissued  Shares  for  the  purposes  of the  Global  Plan  and  the
            Company's other stock compensation  Plans, when applicable,  subject
            to  adjustment  as set forth in Section 10 below.  Any Shares issued
            pursuant  to an Award  under the  Global  Plan or any other  Company
            stock  compensation  plan shall  reduce  the total  number of shares
            reserved  and  available  for the grant of future  Awards  and other
            awards   under  the  Global  Plan  and  any  other   Company   stock
            compensation  plans.  Any Shares which remain unissued and which are
            not subject to outstanding  Awards at the  termination of the Global
            Plan shall cease to be reserved  for the purpose of the Global Plan,
            but until  termination  of the Global Plan the Company  shall at all
            times reserve a sufficient number of Shares to meet the requirements
            of the Global  Plan.  Should  any Award for any reason  expire or be
            canceled prior to its exercise or  relinquishment in full, the Share
            or Shares  subject to such Award may again be  subjected to an Award
            under the Global Plan or under future plans.

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      5.2.  Each Award granted  pursuant to the Global Plan,  shall be evidenced
            by a written Award Agreement  between the Company and the Holder, in
            such form as the Board shall from time to time  approve.  Each Award
            Agreement shall state, inter alia, the number of Shares to which the
            Award  relates,  the type of Award granted  thereunder,  the Vesting
            Dates, the Purchase Price per Share and the Expiration Date.

6.    PURCHASE PRICE

      6.1.  The  Purchase  Price of each  Share  subject  to an  Award  shall be
            determined by the Committee or the Board (as applicable) 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.   Each  Award   Agreement  will  contain  the  Purchase  Price
            determined for each Holder, provided, however, that the Board or the
            Committee  (as   applicable)   may   determine,   at  its  exclusive
            discretion,  that no  purchase  price is  payable  for any  specific
            Award.

      6.2.  The Purchase Price (if any) shall be payable in cash,  check or wire
            transfer. The Purchase Price shall be denominated in the currency of
            the primary  economic  environment of, at the Company's  discretion,
            either the Company or the Employee (that is the functional  currency
            of the Company or the currency in which the Employee is paid).

7.    RESTRICTED STOCK

      An Award of  Restricted  Stock is a grant by the  Company  of a  specified
      number of Shares to the Holder,  which  shares are  subject to  forfeiture
      upon the happening of specified events.  Such an Award shall be subject to
      the following terms and conditions:

      7.1.  Restricted Stock shall be evidenced by Restricted Stock  agreements.
            Such  agreements  shall conform to the  requirements of the Plan and
            may contain such other provisions, as the Board or the Committee (as
            applicable) shall deem advisable.

      7.2.  Upon determination of the number of Shares of Restricted Stock to be
            granted to the Holder,  the Board or the Committee  (as  applicable)
            shall direct that a certificate  or  certificates  representing  the
            number of Shares of Common  Stock be  registered  in the name of and
            issued to the Holder with the Holder  designated  as the  registered
            owner  either  in  book  entry  format  or  represented  by a  stock
            certificate   or   certificates.   The   certificate(s)   (if   any)
            representing  such shares  shall be  legended as to sale,  transfer,
            assignment,  pledge or other  encumbrances  during  the  Restriction
            Period and  deposited  by the  Holder,  together  with a stock power
            endorsed in blank, with the Company, to be held in escrow during the
            Restriction Period.

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      7.3.  Unless  otherwise  determined  by the  Board  or the  Committee  (as
            applicable) at the time of an Award,  during the Restriction  Period
            the Holder  shall have the right to  receive  dividends  from and to
            vote the Shares of Restricted Stock.

      7.4.  The Board or the Committee (as  applicable)  may condition the grant
            of an Award of Restricted Stock or the expiration of the Restriction
            Period  upon the  Holder's  achievement  of one or more  Performance
            Goal(s) specified in the Restricted Stock agreement. For the purpose
            of this Plan,  a  "Performance  Goal" shall mean a goal that must be
            met by the end of a period  specified by the Board or the  Committee
            (but that is  substantially  uncertain to be met before the grant of
            the Award). If the Holder fails to achieve the specified Performance
            Goal(s),  either the Committee shall not grant the Restricted  Stock
            to such Holder or the Holder shall  forfeit the Award of  Restricted
            Stock and the Common Stock shall be  forfeited  to the Company.  The
            Restriction  Period shall provide a three-year minimum period before
            a Restricted Stock award shall fully vest.

      7.5.  The  Restricted  Stock  agreement  shall specify the duration of the
            Restriction   Period  and  the  performance,   employment  or  other
            conditions  (including  the  termination  of a  Holder's  continuous
            service whether due to death, disability, Retirement or other cause)
            under which the  Restricted  Stock may be  forfeited to the Company.
            The Restriction  Period shall be determined at the discretion of the
            Board  or  the  Committee  (as  applicable).   At  the  end  of  the
            Restriction  Period  (unless the Holder  elects a longer  period for
            distribution,  if  permitted  by  the  Committee)  the  restrictions
            imposed  hereunder  shall lapse with respect to the number of shares
            of Restricted  Stock as determined by the Board or the Committee (as
            applicable),  and the  legend  shall be removed  and such  number of
            shares delivered to the Holder (or, where appropriate,  the Holder's
            legal  representative).  The Board or the Committee (as  applicable)
            may, in its sole  discretion,  modify or accelerate  the vesting and
            delivery  of shares of  Restricted  Stock in  certain  circumstances
            including, among others, a Holder's death, disability or a Change in
            Control.

8.    RESTRICTED STOCK UNITS

      An Award of  Restricted  Stock  Units is an Award which may be settled for
      Shares or other  securities or a combination of Shares or other securities
      as  established  by the Board or the  Committee (as  applicable).  Such an
      Award shall be subject to the following terms and conditions.

      8.1.  Restricted  Stock Units shall be evidenced by Restricted  Stock Unit
            agreements. Such agreements shall conform to the requirements of the
            Plan and may  contain  such  other  provisions,  as the Board or the
            Committee (as applicable) shall deem advisable.

      8.2.  Upon  determination  of the number of  Restricted  Stock Units to be
            awarded  to a Holder,  the Board or the  Committee  (as  applicable)
            shall  direct that the same be credited to the  Holder's  account on
            the  books  of the  Company  but  the  underlying  Shares  or  other
            securities  shall be delivered  only upon vesting of the  Restricted
            Stock Units as  provided  in Section  8.5 hereof.  If Shares will be
            issued upon the vesting of the  Restricted  Stock Units,  the Holder
            shall  have no rights as a  stockholder  with  respect to any shares
            underlying the Restricted Stock Units prior to issuance and delivery
            of the Shares upon vesting of the Restricted Stock Units.

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      8.3.  Amounts equal to any  dividends  declared with respect to the number
            of shares of Common Stock (if any) covered by an Award of Restricted
            Stock Units may or may not be paid to the Holder  currently,  or may
            or may not be deferred  and deemed to be  reinvested  in  additional
            Restricted Stock Units, or otherwise reinvested on such terms as are
            determined  at the time of the Award by the  Committee,  in its sole
            discretion, and specified in the Restricted Stock Unit agreement.

      8.4.  The Board or the Committee (as  applicable)  may condition the grant
            of an Award of  Restricted  Stock  Units  or the  expiration  of the
            Restriction  Period  upon the  Holder's  achievement  of one or more
            Performance   Goal(s)   specified  in  the  Restricted   Stock  Unit
            agreement.  If the Holder fails to achieve the specified Performance
            Goal(s), either the Board or the Committee (as applicable) shall not
            grant the Restricted  Stock Units to such Holder or the Holder shall
            forfeit the Award of Restricted Stock Units. The Restriction  Period
            shall provide a three-year  minimum period before a Restricted Stock
            Unit award shall fully vest.

      8.5.  The Restricted  Stock Unit  agreement  shall specify the duration of
            the  Restriction  Period and the  performance,  employment  or other
            conditions  (including  the  termination  of a  Holder's  Continuous
            Service whether due to death, disability, Retirement or other cause)
            under  which the  Restricted  Stock  Units may be  forfeited  to the
            Company.   The  Restriction   Period  shall  be  determined  at  the
            discretion of the Board or the Committee (as applicable). At the end
            of the Restriction  Period (unless the Holder elects a longer period
            for  distribution,  if permitted by the Committee) the  restrictions
            imposed  hereunder  shall  lapse  with  respect  to  the  number  of
            Restricted  Stock Units as  determined by the Board or the Committee
            (as applicable).

9.    RESTRICTIONS ON ASSIGNABILITY AND SALE OF AWARDS

      No Award shall be assignable, transferable, or given as collateral nor any
      right with  respect  thereto may be given to any third  party  whatsoever,
      other  than by  will or by the  laws of  descent  and  distribution  or as
      specifically  otherwise  allowed  under the  Global  Plan and  during  the
      lifetime of the Holder,  each and all of such Holder's  rights to purchase
      Shares hereunder shall be exercisable only by the Holder.  Any action made
      in contradiction to the aforementioned, shall be null and void.

10.   ADJUSTMENTS

      Upon the  occurrence of any of the following  described  events,  Holder's
      rights to  purchase  Shares  under the Global  Plan shall be  adjusted  as
      hereafter provided:

      10.1. In the event of Transaction, the unexercised Awards then outstanding
            under  the  Global  Plan  shall be  assumed  or  substituted  for an
            appropriate  number  of  shares  of each  class of  shares  or other
            securities  of the  Successor  Company (or a parent or subsidiary of
            the Successor  Company) as were  distributed to the  shareholders of
            the Company in connection  and with respect to the  Transaction.  In
            the  case  of  such  assumption   and/or   substitution  of  Awards,
            appropriate adjustments shall be made to the Purchase Price so as to
            reflect such action and all other terms and  conditions of the Award
            Agreements shall remain unchanged,  including but not limited to the
            vesting schedule,  all subject to the determination of the Committee
            or the Board (as applicable),  which determination shall be in their
            sole discretion  final and conclusive and unless stated otherwise in
            an Award  Agreement.  The  Company  shall  notify  the Holder of the
            Transaction in such form and method as it deems  applicable at least
            ten (10) days prior to the effective date of such Transaction.

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      10.2. Subject to all  applicable  law,  unless  stated  otherwise  under a
            specific  Award  Agreement,  if in  any  Transaction  the  Successor
            Company (or parent or subsidiary of the Successor  Company) does not
            agree to assume or  substitute  the  Awards,  the  Vesting  Dates of
            outstanding  Awards shall be  accelerated so that any unvested Award
            or any portion  thereof shall be  immediately  vested as of the date
            which  is  ten  (10)  days  prior  to  the  effective  date  of  the
            Transaction.

      10.3. For the purposes of Section 10.1 above, an Award shall be considered
            assumed or substitute if, following the Transaction, the Award shall
            confer the right, subject to such Award's original vesting schedule,
            to  purchase  or  receive,  for each  Share  underlying  such  Award
            immediately  prior to the Transaction,  the  consideration  (whether
            shares,  cash,  or other  securities  or  property)  received in the
            Transaction  by the  holders  of shares  for each  Share held on the
            effective date of the Transaction  (and if such holders were offered
            a choice of consideration,  the type of consideration  chosen by the
            holders of a majority of the outstanding Shares); provided, however,
            that if such consideration received in the Transaction is not solely
            shares  of  common  stock (or  their  equivalent)  of the  Successor
            Company or its parent or subsidiary,  the Board or the Committee (as
            applicable) may, with the consent of the Successor Company,  provide
            for the consideration to be received upon the exercise of the Awards
            to be solely  shares of common  stock (or their  equivalent)  of the
            Successor  Company or its parent or subsidiary  equal in Fair Market
            Value  to the per  Share  consideration  received  by  holders  of a
            majority of the outstanding shares in the Transaction;  and provided
            further  that the  Committee  or the  Board  may  determine,  in its
            discretion,  that  in lieu of such  assumption  or  substitution  of
            Awards  for  awards  of  the  Successor  Company  or its  parent  or
            subsidiary,  such Awards will be  substituted  for any other type of
            asset  or   property   including   cash  which  is  fair  under  the
            circumstances.

      10.4. If  the  Company  is  voluntarily   liquidated  or  dissolved  while
            unexercised  Awards remain  outstanding  under the Global Plan,  the
            Company shall  immediately  notify all unexercised  Award holders of
            such  liquidation,  and the Award  holders  shall then have ten (10)
            days to exercise any  unexercised  Vested Award held by them at that
            time,  in accordance  with the exercise  procedure set forth herein.
            Upon  the  expiration  of  such  ten-days   period,   all  remaining
            outstanding Awards will terminate immediately.

      10.5. The Holder  acknowledges that Holder's rights to sell the Shares may
            be subject to certain  limitations  (including a lock-up period), as
            will be requested by the Company or its underwriters, and the Holder
            unconditionally agrees and accepts any such limitations.

      10.6. If the outstanding  Awards shall at any time be changed or exchanged
            by declaration of a share dividend  (bonus  shares),  Share split or
            reverse   Share   split,   combination   or   exchange   of  shares,
            recapitalization,  or any other like event by or of the Company, and
            as often as the same shall occur, then the number, class and kind of
            the  Shares  subject  to the  Global  Plan or  subject to any Awards
            theretofore granted, and the Purchase Prices, shall be appropriately
            and equitably adjusted so as to maintain the proportionate number of
            Shares  without  changing the aggregate  Purchase  Price;  provided,
            however,  that  no  adjustment  shall  be  made  by  reason  of  the
            distribution of subscription rights (rights offering) on outstanding
            Shares.  Upon  happening  of any of the  foregoing,  the  class  and
            aggregate number of Shares issuable  pursuant to the Global Plan (as
            set forth in Section 5 hereof), in respect of which Options have not
            yet  been  exercised,   shall  be  appropriately  adjusted  (all  as
            determined by the Board whose determination shall be final).

<PAGE>
                                     - 11 -

11.   TERM AND EXERCISE OF AWARDS

      11.1. Awards shall be exercised by the Holder's by giving  written  notice
            of to the  Company or to any third party  designated  by the Company
            (the "Representative"), in such form and method as may be determined
            by the Company,  which  exercise  shall be effective upon receipt of
            such notice by the Company and/or the Representative and the payment
            of the Exercise Price for the number of Shares with respect to which
            the   award   is  being   exercised,   at  the   Company's   or  the
            Representative's  principal office or bank account. The notice shall
            specify  the  number of Shares  with  respect  to which the Award is
            being exercised.

      11.2. Subject to Sections 7.5 and 8.5 hereinabove,  Awards,  to the extent
            not previously  exercised,  shall terminate upon the earlier of: (i)
            the date set forth in the Award  Agreement;  (ii) the  expiration of
            ten (10) years from the Date of Grant;  or (iii) the  expiration  of
            any  extended  period in any of the events set forth in Section 11.5
            below.

      11.3. The Awards may be exercised by the Holder in whole at any time or in
            part from time to time,  to the extent  that the Awards  have become
            vested and  exercisable,  prior to the Expiration Date, and provided
            that, subject to the provisions of Section 11.5 below, the Holder is
            an  Employee or a Service  Provider  at all times  during the period
            beginning  with the  granting of the Awards and ending upon the date
            of exercise.

      11.4. Subject to the  provisions of Sections 7.5 and 8.5  hereinabove  and
            Section  11.5  below,  in the  event of a  termination  of  Holder's
            employment or service, all Award Shares granted to such Holder shall
            immediately  expire.  Unless otherwise approved by the Committee,  a
            notice of  termination  of employment or services shall be deemed to
            constitute termination of employment or services.

      11.5. Notwithstanding  anything  to the  contrary  hereinabove  and unless
            otherwise  determined in the Holder's Award Agreement,  an Award may
            be exercised after the date of termination of Holder's employment or
            service during an additional  period of time beyond the date of such
            termination, but only with respect to the number of Vested Awards at
            the time of such termination according to the Vesting Dates, if:

                  (I)   termination is without Cause,  in which event the Vested
                        Awards  still in force and  unexpired  may be  exercised
                        within a period  of three (3)  months  after the date of
                        such termination; or

                  (II)  termination  is the result of death or disability of the
                        Holder,  in which event the Vested Awards still in force
                        and unexpired may be exercised within a period of twelve
                        (12) months after such date of termination; or-

<PAGE>
                                     - 12 -

                  (III) prior to the  date of such  termination,  the  Committee
                        shall  authorize an extension of the term of all or part
                        of the Vested Awards beyond the date of such termination
                        for a period not to exceed the period  during  which the
                        Awards  by  their  terms  would   otherwise   have  been
                        exercisable.

                  (IV)  For avoidance of any doubt, if termination of employment
                        or  service is for Cause,  any  outstanding  unexercised
                        Award (vested or unvested) will  immediately  expire and
                        terminate,  and the  Holder  shall not have any right in
                        respect of such outstanding Awards.

      11.6. To  avoid  doubt,  Holders  shall  not  have  any of the  rights  or
            privileges of shareholders of the Company,  in respect of any Shares
            purchasable  upon the exercise of an Award, nor shall they be deemed
            to be a class of  shareholders  or  creditors of the Company for the
            purpose of all applicable  law, until  registration of the Holder as
            holder of such Shares in the Company's register of shareholders upon
            exercise  of the  Award in  accordance  with the  provisions  of the
            Global Plan.

      11.7. Any  form of  Award  Agreement  authorized  by the  Global  Plan may
            contain  such other  provisions,  not  inconsistent  with the Global
            Plan, as the Board may, from time to time, deem advisable.

12.   PURCHASE FOR INVESTMENT

      The Company's  obligation to issue or allocate  Shares upon exercise of an
      Award granted under the Global Plan is expressly conditioned upon: (a) the
      Company's  completion of any registration or other  qualifications of such
      Shares  under  all  applicable   laws,   rules  and   regulations  or  (b)
      representations   and   undertakings   by  the   Holder   (or  his   legal
      representative,  heir or legatee,  in the event of the Holder's  death) to
      assure  that  the  sale  of the  Shares  complies  with  any  registration
      exemption requirements which the Company in its sole discretion shall deem
      necessary or advisable. Such required representations and undertakings may
      include  representations  and  agreements  that such  Holder (or his legal
      representative,  heir,  or  legatee):  (a) is  purchasing  such Shares for
      investment  and not with any  present  intention  of selling or  otherwise
      disposing thereof; and (b) agrees to have placed upon the face and reverse
      of any certificates  evidencing such Shares a legend setting forth (i) any
      representations  and  undertakings  which  such  Holder  has  given to the
      Company or a reference  thereto and (ii) that, prior to effecting any sale
      or other  disposition  of any such Shares,  the Holder must furnish to the
      Company an opinion of counsel, satisfactory to the Company, that such sale
      or disposition will not violate the applicable laws, rules and regulations
      of the  United  States or any other  state  having  jurisdiction  over the
      Company and the Holder.

13.   DIVIDENDS

      With respect to all Shares (but excluding, for avoidance of any doubt, any
      unexercised  Awards)  allocated  or  issued  upon the  vesting  of  Awards
      purchased by the Holder and/or held by the Holder or by a trustee,  as the
      case may be,  the  Holder  shall  be  entitled  to  receive  dividends  in
      accordance with the quantity of such Shares,  subject to the provisions of
      the Company's  incorporation  documents,  as amended from time to time and
      subject to any applicable taxation on distribution of dividends.

<PAGE>
                                     - 13 -

14.   EFFECTIVE DATE AND DURATION OF THE GLOBAL PLAN

      The Global  Plan shall be  effective  as of the day it was  adopted by the
      Board and shall  terminate  at the end of ten (10)  years from such day of
      adoption.

15.   AMENDMENTS OR TERMINATION

      15.1. The Board may at any time, subject to the provisions of Section 15.2
            below and all applicable law, amend, alter, suspend or terminate the
            Global Plan,  provided,  however,  that (i) the Board may not extend
            the term of the  Global  Plan  specified  in  Section 14 and (ii) no
            amendment, alteration,  suspension or termination of the Global Plan
            shall  materially  impair the rights of any Holder,  unless mutually
            agreed otherwise by the Holder and the Company, which agreement must
            be in writing  and signed by the  Holder  and the  Company.  Earlier
            termination of the Global Plan prior to the  Termination  Date shall
            not affect the Board's  ability to exercise the powers granted to it
            hereunder with respect to Awards granted under the Global Plan prior
            to the date of such earlier termination.

      15.2. The Company shall obtain the approval of the Company's  shareholders
            for this  Global Plan and any  amendment  to this Global Plan and/or
            the Appendices thereto if and to the extent  shareholders'  approval
            is required under any applicable  law including  without  limitation
            the U.S. securities law or the securities laws of other jurisdiction
            applicable  to Awards  granted to Holders  under  this  Global  Plan
            and/or the  Appendices  thereto,  or if  shareholders'  approval  is
            required  by  any  authority  or by  any  governmental  agencies  or
            national securities  exchanges including without limitation the U.S.
            Securities and Exchange Commission.

16.   GOVERNMENT REGULATIONS

      The Global Plan, the granting and the issuance of Shares underlying Awards
      hereunder  and the  obligation  of the Company to sell and deliver  Shares
      under  such  Awards  shall  be  subject  to all  applicable  laws,  rules,
      regulations,  approvals  and consents  whether of the United  States,  the
      State of Israel,  or any other state having  jurisdiction over the Company
      or the Holder,  including the  registration of the Shares under the United
      States  Securities  Act 1933 or under the securities act of any applicable
      jurisdiction,  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.

17.   CONTINUANCE OF EMPLOYMENT/SERVICE

      Neither  the  Global  Plan  nor  any  Award  Agreement  shall  impose  any
      obligation on the Company or a Related  Company  (including  any affiliate
      thereof) to continue the employment or service of any Holder,  and nothing
      in the Global Plan or in any Award  granted  pursuant  hereto shall confer
      upon any Holder any right to continue his  employment  or service with the
      Company or a Related Company or an affiliate thereof or restrict the right
      of the Company or such affiliate  thereof to terminate such  employment or
      service at any time.

<PAGE>
                                     - 14 -

18.   GOVERNING LAW AND JURISDICTION

      The  Global  Plan shall be  governed  by and  construed  and  enforced  in
      accordance with the laws of the State of Nevada as applicable to contracts
      made and to be performed therein,  without giving effect to the principles
      of conflict of laws.  The  competent  courts of the State of Nevada or any
      other state of the United  States in which the company is  qualified to do
      business  shall have sole  jurisdiction  in any matters  pertaining to the
      Global Plan.

19.   TAX CONSEQUENCES

      Any tax  consequences  to any Holder arising from the grant or exercise of
      any Award,  from the payment for Shares covered  thereby or from any other
      event  or act  (of  the  Company  and/or  a  Related  Company  and/or  its
      affiliates,  or the Holder) hereunder shall be borne solely by the Holder.
      The Company and/or a Related Company and/or its affiliates  shall withhold
      taxes according to the  requirements  under  applicable  laws,  rules, and
      regulations,  including  withholding  taxes at  source.  Furthermore,  the
      Holder shall agree to  indemnify  the Company  and/or the Related  Company
      and/or its affiliates 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 Holder.

      The Company  shall not be required to release any Share  certificate  to a
      Holder until all required payments have been fully made.

20.   NON-EXCLUSIVITY OF THE GLOBAL PLAN

      The  adoption of the Global Plan 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 Awards otherwise then under
      the Global Plan, and such arrangements may be either applicable  generally
      or only in specific  cases.  For the  avoidance  of doubt,  prior grant of
      Awards to Holders of the Company under their  employment  agreements,  and
      not in the  framework of any previous  award plan,  shall not be deemed an
      approved incentive arrangement for the purpose of this section.

21.   MULTIPLE AGREEMENTS

      The terms of each Award may differ  from other  Awards  granted  under the
      Global  Plan at the same time,  or at any other  time.  The Board may also
      grant more than one Award to a given Holder  during the term of the Global
      Plan,  either in addition to, or in  substitution  for, one or more Awards
      previously granted to that Holder.

<PAGE>
                                     - 15 -

22.   RULES PARTICULAR TO SPECIFIC COUNTRIES

      Notwithstanding  anything herein to the contrary, the terms and conditions
      of the Global Plan may be adjusted with respect to a particular country by
      means of an  addendum  to the  Global  Plan in the  form of an annex  (the
      "Annex"), and to the extent that the terms and conditions set forth in the
      Annex  conflict with any  provisions of the Global Plan, the provisions of
      the Annex shall govern.  Terms and conditions set forth in the Annex shall
      apply  only to Awards  issued to  Holders  under the  jurisdiction  of the
      specific  country  that is  subject  of the  Annex  and shall not apply to
      Awards issued to any other Holder. The adoption of any such Annex shall be
      subject to the  approval of the Board and if required  the approval of the
      shareholders of the Company.

                                     * * * *

<PAGE>
                                     - 16 -

                          TRACEGUARD TECHNOLOGIES, INC.

                                ANNEX A - ISRAEL

               TO THE 2006 GLOBL STOCK INCENTIVE COMPENSATION PLAN

1.    GENERAL

      1.1.  This Annex shall apply only to participants who are residents of the
            state of Israel or those who are deemed to be residents of the state
            of Israel for the payment of tax. The provisions specified hereunder
            shall  form an  integral  part of the 2006  Global  Stock  Incentive
            Compensation Plan of TraceGuard Technologies Inc. (hereinafter:  the
            "Plan"),  which  applies  to the  issuance  of Shares of  TraceGuard
            Technologies,  Inc. (hereinafter:  the "Company").  According to the
            Plan,  Company's  Shares  may be  issued  to  Employees,  directors,
            consultants,  service provides and independent agents of the Company
            or its Affiliates.

      1.2.  This  Annex  is to be read as a  continuation  of the  Plan and only
            modifies  Awards granted to Israeli Holders so that they comply with
            the  requirements  set  by  the  Israeli  law  in  general,  and  in
            particular with the provisions of Section 102 (as specified herein),
            as may be amended or replaced  from time to time.  For the avoidance
            of doubt,  this  Annex does not add to or modify the Plan in respect
            of any other category of Holders.

      1.3.  The Plan and this Annex are complimentary to each other and shall be
            deemed as one.  In any case of  contradiction,  whether  explicit or
            implied,  between  the  provisions  of this Annex and the Plan,  the
            provisions set out in the Annex shall prevail.

      1.4.  Any capitalized  terms not specifically  defined in this Annex shall
            be  construed  according  to the  interpretation  given to it in the
            Plan.

2.    DEFINITIONS

      2.1.  "Affiliate"  means any  "employing  company"  within the  meaning of
            Section 102(a) of the Ordinance.

      2.2.  "Approved  102 Award"  means an Award  granted  pursuant  to Section
            102(b)  of the  Ordinance  and held in trust  by a  Trustee  for the
            benefit of the Holder.

      2.3.  "Capital  Gain Award (CGA)" means an Approved 102 Award  elected and
            designated  by the  Company to qualify  under the  capital  gain tax
            treatment in accordance with the provisions of Section  102(b)(2) of
            the Ordinance.

      2.4.  "Controlling  Shareholder"  shall have the meaning ascribed to it in
            Section 32(9) of the Ordinance.

      2.5.  "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 any Controlling Shareholder,  all as
            determined in Section 102 of the Ordinance.

<PAGE>
                                     - 17 -

      2.6.  "ITA" means the Israeli Tax Authority.

      2.7.  "Non-Employee"  means  a  consultant,   adviser,  service  provider,
            Controlling Shareholder or any other person who is not an Employee.

      2.8.  "Ordinary  Income Award  (OIA)" means an Approved 102 Award  elected
            and  designated by the Company to qualify under the ordinary  income
            tax treatment in accordance with the provisions of Section 102(b)(1)
            of the Ordinance.

      2.9.  "102 Award" means any Award granted to Employees pursuant to Section
            102 of the Ordinance  (as defined  below) and/or other rights issued
            with respect thereto, including, but not limited to, bonus shares.

      2.10. "3(i) Award" means an Award granted  pursuant to Section 3(i) of the
            Ordinance to any person who is a Non- Employee.

      2.11. "Ordinance"  means the Israeli  Income Tax  Ordinance  [New Version]
            1961 as now in effect or as hereafter amended.

      2.12. "Rules"  means the Israeli  Income Tax Rules (Tax Relief in Issuance
            of Shares to Employees) 2003.

      2.13. "Section   102"  means   section  102  of  the   Ordinance  and  any
            regulations,  Rules, orders or procedures  promulgated thereunder as
            now in effect or as hereafter amended.

      2.14. "Trustee" means any individual  appointed by the Company to serve as
            a  trustee  and  approved  by the ITA,  all in  accordance  with the
            provisions of Section  102(a) of the Ordinance and any  regulations,
            Rules, orders or procedures  promulgated thereunder as now in effect
            or as hereafter amended.

      2.15. "Unapproved  102 Award" means an Award  granted  pursuant to Section
            102(c) of the Ordinance and not held in trust by a Trustee.

3.    ISSUANCE OF AWARDS

      3.1.  The persons eligible for  participation in the Plan as Holders 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 Awards; and (ii) Non-Employees  and/or Controlling  Shareholders
            may only be granted 3(i) Awards.

      3.2.  The Company may designate  Awards  granted to Employees  pursuant to
            Section 102 as Unapproved 102 Awards or Approved 102 Awards.

      3.3.  The grant of  Approved  102  Awards  shall be made  under this Annex
            adopted by the Board,  and shall be conditioned upon the approval of
            this Annex by the ITA.

      3.4.  Approved 102 Awards may either be  classified as Capital Gain Awards
            ("CGAs") or Ordinary Income Awards ("OIAs").

      3.5.  No  Approved  102  Awards  may be  granted  under  this Annex to any
            eligible  Employee,  unless and until, the Company's election of the
            type of Approved 102 Awards as CGA or OIA granted to Employees  (the
            "Election"),  is  appropriately  filed with the ITA.  Such  Election
            shall  become  effective  beginning  the  first  date of grant of an
            Approved  102 Award  under this Annex and shall  remain in effect at
            least until the end of the year  following the year during which the
            Company first granted  Approved 102 Awards.  The Election shall also
            apply with respect to rights  issued to the  Employee in  connection
            with such Award,  including,  but not limited to, bonus  shares.  In
            addition,  the Election shall obligate the Company to grant only the
            type of Approved  102 Award it has  elected,  and shall apply to all
            Holders  who were  granted  Approved  102  Awards  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 Awards
            simultaneously.

<PAGE>
                                     - 18 -

      3.6.  All  Approved  102  Awards  must be held in trust by a  Trustee,  as
            described in Section 4 below.

      3.7.  For the avoidance of doubt, the designation of Unapproved 102 Awards
            and Approved 102 Awards shall be subject to the terms and conditions
            set forth in Section 102.

4.    TRUSTEE

      4.1.  Approved 102 Awards  which shall be granted  under this Annex and/or
            any Shares allocated or issued upon exercise of Options and/or other
            shares  received  subsequently  following any realization of rights,
            including  without  limitation  bonus shares,  shall be allocated or
            issued to the Trustee and held for the benefit of the Holders for at
            least  such  period  of  time  as  required  by  Section  102 or any
            regulations,  rules or orders or procedures  promulgated  thereunder
            (the "Holding  Period").  In the case the  requirements for Approved
            102 Awards are not met, then the Approved 102 Awards may be regarded
            as Unapproved 102 Awards,  all in accordance  with the provisions of
            Section 102.

      4.2.  Notwithstanding  anything to the  contrary,  the  Trustee  shall not
            release any Shares allocated or issued upon exercise of Approved 102
            Awards prior to the full  payment of the  Holder's  tax  liabilities
            arising  from  Approved  102 Awards which were granted to him and/or
            any Shares allocated or issued upon exercise of Options.

      4.3.  With respect to any Approved 102 Award, subject to the provisions of
            Section  102 and any rules or  regulation  or  orders or  procedures
            promulgated  thereunder,  a Holder  shall not sell or  release  from
            trust  (including  as set  forth in  Section  7.1  below)  any Share
            received upon the exercise of an Approved 102 Award 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 of the Ordinance and subject to
            the   limitations   set   forth   in   Section   7.1    hereinbelow.
            Notwithstanding the above, if any such sale or release occurs during
            the Holding  Period,  the provisions of Section 7.1  hereinbelow and
            the sanctions under Section 102 of the Ordinance and under any rules
            or regulation or orders or procedures  promulgated  thereunder shall
            apply to and shall be borne solely by such Holder.

      4.4.  Upon  receipt  of  Approved  102  Award,  the  Holder  will  sign an
            undertaking  to release  the Trustee  and/or the Company  and/or its
            Affiliates  from any  liability in respect of any action or decision
            duly taken and bona fide  executed in relation  with this Annex,  or
            any  Approved  102  Award  or  Share  of  any  kind  granted  to him
            thereunder.

<PAGE>
                                     - 19 -

5.    THE AWARDS

      The terms  and  conditions,  upon  which the  Awards  shall be issued  and
      exercised,  shall be as  specified  in the Award  Agreement to be executed
      pursuant to the Plan and to this Annex.  Each Award Agreement shall state,
      inter alia, the number of Shares to which the Award  relates,  the type of
      Award granted  thereunder  (whether a CGA, OIA,  Unapproved 102 Award or a
      3(i)  Award),  the vesting  provisions  (as  applicable)  and the exercise
      price.

6.    FAIR MARKET VALUE

      Without  derogating  from  Section  2.13 of the  Plan and  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 of the  CGAs,  the fair  market  value of the
      Shares 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.

7.    ASSIGNABILITY AND SALE OF AWARDS

      7.1.  Notwithstanding  any other  provision of the Plan, no Award shall be
            assignable,  transferable  or given as  collateral or any right with
            respect to them given to any third party whatsoever,  and during the
            lifetime  of the  Holder  each and all of such  Holder's  rights  to
            purchase Shares  hereunder shall be exercisable  only by the Holder.
            Any such  action  made  directly  or  indirectly,  for an  immediate
            validation or for a future one, shall be void.

      7.2.  As long as 102  Awards  are held by the  Trustee  on  behalf  of the
            Holder,  all rights of the Holder over the shares are personal,  can
            not be transferred,  assigned,  pledged or mortgaged,  other than by
            will or laws of descent and  distribution.  For the sake of clarity,
            in any event of an assignment of the 102 Awards  pursuant to will or
            laws of descent and  distribution,  the provisions of the Plan shall
            continue  to be in full force and effect in respect of the  assigned
            102 Awards.

8.    INTEGRATION OF SECTION 102 AND TAX ASSESSING OFFICER'S PERMIT

      8.1.  With  regards to Approved  102 Awards,  the  provisions  of the Plan
            and/or the Annex and/or the Award  Agreement shall be subject to the
            provisions  of Section 102 and the Tax Assessing  Officer's  permit,
            and the said  provisions and permit shall be deemed an integral part
            of the Plan and of the Annex and the Award Agreement.

      8.2.  Any  provision  of  Section  102  and/or  the said  permit  which is
            necessary  in  order  to  receive  and/or  to keep  any tax  benefit
            pursuant to Section  102,  which is not  expressly  specified in the
            Plan or the  Annex  or the  Award  Agreement,  shall  be  considered
            binding upon the Company and the Holders.

<PAGE>
                                     - 20 -

9.    DIVIDEND

      Subject to the  Company's  incorporation  documents,  with  respect to all
      Shares (but  excluding,  for avoidance of any doubt,  any unvested  and/or
      unexercised  Awards)  allocated  or issued upon the exercise of Awards and
      held by the Holder or by the Trustee as the case may be, the Holder  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 when  applicable  subject to the provisions of Section 102
      and the rules, regulations or orders promulgated thereunder

10.   TAX CONSEQUENCES

      10.1. Any tax consequences arising from the grant or exercise of any Award
            and/or the issuance of Shares,  from the payment for Shares  covered
            thereby or from any other event or act (of the  Company,  and/or its
            Affiliates,  and the  Trustee or the  Holder),  hereunder,  shall be
            borne  solely by the  Holder.  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, the Holder 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 Holder.

      10.2. The  Company  and/or,  when  applicable,  the  Trustee  shall not be
            required  to release  any share  certificate  and/or any other right
            underlying the 102 Awards (including bonus shares) to a Holder until
            all required payments have been fully made.

      10.3. With respect to  Unapproved  102 Award,  if the Holder  ceases to be
            employed by the Company or any Affiliate, the Holder shall extend to
            the Company  and/or its  Affiliate a security or  guarantee  for the
            payment of tax due at the time of sale of Shares,  all in accordance
            with the  provisions  of Section  102 and the rules,  regulation  or
            orders promulgated thereunder.

11.   GOVERNING LAW & JURISDICTION

      Notwithstanding  any provision to the contrary under the Plan,  this Annex
      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 this Annex.

                                     * * * *

DATE APPROVED BY BOARD OF DIRECTORS:      ___________________DELTATHREE,
      Inc.

    AMENDED
      AND RESTATED 1999 PERFORMANCE INCENTIVE PLAN

     

    1.
      Purpose

    

    The
      purposes of the Plan are to enable the Company and its Subsidiaries to attract,
      retain, motivate and reward the best qualified executive officers and key
      employees by providing them with the opportunity to earn competitive
      compensation directly linked to the Company's performance.

    

    2.
      Definitions

    

    Unless
      the context requires otherwise, the following words as used in the Plan shall
      have the meanings ascribed to each below, it being understood that masculine,
      feminine and neuter pronouns are used interchangeably and that each comprehends
      the others.

    

    "Board"
      means the Board of Directors of the Company.

    

    "Code"
      means the Internal Revenue Code of 1986, as amended.

    

    "Common
      Stock" shall mean the Class A common shares, par value $0.001 per share, of
      the
      Company.

    

    "Committee"
      means the Compensation Committee of the Board (or such other committee of the
      Board that the Board shall designate from time to time) consisting of two or
      more directors each of whom is a Disinterested Director.

    

    "Company"
      means deltathree, Inc., a Delaware Corporation.

    

    "Disinterested
      Director" shall mean both an “independent director” of the Company as set forth
      in Rule 4200(15) of the Nasdaq Marketplace Rules and a director who is a
      "Non-Employee Director" within the meaning of Rule 16b-3 under the Exchange
      Act.

    

    "Effective
      Date" shall mean the date of July 5, 2006.

    

    "Fair
      Market Value" shall mean, on any date, the closing price of a Share as reported
      on the National Association of Securities Dealers Automated Quotation/ Capital
      Market ("NASDAQ/Capital Market") (or on such other recognized market or
      quotation system on which the trading prices of the Share are traded or quoted
      at the relevant time).

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    "Participant"
      means (i) the Chief Executive Officer of the Company and (ii) each other key
      employee of the Company or a Subsidiary recommended by the Chief Executive
      Officer of the Company and approved by the Committee, or recommended by the
      Committee, to be a participant under the Plan.

    

    "Performance
      Period" means each calendar year .

    

    "Plan"
      means the deltathree, Inc. Amended and Restated 1999 Performance Incentive
      Plan, as set forth herein and as may be amended from time to time.

     

    "Share"
      shall mean a share of Common Stock.

    

    "Subsidiary"
      means any corporation of which the Company possesses directly or indirectly
      fifty percent (50%) or more of the total combined voting power of all classes
      of
      stock of such corporation and any other business organization, regardless of
      form, in which the Company possesses directly or indirectly fifty percent (50%)
      or more of the total combined equity interests in such
      organization.

    

    “Target”
      shall have the meaning ascribed to it in Section 4 hereof.

    

    3.
      Administration

    

    The
      Committee shall administer and interpret the Plan. The Committee shall establish
      the performance objectives for any calendar year in accordance with Section
      4
      and certify whether such performance objectives have been attained. Any
      determination made by the Committee under the Plan shall be final and
      conclusive; provided, however, that in the event there is a disagreement between
      the Committee and the Chief Executive Officer regarding the establishment of
      Targets for any calendar year, pursuant to Section 4(a), or regarding whether
      the Targets have been achieved, pursuant to Section 5, then the Committee shall
      present the plan or the conclusion of the committee to the entire Board for
      approval and the Board’s determination shall then be final and conclusive. The
      Committee may employ such legal counsel, consultants and agents (including
      counsel or agents who are employees of the Company or a Subsidiary) as it may
      deem desirable for the administration of the Plan and may rely upon any opinion
      received from any such counsel or consultant or agent and any computation
      received from such consultant or agent. All expenses incurred in the
      administration of the Plan, including, without limitation, for the engagement
      of
      any counsel, consultant or agent, shall be paid by the Company. No member or
      former member of the Board or the Committee shall be liable for any act,
      omission, interpretation, construction or determination made in connection
      with
      the Plan other than as a result of such individual's willful
      misconduct.

    

    4.
      Bonuses

    

    (a)
      Performance Objectives and Targets for Company’s Chief Executive Officer. During
      each Performance Period by February 28 or within thirty (30) days after the
      establishment of a Board-approved Company budget, whichever occurs later, the
      Committee shall establish the performance objectives and targets (each, a
“Target”) for performance objectives that must be satisfied in order for a
      Participant to receive a bonus for such Performance Period. For each Performance
      Period, the categories of the performance objectives with respect to the
      Company, a Subsidiary or a division or business unit of the Company or a
      Subsidiary, as determined by the Committee, will be as follows: (i) financial;
      (ii) strategic; and (iii) discretionary. In connection with establishing the
      performance objectives and Targets in each Performance Period, the Committee
      shall:

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    	(i)  	
            determine
              the relative weight of each of the three categories of performance
              objectives, expressed in percentage out of a total of
              100%;

          

    	(ii)  	
            determine
              the specific performance objectives/measures within each of the categories
              of performance objectives;

          

    	(iii)  	
            determine
              the Targets for each performance objective, expressed in a percentage
              out
              of a total of 100%; 

          

    	(iv)  	
            determine
              the range of the minimum and the maximum achievement figure/criteria
              for
              each Target; and 

          

    	(v)  	
            make
              any other determination as it deems necessary.

          

    

    The
      maximum amount payable in a specific category shall be determined based upon
      (A)
      the achievement of the Targets within such category of performance objectives
      and (B) the product of the total maximum amount payable for a Participant,
      pursuant to subsection c of this Section below, multiplied by the relative
      weight assigned to such category. In the event a Participant is not eligible
      for
      payment under one or two out of the three categories of performance objectives,
      this does not automatically preclude the Participant from being eligible to
      earn
      a payment under the other remaining category (or categories), subject to
      achieving the applicable performance objectives and Targets. 

    

    Performance
      equal to or below the minimum achievement figure/criteria for a Target shall
      result in no payment for such Target. Performance above the minimum achievement
      figure/criteria shall be pro-rated in proportion to the achievement above the
      minimum, up to the maximum achievement figure/criteria.

     

    (b)
      Performance Objectives and Targets for Participants other than the Chief
      Executive Officer. During each Performance Period by February 15 or within
      thirty (30) days after the establishment of a Board-approved Company budget,
      whichever occurs later, the Company’s Chief Executive Officer shall recommend to
      the Committee the performance objectives and Targets for executive officers
      and
      other senior management of the Company. The Committee shall approve, or provide
      any changes to, the performance objectives and Targets by February 28 or within
      forty five (45) days after the establishment of a Board-Approved Company budget,
      whichever occurs later, of each Performance Period. The performance objectives
      and the method of calculating the Targets shall be as provided in subsection
      (a)
      above. 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

      

    (c)
      Maximum Amount Payable.

    

    (i)
      In
      the case of a Participant other than the Company’s Chief Executive
      Officer:

    

    If
      the
      Committee certifies in writing that the performance objectives and Targets
      established for the relevant Performance Period under Section 4(a) and 4(b)
      have
      been satisfied, each Participant who is employed by the Company or one of its
      Subsidiaries on the last day of the Performance Period for which the bonus
      is
      payable shall be eligible to receive a bonus , calculated as a percentage of
      the
      Participant’s base salary, which shall be recommended by the Chief Executive
      Officer and approved by the Committee. The actual potential bonus for a
      Participant, other than the Chief Executive Officer, shall be determined for
      each Performance Period at the same time that the Chief Executive Officer
      recommends the performance objectives and Targets to the Committee. Factors
      that
      may be considered in determining a Participant’s potential bonus include, but
      are not limited to, seniority level and employment duration. 

    

    (ii)
      In
      the case of the Company’s Chief Executive Officer:

    

    If
      the
      Committee certifies in writing that the performance objectives and Targets
      established for the relevant Performance Period under Section 4(a) and 4(b)
      have
      been satisfied, the Chief Executive Officer who is employed by the Company
      on
      the last day of the Performance Period for which the bonus is payable shall
      be
      eligible to receive a maximum bonus hereunder of up to 45% of such person’s base
      salary. The actual potential bonus for the Chief Executive Officer shall be
      determined by the Committee for each Performance Period at the time it
      determines the performance objectives and the Targets. 

    

    If
      a
      Participant's employment terminates for any reason (including, without
      limitation, his death, disability or retirement under the terms of any
      retirement plan maintained by the Company or a Subsidiary) prior to the last
      day
      of the Performance Period for which the bonus is payable but after March 31
      of
      such Performance Period, the Committee shall determine whether a pro rated
      bonus
      shall be paid, provided that the maximum bonus for which such Participant shall
      be eligible shall be the amount applicable to such Participant under the
      preceding clause (i) or (ii) (as adjusted by clause (iii)) multiplied by a
      fraction, the numerator of which is the number of days that have elapsed during
      the Performance Period in which the termination occurs prior to and including
      the date of the Participant's termination of employment and the denominator
      of
      which is the total number of days in the Performance Period.

     

    5.
      Payment and Certification

    

    Except
      as
      otherwise provided hereunder, determination of payment of any bonus amount
      determined under Section 4 shall be made for the Company’s Chief Executive
      Officer after the Committee certifies that one or more of the applicable
      performance objectives have been attained, but in no event later than February
      28 of the following Performance Period or within 30 days after the annual
      financial results have been determined for the applicable Performance Period,
      whichever occurs later. Payment of any bonus amount shall be made within 30
      days
      after the completion of such determination.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    Except
      as
      otherwise provided hereunder, the Chief Executive Officer shall provide a
      recommendation to the Committee of any bonus amount determined under Section
      4
      for each Participant after the Committee certifies that one or more of the
      applicable performance objectives have been attained, but in no event later
      than
      February 15 of the following Performance Period or within 30 days after the
      annual financial results have been determined for the applicable Performance
      Period, whichever occurs later. The Committee shall approve or provide any
      changes to, the bonus amounts by February 28 or within 15 days after receipt
      of
      the recommendation if such recommendations were provided to the Committee after
      February 15. Payment of any bonus amount shall be made within 30 days after
      the
      completion of such determination.

     

    6.
      Form
      of Payment

    

    The
      bonus
      payable under the Plan is payable in cash. Subject to agreement between the
      Participant and the Committee, the Participant may elect to receive all or
      a
      portion of his or her bonus payable hereunder in shares of Common Stock (based
      on the Fair Market Value of such shares at the time of payment). Any such shares
      shall be provided to the Participant pursuant to the Company’s 2004 Stock
      Incentive Plan, as amended. 

     

    7.
      General Provisions

    

    (a)
      Effectiveness. The Plan shall become effective on the Effective Date.

    

    (b)
      Amendment and Termination. Notwithstanding Section 8(a), the Board or the
      Committee may at any time amend, suspend, discontinue or terminate the Plan;
      provided, however, that, unless otherwise determined by the Board, an amendment
      that requires stockholder approval in order to comply with any law, regulation
      or stock exchange requirement shall not be effective unless approved by the
      requisite vote of the stockholders.

    

    (c)
      Designation of Beneficiary. Each Participant may designate a beneficiary or
      beneficiaries (which beneficiary may be an entity other than a natural person)
      to receive any payments which may be made following the Participant's death.
      Such designation may be changed or canceled at any time without the consent
      of
      any such beneficiary. Any such designation, change or cancellation must be
      made
      in a form approved by the Committee and shall not be effective until received
      by
      the Committee. If no beneficiary has been named, or the designated beneficiary
      or beneficiaries shall have predeceased the Participant, the beneficiary shall
      be the Participant's spouse or, if no spouse

    survives
      the Participant, the Participant's estate. If a Participant designates more
      than
      one beneficiary, the rights of such beneficiaries shall be payable in equal
      shares, unless the Participant has designated otherwise.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    (d)
      No
      Right of Continued Employment. Nothing in this Plan shall be construed as
      conferring upon any Participant any right to continue in the employment of
      the
      Company or any of its Subsidiaries.

    

    (e)
      Section 409A of the Code. Notwithstanding anything in Section 5 (Payment and
      Certification) or otherwise in the Plan to the contrary, the payment of any
      bonus under the Plan shall be made to the Participant in accordance with the
      requirements under Section 409A of the Code for short-term deferrals.

    

    (f)
      No
      Limitation on Corporate Actions. Nothing contained in the Plan shall be
      construed to prevent the Company or any Subsidiary from taking any corporate
      action which is deemed by it to be appropriate or in its best interest, whether
      or not such action would have an adverse effect on any awards

    made
      under the Plan. No employee, beneficiary or other person shall have any claim
      against the Company or any Subsidiary as a result of any such
      action.

    

    (g)
      Nonalienation of Benefits. Except as expressly provided herein, no Participant
      or beneficiary shall have the power or right to transfer, anticipate, or
      otherwise encumber the Participant's interest under the Plan. The Company's
      obligations under this Plan are not assignable or transferable except to (i)
      a
      corporation which acquires all or substantially all of the Company's assets
      or
      (ii) any corporation into which the Company may be merged or consolidated.
      The
      provisions of the Plan shall inure to the benefit of each Participant and the
      Participant's beneficiaries, heirs, executors, administrators or successors
      in
      interest.

    

    (h)
      Withholding. Any amount payable to a Participant or a beneficiary under this
      Plan shall be subject to any applicable Federal, state and local income and
      employment taxes and any other amounts that the Company or a Subsidiary is
      required at law to deduct and withhold from such payment.

    

    (i)
      Exclusivity of Bonus. In the event that a Participant is entitled to a bonus,
      in
      any form, from the Company based on any arrangement or agreement with the
      Company other than this Plan, then such Participant shall receive his or her
      bonus under such agreement or arrangement and shall not be entitled to receive
      any bonus under this Plan.

    

    (j)
      Severability. If any provision of this Plan is held unenforceable, the remainder
      of the Plan shall continue in full force and effect without regard to such
      unenforceable provision and shall be applied as though the unenforceable
      provision were not contained in the Plan.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    (k)
      Governing Law. The Plan shall be construed in accordance with and governed
      by
      the laws of the State of New York.

    

    (l)
      Headings. Headings are inserted in this Plan for convenience of reference only
      and are to be ignored in a construction of the provisions of the
      Plan.

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