Registration No. 333-____

As filed with the Securities and Exchange Commission on September 28, 2006

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-8

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

OPTIBASE LTD.
(Exact Name of Registrant as Specified in its Charter)

Israel N/A
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)

2 Gav Yam Center
7 Shenkar Street
Herzliya 46120, Israel
+972-9-970-9288
(Address of Principal Executive Offices) (Zip Code)

2006 Israeli Incentive Compensation Plan
(Full Title of the Plan)

Optibase Inc.
1250 Space Park Way
Mountain View, CA 94043
Tel: 650-230-2400
(Name and address of Agent for Service)

Copies to:

Aya Yoffe, Adv.
Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co.
One Azrieli Center
Tel Aviv 67021, Israel

Approximate date of commencement of proposed sale to public: From time to time after the effective date of this Registration Statement.

CALCULATION OF REGISTRATION FEE

Title of each class of
securities to be registered 		Amount to be registered (1) Proposed Maximum Offering
Price per Share (2) 		Proposed Maximum Aggregate
Offering Price (2) 		Amount of
Registration Fee
Ordinary Shares, par value NIS 0.13 per share 138,300 $2.95 $407,985 $44

(1) This registration statement on Form S-8 (this “ Registration Statement ”) covers and aggregate of 138,300 ordinary shares, par value 0.13 NIS per share, of Optibase Ltd. (the “ Registrant ”) available for issuance under the 2006 Israeli Incentive Compensation Plan (“ 2006 Plan ”). Pursuant to Rule 416(a) under the Securities Act of 1933, as amended, this Registration Statement covers, in addition to the shares stated above, an indeterminate number of shares that may become issuable under the Plan as a result of anti-dilution adjustments.

(2) Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(c) and (h) under the Securities Act of 1933, as amended, and based upon the average of the high and low prices of the Registrant’s ordinary shares as reported on the Nasdaq Global Market on September 26, 2006.

PART I

INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS

Item 1. Plan Information.*

Item 2. Registrant Information and Employee Plan Annual Information.*

* Information required by Part I is omitted from this Registration Statement in accordance with Rule 428 under the Securities Act of 1933, as amended and the Introductory Note to Part I of Form S-8.

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Documents by Reference.

        The following documents are incorporated herein by reference as of their respective dates:

    (1)        Our Annual Report on Form 20-F, as filed with the Securities and Exchange Commission (the “Commission”) on April 12, 2006;

    (2)        Our Current Reports on Form 6-K as furnished to the Commission since December 31, 2005; and

    (3)        The description of our ordinary shares contained in the registration statement on Form 8-A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), dated April 1, 1999, and including any subsequent amendment or report filed for the purpose of updating such description.

        Additionally, all documents subsequently filed by us pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be a part hereof from the respective date of filing of such documents. Any statement contained in a document incorporated by reference herein is modified or superseded for all purposes to the extent that a statement contained in this Registration Statement or in any other subsequently filed document which is incorporated by reference modifies or replaces such statement.

Item 6. Indemnification of Directors and Officers.

        The Israeli Companies Law, or Companies Law, permits a company to insure its directors and officers, provide them with indemnification, either in advance or retroactively, and exempt its directors and officers from liability resulting from their breach of their duty of care towards the company, all in accordance with the terms and conditions specified under Israeli law. Our articles of association include clauses allowing us to provide our directors and officers with insurance, indemnification and to exempt them from liability subject to the terms and conditions set forth by the Companies Law, as described below.

        Subject to statutory limitations, our articles of association provide that we may insure the liability of our directors and offices to the fullest extent permitted by the Companies Law. Without derogating from the aforesaid, we may enter into a contract to insure the liability of our directors and officers for an obligation imposed on such director or officer in consequence of an act done in his capacity as a director or officer, in any of the following cases:

— a breach of the duty of care vis-a-vis us or vis-a-vis another person;

2

— a breach of the fiduciary duty vis-a-vis us, provided that the director or officer acted in good faith and had a reasonable basis to believe that the act would not harm us;

— a monetary obligation imposed on him in favor of another person;

— any other matter in respect of which it is permitted or will be permitted under applicable law to insure the liability of our director or officer.

        Our articles of association further provide that we may indemnify our directors and officers, to the fullest extent permitted by the Companies Law. Without derogating from the aforesaid, we may indemnify our directors and officers for liability or expense imposed on him in consequence of an action made by him in the capacity of his position as a director or officer, as follows:

— Any financial liability he incurs or imposed on him or her in favor of another person in accordance with a judgment, including a judgment given in a settlement or a judgment of an arbitrator, approved by a court.

— Reasonable litigation expenses, including legal fees, incurred by the director or officer or which he was ordered to pay by a court, within the framework of proceedings filed against him by or on behalf of us, or by a third party, or in a criminal proceeding in which he was acquitted, or in a criminal proceeding in which he was convicted of a felony which does not require a finding of criminal intent.

— Reasonable litigation expenses, including legal fees he incurs due to an investigation or proceeding conducted against him by an authority authorized to conduct such an investigation or proceeding, and which was ended without filing an indictment against him and without being subject to a financial obligation as a substitute for a criminal proceeding, or that was ended without filing an indictment against him, but with the imposition of a financial obligation, as a substitute for a criminal proceeding relating to an offence which does not require criminal intent, within the meaning of the relevant terms in the Companies Law.

— Any other obligation or expense in respect of which it is permitted or will be permitted under law to indemnify a director or officer.

        In addition, our articles of association provide that we may give an advance undertaking to indemnify a director and/or an officer in respect of all of the matters above, provided that with respect to the first matter above, the undertaking is restricted to events, which in the opinion of our board of directors, are anticipated in light of our actual activity at the time of granting the obligation to indemnify and is limited to a sum or measurement determined by our board of directors as reasonable under the circumstances. We may further indemnify an officer therein, save for the events subject to any applicable law. Our articles of association further provide that we may exempt a director or officer in advance and retroactively for all or any of his liability for damage in consequence of a breach of the duty of care vis-a-vis our company, to the fullest extent permitted by the Companies Law. Notwithstanding the foregoing, the Companies Law prohibits a company to exempt any of its directors and officers in advance from their liability towards such company for the breach of its duty of care in distribution, as defined in the Companies Law, for such company’s shareholders (including distribution of dividend and purchase of such company’s shares by the company or an entity held by it).

        The above provisions with regard to insurance, exemption and indemnity are not and shall not limit the Company in any way with regard to its entering into an insurance contract and/or with regard to the grant of indemnity and/or exemption in connection with a person who is not an officer of the Company, including employees, contractors or consultants of the Company, all subject to any applicable law.

        All of the above shall apply mutatis mutandis in respect of the grant of insurance, exemption and/or indemnification for persons serving on behalf of the Company as officers in companies controlled by the Company, or in which the Company has an interest.

        The Companies Law provides that companies may not give insurance, indemnification (including advance indemnification), or exempt their directors and/or officers from their liability in the following events:

— a breach of the fiduciary duty, except for a breach of the fiduciary duty vis-à-vis the company with respect to indemnification and insurance if the director or officer acted in good faith and had a reasonable basis to believe that the act would not harm the company;

— an intentional or reckless breach of the duty of care, except for if such breach was made in negligence;

— an act done with the intention of unduly deriving a personal profit; or

3

— a fine imposed on the directors or officer.

        We have a directors and officers liability insurance policy. Our shareholders approved indemnification of our directors and officers in connection with our public offerings. We have undertaken to indemnify our directors and officers to the fullest extent permitted by the Companies Law and our articles of association and entered into an indemnity letter with each of our directors and executive officers. The aggregate indemnification amount shall not exceed the higher of: (i) 25% of our shareholders’ equity, as set forth in our financial statements prior to such payment; or (ii) $7.5 million.

        Optibase, Inc. has also undertaken to indemnify its directors and officers to the maximum extent and in a manner permitted by the California Corporation Code and entered into an indemnity letter with each of its directors and officers, subject to similar limitations. The aggregate indemnification amount shall not exceed the higher of: (i) 25% of the shareholders’ equity of Optibase, Inc., as set forth in Optibase, Inc.‘s financial statements prior to such payment; or (ii) $7.5 million.

4

Item 8. Exhibits.

        The following exhibits are filed herewith:

Exhibit No. Description

3.1 Amended and Restated Memorandum of Association of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant's Form 6-K, dated February 15, 2002)

3.2 Articles of Association of the Registrant, as amended

4.1 2006 Israeli Incentive Compensation Plan

5.1 Opinion of Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co. with respect to the legality of the ordinary shares being registered.

23.1 Consent of Kost, Forer, Gabbay & Kasierer (a member of Ernst & Young Global)

23.2 Consent of Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co. (contained in the opinion filed as Exhibit 5.1 to this Registration Statement)

24.1 Powers of Attorney (included on the signature page)

5

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant, Optibase Ltd., certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Herzliya, State of Israel, on September 28, 2006.

OPTIBASE LTD.


By: /s/ Tom S. Wyler
——————————————
Tom S. Wyler
Chairman of the Board and President

POWER OF ATTORNEY

        KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears below constitutes and appoints Tom S. Wyler his true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign this Registration Statement and any and all future amendments (including post-effective amendments) to the Registration Statement, and to file the same with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or any of them, or their or his substitute, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:

Signature Title Date

/s/ Tom S. Wyler
——————————————
Tom S. Wyler 		Chairman of the Board of Directors and
President 		September 28, 2006

/s/ Danny Lustiger
——————————————
Danny Lustiger 		Chief Financial Officer (principal
financial and accounting officer) 		September 28, 2006


——————————————
Alex Hilman 		Director September 28, 2006


——————————————
Gil Weizer 		Director September 28, 2006

/s/ Chaim Lebensky
——————————————
Chaim Lebensky 		Director September 28, 2006

/s/ Dana Tamir
——————————————
Dana Tamir 		Director September 28, 2006

        Pursuant to the requirements of the Securities Act of 1933, as amended, the undersigned, the duly authorized representative in the United States of Optibase Ltd. has signed this Registration Statement on this 28th of September, 2006.

OPTIBASE INC.


By: /s/ Amir Philips
——————————————
Amir Philips, VP Finance


/s/ Adam Schadle
——————————————
Adam Schadle, President

EXHIBIT IBDEX

Exhibit No. Description

3.1 Amended and Restated Memorandum of Association of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant's Form 6-K, dated February 15, 2002)

3.2 Articles of Association of the Registrant, as amended

4.1 2006 Israeli Incentive Compensation Plan

5.1 Opinion of Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co. with respect to the legality of the ordinary shares being registered.

23.1 Consent of Kost, Forer, Gabbay & Kasierer (a member of Ernst & Young Global)

23.2 Consent of Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co. (contained in the opinion filed as Exhibit 5.1 to this Registration Statement)

24.1 Powers of Attorney (included on the signature page)

Exhibit 3.2

ARTICLES OF ASSOCIATION

OF

OPTIBASE LTD.

(“THE COMPANY”)

CONTENTS

Paragraph Subject Page
 
Chapter One    
 
1. Introduction  
2. Public Company  
3. The Company's Purpose  
4. The Company's Objects  
5. Limitation of Liability  
 
Chapter Two
 
6. The Share Capital  
7. The Issue of Shares and Other Securities and the repurchase of shares  
8. Calls for Payment  
9. The Company's Register of Shareholders and the Issue of Share Certificates  
10. Transfer of the Company's Shares  
 
11. Lien  
12. Alterations to the Share Capital  
 
Chapter Three
 
13. The General Meeting's Powers  
14. Annual and Special General Meetings and Class Meetings  
15. Convening of General Meetings  
16. The General Meeting's Agenda  
17. The Discussion at General Meetings  
18. Voting by Shareholders  
19. The Appointment of a Proxy  
20. Voting Instrument  

Chapter Four    
 
21. The Board of Directors' Powers  
22. The Appointment of Directors and Termination of Their Office  
23. The Directors' Acts  
24. Board of Directors' Committees  
25. The Board of Directors' Chairman  
 
Chapter Five
 
26. The General Manager  
27. Secretary, Internal Auditor and Other Officials in the Company  
28. Auditor  
 
Chapter Six
 
29. Permitted Distribution  
30. Dividend and Bonus Shares  
31. Purchase of the Company's Shares  
 
Chapter Seven
 
32. Insurance of Officers  
33. Indemnity of Officers  
34. Exemption of Officers  
35. Insurance, Exemption and Indemnity - General  
 
Chapter Eight
 
36. Merger  
37. Winding Up  
38. The Sale of the Company's Assets  
 
Chapter Nine
 
39. Notices  

2

CHAPTER ONE – GENERAL

1. Introduction

  1.1 In these articles, each of the following expressions shall bear the meanings set forth alongside them:

  “shareholder” – any person to whose credit a share is registered with a member of the Stock Exchange (as defined in the Companies Law) and such share is included among the shares registered in the shareholders register of the Company in the name of a registration Company, or a person registered as a shareholder in the Company’s register of shareholders;

“financial statements” – the financial statements which the Company must prepare pursuant to the law;

  “periodic report” – as defined in Chapter Two of the Securities (Periodic and Immediate Reports), Regulations 5730-1970 or any securities regulations replacing them;

  “law” – the provisions of any law prevailing in the State of Israel;

  “director” – as defined in section 1 of the Companies Law, including an alternate or attorney;

  “the Companies Law” – the Companies Law, 5759-1999;

  “the Securities Law” – the Securities Law, 5728-1968;

  “business day” – Sundays to Thursdays, other than religious and public holidays in the State of Israel;

  “writing” – print and any other form of printing words, including documents sent in writing by facsimile, cable, telex, e-mail, computer or through any other electronic media, which creates or enables the creation of a copy and/or printout of the document;

  “office” – the Company’s registered office;

  “securities” – shares, debentures, capital notes, securities convertible into shares and rights to any of the aforegoing, issued by the Company;

  “the Companies Ordinance” – the Companies Ordinance (New Version), 5743-1983;

3

  “ordinary majority” – a majority of more than half the votes of the shareholders entitled to vote and voting themselves, by proxy or through a voting instrument;

  “special majority” – a majority of more than three quarters of the votes of the shareholders entitled to vote and voting themselves, by proxy or through a voting instrument;

  “articles” – the Company’s articles as formulated herein or as altered, expressly or pursuant to the law;

  “the Companies Regulations” – regulations promulgated by virtue of the authority granted pursuant to the Companies Law;

  “Securities Regulations” – regulations promulgated by virtue of the authority granted pursuant to the Securities Law.

  “person”or “persons”- Including a corporation.

  “year”and “month”- a Gregorian month or year.

  1.2 The provisions of sections 3-10 of the Interpretation Law, 5741-1981 shall also apply, mutatis mutandis, to the interpretation of the articles, if there is no provision to the contrary or unless the context otherwise admits.

  Save as provided in this paragraph, every word and expression herein shall bear the meaning designated to them in the Companies Law, and if none – the meaning designated to them in the Companies Regulations, and if none – the meaning designated to them in the Securities Law, and if none – the meaning designated to them in the Securities Regulations, and if none – the meaning designated to them in any other law, unless the context otherwise admits.

  Where these articles refer to any legal provision and such provision is amended or cancelled, the said provision shall be deemed valid and as part of the articles, unless such is prohibited by the law.

  The headings in these articles are meant for the purpose of convenience only and shall not be used for the interpretation of these articles

  Provisions of the Companies Law which are dispositive shall apply to the Company, to the extent that it is not otherwise provided in these articles and to the extent that there is no contradiction between them and between the provisions of these articles.

4

  1.3 Amendment If a resolution to amend these articles is recommended by the Board of Directors, such recommended resolution’s adoption in a General Meeting requires a simple majority. In any other case a resolution adopted in a General Meeting approved by a special majority is required to approve any amendment of these articles.

2. Public Company

  The Company is a “public company” as defined in section 1 of the Companies Law.

3. The Company’s Purpose

  The Company’s purpose is according to its Amended and Restated Memorandum of Association. If the memorandum is silent with regard to the Company’s purpose, than it will act pursuant to business considerations to make profits; however, the Company may contribute a reasonable amount for an appropriate cause, even if the contribution is not within the framework of the said business considerations.

4. The Company’s Objects

  The Company shall engage in any Lawful business.

5. Limitation of Liability

  The liability of the Company’s shareholders is limited, each to payment of the full amount which he undertook to pay for the shares allotted to him at the time of the allotment.

5

CHAPTER TWO – THE COMPANY’S SHARE CAPITAL

6. The Share Capital

  6.1 The Company’s authorised share capital is NIS 2,500,004 divided into 19,230,800 ordinary shares of NIS 0.13 par value each (hereinafter referred to as “share”, “ordinary share”, “shares” or “ordinary shares”, as the case may be). The Company may alter the authorised share capital in accordance with the provisions of the Companies Law and of these articles.

  6.2 Each share vests a right to receive invitations, to participate in and vote at the general meetings. A shareholder shall have one vote for each share held by him.

  6.3 All the shares rank pari passu in relation to the amounts of capital paid or credited as paid on their nominal value, in connection with dividend, the distribution of bonus shares and any other distribution, return of the capital and participation in a distribution of the Company’s surplus assets on winding up.

  6.4 The provisions of these articles in respect of shares shall also apply to other securities issued by the Company, mutatis mutandis.

7. The Issue of Shares and Other Securities and the repurchase of shares

  7.1 The Company’s board of directors may issue shares and other securities of the Company, up to the limit of the Company’s authorised share capital. If the Company’s share capital includes a number of classes of shares and securities, shares and securities exceeding the limit of the authorised share capital of such class shall not be issued. In such regard, securities convertible or exercisable into shares shall be deemed to have been converted or exercised on the date of their issue.

  7.2 The Company’s board of directors may issue redeemable securities, with such rights and on such conditions as the board of directors prescribes.

  7.3 Subject to the provisions of the articles and the provisions of the Companies Law, the board of directors may allot shares to any person with restrictions and conditions, for their nominal value, with a discount or with a premium, as it deems fit.

  7.4 The Company’s board of directors may resolve to issue a series of debentures within the framework of its authority to borrow on the Company’s behalf, and within the limits of such authority. The aforegoing does not negate the authority of the general manager or someone authorised by him to borrow on the Company’s behalf, to issue debentures, promissory notes and bills of exchange, within the limits prescribed by the board of directors.

6

  7.5 The Company’s existing shareholders shall not have a right of pre-emption, preferred right or any other right to purchase the Company’s securities. The board of directors may, in its exclusive discretion, first offer the Company’s securities to the existing shareholders or some of them.

7.6 The Company may pay any person commission in consideration for the underwriting, marketing or distribution of the Company’s securities, conditionally or unconditionally, on such terms and conditions as the board of directors prescribes. Such payments may be made in cash or securities of the Company, or partly in one way and partly in another.

7.7 The Company may at any time and from time to time, subject to the Companies Law, purchase back or finance the purchase of any shares or other securities issued by the Company, in such manner and under such terms as the Board of Directors shall determine, whether from any one or more shareholders. Such purchase shall not be deemed as payment of dividends and no security holder will have the right to require the Company to purchase his securities or offer to purchase securities from any other security holders.

8. Calls for Payment

  8.1 If pursuant to the conditions of an allotment of shares there is no fixed date for the payment of any part of the price payable for them, the board of directors may from time to time make calls upon the shareholders in respect of the monies not yet paid in relation to the shares held by them (hereinafter referred to as “calls” or “call”, as the case may be).

  8.2 The call shall determine the date by which the amount specified therein must be paid, together with interest, linkage and the expenses incurred as a result of the non-payment, at the rates and in the amounts prescribed by the board of directors. Such date shall not be less than 14 days from the date of the call.

  The call shall also specify that in the event of non-payment by the date fixed as required, the shares in relation to which the call is being made are likely to be forfeited. If a shareholder does not comply with the call, any share in relation to which the said call has been made may be forfeited at any time thereafter, pursuant to the board of directors’ resolution. Share forfeitures shall include all the dividends on such shares which have not been paid prior to the forfeiture, even if declared.

  8.3 Any amount which pursuant to a share’s allotment conditions is payable at the time of the allotment or at a fixed time, on account of the amount of the share or for premium, shall be deemed in respect of the articles a call duly made and notified, and the payment date is the date fixed for payment. In the event of non-payment, all the paragraphs of the articles dealing with the payment of interest, linkage and expenses, the forfeiture of shares and the like and all the other paragraphs hereof relating to the matter shall apply as though the said amount had been duly called and notified.

7

  8.4 The board of directors may distinguish between the shareholders in relation to the amounts of the calls and/or their payment times.

  8.5 Joint holders of a share shall be jointly and severally liable for payment of the calls made on such share.

  8.6 Any payment on account of a share shall first be attributed on account of the nominal value and only thereafter on account of the premium in respect of any share.

  8.7 A call may be cancelled or postponed to another date, as resolved by the board of directors. The board of directors may waive all or any of the interest, linkage and expenses.

  8.8 The board of directors may accept from a shareholder willing to pay in advance payments on account of his shares in addition to amounts actually called, and the board of directors may pay such shareholder interest on the amounts paid in advance as aforesaid, or on such part thereof as exceeds the amount called on account of the shares, in relation to which the payment was made in advance, or come to any other arrangement with him which is such as to compensate him for the advance payment.

  8.9 A shareholder shall not be entitled to his rights as shareholder, including dividend, unless he has paid all the amounts detailed in the calls made on him, together with interest, linkage and expenses, if any, unless otherwise prescribed by the board of directors.

  8.10 The board of directors may sell, re-allot or otherwise transfer any share forfeited in such manner as it resolves, including without consideration, provided that the Company is paid the full nominal value in respect of such share.

  8.11 The board of directors may, at any time prior to selling or otherwise transferring the forfeited share, cancel the forfeiture on such conditions as it resolves.

  8.12 A shareholder whose shares have been forfeited shall, notwithstanding the forfeiture, be liable to pay the Company all the calls not paid in relation to such shares prior to the forfeiture, together with interest, linkage and expenses up to the date of the payment as though the shares had not been forfeited, and to comply with all the other claims and demands enforceable by the Company in relation to the shares up to the date of the forfeiture, without a deduction or discount for the value of the shares on the date of the forfeiture. His obligation shall only come to an end after the Company has received the full payment specified at the time of the shares’ issue.

8

  8.13 The board of directors may collect the calls not paid in respect of the shares forfeited or some of them, as it deems fit, but shall not be obliged to do so.

  8.14 Share forfeitures shall result, at the time of the forfeiture, in the cancellation of any right in the Company and any claim or demand vis-a-vis it in relation to the share, save for those rights and obligations which are excluded from this rule pursuant to these articles or which the law grants or imposes on the former shareholder.

9. The Company’s Register of Shareholders and the Issue of Share Certificates

  9.1 The Company shall, through its secretary, keep a register of shareholders and register of material shareholders.

  9.2 The board of directors may close the register of shareholders for an overall period of up to 30 days in any year.

  9.3 A shareholder is entitled, at his request, to receive from the Company, without payment, within two months of the allotment or registration of the transfer (unless the issue conditions specify another period of time) one certificate or a number of certificates, in accordance with the Company’s resolution, in respect of all the shares of a particular class registered in his name, which shall specify the number of shares and any other detail which in the board of directors’ opinion is important. In the case of a jointly held share, the Company shall not be liable to issue more than one certificate to all the joint shareholders, and the delivery of such a certificate to one of the joint shareholders shall be deemed delivery to all of them.

  9.4 Every certificate shall bear the Company’s seal or stamp or its printed name and shall be signed by one director and the Company’s secretary, or by two directors or by any other person appointed by the board of directors for such object.

9.5 If a share certificate is destroyed, spoiled, lost or damaged, the board of directors may order the cancellation thereof and the issue of a new certificate in place thereof, provided that the share certificate is delivered to the Company and destroyed by it, or that it is proved to the satisfaction of the board of directors that the certificate has been lost or destroyed and that the Company has received security to the satisfaction of the board of directors against any possible damage. A reasonable sum as may be determined by the board of directors from time to time shall be paid in respect of every certificate issued pursuant to this article.

  9.6 Where two or more persons are registered as joint holders of a share, each of them may confirm the receipt of a dividend or other payments in connection with such share and his confirmation shall bind all the joint shareholders.

9

  9.7 The Company shall not recognize any person as holding a share on trust, and shall not be bound or compelled to recognize any equitable, contingent, future or partial interest in any share, or any other interest in connection with a share, save for the absolute right of the registered holder in respect of any share, except in reliance upon a judicial decision or pursuant to the requirements of any law.

10. Transfer of the Company’s Shares

  10.1 The Company’s shares may be transferred. A share transfer shall not be registered unless a share transfer deed (hereinafter referred to as “share transfer deed”) is submitted to the Company. The share transfer deed shall be drawn up in the following manner or in a manner as similar thereto as possible or in another manner approved by the board of directors.

 

Transfer deed

  I ___________________, ID/Company No. __________, of ___________________ (hereinafter referred to as “the transferor”) transfer to ___________________, ID/Company No. __________, of ___________________ (hereinafter referred to as “the transferee”), in consideration for NIS __________, __________ ordinary shares of NIS __________ n.v. each, which are marked with the numbers __________ to __________ inclusive, of ___________________ Ltd. (hereinafter referred to as “the Company”), to be held by the transferee, administrators of his estate, guardians and successors and assigns on the same terms and conditions pursuant to which I held these shares at the time of signing this instrument, and I the transferee agree to accept the aforementioned shares on the terms and conditions mentioned above and subject to the Company’s articles, as shall be from time to time.

  As witness our hands on ___________________.

  The Transferor -
Name:
Signature: 		The Transferee -
Name:
Signature:

  Witness to Transferor's Signature -
Name:        , Adv.
License No.
Signature: 		Witness to Transferee's Signature -
Name:        , Adv.
License No.
Signature:

 

  10.2 A transfer of shares which are not fully paid, or of shares on which the Company has a lien, shall not be valid, unless approved by the board of directors which may, in its absolute discretion and without giving any grounds therefor, refuse to register such a transfer.

10

  The board of directors may refuse a transfer of shares as aforesaid and may make such a transfer conditional upon the transferee undertaking, to the extent and in the manner prescribed by the board of directors, to perform the transferor’s obligations in respect of the shares or the obligations in respect of which the Company has a lien on the shares.

  10.3 The transfer of part of a share shall not be valid.

  10.4 The transferor shall continue to be considered the holder of the shares being transferred until the transferee’s name is entered in the Company’s register of shareholders.

  10.5 The share transfer deed shall be submitted to the office for registration together with the certificates in which the shares to be transferred are registered (if issued) and any other proof which the Company requires regarding the transferor’s proprietary right in the shares or his right to transfer them. The share transfer deeds shall be kept by the Company. The Company shall not be bound to keep share transfer deeds and share certificates which have been cancelled.

  10.6 A joint shareholder wishing to transfer his right in a share, who is not in possession of the share certificate, shall not be liable to attach the share certificate to the share transfer deeds, provided that the share transfer deeds state that the transferor is not in possession of the share certificate relating to the share his right in which is being transferred and that the share being transferred is jointly held, together with details of the other joint shareholders.

  10.7 The Company may demand the payment of a fee for registering the transfer in such amount as prescribed by the board of directors from time to time.

  10.8 Upon the death of a shareholder of the Company, the Company shall recognise his guardians, administrators of the estate or executors of the will, or in the absence of any of the aforegoing the shareholder’s legal heirs, as the only persons having a right to his shares, after entitlement thereto is proved as prescribed by the board of directors.

  10.9 Where the deceased shareholder held shares jointly with others, the Company shall recognise the surviving joint shareholders as holders of the said shares, unless all the joint shareholders have notified the Company in writing prior to the death of one of them of their wish that the provisions of this article shall not apply; however, such shall not exempt the estate of a joint shareholder from any obligation by which the joint shareholders would have been bound were it not for his death.

11

  10.10 A person acquiring a right to shares in consequence of his being a guardian, administrator of the estate, executor of the will, heir, receiver, liquidator or trustee on bankruptcy of a shareholder or pursuant to the provisions of any other law may, on furnishing proof of his right, as required by the board of directors, be registered as the holder of the shares or transfer them to another person, subject to the provisions of the articles in relation to transfer.

  10.11 A person acquiring a right to a share as a result of their transmission shall be entitled to dividend and the other rights in respect of the share and may accept and give receipts for dividend or other payments payable in connection with the share, but shall not be entitled to receive notices of the Company’s general meetings and to participate thereinin or vote thereat in connection with such share or exercise any right vested by the share, save for the aforegoing, until after he has been entered in the register of shareholders.

11. Lien

  11.1 The Company shall have a first and paramount lien on all the shares not paid in full which are registered in the name of any shareholder, and over the proceeds from the sale thereof, in relation to monies (whether presently payable or not) called or payable at a fixed time in respect of such shares.

  The Company shall also have a first and paramount lien over all the shares (other than fully paid shares) registered in the name of any shareholder to secure monies due from him or from his property, whether such debts are due from him alone or together with others.

  The said lien shall also apply to dividends declared from time to time on such shares.

  11.2 In order to realize the lien, the board of directors may sell the shares to which the lien applies, or any of them, in such manner as it deems fit. No sale as aforesaid shall be effected until after the date specified for payment and after written notice has been given to the shareholder of the Company’s intention to sell the shares, and the amounts are not paid within 14 days of such notice.

  11.3 The net proceeds from any such sale, after payment of the sale expenses, shall be applied towards the discharge of the debts or obligations of such shareholder and the balance (if any) shall be paid to him.

  11.4 If shares are sold in order to realize a lien through prima facie use of the powers given above, the board of directors may enter these shares in the register of shareholders in the purchaser’s name, and the purchaser shall not be liable to check the legality of the acts or the application of the purchase money. After the said shares are registered in the purchaser’s name in the register of shareholders, no person shall be entitled to appeal the validity of the sale.

12

12. Alterations to the Share Capital

  The general meeting may at any time resolve by an ordinary majority to do any of the following acts.

  12.1 Increasing the authorised share capital

  To increase the Company’s authorised share capital, whether or not all the shares registered at such time have been issued. The increased capital shall be divided into shares with ordinary, preferred, deferred or other special rights (subject to the special rights attached to an existing class of shares) or shall be subject to such conditions and restrictions in relation to dividend, return of capital, voting or other conditions as directed by the general meeting in its resolution to increase the authorised capital.

  12.2 Classes of shares

  To divide the share capital into different classes of shares and to determine and alter the rights attached to each class of shares, on the following conditions –

  (a) so long as the shares’ issue conditions do not otherwise provide, the rights attached to any class of shares may be altered after an ordinary majority resolution is passed by general meetings of the holders of each class of shares separately or after obtaining the written consent of the holders of all the classes of shares;

  (b) the rights vested in the holders of shares of a particular class shall not be deemed to have been altered by the creation or issue of other shares with identical rights or alteration of the rights attached to existing shares, unless the issue conditions of such shares otherwise provide.

  12.3 Consolidation of the share capital

  To consolidate and divide any or all of its share capital into shares of a nominal value greater than that specified in the articles. In the event that there are shareholders who are left with fractions of shares as a result of the consolidation, the board of directors may, if it receives the approval of the general meeting in the resolution on the consolidation of the capital as aforesaid:

  (a) sell all the fractions and for such object appoint a trustee in whose name the share certificates containing the fractions shall be issued, who shall sell them, and the consideration received less commissions and expenses shall be distributed amongst the entitlees. The board of directors may resolve that shareholders entitled to a consideration that is less than the amount prescribed by it shall not receive any consideration from a sale of the fractions as aforesaid, and their share of the consideration shall be distributed amongst the shareholders entitled to a consideration exceeding the amount prescribed, pro rata to the consideration to which they are entitled;

13

  (b) to allot to all the shareholders left with fractions of shares as a result of the consolidation and division fully paid shares of the class of shares which existed prior to the consolidation in such number the consolidation of which with the fraction would suffice for one whole consolidated share, and an allotment as aforesaid shall be deemed valid just before the consolidation;

  (c) determine that shareholders shall not be entitled to receive a consolidated share in respect of a fraction of a consolidated share deriving from the consolidation of half or less of the number of shares the consolidation of which creates one consolidated share, and shall be entitled to receive a consolidated share in respect of a fraction of a consolidated share deriving from the consolidation of more than half the number of shares the consolidation of which created one consolidated share.

  In the event that an act pursuant to sub-paragraphs (b) or (c) above obliges the issue of additional shares, the payment thereof shall be effected in the manner in which bonus shares may be paid. Consolidation and division as aforesaid shall not be deemed alteration of the rights attached to the shares the subject of the consolidation and division.

  12.4 Cancellation of unallotted share capital

  To cancel authorised share capital which has not yet been allotted, provided that the Company has not undertaken to allot such shares.

  12.5 Sub-division of the share capital

  To sub-divide the Company’s share capital or any part thereof into shares of a nominal value smaller than that specified in the articles by a sub-division of all or any of the Company’s shares at such time.

14

CHAPTER THREE – GENERAL MEETINGS

13. The General Meeting’s Powers

  13.1 Matters within the general meeting’s authority

  The Company’s resolutions on the following matters shall be passed by the general meeting:

  (a) alterations to the articles.

  (b) the appointment or renewal of the appointment of the auditor, the termination of his office or the non-renewal thereof and the determination of his remuneration in accordance with the provisions of articles 14.1 (b) and 28 below;

  (c) the appointment of directors, including external directors, and the termination of their offices in accordance with article 22.3 below;

  (d) the approval of acts and transactions requiring the general meeting’s approval in accordance with the provisions of sections 255 and 268 to 275 of the Companies Law;

  (e) alterations to the Company’s share capital, in accordance with the provisions of article 12 above;

  (f) a merger as provided in section 320(a) of the Companies Law;

  (g) any resolution which pursuant to the law or in accordance with these articles requires to be adopted by resolution of a general meeting;

  13.2 The general meeting's authority to transfer powers between the organs

  The general meeting may, by a special majority, assume powers given to another organ, and it may transfer powers given to the general manager to the authority of the board of directors.

  The assumption and/or transfer of powers as aforesaid shall be for a particular matter or for a particular period of time, all as provided in the meeting’s resolution.

15

14. Annual and Special General Meetings and Class Meetings

  14.1 Annual meetings

  The annual general meeting shall be held every year by no later than the end of 15 months from the last annual general meeting, at such time and place as may be determined by the Board. These general meetings shall be called “annual meetings”.

  (a) The annual meeting shall be convened in order to pass resolutions on the following matters:

  (1) the appointment of directors and the termination of their office in accordance with article 22 below;

  (2) the appointment of the auditor or the renewal of his office and the board of directors’ authorisation to determine of his remuneration, subject to the provisions of article 28.3 below.

  (b) The annual meeting shall be convened in order to:

  (1) discuss the financial statements and the board of directors’ report submitted by the Company pursuant to the Securities Regulations as at 31st December of the calendar year preceding the year in which the general meeting is being held;

  (2) receive the board of directors’ report on the auditor’s remuneration, as provided in article 28.3 below.

  (c) In addition, the annual meeting shall include a discussion and/or resolution on any other matter placed on the agenda.

  14.2 Special meetings

  General meetings of the Company which are not convened pursuant to article 14.1 above shall be called “special meetings”.

  A special meeting shall only discuss and resolve on all the matters not discussed at the annual meeting which are detailed on the agenda of the special meeting.

  14.3 Class meetings

  The provisions of these articles relating to general meetings shall apply, mutatis mutandis, to class meetings of the Company.

16

15. Convening of General Meetings

  15.1 Convening the annual meeting

  The board of directors shall convene annual meetings in accordance with the provisions of article 14.1 above.

  15.2 Convening a special meeting

  The board of directors shall convene a special meeting pursuant to its resolution; however, it shall be obliged to convene such a meeting if requisitioned by one of the following:

  (a) two directors or one quarter of the directors holding office, whichever is the lower;

  (b) one or more shareholders holding at least 5% of the voting rights in the Company.

  If the board of directors does not convene a general meeting as aforesaid, the person requisitioning the meeting, and where shareholders are involved – such part of them as holds at least one half their voting rights in the Company, may convene the meeting themselves, provided that it shall not be held more than three months after the date the requisition was made, and the meeting shall be convened, insofar as possible, in the same manner as meetings are convened by the board of directors.

  Where a general meeting is convened as aforesaid, the Company shall cover the reasonable expenses incurred by the person requisitioning it.

  15.3 The time for calling a special meeting pursuant to a requisition

  Where the board of directors is requisitioned to call a special meeting, as provided in paragraph 15.2 above, it shall do so within 21 days of the requisition being submitted, for a date that shall not be later than 35 days from the date on which the notice of the special meeting is published.

  15.4 Notice of a general meeting

  15.4.1 Unless a shorter period is permitted by law, notice of a general meeting shall be sent to each registered shareholders and entitled to attend and vote at such meeting notice as aforesaid, at least 21 days prior to the meeting.

  15.4.2 The notice of the general meeting shall specify the type of meeting, the place and time at which the meeting shall be convened, its agenda, a summary of the proposed resolutions, the majority required to pass the resolutions and the date determining the shareholders’ entitlement to participate in and vote at the general meeting according to paragraph 17.1 below.

17

16. The General Meeting’s Agenda

  16.1 The general meeting’s agenda shall be prescribed by the board of directors and shall also include matters in respect of which a special meeting is required as provided in article 14.2 above, and matters obliged in accordance with the provisions of article 16.2 below.

  16.2 One or more shareholders holding at least 1% of the Company’s share capital may ask the board of directors to include a matter on the agenda of a general meeting to be held in the future. The board of directors shall include such a matter on the agenda provided that in its discretion such matter is suitable for discussion at a general meeting of the Company.

  16.3 A request as aforesaid in Article 16.2 above shall be lodged with the Company at least seven days prior to the giving of notice of the convening of the general meeting, and there shall be attached thereto a draft of the resolution proposed by the shareholder.

  16.3 The general meeting may only pass resolutions on the matters on its agenda.

  16.4 So long as not otherwise obliged by the law, the general meeting may pass or defeat a proposed resolution that was on the general meeting’s agenda the text or a summary description of the main points of which was published by the Company, including with slight changes; however, it may not pass a resolution materially different from the proposed resolution.

17. The Discussion at General Meetings

  17.1 Entitlement to participate in a vote

  Subject to the provisions of section 182(c) of the Companies Law, the shareholders who are entitled to participate in and vote at a general meeting shall be the shareholders on the date prescribed in the resolution to call the general meeting, provided that such date is not more than forty (40) days nor less than four (4) days prior to the date of the general meeting (or any longer or shorter period permitted by law, including regulations promulgated pursuant to the Companies Law).

18

  17.2 Quorum

  No discussion may be commenced at a general meeting unless a quorum is present at the time of a discussion. Two shareholders present in person or by proxy, or who have sent the Company a voting instrument indicating the way in which they are voting, and holding or representing at least thirty three and one third percent of the voting rights in the Company, shall constitute a quorum.

  A shareholder or his proxy, who is also acting as the proxy of other shareholders, shall be considered two or more shareholders, in accordance with the number of shareholders represented by him.

  17.3 The general meeting's adjournment in the absence of a quorum

  If no quorum is present within half an hour of the time fixed for the meeting, the meeting shall stand adjourned for seven days, to the same day of the week at the same time and place, without further notice being given thereof, or to such other date, time and place as prescribed by the board of directors in notice to the shareholders, and the adjourned meeting shall discuss those matters for which the first meeting was called. If no quorum is present at the adjourned meeting, two shareholders, at least, present in person or by proxy, shall constitute a quorum, subject to the provisions of section 79(b) of the Companies Law.

  17.4 The general meeting’s chairman

  The board of directors’ chairman (if appointed) shall chair the general meeting. In the absence of a chairman, or if he does not appear at the meeting within 15 minutes of the time fixed therefor, those shareholders present at the meeting shall elect one of the Company’s directors as chairman, or if no director is present, they shall elect one of the shareholders present to chair the meeting.

  The meeting’s chairman shall not have an additional or casting vote (without derogating, however, from the rights of such meeting’s chairman to vote as a shareholder or proxy of a shareholder if, in fact, he is also a shareholder or such proxy).

  17.5 Adjourned meeting

  With the agreement of a meeting at which a quorum is present, the chairman may, and on the demand of the meeting he must, adjourn the meeting from time to time and from place to place, as the meeting resolves (hereinafter in this article referred to as “adjourned meeting”). If a meeting is adjourned for 21 days or more, notice of the adjourned meeting shall be given in the same way in which notice is given of a first meeting. Save for the aforegoing, a shareholder shall not be entitled to receive notice of an adjournment or of the matters to be discussed at an adjourned meeting. The adjourned meeting shall not discuss any matters save for those which could have been discussed at the meeting at which the adjournment was resolved upon. The provisions of articles 17.1 and 17.2 hereof shall apply to an adjourned meeting as mentioned in this article.

19

18. Voting by Shareholders

  18.1 Passing a resolution

  A resolution put to the vote at any general meeting shall be passed if it acquires an ordinary majority or any other majority especially prescribed for it pursuant to the law or these articles.

  If the votes are tied, the resolution shall be deemed to have been defeated.

  18.2 Examining the majority

  18.2.1 The majority shall be examined through a poll, each shareholder being entitled at the time of voting to one vote in respect of each share held by him which has been fully paid or the calls in respect of which have been fully paid.

  18.2.2 The chairman’s declaration that a resolution at the general meeting has been passed or defeated, unanimously or by a particular majority, shall constitute prima facie evidence of that stated therein.

  18.3 Right to participate and vote

  A shareholder shall not be entitled to participate in and vote at any general meeting or to be counted amongst those present so long as he owes the Company any payment called in respect of the shares held by him, unless the shares’ issue conditions otherwise provide.

  18.4 Confirmation of title

  A shareholder in whose favor a share is registered with a stock exchange member and such share is included amongst the shares entered in the register of shareholders in the name of a registration company may not participate in and vote at a general meeting unless he has given the Company confirmation of title as prescribed by the board of directors at least two business days prior to the date of the general meeting.

  18.5 Personal interest in resolutions

  A shareholder wishing to vote on a resolution the majority required to pass which includes the votes of those who do not have a personal interest shall notify the Company before the vote on the said resolution commences, or if voting through a proxy or voting instrument within the framework thereof, whether he does or does not have a personal interest in the resolution.

20

  A shareholder who has not given any notice as aforesaid shall be deemed to have notified the Company that he does not have a personal interest in the resolution.

  18.6 Disqualification of voting instruments

  Subject to the provisions of the law, the Company’s secretary may, in his discretion, disqualify voting instruments or proxy appointment instruments in the following cases:

  (a) there is a reasonable apprehension that they are forged or were given by virtue of shares in respect of which other proxy appointment instruments or voting instruments were given;

  (b) in respect of voting instruments –

  (1) if more than one choice for a particular resolution is marked therein;

  (2) if in respect of resolutions the majority required to pass which includes the votes of persons who do not have a personal interest in the approval, it is not marked whether or not there is a personal interest as aforesaid.

  18.7 Voting by a legally incapacitated person

  A legally incapacitated person may only vote by a trustee, natural guardian or other legal guardian. These persons may vote in person or by proxy.

  18.8 Voting by joint shareholders

  Where two or more shareholders are joint holders of a share, one of them shall vote, himself, by proxy or through a voting instrument. If more than one joint shareholder wishes to participate in the vote, only the first joint shareholder may vote. For such object, the first joint shareholder shall be the person whose name is entered first in the register of shareholders.

  18.9 Minutes of the general meeting

  The general meeting’s chairman shall procure that minutes are properly kept of every general meeting which shall include:

  (a) the name of the shareholder or proxy and the number of shares held by him;

  (b) the main points of the discussion, all the resolutions passed or defeated at the general meeting and if passed – by what majority.

21

  18.10 A defect in convening or conducting the general meeting, including a defect deriving from the non-fulfillment of any provision or condition laid down in the Law or the Company’s articles, including with regard to the manner of convening or conducting the general meeting, shall not disqualify any resolution passed at the general meeting and shall not affect the discussions which took place thereat.

19. The Appointment of a Proxy

  19.1 Voting through a proxy

  A shareholder who is entered in the register of shareholders may appoint a proxy to participate and vote in his stead, at a particular general meeting or at general meetings of the Company in general, personally or through a voting instrument, provided that the proxy appointment instrument is given to the Company at least two business days prior to the date of the general meeting. In the event that the proxy appointment instrument is not for a particular general meeting, a proxy appointment instrument deposited prior to one general meeting shall also be valid for subsequent general meetings. Notwithstanding the aforesaid, the chairman of the meeting may, at his discretion, accept such proxy appointment after such time if he so deems fit at his discretion. If the proxy appointment is not received as aforesaid in this article, it shall not be valid at such meeting

  The aforegoing shall also apply to a shareholder which is a corporation, appointing a person to participate and vote in its stead at the general meeting.

  A proxy need not be a shareholder of the Company.

  19.2 The proxy appointment instrument’s form of wording

  The proxy appointment instrument shall be signed by the shareholder or by the person authorised therefor in writing, and if the appointor is a corporation, it shall be signed in the manner binding the corporation. The Company may demand that it be given written confirmation to its satisfaction of the authority of those signing to bind the corporation. The proxy appointment instrument shall be drawn up in the form of wording set forth below. The Company’s secretary may, in his discretion, accept a proxy appointment instrument in a different form of wording, provided that the changes are not material. The Company shall only accept an original proxy appointment instrument or a copy thereof, provided that it is certified by an attorney with an Israeli license or a notary.

22

 

Proxy Appointment Instrument

Date: __________

  To
[The Company’s Name]
[The Company’s Address]

  Dear Sirs,

  Annual/Special General Meeting of (“the Company” to be held on (“the Meeting”)

  I the undersigned, ___________________, Identity/Registration No. __________, of ___________________, the registered owner of __________ (*) shares ordinary of NIS ___ n.v. each, hereby empower __________, Identity No. (**) __________ and/or __________, Identity No. __________ and/or __________, Identity No. __________ to participate and vote in my name and stead at the above meeting of the Company and at any adjourned meeting thereof/at any general meeting of the Company, until I notify you otherwise.

  ___________________
Signature

  (*) A registered shareholder may grant a number of proxy appointment instruments, each in relation to another quantity of the Company’s shares held by him, provided that he does not grant proxy appointment instruments for a quantity of shares larger than the quantity held by him.

  (**) Where the proxy does not have an Israeli identity document, the passport number and the country which issued the passport may be stated.

 

  19.3 Voting pursuant to a proxy appointment instrument shall be legal even if prior thereto the appointor dies or becomes legally incapacitated or bankrupt, or in the case of a corporation – is liquidated or cancels the proxy appointment instrument or transfers the shares in relation to which it is given, unless written notice is received at the Company’s office prior to the meeting that such an event has occurred. Notwithstanding the aforesaid the chairman of the meeting may, at his discretion, accept such a notice also during the meeting if he shall so deem fit at his discretion.

23

  19.4 The proxy appointment shall state the class and number of shares in respect of which it is given. If the proxy appointment does not state the number of shares in respect of which it is given or states a number of shares which exceeds the number registered in the name of the shareholder, the proxy instrument shall be deemed to have been given in respect of all the shares of the shareholder according to the registration in the Company’s register.

  19.5 If the proxy appointment is given in respect of a number of shares which is less than the number of shares registered in the name of the shareholder, the shareholder shall be deemed not to have participated in the voting in respect of the excess shares and the proxy appointment shall be valid in respect of the number of shares stated therein.

20. Voting Instrument

  20.1 A shareholder may vote at the general meeting through a voting instrument on the matters specified below, unless the Company is legally entitled to a full or partial exemption from the sending of voting instruments in general or in particular circumstances. This paragraph shall only enter into force on the entry of sections 87-89 of the Companies Law into force.

  (a) the appointment and dismissal of directors;

  (b) approving acts with interested parties;

  (c) approving acts and transactions requiring the general meeting’s approval in accordance with the provisions of sections 255 and 268-275 of the Companies Law;

  (d) a merger pursuant to section 320 of the Law;

  (e) any matter which the articles provide may be voted upon through a voting instrument;

  (f) any additional matter specified in the law.

  20.2 The voting instrument’s form of wording

  The voting instrument shall be in the following form of wording, so long as the law does not prescribe another binding form of wording, in which case this form of wording shall apply mutatis mutandis. The Company’s secretary or anyone authorised by the Company’s board of directors to call the meeting may adapt the form of wording of the voting instrument in accordance with the resolutions on the agenda.

24

 

Voting Instrument

Date: __________

  To
[Companys Name]
[Company’s Address]

  Dear Sirs,

  Annual/Special General Meeting of the Company to be Held on (“the Meeting”)

  I the undersigned, ___________________, Identity/Registration No. __________, of ____________________, registered holder/holder of a suitable proxy appointment instrument which is annexed hereto (*) of __________ (**) shares ordinary of NIS _____n.v. each hereby give notice that my vote at the meeting of the Company and at any adjourned meeting of that meeting thereof is as follows:

No. of Resolution
on the Agenda 		Subject of the
Resolution 		The Vote (***) Shareholder's Personal
Interest in the Resolution
(****)
For Abstain Against Yes No
             
             
             

  (*) If the shares are held through a registration company, confirmation of title must be annexed.

  (**) If the shareholder wishes to vote differently for any part of his shares, a separate voting instrument must be submitted for every quantity of shares in respect of which he votes differently.

  (***) X must be marked in accordance with the relevant choice. If more than one choice is selected for a particular resolution, the vote on such resolution shall be disqualified.

  (****) In resolutions the majority required to pass which includes the votes of persons who do not have a personal interest in the approval, X must be marked in the appropriate place – whether there is or is not a personal interest as aforesaid. If X is not marked – the vote on such resolution shall be disqualified.

 

25

  20.3 Sending a voting instrument

  The voting instrument shall be sent by the Company to the shareholders entered in the Company’s register of shareholders and entitled to vote at the general meeting, together with the notice of the general meeting.

  If notice of the general meeting is published in a newspaper or in any other manner that is not personal notice to the shareholders through the mail, the voting instrument shall be sent immediately upon the notice’s publication.

  The voting instrument shall be sent by the Company at its expense.

  20.4 The manner of using a voting instrument

  A voting instrument reaching the Company’s registered office at least two business days prior to the date of the general meeting and not disqualified by the Company’s secretary shall be considered participation and voting by the shareholder who sent it for all intents and purposes, including for the purpose of the quorum.

  A voting instrument received by the Company as provided in this article in respect of a particular matter not voted upon at the general meeting shall be considered abstention for the purpose of the resolution on the meeting’s adjournment and shall be reckoned at the adjourned meeting in accordance with the way of voting appearing therein.

  20.5 Notice of position

  The board of directors and anyone on whose due requisition a special meeting is convened may send the shareholders a notice of position in order to persuade the shareholders to vote in a certain way on the matters to be voted upon in the voting instrument. The notice of position shall be sent at the Company’s expense together with the voting instrument.

  If a general meeting is called on one of the matters enumerated in article 20.1 above, a shareholder may approach the Company with a request that it send a notice of position on his behalf to the Company’s other shareholders. Unless otherwise provided in the law, a notice of position as aforesaid shall be sent at the expense of the shareholder and shall only be sent if delivered to the Company’s registered office at least 10 days prior to the general meeting.

26

CHAPTER FOUR – THE BOARD OF DIRECTORS

21. The Board of Directors’ Powers

  21.1 The board of directors' powers are as specified in the law and the provisions of these articles.

  21.2 The Company's signatory rights and power of attorney on its behalf

  21.2.1 The board of directors shall determine the signatory rights in the Company for various matters. The signature of any person appointed from time to time by the board of directors, in general or for a special matter, himself or together with others, together with the Company’s seal or stamp or its printed name, shall bind the Company, on such conditions as prescribed by the board of directors.

  21.2.2 The board of directors may determine separate signatory rights in respect of different matters of the Company and in respect of the amounts in respect of which such persons are authorised to sign.

  21.2.3 The board of directors may from time to time empower any person to be the Company’s attorney for such objects, with such powers, on such conditions and for such period as it deems fit, and it may give any attorney as aforesaid the power to delegate all or any of the powers, authorities and discretion given to him.

  21.3 The Company’s registered office

  The board of directors shall determine what is the Company’s registered office.

22. The Appointment of Directors and Termination of Their Office

  22.1 The number of directors

  The number of directors in the Company shall be not less than three (3) nor more than nine (9) including the external directors, unless the general meeting otherwise resolves.

  22.2 The director’s identity

  22.2.1 A member of the board of directors may hold another office in the Company.

  22.2.2 A corporation may hold office as a director in the Company, subject to the provisions of article 22.6 below.

27

  22.3 The appointment and tenure of directors

  (a) The directors shall be elected at each annual meeting and shall hold office until the end of the next annual meeting and so long as an annual meeting is not convened, unless their office is vacated prior thereto in accordance with the provisions of these articles.

  The elected directors shall enter into their positions from the end of the meeting at which they are elected, unless a later date is specified in the resolution appointing them.

  (b) At every annual meeting the directors appointed at the previous annual meeting shall be deemed to have resigned from their office. A resigning director may be re-elected. Notwithstanding the aforegoing, if no directors are appointed at an annual meeting, the current directors shall continue to hold office.

  (c) A special meeting of the Company (including the special meeting adopting these articles) may appoint directors for the Company instead of directors whose office has been terminated and wherever the number of members of the board of directors falls below the minimum specified in the articles or by the general meeting.

  (d) The provisions of paragraphs 22.3(a) to (c) above shall not apply to the appointment and tenure of external directors, in respect of whom the provisions of the Companies Law shall apply.

  (e) No person other than a person who officiated as a director up to the annual meeting, shall be appointed as a director at the annual meeting, unless recommended for appointment by the board, or unless a shareholder of the company who wishes to propose a candidate shall have lodged at the office of the Company, not later than within seven days after the notice of the meeting has been given, a document in writing signed by the shareholder notifying his intention to propose such candidate for appointment as a director, to which document there shall be attached the consent of the candidate to officiate as a director and his/her resume.

  22.4 The appointment of directors by the board of directors

  The directors have the right at any time, in a resolution approved by at least a majority of the Company’s directors, to appoint any person as a director, subject to the maximum number of directors specified herein, to fill a place which has randomly been vacated or as an addition to the board of directors. Any director so appointed shall hold office until the next annual meeting and may be re-elected.

28

  22.5 Alternates

  A director may from time to time appoint an alternate for himself (hereinafter referred to as “alternate”), dismiss such alternate and appoint another alternate instead of any alternate whose office has been vacated for any reason, for a particular meeting or on a regular basis, provided however that such alternate is approved in a resolution approved by at least a majority of the Company’s directors. A person who is not qualified to be appointed as a director and a person holding office as a director or alternate shall not hold office as an alternate.

  22.6 Attorney of a corporation holding office as director

  A director which is a corporation shall appoint an individual who is qualified to be appointed as a director in the Company to hold office on its behalf on a permanent basis, or for a particular meeting, or for a particular period, and the said corporation may dismiss the individual and appoint another in his stead.

  22.7 Empowered director

  Each director and each alternate director may appoint a representative to participate and vote on his behalf in any Board or Board’s committee meeting. Such appointment can be either general or for particular meeting or for several meetings. In case the director or the alternate attended such meeting, the empowered representative can not vote in place of his appointer. Such appointment shall be valid in accordance with its terms or until terminated by the appointer.

  22.8 The manner of appointing or dismissing an alternate or attorney of a corporation holding office as a director

  The appointment or dismissal of attorneys of corporations holding office as directors or of alternates shall be effected by written notice to the Company’s secretary signed by the appointors or dismissers and shall enter into force on the date specified in the notice of appointment or dismissal, or on the date of its delivery to the Company’s secretary, whichever is the later.

  22.9 Various provisions in respect of alternates and attorneys of corporations holding office as directors

  The following provisions shall apply in respect of the attorneys of directors, where the directors are corporations, and in respect of alternates:

29

  (a) any person, whether or not he is a director, may serve as the attorney of a corporation holding office as a director, and one person may serve as the attorney of several corporations holding office as directors;

  (b) the attorney of a corporation holding office as director shall have – in addition to his own vote if he himself is a director – a number of votes equal to the number of corporations holding office as directors for whom he is attorney;

  (c) an alternate and the attorney of a director which is a corporation shall have all the powers vested in the director for whom he is serving as alternate or attorney. Notwithstanding the aforesaid, an alternate or attorney shall not have the power to vote at such meetings at which the director himself is present;

  (d) the office of an alternate or attorney of a director which is a corporation shall automatically be vacated if the office of the director for whom or which he is acting as alternate or attorney is vacated.

  22.10 Termination of the office of a director

  22.9.1 The office of a director shall terminate in any one of the following cases:

  (a) if he resigns from his office by a letter signed by him which is submitted to the Company;

  (b) if he is declared bankrupt or settles with his creditors within the framework of bankruptcy proceedings;

  (c) if he is declared legally incapacitated;

  (d) on his death, and in the case of a corporation – if a resolution is passed to wind it up voluntarily or if a liquidation order is given in respect of thereof;

  (e) if he is dismissed from his office following a resolution passed by the Company’s general meeting, before the end of his term of office;

  (f) if he is convicted of an offence as mentioned in section 232 of the Companies Law;

  (g) if his office is terminated by the board of directors, in accordance with the provisions of section 231 of the Companies Law.

30

  22.11 The implications of the termination of a director's office on the board of directors' operation

  Where the place of a director is vacated, the remaining directors may continue to act so long as the number of directors remaining does not fall below the minimum number of directors specified in the articles or by the general meeting.

  Where the number of directors falls below the minimum number, the remaining directors may only act in order to call a general meeting of the Company.

  22.12 The board of directors’ members’ remuneration

  The members of the board of directors who do not hold other offices in the Company and who are not external directors shall not receive remuneration from the Company’s monies, unless the general meeting otherwise resolves and in such amount as the general meeting prescribes, subject to the provisions of the law.

  The directors’ remuneration may be prescribed as an overall payment or as payment in respect of participation at meetings or any combination thereof.

  The Company may, in a board of directors’ resolution, reimburse expenses incurred by a director for the purpose of performing his position.

23. The Directors’Acts

  23.1 The board of directors’ meetings

  (a) The board of directors’ chairman may convene the board of directors at any time.

  (b) The board of directors’ chairman shall convene the board of directors pursuant to the Company’s requirements and at least once a year, in a manner enabling the Company to comply with the provisions of the law.

  (c) The board of directors’ chairman shall convene the board of directors and hold a board of directors’ meeting on a specified matter on the demand of at least two directors or one director alone if the Company has less than five directors.

  (d) The board of directors’ chairman shall act without delay to call a meeting of the board of directors within 14 days of being notified by a director of the Company that he has learned of a matter of the Company in which a breach of the Law or impairment to proper business procedure has prima facie been discovered or of the date on which the Company’s auditor reports to him that he has learned of material deficiencies in the audit of the Company’s accounts.

31

  (e) If a notice or report of the general manager obliges action by the board of directors, the board of directors’ chairman shall, without delay and within 14 days of the notice or report, call a meeting of the board of directors.

  23.2 Calling a board of directors’ meeting

  23.2.1 Notice of a board of directors’ meeting may be given orally or in writing, provided that the notice is given at least three business days prior to the date fixed for the meeting, unless all the members of the board of directors or their alternates or attorneys agree to a shorter time.

  Notice as aforesaid shall be sent in writing or by facsimile or e-mail or by other media, to the postal address, facsimile number, e-mail address or other address given for the sending of notices by other media, as the case may be, given by the director to the Company’s secretary upon his appointment, or in written notice to the secretary thereafter.

  Notice given or sent as aforesaid shall be deemed to have been given to a director personally on the date of being given or sent as aforesaid.

  23.2.2 Where an alternate or attorney has been appointed, notice shall be sent to the alternate or the attorney, unless the director has given notice that he wishes the notice to be sent to him as well.

  23.2.3 The notice calling the meeting shall include the place and date of the board of directors’ meeting, arrangements with regard to the manner of conducting the meeting (where media are being used) and details of the matters on the agenda, and any other material which the board of directors’ chairman wishes to attach to the notice of the meeting.

  23.2.4 Notwithstanding anything to the contrary herein, failure to deliver notice to a director of any such meeting in the manner required hereby may be waived by such director, and a meeting shall be deemed to have been duly convened if such defective notice, or failure to deliver such notice is waived prior to action being taken at such meeting, by all directors entitled to participate at such meeting to whom notice was not duly given as aforesaid. Without derogating from the foregoing, no director present at the commencement of a meeting of the board of directors shall be entitled to seek the abolishment of any proceedings or resolutions adopted at such meeting on account of any defect in the notice of such meeting relating to the time or the place thereof.

32

  23.3 The agenda for the board of directors’ meetings

  The agenda for the board of directors’ meetings shall be prescribed by the board of directors’ chairman and shall include the following matters:

  (a) matters prescribed by the board of directors’ chairman;

  (b) matters in respect of a meeting has been fixed, as provided in paragraphs 23.1(c) to (e) above;

  (c) any matter which a director or the general manager requests the board of directors’ chairman, a reasonable time (having regard to the nature of the matter) prior to the board of directors’ meeting, to include on the agenda.

  23.4 Quorum

  The quorum for meetings shall be a majority of the members of the board of directors who are not legally prevented from participating at the meeting, or any other quorum prescribed by a majority of the members of the board of directors from time to time.

  23.5 Holding a meeting by media

  The board of directors may hold the board of directors’ meeting through the use of any media, provided that all the directors participating may hear each other simultaneously.

  A resolution as aforesaid may be passed by the approval given by media of some of the directors, to the extent that the directors who do not approve the resolution were not entitled to participate at the discussion and vote on the resolution pursuant to the law and provided that they confirm by media that they are aware of the intention to pass a resolution as aforesaid.

  23.6 Voting by the board of directors

  Issues arising at board of directors’ meetings shall be decided by a majority of votes of the directors present (or participating, in the case of voting by media) and voting, each director having one vote, subject to the provisions of article 22.9(b) above with regard to alternates and attorneys of directors which are corporations.

  23.7 Passing resolutions without convening

  The board of directors may pass resolutions without actually convening, provided that all the directors entitled to participate in a discussion and vote on a matter brought for resolution have agreed thereto.

33

  In case such resolutions were passed, as aforesaid, the chairman of the board shall write the resolutions protocol and indicate specifically that it was agreed upon by all directors in writing, orally or by other means of media.

  23.8 Resolution approved by media

  A resolution approved by media by the directors shall be treated as a resolution duly passed at a meeting of the board of directors, and the provisions of paragraph 23.6 above shall apply thereto.

  A resolution as aforesaid may be passed by the approval given by media of some of the directors, to the extent that the directors who do not approve the resolution were not entitled to participate in the discussion and vote on such resolution pursuant to the law and provided that they confirm by media that they are aware of the intention to pass the said resolution.

  23.9 Validity of the directors’ acts

  All acts done in good faith at the directors’ meeting or by a board of directors’ committee or by any person acting as a director shall be valid even if it later transpires that there was some defect in the appointment of such director or person or that they or one of them were actually disqualified as though every such person had been duly appointed and was qualified to be a director.

  23.10 Minutes of board of directors’ meetings

  The board of directors’ chairman shall procure that minutes are properly kept of the board of directors’ meetings, which shall include:

  (a) the names of those participating and present at each meeting;

  (b) all the resolutions and main points of the discussion at the said meetings.

  All such minutes which are signed by the board of directors’ chairman at such meeting or by the board of directors’ chairman at the subsequent meeting shall be accepted as prima facie proof of the matters recorded therein.

24. Board of Directors’ Committees

  24.1 Subject to the provisions of section 112 of the Companies Law, the directors may delegate their powers, or any of them, to committees as they deem fit and they may from time to time widen, narrow or cancel the delegation of such a power; however, the narrowing or cancellation of a power as aforesaid is not such as to prejudice the validity of a committee resolution pursuant whereto the Company acted vis-a-vis another person, who was not aware of the said change. Every such committee must, at the time of exercising a power as aforesaid, comply with all the directions given to it from time to time by the directors.

34

  24.2 A board of directors’ committee shall include at least two directors, one of whom shall be an external director, save for the audit committee, which shall include at least three directors and all the Company’s external directors shall be members thereof.

  24.3 The meetings and discussions of the board of directors’ committees shall be governed by the provisions regarding the meetings of the directors, mutatis mutandis, so long as other provisions are not prescribed by the directors in such regard, and provided that the quorum for meetings of such committees shall be at least two members.

  24.4 A resolution passed or an act done by a board of directors’ committee shall be treated as a resolution passed or act done by the board of directors, unless expressly otherwise prescribed by the board of directors for a particular matter or in respect of a particular committee.

25. The Board of Directors’ Chairman

  25.1 Appointment

  (a) The board of directors shall elect one of its members to serve as its chairman and shall specify, in the appointment resolution, the term for which he shall hold office.

  (b) If not otherwise provided in the resolution appointing him, the board of directors’ chairman shall be elected each calendar year at the first board of directors’ meeting held after the annual meeting at which the Company’s directors are appointed.

  (c) So long as the board of directors’ chairman holds office as a director of the Company, he shall continue to serve in such capacity until someone else is appointed in his stead.

  (d) If the board of directors’ chairman ceases to hold office as a director of the Company, the board of directors shall elect a new chairman at the first board of directors’ meeting held thereafter, who shall serve in such capacity for the term specified in the appointment resolution, and if no term is specified – until the appointment of a chairman as provided in paragraph 25.1(b) above.

  (e) If the board of directors’ chairman is absent from a meeting, the board of directors shall elect one of its members to conduct the meeting and to sign the discussion minutes; however, the person elected shall not have an additional or casting vote in the board of directors’ votes.

35

  25.2 Powers

  (a) The board of directors’ chairman shall conduct the board of directors’ meetings and shall sign the discussion minutes.

  (b) If the votes on a board of directors’ resolution are tied, the board of directors’ chairman shall not have an additional vote.

  (c) The board of directors’ chairman may, at any time, on his own initiative or pursuant to a resolution of the board of directors, demand reports from the general manager on matters relating to the Company’s business.

  25.3 Provisos to the acts of the board of directors' chairman

  (a) The board of directors’ chairman shall not serve as the Company’s general manager, unless appointed in accordance with the provisions of article 26.2 below.

  (b) The board of directors’ chairman shall not be a member of the audit committee.

36

CHAPTER FIVE – OFFICERS OF THE COMPANY, WHO ARE NOT DIRECTORS, AUDITOR

26. The General Manager

  26.1 The appointment and dismissal of the general manager

  (a) The board of directors shall appoint a general manager for a fixed term or for an unlimited term.

  The board of directors may appoint more than one general manager.

  (b) Determining the general manager’s remuneration and employment terms shall be subject to the approval of the board of directors, in such manner as it deems fit. Where the general manager’s remuneration is considered an “exceptional transaction”, and in case of an exemption, insurance, indemnity undertaking or indemnity pursuant to permission is given to the general manager, the board of director’ resolution as aforesaid requires the prior approval of the audit committee.

  (c) The board of directors may from time to time remove or dismiss the general manager from his office and appoint another or others in his stead.

  26.2 The board of directors’ chairman as general manager

  (a) The Company’s general meeting may authorise the board of directors’ chairman to fill the position of general manager or to exercise his powers, provided that in counting the votes of the majority at the general meeting at least two thirds of the votes of shareholders who are not the Company’s controlling shareholders or persons on their behalf, present at the vote, shall be included. In counting the votes of the shareholders, the votes of those abstaining shall not be taken into account.

  (b) The validity of such a resolution is limited to a period not exceeding three years from the date the resolution is passed by the general meeting. If no period is specified for authority as aforesaid, the authority shall be for a period of three years.

  Before the end of the said three year period and even after it has come to an end, the general meeting may pass another resolution, and so on and so forth.

  (c) The said resolution may relate to the authorization of the board of directors’ chairman in general or it may relate to the authorization of a particular board of directors’ chairman.

37

  26.3 The general manager's powers and his subordinacy to the board of directors

  (a) The general manager is responsible for the routine management of the Company’s affairs within the framework of the policy prescribed by the board of directors and subject to its guidelines.

  The general manager shall have all the management and execution powers not vested by the law or the articles in another organ of the Company, and he shall be under the supervision of the board of directors and subject to its guidelines.

  The general manager shall appoint and dismiss the Company’s officers, save for the directors and general manager, and shall determine the terms of their employment, unless otherwise prescribed by the board of directors.

  (b) The board of directors may instruct the general manager how to act in a particular matter; if the general manager does not obey the instruction, the board of directors may exercise the power required to implement the instruction in his stead.

  (c) If the general manager is unable to exercise his powers, the board of directors may exercise them in his stead or authorise someone else to exercise them.

  (d) Subject to the provisions of the Companies Law, the board of directors may delegate to the general manager powers which the board of directors has pursuant to the Company’s articles, as it deems fit, and it may delegate these powers, or any of them, for such period and objects, on such conditions and with such restrictions as it deems fit. The board of directors may alter or cancel any delegation of powers as aforesaid.

  26.4 The general manager’s reporting duties

  The general manager must notify the board of directors’ chairman of any exceptional matter which is material to the Company or of any material deviation of the Company from the policy prescribed by the board of directors. If the Company does not have a board of directors’ chairman, for any reason, the general manager shall notify all the board of directors’ members as aforesaid.

  The general manager shall submit reports to the board of directors on the matters, at the times and on the scale prescribed by the board of directors.

  The general manager shall report to the board of directors’ chairman, on his demand, on matters relating to the Company’s business and the proper management thereof as mentioned in article 22.1 above.

38

  26.5 Delegation of the general manager’s powers

  The general manager may, with the board of directors’ approval, delegate any of his powers to another, who is subordinate to him; however, the delegation of powers as aforesaid does not exempt the general manager from liability for the aforegoing.

27. Secretary, Internal Auditor and Other Officials in the Company

  27.1 Secretary

  27.1.1 The board of directors may appoint a secretary for the Company, on such terms as it deems fit, and may appoint a deputy secretary and determine their duties and powers.

  27.1.2 If a secretary is not appointed for the Company, the general manager, or someone authorised by him for such purpose and in the absence of a general manager someone authorised for such purpose by the board of directors, shall perform the duties prescribed for the secretary pursuant to the law, these articles and the board of directors’resolution.

  27.1.3 The Company’s secretary shall be liable for all the documents kept at the Company’s registered office, as provided in section 124 of the Companies Law, and shall keep the registers kept by the Company pursuant to the law.

  27.2 Internal auditor

  27.2.1 The Company's organizational superior over the internal auditor is the board of directors' chairman.

  27.2.2 The internal auditor shall submit a proposal for an annual or periodic work plan to the board of directors, which shall be approved by the board of directors, with such changes as it deems fit.

  27.3 Other officials in the Company

  The board of directors may resolve that in addition to the general manager and the secretary, other officials shall be appointed by it, in general or in a particular case. In such case, the board of directors shall appoint the official, define his position and powers and determine his remuneration and employment terms.

39

28. Auditor

  28.1 The annual general meeting shall appoint an auditor for the period up to the end of the following general meeting. The general meeting may appoint an auditor for a period that shall not extend beyond the end of the third general meeting after the general meeting at which he was appointed. Where the auditor is appointed for such a period, the annual meeting shall not discuss the appointment of an auditor during the said period, unless a resolution is passed to terminate his office.

  28.2 The general meeting may at any time terminate the office of the auditor or decline to renew it.

  28.3 The board of directors shall determine the remuneration of the Company’s auditor and shall report thereon to the Company’s annual meeting.

  28.4 The board of directors meeting shall determine the auditor’s remuneration for services other than the audit and shall report thereon to the Company’s annual meeting.

40

CHAPTER SIX – SAFEGUARDING THE COMPANY’S CAPITAL AND THE DISTRIBUTION THEREOF

29. Permitted Distribution

  29.1 Definitions

  In this chapter the following expressions shall bear the meanings attributed to them in sections 1 and 302 of the Companies Law: “distribution”, “purchase”, “profits”, “profit criterion”, “adjusted financial statements”, “surpluses”.

  29.2 Distribution from profits alone

  The Company shall not effect any distribution except from its profits, provided that there is no reasonable apprehension that the distribution will deprive the Company of the ability to perform its existing and expected obligations, when the time comes to perform them. Notwithstanding the aforegoing, the Company may effect a distribution that is inconsistent with the profit criterion if it receives the court’s approval therefor.

  29.3 Allotment for a consideration lower than the nominal value

  Where the Company resolves to allot shares which have a nominal value for a consideration lower than their nominal value, including bonus shares, it must convert into share capital part of its profits, from premium on shares or from any other source included in its equity, which are mentioned in its last financial statements, in an amount equal to the difference between the nominal value and the consideration.

  Notwithstanding the aforegoing, the Company may, with the court’s approval, allot shares for a consideration lower than their nominal value.

30. Dividend and Bonus Shares

  30.1 Right to dividend or bonus shares

  30.1.1 The Company’s shareholders have a right to receive dividend or bonus shares, if the Company resolves thereon as provided in paragraph 30.2 below, in accordance with the rights attached to any class of shares in such regard.

  30.1.2 Dividend or bonus shares shall be distributed amongst anyone entered in the Company’s register of shareholders on the date of the resolution on the distribution or at a later date, if another date is prescribed therefor in such resolution (hereinafter referred to as “the determining date”).

41

  30.1.3 If the Company’s capital contains shares of different nominal values, dividend or bonus shares shall be distribution pro rata to the nominal value of each share.

  30.1.4 Subject to the special rights granted to special shares pursuant to their issue conditions, the Company’s profits, in respect of which a resolution was passed to distribute them as dividend or bonus shares, shall be paid pro rata to the amount paid or credited as paid on account of the nominal value of the shares held by the shareholder.

  30.1.5 If not otherwise provided in the shares’ issue conditions or in the general meeting’s resolution, all the dividends and bonus shares on shares which are not fully paid within any period in respect of the dividends or bonus shares are payable shall be paid pro rata to the amounts paid or credited as paid on the nominal value of the shares during any part of the said period (pro rata temporis).

  30.2 The Company's resolution to distribute dividend or bonus shares

  30.2.1 The Company’s resolution to distribute dividends, bonus shares or interim dividends on account of future dividends, as it deems fit in accordance with the state of the Company’s profits and the terms and conditions thereof, shall be passed by the Company’s board of directors.

  30.2.2 Funds

  The board of directors may, in its discretion, make provisions to special funds of any amount from the Company’s profits, or from a revaluation of its assets, or its proportional part in the revaluation of the assets of its affiliates, and determine the purpose of these funds.

  30.3 Payment of the dividend

  30.3.1 Manner of payment

  If not otherwise provided in the resolution on the dividend’s distribution, it shall be possible to pay any dividend less the tax required pursuant to the law by a cheque to the payee alone, which shall be sent by registered mail in accordance with the registered address of the shareholder entitled thereto, or by a bank transfer. Any such cheque shall be made out to the order of the person to whom it is being sent.

42

  In the case of registered joint shareholders, the cheque shall be sent to the shareholder whose name is entered first in the register of shareholders in relation to the joint shareholding.

  The dispatch of the cheque to a person who on the prescribed date is entered in the register of shareholders as the holder of a share, or in the case of joint shareholders – one of the joint shareholders, shall serve as a release in relation to all the payments made in connection with such share.

  The Company may resolve that it shall not send a cheque under a certain amount, and the dividend amounts that should have been payable as aforesaid shall be treated as unclaimed dividend.

  30.3.2 Unclaimed dividend

  The board of directors may invest any dividend not claimed within a year of being declared or otherwise use it in favour of the Company until it is claimed. The Company shall not be liable to pay interest or linkage for unclaimed dividend.

  30.3.3 Dividend in specie

  Where the Company declares a dividend, it may resolve that such dividend shall be paid, in whole or in part, by the distribution of particular assets, including paid shares or debentures of any other company or by a combination of such assets.

  30.4 The capitalisation of profits and the distribution of bonus shares

  30.4.1 Subject to the provisions of paragraph 30 above, the Company’s undistributed profits, or premium on shares, or funds created from a revaluation of the Company’s assets, or funds created on an equity basis from the profits of affiliated companies, or from a revaluation of the assets of affiliated companies and capital redemption funds – may be capitalised and distributed amongst the entitled shareholders, pursuant to paragraph 31.1 above, to be held by them as capital, and all or any of the money from this capitalisation shall be used in the name of such shareholders for the full payment, at the nominal value or with such premium as the resolution prescribes, of shares distributed in accordance therewith, and such distribution or payment shall be accepted by such shareholders as full consideration for their benefit in the aforementioned capitalised amount, as prescribed by the board of directors.

  The provisions of this chapter shall also apply to a distribution of debentures.

43

  30.4.2 Where the Company resolves to distribute bonus shares, it may resolve to transfer to a special fund designated for a distribution of bonus shares in the future such amount the capitalisation of which would be sufficient to allot to anyone who at such time has a right to purchase shares of the Company (including a right which is only exercisable at a later date) bonus shares of such nominal value as would have been due to him had he exercised the right to purchase the shares prior to the determining date at the price of the right in force at such time. If after the determining date the holder of the said right exercises his right to purchase the shares or part thereof, the board of directors shall allot him fully paid bonus shares at such nominal value and of such class as would have been due to him had he exercised the right to purchase the shares which he actually purchased prior to the determining date, by appropriate capitalisation that shall be effected by the board of directors from the said special fund. With regard to determining the nominal value of the bonus shares that are distributed, any amount transferred to the special fund created in respect of a distribution of previous bonus shares shall be treated as though already capitalised and as if shares entitling the holders of the right to purchase shares of the Company to bonus shares had already been allotted therefrom.

  30.4.3 In a distribution of bonus shares, all the Company’s shareholders shall receive shares of a uniform class or of the class which vested him with the rights to receive the bonus shares, as prescribed by the board of directors.

  30.4.4 In order to implement any resolution pursuant to the provisions of paragraph 30.4, the board of directors may settle any difficulty arising in relation to a distribution of bonus shares as it deems fit, and in particular may issue certificates for fractions of shares and sell the fractions in order to pay the proceeds thereof to entitlees and may determine the value for the purpose of distribution of certain assets and resolve that payments in cash shall be made to the shareholders in reliance upon the value so prescribed, or that fractions whose value is less than NIS 1 shall not be taken into account for the purpose of adjusting the rights of all the parties. The board of directors may pay cash or grant these particular assets to trustees on trust in favour of the persons entitled to dividend or capitalised fund, as it deems beneficial.

31. Purchase of the Company’s Shares

  31.1 The Company may purchase or finance the purchase, directly or indirectly, of shares of the Company or of securities convertible into shares or exercisable into shares of the Company, including undertakings to do any of the aforegoing, subject to compliance with the condition of permitted distribution, as provided in paragraph 29 above.

44

  31.2 If the Company purchases any of its shares, the share shall become a dormant share and shall not vest any rights, so long as it is held by the Company.

  31.3 If a share of the Company is purchased by a subsidiary or by a corporation under the Company’s control, the share shall not vest voting rights, so long as it is held by the said subsidiary or corporation.

45

CHAPTER SEVEN – INSURANCE, INDEMNITY AND EXEMPTION OF OFFICERS

32. Insurance of Officers

  32.1 The Company may insure the liability of an officer therein to the fullest extent permitted by law.

  32.2 Without derogating from the aforesaid the Company may enter into a contract to insure the liability of an officer therein for an obligation imposed on him in consequence of an act done in his capacity as an officer therein, in any of the following cases:

  (a) a breach of the duty of care vis-a-vis the Company or vis-a-vis another person;

  (b) a breach of the fiduciary duty vis-a-vis the Company, provided that the officer acted in good faith and had a reasonable basis to believe that the act would not harm the Company;

  (c) a monetary obligation imposed on him in favor of another person.

  (d) any other matter in respect of which it is permitted or will be permitted under applicable law to insure the liability of an officer in the Company.

33. Indemnity of Officers

  33.1 The Company may indemnify an officer therein, to the fullest extent permitted by law. Without derogating from the aforesaid the Company may indemnify an officer in the Company for liability or expense imposed on him in consequence of an action made by him in the capacity of his position as an officer in the Company, as follows:

  33.1.1 Any financial liability he incurs or imposed on him in favor of another person in accordance with a judgment, including a judgment given in a settlement or a judgment of an arbitrator, approved by a court.

  33.1.2 Reasonable litigation expenses, including legal fees, incurred by the officer or which he was ordered to pay by a court, within the framework of proceedings filed against him by or on behalf of the Company, or by a third party, or in a criminal proceeding in which he was acquitted, or in a criminal proceeding in which he was convicted of a felony which does not require a finding of criminal intent.

46

  33.1.3 Reasonable litigation expenses, including legal fees he incurs due to an investigation or proceeding conducted against him by an authority authorized to conduct such an investigation or proceeding, and which was ended without filing an indictment against him and without being subject to a financial obligation as a substitute for a criminal proceeding, or that was ended without filing an indictment against him, but with the imposition of a financial obligation, as a substitute for a criminal proceeding relating to an offence which does not require criminal intent, within the meaning of the relevant terms in the Companies Law.

  33.1.4 Any other obligation or expense in respect of which it is permitted or will be permitted under law to indemnify an officer in the Company.

  33.2 Advance indemnity

  The Company may give an advance undertaking to indemnify an officer therein in respect of the following matters:

  33.2.1 Matters as detailed in Article 33.1.1, provided however, that the undertaking is restricted to events, which in the opinion of the Board of Directors, are anticipated in light of the Company’s actual activity at the time of granting the obligation to indemnify and is limited to a sum or measurement determined by the Board of Directors as reasonable under the circumstances. The indemnification undertaking shall specify the events that, in the opinion of the Board of Directors are expected in light of the Company’s actual activity at the time of grant of the indemnification and the sum or measurement, which the Board of Directors determined to be reasonable under the circumstances.

  33.2.2 Matters as detailed in Article 33.1.2 and 33.1.3.

  33.2.3 Any matter permitted by applicable law.

  33.3 Retroactive indemnity

  The Company may indemnify an officer therein, save for the events subject to any applicable law.

34. Exemption of Officers

  The Company may exempt an officer therein in advance and retroactively for all or any of his liability for damage in consequence of a breach of the duty of care vis-a-vis the Company, to the fullest extent permitted by law.

35. Insurance, Exemption and Indemnity – General

  35.1 The above provisions with regard to insurance, exemption and indemnity are not and shall not limit the Company in any way with regard to its entering into an insurance contract and/or with regard to the grant of indemnity and/or exemption in connection with a person who is not an officer of the Company, including employees, contractors or consultants of the Company, all subject to any applicable law;

47

  35.2 Articles 32 through 35 shall apply mutatis mutandis in respect of the grant of insurance, exemption and/or indemnification for persons serving on behalf of the Company as officers in companies controlled by the Company, or in which the Company has an interest.

  35.3 An undertaking to insure, exempt and indemnify an officer in the Company as set forth above shall remain in full force and effect even following the termination of such officer service with the Company.

48

CHAPTER EIGHT – MERGER, WINDING UP AND SALE OF THE COMPANY’S ASSETS IN CONSIDERATION FOR SECURITIES

36. Merger

  Notwithstanding the provisions of section 327(a) of the Companies Law, the majority required for the approval of a merger by the general meeting or by a class meeting shall be an ordinary majority of the votes of the shareholders entitled to vote and voting themselves.

38. Winding Up

  38.1 If the Company is wound up, voluntarily or otherwise, the liquidator may, with the general meeting’s approval, distribute parts of the Company’s property in specie amongst the shareholders, and he may, with similar approval, deposit any part of the Company’s property with trustees in favour of the shareholders as the liquidator, with the approval mentioned above, deems fit.

  38.2 Subject to the special rights attached to shares, if shares are issued with special rights, the Company’s shares shall rank equally inter se in relation to the amounts of capital paid or credited as paid on the nominal value of the shares, in connection with the return of the capital and participation in a distribution of the Company’s surplus assets on winding up.

39. The Sale of the Company’s Assets in Consideration for Securities

  39.1 At the time of selling the Company’s property, the board of directors, or the liquidators (in the case of winding up) may, if so permitted in a resolution passed by the Company’s general meeting by an special majority, accept fully or partially paid shares, debentures or securities of another company, Israeli or foreign, incorporated or about to be incorporated for the purpose of purchasing the Company’s property, or part thereof, and the directors (if the Company’s profits so permit) or the liquidators (in the case of winding up) may distribute the shares or securities mentioned above or any other property of the Company amongst the shareholders, without realising them or depositing them with trustees for the shareholders.

  39.2 The general meeting may, in a resolution passed by the Company’s general meeting by an special majority, resolve on a valuation of the securities or property mentioned above at such price and in such manner as the general meeting resolves, and all the shareholders shall be liable to accept any valuation or distribution permitted as aforesaid and waive their rights in such regard, save, where the Company is about to be wound up or is in winding up proceedings, for those legal rights (if any) which pursuant to the provisions of the law may not be altered or qualified.

49

CHAPTER NINE – MISCELLANEOUS

40. Notices

  40.1 Subject to the provisions of paragraphs 15.4 and 17.1 above, notice or any other document may be sent by the Company to all the shareholders appearing in the Company’s register of shareholders personally or by registered mail to such shareholder’s address as entered in the register of shareholders or at the address given by the shareholder to the Company in writing for the purpose of sending notices.

  40.2 All the notices which must be given to the shareholders shall be given, in relation to shares which are jointly held, to the person whose name is entered first in the register of shareholders and any notice given in such manner shall be adequate notice to all the joint shareholders.

  40.3 Subject to the provisions of paragraphs 15.4 and 17.1 above, every shareholder entered in the register of shareholders according to address, whether in Israel or abroad, shall be entitled to have sent to him, at such address, any notice which he is entitled to receive in accordance with the articles or the provisions of the law. Save for the aforegoing, no person who is not entered in the register of shareholders shall be entitled to receive any notice from the Company.

  40.4 Any notice or other document delivered or sent to a shareholder in accordance with these articles shall be deemed to have been duly delivered and sent in respect of all the shares held by him (alone or together with others), even if such shareholder has passed away at such time, or become bankrupt, or an order has been given for its winding up, or a trustee or liquidator or receiver has been appointed for his shares (whether or not the Company was aware thereof), until another person is entered in the register of shareholders in his stead as the holder thereof, and the giving or dispatch of a notice or document as mentioned above shall be deemed adequate delivery or dispatch to any person who has a right in these shares.

  40.5 Any notice or other document sent by the Company by mail in accordance with an address in Israel shall be deemed to have been delivered within 48 hours of the letter containing the notice or document being mailed, or within 96 hours where the address is abroad, and when coming to prove the delivery it shall be sufficient to prove that the letter containing the notice or document was properly addressed and mailed.

50

  40.6 An accidental omission in giving notice of a general meeting to any shareholder or non-receipt of notice of a meeting or any other notice by a shareholder shall not cause the cancellation of a resolution passed at such meeting or cancellation of proceedings based on such notice.

  40.7 Every shareholder and every board of directors’ member may waive his right to receive notice or his right to receive notice within a particular time and may agree that a general meeting of the Company or a board of directors’ meeting, as the case may be, be convened or take place despite the fact that he has not received notice thereof, or despite the fact that the notice was not received by him within the required time, subject to the provisions of any law prohibiting such waiver or consent.

51

Exhibit 4.1

Optibase Ltd.

2006 ISRAELI INCENTIVE COMPENSATION PLAN

1. PURPOSE

  The purpose of this Plan (as defined in Section 2.1 below) is to secure for Optibase Ltd., a company organized under the laws of the State of Israel (the “ Company ”) and its shareholders the benefits arising from ownership of share capital by employees, officers and directors of the Company and its Affiliates (as defined in Section 2.1 below), who are expected to contribute to the Company’s future growth and success.

2. DEFINITIONS

2.1 DEFINED TERMS

  Initially capitalized terms, as used in this Plan, shall have the meaning ascribed thereto as set forth below:

  "Administrator" means the Board of Directors of the Company, or a committee to which the Board of Directors shall have delegated power to act on its behalf with respect to the Plan. Subject to the Articles of Association of the Company, as may be amended from time to time, the Administrator, if it is a committee, shall consist of such number of members (but not less than two (2)) as may be determined by the Board.

  "Affiliate(s)" means a present or future entity that either (i) Controls the Company or is Controlled by the Company; or (ii) is Controlled by the same person or entity that Controls the Company.

  "Award(s)" means an award of Restricted Share(s) and/or Restricted Share Unit(s) and/or Option(s).

  "Award Grant Letter" means Option Grant Letter and/or Restricted Share Grant Letter and/or Restricted Share Unit Grant Letter.

  "Allocate" or "Allocated" with respect to Awards, means the allocation of Awards by the Company to the Trustee on behalf of a Participant.

  "Articles" the Articles of Association of the Company, as may be amended from time to time.

  "Board" the board of directors of the Company.

  "Cause" when used in connection with the termination of a Participant's employment with, or services to the Company or an Affiliate, and forming the basis of such termination: (a) the definition ascribed to Cause in the individual employment agreement or services agreement between the Company and/or its Affiliate and the Participant, (b) if no such definition exists, then any one of the following: (i) termination of engagement by the Company or an Affiliate, which under Israeli law denies the Participant's entitlement to severance pay; (ii) dishonesty towards the Company or an Affiliate, (iii) insubordination with respect to reasonable directives of the Participant's direct supervisor or to directives of the Board, (iv) substantial malfeasance or nonfeasance of duty, (v) embezzlement of the Company's or an Affiliate's funds, (vi) unauthorized disclosure of confidential information, (vii) conduct substantially prejudicial to the business of the Company or Affiliate, (viii) any substantial breach by the Participant of his/ her employment or service agreement or any other obligations towards Company or an Affiliate.

  "Commencement Date" means the date of commencement of the vesting schedule with respect to a Grant of Awards which, unless otherwise determined by the Administrator, shall be the date on which such Grant of Awards shall be Allocated.

  "Control" or "Controlled" shall have the meaning ascribed thereto in Section 102.

  "Disability" means disability resulting in the inability to perform services for the Company for six months or more.

  "Exercise Price" means the price determined by the Administrator in accordance with Section 7.1 below which is to be paid to the Company in order to exercise a granted Option and convert such Option into an Underlying Share.

  "Exercise Notice" means a notice delivered by a Participant to the Company in the form prescribed by the Company, for the initiation of the Exercise process of an Option.

  "Option Grant Letter" means a letter from the Company or Affiliate to a Participant in which the Participant is notified of the decision to Grant to the Participant of Options according to the terms of the Plan. The Grant Letter may specify (i) the Tax Track that the Company chooses according to Section 11 of the Plan; (ii) the Exercise Price; (iii) the number of Options Granted to the Participant and (iv) the time(s) at which all or portions of an outstanding Option becomes vested and exercisable by the Participant.

2

  "Grant of Award(s)" with respect to Awards, means the grant of Awards by the Company to a Participant pursuant to a Award Grant Letter.

  "Holding Period" means the period in which the Allocated Awards granted to a Participant are to be held by the Trustee on behalf of the Participant, in accordance with Section 102, and pursuant to the Tax Track which the Company selects.

  "Law" means the laws of the State of Israel as are in effect from time to time.

  "NASDAQ" means the Nasdaq Market Inc. National Market.

  "Option" means the right granted to a Participant to purchase one (1) Share of the Company.

  "Parent" a parent corporation, whether now or hereafter existing, as means in the Securities Law.

  "Participant" means an employee, officer or director of the Company or any Affiliate (provided that such person does not Control the Company as such term is defined in the Tax Ordinance), on behalf of whom an Award is Granted pursuant to the Plan.

  "Plan" or "Option Plan" means the 2006 Israeli Incentive Compensation Plan, as may be amended from time to time.

  "Retirement" means the termination of a Participant's employment as a result of his/her reaching the earlier of (i) the age of retirement prescribed by Law; or (ii) the age of retirement specified in the Participant's employment agreement; or (iii) the Company's written consent for retirement.

  "Restricted Share(s)" means a specified number of Shares which are subject to restrictions and are subject to forfeiture upon happening of specified events. If and when the restrictions set forth in Paragraph 8.2 expire in accordance with the terms of this Plan and the Restricted Share Grant Letter without forfeiture of the Restricted Shares, and upon the satisfaction of all other applicable conditions as to the Restricted Shares, such shares shall no longer be considered Restricted Shares for purposes of this Plan. No expiration of the restrictions set forth in Paragraph 8 shall affect the restrictions contained in Section 102.

3

  "Restricted Share Unit(s)" or RSU(s) means a specified number of units which entitle the Participants to a specified number of Shares upon Vesting on a one-for-one basis. Unless and until a Restricted Share Units shall have vested in the manner set forth in paragraph 9.1, the Participant will have no right to receive Shares issued upon vesting of such Restricted Share Units and such Restricted Share Units will represent an unsecured obligation. Delivery of any vested Restricted Share Units shall be made in whole Shares only.

  "Restricted Share Grant Letter" means a letter from the Company or Affiliate to a Participant in which the Participant is notified of the decision to Grant to the Participant Restricted Shares according to the terms of the Plan. The Restricted Shares Grant Letter may specify (i) the Tax Track that the Company chooses according to Section 11 of the Plan; (ii) the number of Restricted Shares Granted to the Participant and (iii) the time(s) at which all or portions of an outstanding Restricted Shares become released from Vesting Period as defined in Paragraph 8.3.

  "Restricted Share Unit Grant Letter" means a letter from the Company or Affiliate to a Participant in which the Participant is notified of the decision to Grant to the Participant of Restricted Share Units according to the terms of the Plan. The Restricted Share Unit Grant Letter may specify (i) the Tax Track that the Company chooses according to Section 11 of the Plan; (ii) the number of Restricted Share Units Granted to the Participant and (iii) the time(s) at which all or portions of an outstanding Restricted Share Units become vested.

  "Section 102" means Section 102 of the Tax Ordinance.

  "Section 102 Rules" means the Income Tax Rules (Tax Relief for Issuance of Shares to Employees), 2003.

  "Securities Law" means the Israeli Securities Law - 1968, as amended

  "Share(s)" means the Company's Ordinary Shares having a nominal value of 0.13 NIS, as adjusted in accordance with Section 4 below.

4

  "Subsidiary" means a "subsidiary corporation," whether now or hereafter existing, as defined in Section 1 of the Securities Law.

  "Tax Ordinance" means the Israeli Income Tax Ordinance [New Version], 1961, as amended, and any regulations, rules, orders or procedures promulgated there under.

  "Tax Track" means one of the three tax tracks described under Section 102, specifically: (1) the "Capital Gains Track Through a Trustee"; (2) "Income Tax Track Through a Trustee"; or (3) the "Income Tax Track Without a Trustee"; each as defined in Sections 11.1-11.2 of this Plan, respectively.

  "Termination of Employment" Termination of the employment relationship of a Participant who is either an employee, director or officer of the Company or an Affiliate, by either the Company, an Affiliate or the Participant.

  "Term of the Options" means, with respect to Granted but unexercised Options, the time period set forth in Section 7.6 below.

  "Trustee" means a Trustee appointed by the Company to hold in trust, Awards and Underlying Shares.

  "Underlying Shares" means Shares issued or to be issued upon exercise of Granted Options and/or Shares issued upon vesting of RSU and/or Shares released upon vesting of Restricted Shares, all in accordance with the Plan.

2.2 GENERAL

  Without derogating from the meanings ascribed to the capitalized terms above, all singular references in this Plan shall include the plural and vice versa, and reference to one gender shall include the other, unless otherwise required by the context.

3. SHARES AVAILABLE FOR OPTIONS

  The total number of Shares reserved for issuance under this Plan and any modification thereof, shall be 200,000, unless otherwise determined by the Board of Directors. Such number of Shares shall be subject to adjustment as required for the implementation of the provisions of this Plan, in accordance with the provisions of Section 4 below.

  In the event that Awards Allocated under the Plan expire, forfeit or otherwise terminate in accordance with the provisions of the Plan, such expired or terminated Awards shall become available for future Grants and Allocations under the Plan.

5

4. ADJUSTMENTS

  Changes in Capitalization – In the event the Shares shall be subdivided or combined into a greater or smaller number of Shares or if, upon a reorganization, recapitalization or the like, the Shares shall be exchanged for other securities of the Company, each Participant shall be entitled, subject to the conditions herein stated, to purchase or receive such greater or smaller number of Shares or amount of other securities of the Company as were exchangeable, for the number of Shares of the Company which such Participant would have been entitled to purchase or receive following such subdivision, combination or exchange in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under this Plan. With respect to Options, appropriate adjustments may be made in the exercise price per share to reflect such subdivision, combination or exchange.

  In the event that the Company shall issue any of its Shares or other securities as bonus shares or a stock dividend upon or with respect to any Shares, which shall at the time be subject to an Award hereunder, each Participant upon exercising or vesting of such Award, shall be entitled to receive (for the purchase price payable upon such exercise or vesting, as applicable), the Shares as to which he or she is exercising such Option or the Shares as to which he or she is entitled to receive upon vesting of RSU or Restricted Shares. In addition thereto (at no additional cost), such number of Shares (of the class or classes in which such bonus shares or stock dividend were declared), and such amount of Shares (and the amount in lieu of fractional Shares) as is equal to the Shares which he would have received had he been the holder of the Shares as to which he is exercising his Option at all times between the date of the granting of such Option and the date of its exercise, and/or such amount of Shares (and the amount in lieu of fractional Shares) as is equal to the Shares which he would have received had he been the holder of the Shares as to which he is entitled to receive at all times between the date of the granting of such RSU or Restricted Shares and the date of its vesting.

  If the Company offers the holders of the Shares, or of any other class of security for which the Options are then exercisable, rights to purchase securities of the Company, then the Company shall offer the same rights to the Participants as if they had exercised their Options on the record date with respect to such rights offering.

5. ADMINISTRATION OF THE PLAN

5.1 POWER

  Subject to applicable law, the Articles of Association of the Company, and any resolution to the contrary by the Company’s Board of Directors, the Administrator is authorized, in its sole and absolute discretion, to exercise all powers and authorities either specifically granted to it under the Plan or necessary or advisable in the administration of the Plan; including, without limitation:

6

  (A) to determine:

  (i) the Participants in the Plan, the number of Awards to be Granted for each Participant’s benefit and the Exercise Price (in case of Options) subject to the approval of the Board of Directors if such approval is required by Law;

  (ii) the time or times at which Awards shall be Granted;

  (iii) whether, to what extent, and under what circumstances an Award may be settled, canceled, forfeited, exchanged, or surrendered;

  (iv) any terms and conditions in addition to those specified in the Plan under which an Award may be Granted; and

  (v) any measures, and to take actions, as deemed necessary or advisable for the administration and implementation of the Plan.

  (B) to interpret the provisions of the Plan and to take all actions resulting therefrom including without limitation;

  (i) subject to Section 7, 8 and 9, to accelerate the date on which any Allocated Award under the Plan becomes vested;

  (ii) to waive or amend Plan provisions relating to exercise of Options, including exercise of Options after termination of employment, for any reason; and

  (iii) to amend any of the terms of the Plan, including the terms of specific Allocation or any prior determinations of the Administrator;

  (C) The Administrator may, at any time, and when applicable, after consultation with the Trustee, amend, alter, suspend or terminate this Plan. Termination of this Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under this Plan prior to the date of such termination.

5.2 LIMITATIONS

  Notwithstanding the provisions of Section 5.1 above, no interpretations, determinations or actions of the Administrator shall contradict the provisions of Section 102, and no waiver or amendment with respect to the Plan shall have a material adverse affect on any Participant’s rights in connection with any Granted Award under the Plan without receiving the consent of such Participant.

7

6. ALLOCATION OF AWARDS

6.1 CONDITIONS FOR ALLOCATION OF AWARDS

  Awards may be Allocated at any time after:

  (A) the Plan has been approved by the necessary corporate bodies of the Company; and

  (B) the Trustee and the Plan have been approved by the Israeli Income Tax Authorities pursuant to the requirements of the Tax Ordinance or the Company has filed all required documents with the Israeli Tax Authorities as specified in Section 102 and the Rules; and

  (C) all other approvals, consents or requirements necessary by Law and/or NASDAQ rules have been received or met

6.2 DATE OF ALLOCATION

  (A) In case of allocation to a Trustee according to Section 102, the date on which Awards shall be deemed Allocated under the Plan shall be the date on which the Company shall notify the Trustee that such Allocated Awards have been Allocated in the name of the Trustee on behalf of a Participant

  (B) In case of allocation to a Participant, the date on which Awards shall be deemed Granted under this Plan shall be the date on which the Administrator resolved that an Award has been Granted to a Participant.

7. OPTIONS

7.1 EXERCISE PRICE

  The Exercise Price per Underlying Share deliverable upon the exercise of an Option shall be determined by the Administrator. The Exercise Price shall be set forth in the Grant Letter.

7.2 VESTING SCHEDULE

  Options shall vest (i.e., Options shall become exercisable) at the dates set forth in the Option Grant Letter (the “ Option Vesting Dates ”). The vesting schedule may be conditioned on the achievement of certain performance goals as shall be determined by the Administrator. An Option may be subject to such other terms and conditions on the time(s) when it may be exercised as the Administrator may deem appropriate. The vesting provisions of individual Options may vary.

  Unless otherwise determined by the Administrator, all Options Granted on a certain date shall be subject to the continued employment with or service to the Company or Affiliate by the Participant, from the date the Option is Granted until the end of the last Option Vesting Dates set forth in the Option Grant Letter.

8

7.3 MINIMUM EXERCISE

  When exercising an Option, and unless restricted by the number of Underlying Shares available for exercise, the Participant must exercise such Option with respect to at least one hundred (100) Underlying Shares. An Option may not be exercised for fractional Shares.

  The exercise by a Participant of a portion of the Options granted shall not cause the expiration, termination or cancellation of the remaining portions of Options that have vested and that are held by the Participant or the Trustee on behalf of the Participant.

7.4 MANNER OF EXERCISE

  An Option may be exercised by and upon the fulfillment of the following:

  (A) Method of Exercise

  The Option shall be exercisable by delivery of an Exercise Notice to the Company, which shall state the election to exercise the Option, the number of Shares with respect to which the Option is being exercised, and such other representations and agreements as may be required by the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price. The Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise Price. The Company may revise the method of exercise and the form of the Exercise Notice from time to time (including without limitation in connection with exercise of options accompanied by instruction to sell). In the event of such change, none of the terms or conditions specified herein shall be deemed to be revised unless explicitly being revised..

  (B) Payment of Purchase Price

  The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator, shall be determined at the time of grant and may consist entirely of (1) cash, (2) check, (3) wire transfer, (4) consideration received by the Company under a formal cashless exercise program adopted by the Company in connection with the Plan, or (5) any combination of the foregoing methods of payment. To the extent that the consideration paid for the Shares is denominated in a currency other than the currency in which the exercise price is denominated, the exchange rate to be used shall be the last known representative exchange rate published by the Bank of Israel on the date of grant of the Option. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company.

9

  (C) Allocation of Shares

  Upon the delivery of a duly signed Notice of Exercise and the payment to the Company of the Exercise Price, the Company shall issue the Underlying Shares to the Trustee (according to the applicable Holding Period) or to the Participant, as the case may be.

  (D) Expenses

  All costs and expenses including broker fees and bank commissions, derived from the exercise of Options or Underlying Shares, shall be borne solely on the Participant.

7.5 WAIVER OF OPTIONS

  (A) At any time prior to the expiration of any Granted (but unexercised) Option, a Participant may waive his rights to such Option by providing the Company, at its principal office, written notice expressly waiving his/her rights to the Option(s) (the “ Waiver Notice ”). A Waiver Notice shall specify the number of Options being waived and shall be signed by the Participant.

  (B) Upon receipt by the Company of the Waiver Notice, such Options shall expire and become available for future Grants and Allocations under this Plan.

7.6 TERM OF THE OPTIONS

  Unless earlier terminated pursuant to the provisions of this Plan, all Granted but unexercised Options shall expire and cease to be exercisable at 5:00 p.m. Israel time on the tenth (10 th ) anniversary of the Commencement Date of such Options.

8. RESTRICTED SHARES

8.1 GRANT OF RESTRICTED SHARE

  As soon as practicable after the Date of Allocation, the Company shall direct that the Restricted Shares be registered in the name of and issued to the Trustee for the benefit of the Participant, either in book entry format or represented by a stock certificate or certificates. A Participant selected to receive Restricted Shares shall not have any rights with respect to such Award, unless and until such Participant has delivered to the Company a fully executed copy of the Restricted Share Grant Letter relating thereto and has otherwise complied with the applicable terms and conditions of such Award. Further, such Award shall be subject to the following conditions:

10

  (A) Purchase Price

  The purchase price of Restricted Shares shall be determined by the Administrator, all in accordance with the Law. The purchase price shall be set forth in the Restricted Share Grant Letter. Should the purchase price be less than the par value of the Share, the Administrator shall follow the provisions of the Law. The payment of the purchase price shall be made by the Participant at the Restricted Share Vesting Date as defined below.

  (B) Legend

  Each certificate, if any, for the Restricted Shares shall bear the following legend:

  “The ownership and transferability of this certificate and the shares represented hereby are subject to the terms and conditions (including forfeiture) of the Optibase Ltd. 2006 Israeli Incentive Compensation Plan and a Restricted Share Grant Letter entered into between the beneficial owner and Optibase Ltd. Copies of such Plan and Letter are on file in the executive offices of Optibase Ltd.”

  In addition, the Restricted Shares shall be subject to restrictions as the Company may deem advisable and the Company may cause a legend or legends to be placed on such certificate or certificates to make appropriate reference to such other restrictions.

  (C) Custody

  All Restricted Shares and Underlying Shares, and any certificate or certificates representing the same, shall be held in the Trustee, until the later of the time when (i) such shares no longer are considered Restricted Shares and (ii) the required Holding Period (if applicable) under the Tax Ordinance has run and the Participant has, provided in writing to the Company, requested release of the Shares. Notwithstanding the above the Trustee shall not release Shares to a Participant unless the latter, prior to, or concurrently with, such release, provides the Company and the Trustee with evidence, satisfactory in form and substance to the Company and the Trustee, that all taxes, if any, required to be paid upon such release have, in fact, been paid.

8.2 RESTRICTIONS

  The Participant or the Trustee, as applicable, as registered holder of the Award (the “ Holder ”) shall have all rights and privileges of a shareholder as to the Restricted Shares, and receive dividends or other distributions with respect to the Restricted Shares, except that the following restrictions shall apply:

  (A) Restricted Shares issued to a Participant or to the Trustee for the benefit of a Participant, shall be voted by an irrevocable proxy assigned to a designated person, who has been appointed by the Company’s Board of Directors as a representative (the “Representative”).

11

  (I) The Company’s Board of Directors may, at its discretion, replace the Representative from time to time.

  (II) Shares subject to proxy shall be voted by the Representative on any issue or resolution brought before the shareholders of the Company in accordance with instructions of the Board of Directors of the Company.

  (III) Each Participant, upon execution of the irrevocable proxy specified above, undertakes to hold the Representative harmless from any and all claims related or connected to said proxy.

  (IV) The Representative shall be indemnified and held harmless by the Company against any cost or expense (including attorneys’ fees) reasonably incurred by the Representative, 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 voting of the Shares subject to proxy, unless arising out of the Representative’s own fraud or gross negligence, to the extent permitted by applicable law. In the event the Representative shall have indemnification by virtue of other functions or services he or she performs for the Company or Affiliate (whether by agreement, insurance policy or decision of the appropriate corporate body(ies) of the Company and/or Affiliate) , this indemnification shall be in addition to any such other indemnification.

  (B) the Participant shall not be entitled to delivery of any of the Restricted Shares (whether by transfer to Participant’s brokerage account or by delivery of stock certificates) until the applicable vesting period as defined in paragraph 8.3 has run and upon the satisfaction of all other applicable conditions whereupon Participant will only be entitled to the applicable percentage of Restricted Shares in accordance with the schedule set forth in the Restricted Share Grant Letter (the; “ Restricted Share Vested Percentage ”) on the applicable vesting date in accordance with the schedule set forth in the Restricted Share Grant Letter (the: “ Restricted Share Vesting Date ”);

  (C) Restricted Shares may not be sold, pledged, assigned, transferred, or otherwise encumbered or disposed of for any reason until the latter of the (i) applicable Restricted Share Vesting Date and (ii) the applicable Holding Period.

  (D) all Shares distributed as a dividend or distribution, if any, with respect to Restricted Shares prior to the applicable Restricted Share Vesting Date, shall be delivered to and held by the Trustee, and shall be subject to the same restrictions as the shares of Restricted Shares in respect of which the dividend or distribution was made; and

  (E) all unvested Restricted Shares shall be forfeited and returned to the Company and all rights of the Holder with respect to such Shares shall terminate in their entirety on the terms and conditions set forth in Paragraph 8.5.

  (F) Any attempt to dispose of unvested Restricted Share or any interest in such shares in a manner contrary to the restrictions set forth in this Plan shall be void and of no effect.

12

  For the avoidance of doubt, the foregoing restrictions shall be in addition to, and separate from, the restrictions contained in the Section 102 including, without limitation, the restrictions on the Employee’s right to hold the shares directly or to sell or otherwise dispose of the shares prior to the expiration of the Holding Period.

8.3 VESTING PERIOD

  Restricted Shares shall vest at the dates set forth in the Restricted Share Grant Letter. The vesting schedule may be conditioned on the achievement of certain performance goals as shall be determined by the Administrator .A Restricted Share may be subject to such other terms and conditions on the time(s) when it may be vested, as the Administrator may deem appropriate. The vesting provisions of individual Restricted Shares may vary.

  Unless otherwise determined by the Administrator, all Restricted Shares Granted shall be subject to the continued employment with or service to the Company or Affiliate by the Participant, from the date the Restricted Shares are Granted until the end of the last Restricted Share Vesting Dates set forth in the Restricted Share Grant Letter. Vesting shall cease upon the date Participant’s Employment terminates for any reason unless otherwise determined by the Administrator in its sole discretion.

8.4 LAPSE OF RESTRICTION

  The restrictions set forth in Paragraph 8.2 with respect to Restricted Shares shall apply for a period beginning on the Date of Allocation specified in the Restricted Share Grant Letter and ending on the applicable Restricted Share Vesting Date. For the avoidance of doubt, no vesting under this Plan shall entitle the Participant to take possession of any Shares or become the registered holder thereof until the Holding Period has run (if applicable).

  As soon as administratively practicable following the applicable Restricted Share Vesting Dates, and upon the satisfaction of all other applicable conditions as to such Vested Percentage of Restricted Shares and without any notification by the Participant, the Company shall, at its option, (i) deliver or cause to be delivered to the Trustee, or if the Holding Period has run and the Participant has requested release of the Shares, the Participant a certificate or certificates for the applicable Restricted Shares which shall not bear the Legend or (ii) transfer or arrange to have transferred the vested Shares to a brokerage account of the Trustee, or if the Holding Period has run and the Participant has requested release of the shares released from trust free of any Company-imposed transfer restrictions. Notwithstanding the above the Company shall not deliver Shares to a Participant unless the latter, prior to, or concurrently with, such release, provides the Company and the Trustee with evidence, satisfactory in form and substance to the Company and the Trustee, that all taxes, if any, required to be paid upon such release have, in fact, been paid.

13

8.5 FORFEITURE

  At the time of the Participant’s Termination of Employment for any or no reason, all unvested Restricted Shares shall be forfeited by the Holder as of the date of termination unless otherwise determined by the Administrator in its sole discretion. In the event of any such forfeiture, all such forfeited Shares of Restricted Share shall become the property of the Company and any certificate or certificates representing such Restricted Shares shall be returned immediately to the Company at no cost, all in accordance with the Law.

9. RESTRICTED SHARES UNITS

9.1 VESTING

  Restricted Share Units shall vest at the dates set forth in the Restricted Share Unit Grant Letter (the “ Units Vesting Dates ”). The vesting schedule may be conditioned on the achievement of certain performance goals as shall be determined by the Administrator. The vesting provisions of individual Restricted Share Units may vary.

  Unless otherwise determined by the Administrator, all Restricted Share Units Granted shall be subject to the continued employment with or service to the Company or Affiliate by the Participant, from the date the Restricted Share Unit is Granted until the end of the last Units Vesting Dates set forth in the Restricted Share Unit Grant Letter.

  Vested Restricted Share Units included in the Award shall be settled in Shares of the Company’s Share on a one-for-one basis. As soon as administratively practicable following each of the Units Vesting Dates specified in the Restricted Share Unit Grant Letter and without any notification by the Participant, the Company shall deliver the Trustee for the benefit of the Participant or if the Holding Period has run and the Participant has requested release of the Shares, the Participant a certificate, representing a number of Shares equal to the number of vested Restricted Share Units. Notwithstanding the above the Company shall not release Shares to a Participant unless the latter, prior to, or concurrently with, such release, provides the Company and the Trustee with evidence, satisfactory in form and substance to the Company and the Trustee, that all taxes, if any, required to be paid upon such release have, in fact, been paid.

9.2 SELLING SHARES

  The Trustee shall act with respect to the Underlying Shares issued upon vesting of RSU as follows: upon a written request of the Participant the trustee shall release and/or sell from the trust Underlying Shares, on behalf of the Participant, by executing and delivering to the Company such instrument(s) as the Company may require, giving due notice of such release to such Participant. Notwithstanding the above the Trustee shall not release such Shares to such Participant unless the latter, prior to, or concurrently with, such release, provides the Trustee with evidence, satisfactory in form and substance to the Trustee, that all taxes, if any, required to be paid upon such release have, in fact, been paid.

14

9.3 RESTRICTIONS

  Notwithstanding any other provision of this Plan, if the Administrator shall at any time determine that any Consent (as hereinafter defined) is necessary or desirable as a condition of, or in connection with, the issuance or transfer of Shares or the taking of any other action in connection with the Restricted Share Unit Grant Letter or the Plan, then such action shall not be taken, in whole or in part, unless and until such Consent shall have been effected or obtained to the full satisfaction of the Administrator, or the Administrator may require that such action be taken only to the extent and in such manner as to make such Consent unnecessary.

  For purposes of this Section 9.3, the term “Consent” means (a) any and all listings, registrations or qualifications in respect thereof upon any securities exchange or under any foreign or local law, rule or regulation, (b) any and all written agreements and representations by the Participant with respect to the disposition of Shares, or with respect to any other matter, which the Administrator shall deem necessary or desirable to comply with the terms of any such listing, registration or qualification or to obtain an exemption from the requirement that any such listing, qualification or registration be made and (c) any and all consents, clearances and approvals by any governmental or other regulatory bodies in respect of any action taken or to be taken under the Plan or Restricted Share Unit Grant Letter.

9.4 NO RIGHTS AS A SHAREHOLDER

  Until the Shares subject to RSU, are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder, shall exist with respect to the Shares.

9.5 FORFEITURE

  Notwithstanding any contrary provision of this Plan, the balance of the Restricted Share Units that have not vested pursuant to paragraph 9.1 at the time of the Participant’s Termination of Employment for any or no reason will be forfeited and automatically transferred to and reacquired by the Company at no cost to the Company, all in accordance with the Law.

10. TERMINATION OF EMPLOYMENT

10.1 TERMINATION OF EMPLOYMENT

  If a Participant ceases to be an employee, director, or officer of the Company or Affiliate for any reason (as defined above – Termination of Employment) other than death, Retirement, Disability or Cause, then (A) any vested but unexercised Options on the date of Termination of Employment (as shall be determined by the Company or Affiliate, in its sole discretion), Allocated on the Participant’s behalf (“ Exercisable Options ”) may be exercised, if not previously expired, not later than the earlier of (i) 90 days after the date of Termination of Employment; or (ii) the Term of the Options and (B) any rights upon vested Restricted Share or vested Restricted Share Units shall be delivered to Participant but only to the extent that they were vested within the date his employment terminates.

15

  All other Granted Awards for the benefit of Participant shall expire upon the date of Termination of Employment.

10.2 TERMINATION FOR CAUSE

  In the event of Termination of Employment of a Participant for Cause, than (A) the Participant’s right to exercise any unexercised Options, Granted to such Participant, whether vested or not on the date of Termination of Employment, shall cease as of such date of Termination of Employment, and the Options shall thereupon expire and (B) any unvested Restricted Shares or unvested Restricted Share Units shall terminate and expire on the day the Participant is notified of his dismissal or on such earlier date as the Administrator may determine.

  If subsequent to the Participant’s Termination of Employment, but prior to the exercise of Options Granted to such Participant, the Administrator determines that either prior or subsequent to the Participant’s Termination of Employment, the Participant engaged in conduct which would constitute Cause, then the Participant’s right to exercise the Options Granted to such Participant shall immediately cease upon such determination and the Options shall thereupon expire.

  The determination by the Administrator as to the occurrence of Cause shall be final and conclusive for all purposes of this Plan.

10.3 TERMINATION BY REASON OF DEATH, RETIREMENT, OR DISABILITY

  (A)     Death . If Termination of Employment is by reason of death of the Participant, than (A) his/her estate, personal representative or beneficiaries may, exercise the Participant’s Options, to the extent it was vested within the 30th day after the Participant’s death, at any time but not later than the first to occur of: (i) one (1) year following Participant’s death; or (ii) the end of the Term of the Options and (B) any rights upon vested Restricted Shares or vested Restricted Share Units shall be delivered to Participant’s estate, personal representative or beneficiaries but only to the extent it was vested within the 30th day after employment terminates.

  (B)     Disability and Retirement . If Termination of Employment is by reason of Retirement or Disability of the Participant, the Participant than (A) may exercise any portion of the Options which have vested within 30 days after the date of Retirement or Disability, at any time but not later than the first to occur of: (i) one (1) year after the date of Retirement or Disability, as the case may be; or (ii) the end of the Term of the Options and (B) shall be entitled to any rights upon vested Restricted Shares or vested Restricted Share Units to be delivered to Participant’s estate, personal representative or beneficiaries but only to the extent it was vested within the 30th day after employment terminates.

16

  All other Granted Options for the benefit of a Participant and which have not vested on the date of Disability or Retirement, as the case may be, shall expire upon the date of Retirement or Disability, as applicable

10.4 EXCEPTIONS

  In special circumstances, pertaining to the Termination of Employment of a certain Participant, the Administrator may in its discretion decide to extend any of the periods stated above in Sections 10.1-10.3.

10.5 TRANSFER OF EMPLOYMENT OR SERVICE

  Subject to the receipt of appropriate approvals from the Israeli Tax Authorities, a Participant’s right to Awards that were Granted to him or her under this Plan, shall not be terminated or expire or forfeited solely as a result of the fact that the Participant’s employment or service as an employee, officer or director changes from the Company to an Affiliate or vice versa.

11. TRUST ARRANGEMENT AND HOLDING PERIOD

11.1 TRUSTEE TAX TRACKS

  If the Company elects to Grant Awards through (i) the Capital Gains Track Through a Trustee, or (ii) the Income Tax Track Through a Trustee, then, in accordance with the requirements of Section 102, the Company shall appoint a Trustee who will hold in trust on behalf of each Participant the Allocated Awards and the Underlying Shares issued upon (i) exercise of Options (ii) vesting of Restricted Shares and (iii) vesting of Restricted Share Units in trust on behalf of each Participant.

  The Holding Period for the Awards will be as follows:

  (A) The Capital Gains Tax Track Through a Trustee – if the Company elects to Allocate the Awards according to the provisions of this track, then the Holding Period will be 24 months from the date of Allocation; or such period as may be determined in any amendment of Section 102 or the Section 102 Rules.

  (B) Income Tax Track Through a Trustee – if the Company elects to Allocate Awards according to the provisions of this track, then the Holding Period will be 12 months from the date of Allocation; or such period as may be determined in any amendment of Section 102.

  Subject to Section 102 and the Rules, Participants shall not be able to receive from the Trustee, nor shall they be able to sell or dispose of Underlying Shares before the end of the applicable Holding Period. If a Participant sells or removes the Underlying Shares form the Trustee before the end of the applicable Holding Period (“ Breach ”), the Participant shall pay all applicable taxes imposed on such Breach by Section 7 of the Rules.

17

  In the event of a distribution of rights, including an issuance of bonus shares, in connection with Awards originally Allocated (the “ Additional Rights ”), all such Additional Rights shall be Allocated and/or issued to the Trustee for the benefit of Participants, and shall be held by the Trustee for the remainder of the Holding Period applicable to the Awards originally Allocated. Such Additional Rights shall be treated in accordance with the provisions of the applicable Tax Track.

11.2 INCOME TAX TRACK WITHOUT A TRUSTEE

  If the Company elects to Allocate Awards according to the provisions of this track, then the Awards will not be subject to a Holding Period. However, upon exercise or vesting of Awards under this Tax Track, the Trustee shall hold Underlying Shares for the benefit of the Participant until the sale or transfer from the Trustee of such Shares and the full payment of all required taxes under Rule 7.

11.3 TRACK SELECTION

  The Company, in its sole discretion, shall elect under which of the above three Tax Tracks each Award is Granted and shall notify the Participant in the Grant Letter, which Tax Track applies to each Granted Award.

11.4 CONCURRENT CONDITIONS

  The Holding Period, if any, is in addition to any vesting period as specified in this Plan. The Holding Period and vesting period may run concurrently, but neither is a substitute for the other, and each are independent terms and conditions for Awards Granted.

11.5 TRUST AGREEMENT

  The terms and conditions applicable to the trust relating to the Tax Track selected by the Company, as appropriate, shall be set forth in an agreement signed by the Company and the Trustee (the “Trust Agreement”).

12. TERM OF SHARES HELD IN TRUST

  No Underlying Shares or Additional Rights issued by the Company to the Trustee, shall be held by the Trustee on behalf of the Participant for a period longer than ten (10) years. The Administrator shall instruct the Trustee as to the transfer of these Shares.

13. RIGHTS AS A SHAREHOLDER

  Unless otherwise specified in the Plan, until the Shares are issued (as evidenced by an appropriate share certificate or by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares, notwithstanding the exercise of an Option.

18

  For the avoidance of doubt, any rights as a shareholder with respect to Restricted Shares shall be in accordance with Section 8 to this Plan.

14. NO SPECIAL EMPLOYMENT RIGHTS

  Nothing contained in this Plan or any Award Grant Letter shall confer upon any Participant any right with respect to the continuation of employment by or service to the Company or an Affiliate or to interfere in any way with the right of the Company or an Affiliate to terminate such employment or service or to increase or decrease the compensation of the Participant with respect to such employment or service.

15. RESTRICTIONS ON SALE OF OPTIONS AND SHARES

15.1 AWARDS

  (A)     Awards Granted under this Plan: (i) are not transferable by Participants other than by will or the laws of descent and during the lifetime of a Participant may be exercised only by the Participant; and (ii) whether or not fully paid, may not be sold, assigned, transferred, pledged, encumbered, hypothecated or otherwise disposed of (each, a “ Disposition ”); and (iii) are not assignable by operation of law, and shall not be subject to execution, attachment or similar process.

  (B)     During the lifetime of a Participant, each and all of such Participant’s rights to receive or purchase the Underlying Shares may be received or exercised only by the Participant.

  (C)     Any attempted Disposition contrary to the provisions of this Plan, and the levy of any execution, attachment or similar process upon an Award, whether directly or indirectly, shall be null and void.

15.2 DISSOLUTION, LIQUIDATION, MERGER OR ASSETS SALE

  Dissolution or Liquidation – In the event of a proposed dissolution or liquidation of the Company, the Administrator shall notify each Participant as soon as practicable, prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for a Participant to have the right to exercise his or her Option until fifteen (15) days prior to such transaction as to all of the Shares subject to Options, including Shares as to which the Option would not otherwise be exercisable. To the extent it has not been previously exercised, an Option will terminate immediately prior to the consummation of such proposed action. The Administrator may in its sole discretion decide if and how the vesting of RSU or Restricted Shares shall be accelerated in such cases.

  Merger or Asset Sale – In the event of a merger of the Company with or into another corporation, or the sale of substantially all of the assets of the Company, each outstanding Award shall be assumed or an equivalent Award substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the RSU and/or Option, the RSU and/or Option shall terminate as of the closing of the merger or sale of assets. For the purposes of this paragraph, the Award shall be considered assumed if, following the merger or sale of assets, the Award confers the right to purchase or receive, for each Award immediately prior to the merger or sale of assets, the consideration (whether shares, cash, or other securities or property) received in the merger or sale of assets by holders of Shares for each Share held on the effective date of the transaction (and if such holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or sale of assets is not solely ordinary shares (or their equivalent) of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise or vesting of the Award, for each Shares subject to Awards, to be solely ordinary shares (or their equivalent) of the successor corporation or its Parent equal in fair market value to the per Share consideration received by holders of Ordinary Shares in the merger or sale of assets.

19

15.3 ACCELERATION PROVISION

  The Administrator, in its sole discretion, may decide to add a provision in certain Awards Grant Letters, according to which in case of a Merger, all or some of the unvested Awards, shall automatically accelerate.

15.4 LOCK UP

  The Participant shall undertake that, if so requested by the Company or any representative of the underwriters (the “Managing Underwriter”) in connection with any registration of the offering of any securities of the Company, Participant shall not sell or otherwise transfer any Shares or other securities of the Company during the 180-day period (or such other period as may be requested in writing by the Managing Underwriter and agreed to in writing by the Company) (the “Market Standoff Period”) following the effective date of a registration statement of the Company. The Company may impose stop-transfer instructions with respect to securities subject to the foregoing restrictions until the end of such Market Standoff Period

15.5 RIGHTS OF ORDINARY SHARES

  Unless specifically restricted by this Plan and/or the provisions of the Award Grant Letter, the Restricted Shares and the Underlying Shares or any other securities of the Company so issuable, shall have the rights set forth in the Articles, and shall be subject to the obligations set forth in the Articles for holders of the same class of securities. Upon the registration of a Participant in the Share Register, the Participant shall be entitled to receive a copy of the Articles at his/her request.

20

16. VOTING

  Each of the Underlying Shares shall entitle the holder thereof to one vote at shareholders meetings of the Company. The Trustee shall forward any notice regarding shareholders meetings to the last address of the Participants provided to the Trustee by the Company. A Participant, who wishes to exercise his/her right to vote at such meeting, shall send a letter to the Trustee at least two (2) working days before the meeting. The Trustee shall issue a power of attorney to such Participant, enabling the Participant to vote the number of Underlying Shares held for him/her in trust.

17. TAX MATTERS

  This Plan shall be governed by, and shall conform with and be interpreted so as to comply with, the requirements of Section 102 and any written approval from the Israeli Tax Authorities. All tax consequences under any applicable law (other than stamp duty) which may arise from the Grant or Allocation of Awards, from the exercise or vesting thereof or from the holding or sale of Underlying Shares (or other securities issued under the Plan) by or on behalf of the Participant, shall be borne solely by the Participant. The Participant shall indemnify the Company and/or Affiliate, as the case may be, and hold them harmless, against and from any liability for any such tax or any penalty, interest or indexing.

18. WITHHOLDING TAXES

  Whenever an amount with respect to withholding tax relating to Awards Granted to a Participant and/or Underlying Shares issued upon exercise or vesting, is due from the Participant and/or the Company and/or an Affiliate, the Company and/or an Affiliate shall have the right to demand from a Participant such amount sufficient to satisfy any applicable withholding tax requirements related thereto, and whenever Shares or any other non-cash assets are to be delivered pursuant to the exercise of an Award, or transferred thereafter, the Company and/or an Affiliate shall have the right to require the Participant to remit to the Company and/or to the Affiliate, or to the Trustee an amount in cash sufficient to satisfy any applicable withholding tax requirements related thereto. If such amount is not timely remitted, the Company and/or the Affiliate shall have the right to withhold or set-off (subject to Law) such Shares or any other non-cash assets pending payment by the Participant of such amounts.

  Until all taxes have been paid in accordance with Rule 7 of the Section 102 Rules, Awards and/or Underlying Shares may not be sold, transferred, assigned, pledged, encumbered, or otherwise willfully hypothecated or disposed of, and no power of attorney or deed of transfer, whether for immediate or future use may be validly given. Notwithstanding the foregoing, the Awards and/or Underlying Shares may be validly transferred in accordance with Section 20 below, provided that the transferee thereof shall be subject to the provisions of Section 102 and the Section 102 Rules as would have been applicable to the deceased Participant were he or she to have survived.

19. NO TRANSFER OF AWARDS BY TRUSTEE

  The Trustee is prohibited from transferring Awards to any third party, including a Participant, except in accordance with instructions received from the Administrator.

21

20. TRANSFER OF RIGHTS UPON DEATH

  No transfer of any right to an Award or Underlying Share issued upon the exercise or vesting by will or by the laws of descent shall be effective to bind the Company unless the Company shall have been furnished with the following signed and notarized documents:

  (A) A written request for such transfer and a copy of the legal documents creating and confirming the right of the person acting with respect to the Participant’s estate and of the transferee;

  (B) A written consent by the transferee to pay any amounts in connection with the Awards and Underlying Shares any payment due according to the provisions of the Plan and otherwise abide by all the terms of the Plan; and

  (C) any such other evidence as the Administrator may deem necessary to establish the right to the transfer of the Award or Underlying Share issued upon the exercise thereof and the validity of the transfer.

21. NO RIGHT OF OTHERS TO AWARDS

  Subject to the provisions of this Plan, no person other than a Participant shall have any right with respect to Awards Granted to the Participant under this Plan.

22. EXPENSES AND RECEIPTS

  The expenses incurred in connection with the administration and implementation of this Plan shall be borne by the Company. Any proceeds received by the Company in connection with the exercise of any Option may be used for general corporate purposes.

23. REQUIRED APPROVALS

  The Plan is subject to the receipt of all approvals required under Section 102 and the Law.

24. GOVERNING LAW

  This Plan and all documents delivered or executed by the Company or an Affiliate in connection herewith shall be governed by, construed and administered in accordance with the Israeli law. The district courts of Tel Aviv-Jaffa shall be the appropriate and exclusive venue for any disputes arising under and in connection with this Plan and any and all documents delivered or executed in connection hereto.

25. TREATMENT OF PARTICIPANTS

  The Company and/or an Affiliate are under no obligation to treat Participants in a uniform manner. Subject to the requirements of the Israeli law resulting from the Company’s election of a particular Tax Track, the terms of each Award may differ, in the sole discretion of the Administrator, from other Awards Granted under this Plan at the same time, or at any other time. The Administrator may also grant more than one (1) Award to a given Participant during the term of this Plan, either in addition to, or in substitution for, one or more Awards previously Granted to that Participant.

22

26. NO CONFLICTS

  Unless otherwise specified in the Award Grant Letter, in the event of any conflict between the terms of the Plan and the Award Grant Letter, the Plan shall prevail.

27. PARTICIPANT UNDERTAKINGS

  By entering into this Plan, any Participant who is a resident of Israel shall (1) agrees and acknowledges that he or she have received and read the Plan, and the Award Grant Letter; (2) undertake all the provisions set forth in: Section 102 (including provisions regarding the applicable Tax Track that the Company has selected), the 102 Rules, the Plan, the Award Grant Letter and the Trust Agreement; and (3) subject to the provisions of Section 102 and the Rules, undertake not to sell or release the underlying Shares from trust before the end of the Holding Period (if any).

28. ENFORCEABILITY

  The provisions of this Plan shall be binding upon the Participant, his/her estate, personal representatives, heirs and beneficiaries.

29. NOTICES

  Each notice relating to this Plan and any Award Grant Letter issued hereunder shall be in writing and delivered in person or by first class mail, postage prepaid, to the address last known of the person to be notified. Each notice shall be deemed given on the date it is received. If delivered in person, it shall be deemed received upon such delivery. If sent by mail, it shall be deemed received no later than five (5) business days following its mailing. The Company’s address for notice purposes is:

  Optibase Ltd.

  Attn: __________________________

  Address: ________________________

23

Exhibit 5.1

GROSS, KLEINHENDLER, HODAK, HALEVY, GREENBERG & CO.

September 28, 2006

Optibase Ltd.
2 Gav Yam Center
7 Shenkar Street
Herzliya, 46120

Ladies and Gentlemen:

We have acted as counsel to Optibase Ltd., a company organized under the laws of the State of Israel (the “ Company ”), in connection with its filing of a registration statement on Form S-8 (the “ Registration Statement ”) under the Securities Act of 1933, as amended (the “ Securities Act ”), relating to the registration of 138,300 of the Company’s ordinary shares, par value NIS 0.13 per share (“ Ordinary Shares ”), issuable under the Company’s 2006 Israeli Incentive Compensation Plan (the “ Plan ”).

In our capacity as counsel to the Company, we have examined originals or copies, satisfactory to us, of the Company’s (i) Articles of Association, (ii) the Plan and (iii) resolutions of the Board of Directors. In such examination, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals and the conformity with the original documents of all documents submitted to us as copies or facsimiles. As to any facts material to such opinion, to the extent that we did not independently establish relevant facts, we have relied on certificates of public officials and certificates of officers or other representatives of the Company. We are admitted to practice law in the State of Israel and the opinion expressed herein is expressly limited to the laws of the State of Israel.

On the basis of the foregoing, we are of the opinion that the 138,300 Ordinary Shares being registered pursuant to the Registration Statement, when issued and paid for in accordance with the Plan, will be validly issued, fully paid and non-assessable.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement. In giving our consent, we do not admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations thereunder.

Very truly yours,

/s/ Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co.

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        We consent to the incorporation by reference in the Registration Statement (Form S-8), pertaining to the “2006 Israeli Incentive Compensation Plan” of Optibase Ltd., of our report, dated January 31, 2006, with respect to the consolidated financial statements of Optibase Ltd. included in its Annual Report (Form 20-F) for the year ended December 31, 2005, filed with the Securities and Exchange Commission.

Tel-Aviv, Israel
September 28, 2006 		KOST FORER GABBAY & KASIERER
A Member of Ernst & Young Global