SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-8

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Silicom Ltd.
(Exact Name of Registrant as Specified in Its Charter)

Israel
(State or Other Jurisdiction of Incorporation or Organization)

Not Applicable
(I.R.S. Employer Identification No.)

8 Hanagar St., P.O.Box 2164
Kfar-Sava 44425, Israel.
(Address of Principal Executive Offices)

U.S. Share Option Plan (2000)
Share Option Plan (2004)
(Full Title of Plans)

Silicom Connectivity Solutions, Inc.
6 Forest Avenue Paramus
New Jersey, USA, 07652
Tel: 201-843-1175
Facsimile: 201-843-1457
(Name, address and telephone number of agent for service)

Copies of all Correspondence to:

DAVID H. SCHAPIRO, ESQ.
Yigal Arnon & Co.
1 Azrieli Center
Tel Aviv, 67021 Israel
Tel: 972-3-608-7856

CALCULATION OF REGISTRATION FEE

Title of Securities to be Registered			Proposed Maximum Offering Price Per Share			Proposed Maximum Aggregate Offering Price		Amount of Registration Fee




Ordinary Shares, par value
NIS 0.01 per share
To be issued under the
Registrant's U.S. Share
Option Plan (2000)	191,200	(2)	$	15.21	(3)	$	2,908,152	$	114.29
To be issued under the
Registrant's Share Option
Plan (2004), as amended	143,750	(4)	$	15.21	(3)	$	2,186,437.50	$	85.93
Issued under the
Registrant's U.S. Share
Option Plan (2000)	8,800	(5)(6)	$	4.06	(7)	$	35,728	$	1.40
Issued under the
Registrant's Share Option
Plan (2004), as amended	439,000	(8)(6)	$	6.51	(9)	$	2,857,890	$	112.32
TOTAL:	782,750							$	313.94

(1)

This registration statement shall also cover any additional Ordinary Shares which may become issuable under the U.S. Share Option Plan (2000) and Share Option Plan (2004), as amended, by reason of any share dividend, share split, recapitalization, or other similar transaction effected without the receipt of consideration which results in an increase in the number of outstanding Ordinary Shares of the Registrant.

(2)	Represents Ordinary Shares that may be issued pursuant to future awards under the U.S. Share Option Plan (2000).

(3)

The proposed maximum offering price per share as to shares authorized for issuance pursuant to future awards solely for the purpose of calculating the registration fee, pursuant to Rule 457(c) and Rule 457(h)(1) of the Securities Act of 1933, as amended (the “Securities Act”), based on the average of the high and low prices for the Registrant’s Ordinary Shares on the Nasdaq Capital Market on February 8, 2008.

(4)	Represents Ordinary Shares that may be issued pursuant to future awards under the Share Option Plan (2004), as amended.

(5)	Represents Ordinary Shares underlying options granted under the U.S. Share Option Plan (2000).

(6)	To the extent outstanding awards terminate, expire or otherwise cease to exist without having been exercised, the Ordinary Shares subject to such awards will become available for future issuance.

(7)

The proposed maximum offering price per share has been estimated, solely for the purpose of calculating the registration fee pursuant to Rule 457(h) of the Securities Act, based on a weighted average exercise price of the 8,800 Ordinary Shares underlying options granted under the U.S. Share Option Plan (2000).

(8)	Represents Ordinary Shares underlying options granted under the Share Option Plan (2004), as amended.

(9)

The proposed maximum offering price per share has been estimated, solely for the purpose of calculating the registration fee pursuant to Rule 457(h) of the Securities Act, based on a weighted average exercise price of the 439,000 Ordinary Shares underlying options granted under the Share Option Plan (2004), as amended.

PART I

INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

EXPLANATORY NOTE

Item 1.

Plan information

As permitted by the rules of the Securities and Exchange Commission, this Registration Statement omits the information specified in Part I of Form S-8.

Item 2.

Information and employee plan annual information

The Registrant will provide without charge to each person to whom a copy of a Section 10(a) Prospectus hereunder is delivered, upon the oral or written request of such person, a copy of any document incorporated in this Registration Statement by reference. Requests for such information should be directed to 8 Hanagar St., P.O. Box 2164 Kfar-Sava 44425, Israel. Our telephone number is 972-9-764-4555.

THE COMPANY HAS RECEIVED FROM THE SECURITIES AUTHORITY OF THE STATE OF ISRAEL AN EXEMPTION PURSUANT TO THE PREVAILING LAWS OF THE STATE OF ISRAEL, WITH RESPECT TO THE OFFERING OF SECURITIES DESCRIBED IN THIS PROSPECTUS. NOTHING IN SUCH EXEMPTION SHALL BE CONSTRUED AS AUTHENTICATING THE MATTERS CONTAINED IN THIS PROSPECTUS OR AS AN APPROVAL OF THEIR RELIABILITY OR ADEQUACY OR AS AN EXPRESSION OF OPINION AS TO THE QUALITY OF THE SECURITIES OFFERED HEREBY.

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.

Incorporation of Certain Documents By Reference

The following documents filed with the Securities and Exchange Commission (the “Commission”) by the Registrant, Silicom Ltd., a company organized under the laws of the State of Israel (the “Company”), pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are incorporated by reference in this registration statement:

—

Annual Report on Form 20-F for the year ended December 31, 2006 (filed on May 30, 2007).

—

Report on Form 6-K (filed on July 9, 2007).

—

Report on Form 6-K (filed on July 23, 2007).

—

Report on Form 6-K (filed on August 1, 2007).

—

Report on Form 6-K (filed on September 4, 2007).

—

Reports on Form 6-K (filed on September 24, 2007).

—

Report on Form 6-K (filed on October 3, 2007).

—

Report on Form 6-K (filed on October 24, 2007).

—

Report on Form 6-K (filed on October 29, 2007).

—

Report on Form 6-K (filed on December 13, 2007).

—

Report on Form 6-K (filed on January 22, 2008).

—

Report on Form 6-K (filed on January 24, 2008).

—

Report on Form 6-K (filed on January 28, 2008).

—

Report on Form 6-K (filed on February 4, 2008).

—

The description of the Registrant’s Ordinary Shares contained in the Registrant’s Registration Statement on Form F-1, File No. 33-73662 (filed on December 30, 1993), as amended, including any amendment or report filed for the purpose of updating such description.

All documents subsequently filed by the Company 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 shares offered hereby have been sold or which deregisters all then remaining unsold, shall be deemed to be incorporated by reference in this registration statement and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this registration statement to the extent that a statement contained herein or in any other subsequently filed document which also is incorporated or deemed to be incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this registration statement.

Item 4.

Description of Securities.

Not Applicable.

Item 5.

Interests of Named Experts and Counsel.

Not Applicable.

Item 6.

Indemnification of Directors and Officers.

The Israeli Companies Law-1999, or the Companies Law, provides that a company may include in its articles of association provisions allowing it to:

partially or fully, exempt in advance, an office holder of the company from his responsibility for damages caused by the breach of his duty of care to the company, except for damages caused to the company due to any breach of such office holder's duty of care towards the company in a "distribution" (as defined in the Companies Law).

2.	enter into a contract to insure the liability of an office holder of the company by reason of acts or omissions committed in his capacity as an office holder of the company with respect to the following:

(a)

the breach of his duty of care to the company or any other person;

(b)

the breach of his fiduciary duty to the company to the extent he acted in good faith and had a reasonable basis to believe that the act or omission would not prejudice the interests of the company; and

(c)

monetary liabilities or obligations which may be imposed upon him in favor of other persons.

3.	indemnify an office holder of the company for:

(a)

monetary liabilities or obligations imposed upon, or actually incurred by, such officer holder in favor of other persons pursuant to a court judgment, including a compromise judgment or an arbitrator’s decision approved by a court, by reason of acts or omissions of such officer holder in his or her capacity as an office holder of the company;

(b)

reasonable litigation expenses, including attorneys’ fees, actually incurred by such office holder due to an investigation or a proceeding instituted against such office holder by an authority competent to administrate such an investigation or proceeding, and that was finalized without the filing of an indictment against such office holder and without any financial obligation imposed on such office holder in lieu of criminal proceedings, or that was finalized without the filing of an indictment against such office holder but with financial obligation imposed on such office holder in lieu of criminal proceedings of a crime which does not require proof of criminal intent, in each case by reason of acts of such officer holder in his or her capacity as an office holder of the company; and

(c)

reasonable litigation expenses, including attorney’s fees, actually incurred by such office holder or imposed upon him or her by a court, in an action, suit or proceeding brought against him or her by or on behalf of us or by other persons, or in connection with a criminal action from which he or she was acquitted, or in connection with a criminal action which does not require criminal intent in which he was convicted, in each case by reason of acts or omissions of such officer holder in his or her capacity as an office holder.

The Companies Law provides that a company’s articles of association may provide for indemnification of an office holder post-factum and may also provide that a company may undertake to indemnify an office holder in advance, as described in:

sub-section 3(a) above, provided such undertaking is limited to and actually sets forth the types of occurrences, which, in the opinion of the company’s board of directors based on the current activity of the company, are, at the time such undertaking is provided, foreseeable, and to an amount and degree that the board of directors has determined is reasonable for such indemnification under the circumstances; and

ii.

sub-sections 3(b) and 3(c) above.

The Companies Law provides that a company may not indemnify or exempt the liabilities of an office holder or enter into an insurance contract which would provide coverage for the liability of an office holder with respect to the following:

a breach of his fiduciary duty, except to the extent described above;

a breach of his duty of care, if such breach was done intentionally, recklessly or with disregard of the circumstances of the breach or its consequences, but excluding a breach due to negligence only;

an act or omission done with the intent to unlawfully realize personal gain; or

a fine or monetary settlement imposed upon him.

Under the Companies Law, the term “office holder” means a director, managing director, general manager, chief executive officer, executive vice president, vice president, other managers directly subordinate to the managing director and any other person fulfilling or assuming any such position or responsibility without regard to such person’s title.

The grant of an exemption, an undertaking to indemnify or indemnification of, and procurement of insurance coverage for, an office holder of a company requires, pursuant to the Companies Law, the approval of our audit committee and board of directors, and, in certain circumstances, including if the office holder is a director, the approval of our shareholders.

Our Amended and Restated Articles of Association allow us to indemnify and insure our office holders to the fullest extent permitted by the Companies Law. We have entered into agreements with our office holders according to which we have undertaken to indemnify them to such extent. We have never had the occasion to indemnify any of our office holders and are not aware of any pending or threatened litigation or proceeding involving any our office holders in which indemnification is sought. We also maintain a directors and officers insurance policy.

Item 7.

Exemption From Registration Claimed.

Not Applicable.

Item 8.

Exhibits.

Exhibit No.

Exhibit

4.1

Amended and Restated Articles of Association.

4.2

U.S. Share Option Plan (2000).

4.3

Share Option Plan (2004).

5.1

Opinion of Yigal Arnon & Co.

23.1

Consent of Yigal Arnon & Co. (included in the opinion filed as Exhibit 5.1).

23.2

Consent of Somekh Chaikin, Independent Registered Public Accounting Firm.

24.1

Power of Attorney (set forth on signature page).

Item 9.

Undertakings.

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post-effective amendment hereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement;

provided, however , that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is on Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this Registration Statement.

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:

If the Registrant is relying on Rule 430B:

Each prospectus filed by the Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or

ii.

If the Registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

(5) That, for the purpose of determining liability of the Registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

Any preliminary prospectus or prospectus of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424;

ii.

Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;

iii.

The portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and

iv.

Any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.

(b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual reports pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in such Act and will be governed by the final adjudication of such issue.

SIGNATURES

Pursuant to the requirements of Securities Act of 1933, the Registrant 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 Kfar-Sava, Israel on the 10 ^th day of February, 2008.

SILICOM LTD.

By: /s/ Shaike Orbach
——————————————
Shaike Orbach
Director, President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, each director and officer whose signature appears below constitutes and appoints, Shaike Orbach, Avi Eizenman, Eran Gilad or any of them, his true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, to sign in any and all capacities any and all amendments or post-effective amendments to this registration statement on Form S-8 and to file the same with all exhibits thereto and other documents in connection therewith with the Securities Exchange Commission, granting such attorneys-in-fact and agents, and each of them, full power and authority to do all such other acts and execute all such other documents as they, or any of them, may deem necessary or desirable in connection with the foregoing, as fully as the undersigned might or could do in person, hereby ratifying and confirming all that such attorneys-in-fact and agents, or any of them, 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 their respective capacities and on the respective dates indicated.

Signature	Title	Date




/s/ Avi Eizenman	Chairman of the Board	February 10, 2008
Avi Eizenman

/s/ Shaike Orbach	Director, President and Chief	February 10, 2008
Shaike Orbach	Executive Officer
	(Principal Executive Officer)

/s/ Eran Gilad	Chief Financial Officer	February 10, 2008
Eran Gilad	(Principal Financial Officer and
	Principal Accounting Officer)

/s/ Yehuda Zisapel	Director	February 10, 2008
Yehuda Zisapel

	Director	February __, 2008

Ilan Kalmanovich

	Director	February __, 2008
Einat Domb-Har

AUTHORIZED REPRESENTATIVE IN THE UNITED STATES
Silicom Connectivity Solutions, Inc.

By:/s/ Avi Eizenman		February 10, 2008
Avi Eizenman

Exhibit Index

Exhibit No.

Exhibit

4.1

Amended and Restated Articles of Association.

4.2

U.S. Share Option Plan (2000).

4.3

Share Option Plan (2004).

5.1

Opinion of Yigal Arnon & Co.

23.1

Consent of Yigal Arnon & Co. (included in the opinion filed as Exhibit 5.1).

23.2

Consent of Somekh Chaikin, Independent Registered Public Accounting Firm.

24.1

Power of Attorney (set forth on signature page).

Exhibit 4.1

AMENDED AND RESTATED
ARTICLES OF ASSOCIATION

OF

SILICOM LTD.

A COMPANY LIMITED BY SHARES

PRELIMINARY

1.	COMPANY NAME

The name of the company is “Silicom Ltd.” (the “Company”).

2.	INTERPRETATION

(a)

In these Articles, the following terms shall bear the meanings set forth below, unless inconsistent with the subject or context.

“Office Holder” shall mean every director and every other person included in the definition of “office holder” under the Companies Law, including the executive officers of the Company.

“External Directors” shall mean directors appointed and serving in accordance with Sections 239 through 249 of the Companies Law.

“Companies Law” shall mean the Israeli Companies Law, 5759-1999, as amended and as may be amended from time to time, and any regulations promulgated thereunder.

“Articles”shall mean these Amended and Restated Articles of Association as originally adopted or as amended from time to time.

“Office”shall mean the registered office of the Company.

“Year”and “Month” shall mean a Gregorian month or year.

(b)

Defined terms used herein, but not defined, shall have the meaning given them in the Companies Law.

(c)

Unless the subject or the context otherwise requires: words and expressions importing the masculine gender shall include the feminine gender; and words and expressions importing persons shall include bodies corporate.

3.	PUBLIC COMPANY; LIMITED LIABILITY AND COMPANY OBJECTIVES

(a)

The Company is a Public Company, as such term is defined in the Companies Law.

(b)

The liability of the Company’s shareholders is limited and, accordingly, the liability of each shareholder for the Company’s obligations shall be limited to the payment of the nominal value of the shares held by such shareholder, subject to the provisions of these Articles and the Companies Law.

(c)

The Company’s objectives are to carry on any business and perform any act which is not prohibited by law. The Company may also make contributions of reasonable sums to worthy purposes even if such contributions are not made on the basis of business considerations

SHARE CAPITAL

4.	SHARE CAPITAL

(a)

The authorized share capital of the Company is one hundred thousand New Israeli Shekels (NIS 100,000) divided into ten million (10,000,000) Ordinary Shares, nominal value NIS 0.01 per share.

(b)

The Ordinary Shares all rank pari passu in all respects.

5.	INCREASE OF AUTHORIZED SHARE CAPITAL

(a)

The Company may, from time to time, by resolution of its shareholders, whether or not all the shares then authorized have been issued and whether or not all the shares theretofore issued have been called up for payment, increase its authorized share capital by the creation of new shares. Any such increase shall be in such amount and shall be divided into shares of such nominal amounts, and such shares shall confer such rights and preferences, and shall be subject to such restrictions, as such resolution shall provide.

(b)

Except to the extent otherwise provided in such resolution, any new shares included in the authorized share capital increased as aforesaid shall be subject to all the provisions of these Articles which are applicable to shares of the same class included in the existing share capital.

6.	SPECIAL RIGHTS; MODIFICATION OF RIGHTS

(a)

Subject to the provisions of these Articles, and without prejudice to any special rights previously conferred upon the holders of existing shares in the Company, the Company may, from time to time, by resolution of its shareholders, provide for shares with such preferred or deferred rights or rights of redemption or other special rights and/or such restrictions, whether in regard to liquidation, dividends, voting, repayment of share capital or otherwise, as may be stipulated in such resolution provided that any resolution with respect to the issuance of shares will be made only by the Board of Directors.

(b)

(i)

If at any time the share capital is divided into different classes of shares, the rights attached to any class, unless otherwise provided by these Articles, may be modified or abrogated by the Company, by a resolution of the shareholders, subject to the consent in writing of the holders of a majority of the issued shares of such class or the adoption of a resolution passed at a separate General Meeting of the holders of the shares of such class.

(ii)

The provisions of these Articles relating to General Meetings shall, mutatis mutandis , apply to any separate General Meeting of the holders of the shares of a particular class, provided, however, that the requisite quorum at any such separate General Meeting shall be two or more members present in person or by proxy and holding not less than thirty three and a third percent (33 1/3%) of the issued shares of such class.

(iii)

Unless otherwise provided by these Articles, the enlargement of an authorized class of shares, or the issuance of additional shares thereof out of the authorized and unissued share capital, shall not be deemed, for purposes of this Article 6(b), to modify or abrogate the rights attached to previously issued shares of such class or of any other class.

7.	CONSOLIDATION, SUBDIVISION, CANCELLATION AND REDUCTION OF SHARE CAPITAL

(a)

The Company may, from time to time, by resolution of its shareholders (subject, however, to the provisions of Article 6(b) hereof and to applicable law):

(i)

consolidate and divide all or part of its issued or un-issued authorized share capital into shares of a per share nominal value which is larger than the per share nominal value of its existing shares;

(ii)

subdivide its shares (issued or un-issued) or any of them, into shares of smaller nominal value;

(iii)

cancel any shares which, at the date of the adoption of such resolution, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so canceled; or

(iv)

reduce its share capital in any manner, subject to any consent required by law.

(b)

With respect to any consolidation of issued shares into shares of a larger nominal value per share, and with respect to any other action which may result in fractional shares, the Board of Directors may settle any difficulty which may arise with regard thereto, as it deems fit, and, in connection with any such consolidation or other action which could result in fractional shares, may, without limiting its aforesaid power:

(i)

determine, as to the holder of shares so consolidated, which issued shares shall be consolidated into a share of a larger nominal value per share;

(ii)

allot, in contemplation of or subsequent to such consolidation or other action, shares or fractional shares sufficient to preclude or remove fractional share holdings;

(iii)

redeem, in the case of redeemable preference shares, and subject to applicable law, such shares or fractional shares sufficient to preclude or remove fractional share holdings; and/or

(iv)

cause the transfer of fractional shares by certain shareholders of the Company to other shareholders thereof so as to most expediently preclude or remove any fractional shareholdings, and cause the transferees of such fractional shares to pay the transferors thereof the fair value thereof, and the Board of Directors is hereby authorized to act in connection with such transfer, as agent for the transferors and transferees of any such fractional shares, with full power of substitution, for the purposes of implementing the provisions of this sub-Article 7(b)(iv).

8.	ISSUANCE OF SHARE CERTIFICATES; REPLACEMENT OF LOST CERTIFICATES

(a)

Share Certificates shall be issued under the corporate seal of the Company and shall bear the signature of one Director, or of any other person or persons so authorized by the Board of Directors.

(b)

Each shareholder shall be entitled to one or several numbered certificates for all the shares of any class registered in his name, each for one or more of such shares. Each certificate shall specify the serial numbers of the shares represented thereby and may also specify the amount paid up thereon.

(c)

A share certificate registered in the names of two or more persons shall be delivered to the person first named in the Shareholder Register in respect of such co-ownership.

(d)

A share certificate which has been defaced, lost or destroyed, may be replaced, and the Company shall issue a new certificate to replace such defaced, lost or destroyed certificate upon payment of such fee, and upon the furnishing of such evidence of ownership and such indemnity, as the Board of Directors in its discretion deems fit.

9.	REGISTERED HOLDER

Except as otherwise provided in these Articles, the Company shall be entitled to treat the registered holder of each share as the absolute owner thereof, and accordingly, shall not, except as ordered by a court of competent jurisdiction, or as required by statute, be obligated to recognize any equitable or other claim to, or interest in, such share on the part of any other person.

10.

ALLOTMENT OF SHARES

The un-issued shares from time to time shall be under the sole control of the Board of Directors, who shall have the power to allot, issue or otherwise dispose of shares to such persons, on such terms and conditions (including inter alia terms relating to calls as set forth in Article 12(f) hereof), and either at par or at a premium, or, subject to the provisions of the Companies Law, at a discount and/or with payment of commission, and at such times, as the Board of Directors deems fit, and the power to give to any person the option to acquire from the Company any shares, either at par or at a premium, or, subject as aforesaid, at a discount and/or with payment of commission, during such time and for such consideration as the Board of Directors deems fit.

11.

PAYMENT IN INSTALLMENTS

If pursuant to the terms of allotment or issue of any share, all or any portion of the price thereof shall be payable in installments, every such installment shall be paid to the Company on the due date thereof by the then registered holder(s) of the share or the person(s) then entitled thereto.

12.

CALLS ON SHARES

(a)

The Board of Directors may, from time to time, as it, in its discretion, deems fit, make calls for payment upon shareholders in respect of any sum which has not been paid up in respect of shares held by such shareholders and which is not pursuant to the terms of allotment or issue of such shares or otherwise, payable at a fixed time, and each shareholder shall pay the amount of every call so made upon him or her (and of each installment thereof if the same is payable in installments), to the Company at the time(s) and place(s) designated by the Board of Directors, as any such time(s) may be thereafter extended or place(s) changed. Unless otherwise stipulated in the resolution of the Board of Directors (and in the notice hereafter referred to), each payment in response to a call shall be deemed to constitute a pro rata payment on account of all the shares in respect of which such call was made.

(b)

Notice of any call for payment by a shareholder shall be given in writing to such shareholder not less than fourteen (14) days prior to the time of payment fixed in such notice, and shall specify the time and place of payment. Prior to the time for any such payment fixed in a notice of a call given to a shareholder, the Board of Directors may in its absolute discretion, by notice in writing to such member, revoke such call in whole or in part, extend the time fixed for payment thereof, or designate a different place of payment. In the event of a call payable in installments, only one notice thereof need be given.

(c)

If pursuant to the terms of allotment or issue of a share or otherwise, an amount is made payable at a fixed time (whether on account of such share or by way of premium), such amount shall be payable at such time as if it were payable by virtue of a call made by the Board of Directors and for which notice was given in accordance with paragraphs (a) and (b) of this Article 12, and the provisions of these Articles with regard to calls (and the non-payment thereof) shall be applicable to such amount (and the non-payment thereof).

(d)

Joint holders of a share shall be jointly and severally liable to pay all calls for payment in respect of such share and all interest payable thereon.

(e)

Any amount called for payment which is not paid when due shall bear interest from the date fixed for payment until actual payment thereof, at such rate (not exceeding the then prevailing debitory rate charged by leading commercial banks in Israel), and payable at such time(s) as the Board of Directors may prescribe.

(f)

Upon the allotment of shares, the Board of Directors may provide for differences among the allottees of such shares as to the amounts and times for payment of calls in respect of such shares.

13.

PREPAYMENT

With the approval of the Board of Directors, any shareholder may pay to the Company any amount not yet payable in respect of his shares, and the Board of Directors may approve the payment by the Company of interest on any such amount until the same would be payable if it had not been paid in advance, at such rate and time(s) as may be approved by the Board of Directors. The Board of Directors may at any time cause the Company to repay all or any part of the money so advanced, without premium or penalty. Nothing in this Article 13 shall derogate from the right of the Board of Directors to make any call for payment before or after receipt by the Company of any such advance.

14.

FORFEITURE AND SURRENDER

(a)

If any shareholder fails to pay an amount payable by virtue of a call, or interest thereon as provided for in accordance herewith, on or before the day fixed for payment of the same, the Board of Directors may at any time after the day fixed for such payment, so long as such amount (or any portion thereof) or interest thereon (or any portion thereof) remains unpaid, resolve to forfeit all or any of the shares in respect of which such payment was called for. All expenses incurred by the Company in attempting to collect any such amount or interest thereon, including, without limitation, attorney’s fees and costs of legal proceedings, shall be added to, and shall, for all purposes (including the accrual of interest thereon), constitute a part of, the amount payable to the Company in respect of such call.

(b)

Upon the adoption of a resolution as to the forfeiture of a shareholder’s share, the Board of Directors shall cause notice thereof to be given to such shareholder, which notice shall state that, in the event of the failure to pay the entire amount so payable by a date specified in the notice (which date shall be not less than fourteen (14) days after the date such notice is given and which may be extended by the Board of Directors), such shares shall be ipso facto forfeited, provided, however, that, prior to such date, the Board of Directors may nullify such resolution of forfeiture, but no such nullification shall prevent the Board of Directors from adopting a further resolution of forfeiture in respect of the non-payment of the same amount.

(c)

Without derogating from Articles 54 and 59 hereof, whenever shares are forfeited as herein provided, all dividends, if any, theretofore declared in respect thereof and not actually paid shall be deemed to have been forfeited at the same time.

(d)

The Company, by resolution of the Board of Directors, may accept the voluntary surrender of any share not fully paid for.

(e)

Any share forfeited or surrendered as provided herein, shall become the property of the Company, and the same, subject to the provisions of these Articles, may be sold, re-allotted or otherwise disposed of as the Board of Directors deems fit.

(f)

Any shareholder whose shares have been forfeited or surrendered shall cease to be a shareholder in respect of the forfeited or surrendered shares, but shall, notwithstanding, be liable to pay, and shall forthwith pay, to the Company, all calls, interest and expenses owing upon or in respect of such shares at the time of forfeiture or surrender, together with interest thereon from the time of forfeiture or surrender until actual payment, at the rate prescribed in Article 12(e) above, and the Board of Directors, in its discretion, may, but shall not be obligated to, enforce the payment of such moneys, or any part thereof. In the event of such forfeiture or surrender, the Company, by resolution of the Board of Directors, may accelerate the date(s) of payment of any or all amounts then owing to the Company by the shareholder in question (but not yet due) in respect of all shares owned by such shareholder, solely or jointly with another.

(g)

The Board of Directors may at any time, before any share so forfeited or surrendered shall have been sold, re-allotted or otherwise disposed of, nullify the forfeiture or surrender on such conditions as it deems fit, but no such nullification shall prevent the Board of Directors from re-exercising its powers of forfeiture pursuant to this Article 14.

15.

LIEN

(a)

Except to the extent the same may be waived or subordinated in writing, the Company shall have a first and paramount lien upon all the shares registered in the name of each shareholder (without regard to any equitable or other claim or interest in such shares on the part of any other person), and upon the proceeds of the sale thereof, for his debts, liabilities and engagements to the Company arising from any amount payable by such shareholder in respect of any unpaid or partly paid share, whether or not such debt, liability or engagement has matured. Such lien shall extend to all dividends from time to time declared or paid in respect of such share. Unless otherwise provided, the registration by the Company of a transfer of shares shall be deemed to be a waiver on the part of the Company of the lien (if any) existing on such shares immediately prior to such transfer.

(b)

The Board of Directors may cause the Company to sell a share subject to such a lien when the debt, liability or engagement giving rise to such lien has matured, in such manner as the Board of Directors deems fit, but no such sale shall be made unless such debt, liability or engagement has not been satisfied within fourteen (14) days after written notice of the intention to sell shall have been served on such shareholder, his executors or administrators.

(c)

The net proceeds of any such sale, after payment of the costs thereof, shall be applied in or toward satisfaction of the debts, liabilities or engagements of such member in respect of such share (whether or not the same have matured), and the residue (if any) shall be paid to the shareholder, his executors, administrators or assigns.

16.

SALE AFTER FORFEITURE OR SURRENDER OR IN ENFORCEMENT OF LIEN

Upon any sale of a share after forfeiture or surrender or for enforcing a lien, the Board of Directors may appoint any person to execute an instrument of transfer of the share so sold and cause the purchaser’s name to be entered in the Shareholder Register in respect of such share. The purchaser shall be registered as the shareholder and shall not be bound to see to the regularity of the sale proceedings, or to the application of the proceeds of such sale, and after his name has been entered in the Shareholder Register in respect of such share, the validity of the sale shall not be impeached by any person, and the remedy of any person aggrieved by the sale shall be in damages only and against the Company exclusively.

17.

REDEEMABLE SHARES

The Company may, subject to applicable law, issue redeemable shares and redeem the same.

TRANSFER OF SHARES

18.

REGISTRATION OF TRANSFER

(a)

No transfer of shares shall be registered unless a proper writing or instrument of transfer (in any customary form or any other form satisfactory to the Board of Directors) has been submitted to the Company (or its transfer agent), together with the share certificate(s) and such other evidence of title as the Board of Directors may reasonably require. Until the transferee has been registered in the Shareholder Register (or with the transfer agent) in respect of the shares so transferred, the Company may continue to regard the transferor as the owner thereof. The Board of Directors, may, from time to time, prescribe a fee for the registration of a transfer.

(b)

The Board of Directors may, in its discretion to the extent it deems necessary, close the Shareholder Register for registrations of transfers of shares during any year for a period determined by the Board of Directors, and no registrations of transfers of shares shall be made by the Company during any such period during which the Shareholder Register is so closed.

19.

RECORD DATE FOR NOTICES OF GENERAL MEETINGS AND OTHER ACTION

(a)

Notwithstanding any provision of these Articles to the contrary, and to allow the Company to determine the shareholders entitled to notice of, or to vote at, any Annual or Extraordinary General Meeting or any adjournment thereof, or to express consent to or dissent from any corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of, or to take or be the subject to, any other action, the Board of Directors may fix, a record date, which shall not be more than forty (40) days, or any longer period required under the Companies Law, nor less than four (4) days, or any longer period required under the Companies Law, before the date of such meeting or other action. A determination of shareholders of record entitled to notice of or to vote at a meeting shall apply to any adjournment of the meeting: provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

(b)

Any shareholder or shareholders of the Company holding, at least (i) five percent (5%) of the issued share capital of the Company and one percent (1%) of the voting rights in the issued share capital of the Company or (ii) five percent (5%) of the voting rights in the issued share capital of the Company, may, pursuant to the Companies Law, request that the Board of Directors include a subject in the agenda of a General Meeting to be held in the future. Any such request must be in writing, must include all information related to subject matter and the reason that such subject is proposed to be brought before the General Meeting and must be signed by the shareholder or shareholders making such request. In addition, subject to the Companies Law and the provisions of Article 39, the Board of Directors may include such subject in the agenda of a General Meeting only if the request has been delivered to the Secretary of the Company not later than sixty (60) days and not more than one hundred and twenty (120) days prior to the General Meeting in which the subject is to be considered by the shareholders of the Company. Each such request shall also set forth: (a) the name and address of the shareholder making the request; (b) a representation that the shareholder is a holder of record of shares of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting; (c) a description of all arrangements or understandings between the shareholder and any other person or persons (naming such person or persons) in connection with the subject which is requested to be included in the agenda; and (d) a declaration that all the information that is required under the Companies Law and any other applicable law to be provided to the Company in connection with such subject, if any, has been provided. Furthermore, the Board of Directors, may, in its discretion to the extent it deems necessary, request that the shareholders making the request provide additional information necessary so as to include a subject in the agenda of a General Meeting, as the Board of Directors may reasonably require.

TRANSMISSION OF SHARES

20.

DECEDENTS’SHARES

(a)

In case of death of a registered holder of a share registered in the names of two or more holders, the Company may recognize the survivor(s) as the sole owner(s) thereof unless and until the provisions of Article 20(b) have been effectively invoked.

(b)

Any person becoming entitled to a share in consequence of the death of any shareholder, upon producing evidence of the grant of probate or letters of administration or declaration of succession (or such other evidence as the Board of Directors may reasonably deem sufficient), shall be registered as a shareholder in respect of such share, or may, subject to the regulations as to transfer herein contained, transfer such share.

21.

RECEIVERS AND LIQUIDATORS

(a)

The Company may recognize any receiver, liquidator or similar official appointed to wind-up, dissolve or otherwise liquidate a corporate shareholder, and a trustee, manager, receiver, liquidator or similar official appointed in bankruptcy or in connection with the reorganization of, or similar proceeding with respect to a shareholder or its properties, as being entitled to the shares registered in the name of such member.

(b)

Such receiver, liquidator or similar official appointed to wind-up, dissolve or otherwise liquidate a corporate shareholder and such trustee, manager, receiver, liquidator or similar official appointed in bankruptcy or in connection with the reorganization of, or similar proceedings with respect to a shareholder or its properties, upon producing such evidence as the Board of Directors may deem sufficient as to his authority to act in such capacity or under this Article, shall with the consent of the Board of Directors (which the Board of Directors may grant or refuse in its absolute discretion), be registered as a shareholder in respect of such shares, or may, subject to the regulations as to transfer herein contained, transfer such shares.

GENERAL MEETINGS

22.

ANNUAL GENERAL MEETING

(a)

An Annual General Meeting shall be held once in every calendar year at such time (within a period of not more than fifteen (15) months after the last preceding Annual General Meeting) and at such place, either within or without the State of Israel, as may be determined by the Board of Directors.

(b)

Subject to the provisions of these Articles, the function of the Annual General Meeting shall be to elect the members of the Board of Directors; to receive the financial statements; to appoint the Company’s auditors and to fix their remuneration and to transact any other business which, in accordance with these Articles or the Companies Law, are to be transacted at a General Meeting.

23.

EXTRAORDINARY GENERAL MEETINGS

All General Meetings other than Annual General Meetings shall be called “Extraordinary General Meetings”. The Board of Directors may, whenever it thinks fit, convene an Extraordinary General Meeting, at such time and place, within or out of the State of Israel, as may be determined by the Board of Directors, and shall be obliged to do so upon a requisition in writing in accordance with Section 63 of the Companies Law. In addition, the Board of Directors may, whenever it thinks fit, postpone or cancel an Extraordinary General Meeting.

24.

NOTICE OF GENERAL MEETINGS; OMISSION TO GIVE NOTICE

(a)

Not less than twenty-one (21) days’ prior notice, or thirty-five (35) days’ prior notice to the extent required under regulations promulgated under the Companies Law, shall be given of every General Meeting. Each such notice shall specify the place and the day and hour of the meeting and the general nature of each item to be acted upon thereat, said notice to be given to all members who would be entitled to attend and vote at such meeting. Anything therein to the contrary notwithstanding, with the consent of all members entitled to vote thereon, a resolution may be proposed and passed at such meeting although a lesser notice than hereinabove prescribed has been given.

(b)

The accidental omission to give notice of a meeting to any member, or the non-receipt of notice sent to such member, shall not invalidate the proceedings at such meeting.

(c)

Notwithstanding anything to the contrary in this Article 24, and subject to any applicable stock exchange rules or regulations, notice of a General Meeting need not be delivered to shareholders, and notice by the Company of such General Meeting that is published in two daily newspapers in Israel shall be deemed to have been duly given on the date of such publication to any shareholder whose address, as listed in the Register of Shareholders (or as designated in writing for the receipt of notices and other documents), is located in the State of Israel, and notice by the Company of a General Meeting which is published in one daily newspaper in New York, New York, USA or in one international wire service, shall be deemed to have been duly given on the date of such publication to any shareholder whose address, as registered in the Register of Shareholders (or as designated in writing for the receipt of notices and other documents), is located outside of Israel.

25.

MANNER OF MEETING

The Board may, in its absolute discretion, resolve to enable persons entitled to attend a General Meeting to do so by simultaneous attendance and participation at the principal meeting place and a satellite meeting place or places anywhere in the world and the shareholders present in person, by proxy or by written ballot at satellite meeting places shall be counted in the quorum for and entitled to vote at the General Meeting in question, and that meeting shall be duly constituted and its proceedings valid, provided that the chairman of the General Meeting is satisfied that adequate facilities are available throughout the General Meeting to ensure that shareholders attending at all the meeting places are able to:

(a)

participate in the business for which the meeting has been convened;

(b)

hear all persons who speak (whether by the use of microphones, loudspeakers audio-visual communications equipment or otherwise) in the principal meeting place and any satellite meeting place(s); and

(c)

be heard by all other persons so present in the same way.

PROCEEDINGS AT GENERAL MEETINGS

26.

QUORUM

(a)

No business shall be transacted at a General Meeting, or at any adjournment thereof, unless the quorum required under these Articles for such General Meeting or such adjourned meeting, as the case may be, is present when the meeting proceeds to business.

(b)

In the absence of contrary provisions in these Articles, two or more shareholders (not in default in payment of any sum referred to in Article 32(a) hereof), present in person or by proxy and holding shares conferring in the aggregate more than thirty three and a third (33 1/3 %) percent of the voting power of the Company, shall constitute a quorum of General Meetings.

(c)

If within half an hour from the time appointed for the meeting a quorum is not present, the meeting, if convened upon requisition under Sections 64 or 65 of the Companies Law, shall be dissolved, but in any other case it shall be adjourned to the same day in the next week, at the same time and place, or to such day and at such time and place as the Chairman may determine. No business shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting as originally called.

(d)

The Board of Directors may determine, in its discretion, the matters that may be voted upon at the meeting by proxy or written ballot in addition to the matters listed in Section 87(a) to the Companies Law.

27.

CHAIRMAN

The Chairman of the Board of Directors, shall preside as Chairman at every General Meeting of the Company. If at any meeting the Chairman is not present within fifteen (15) minutes after the time fixed for holding the meeting or is unwilling to act as Chairman, the Co-Chairman shall preside at the meeting. If at any such meeting both the Chairman and the Co-Chairman are not present or are unwilling to act as Chairman, the shareholders present shall choose someone of their number to be Chairman. The office of Chairman shall not, by itself, entitle the holder thereof to vote at any General Meeting nor shall it entitle such holder to a second or casting vote (without derogating, however, from the rights of such Chairman to vote as a shareholder or proxy of a shareholder if, in fact, he is also a shareholder or proxy).

28.

ADOPTION OF RESOLUTIONS AT GENERAL MEETINGS

(a)

A resolution, including a resolution to amend these Articles, shall be deemed adopted if approved by the holders of a majority of the voting power represented at the meeting in person or by proxy or by written ballot and voting thereon.

(b)

Every question submitted to a General Meeting shall be decided by a show of hands, but the Chairman of the Meeting may determine that a resolution shall be decided by a written ballot. A written ballot may be implemented before the proposed resolution is voted upon or immediately after the declaration by the Chairman of the results of the vote by a show of hands. If a vote by written ballot is taken after such declaration, the results of the vote by a show of hands shall be of no effect, and the proposed resolution shall be decided by such written ballot.

(c)

A declaration by the Chairman of the meeting that a resolution has been carried unanimously, or carried by a particular majority, or lost, and an entry to that effect in the minute book of the Company, shall be conclusive evidence of the fact without proof of the number or proportion of the votes recorded in favor of or against such resolution.

(d)

Notwithstanding any of the other provisions of these Articles, any resolution to consummate a Merger, as defined in Section 1 of the Companies Law, shall require the approval of the holders of a majority of the voting power of the Company. For the avoidance of doubt, any amendment to this Article 28(d) shall require the approval of the holders of a majority of the voting power of the Company.

29.

RESOLUTIONS IN WRITING

A resolution in writing signed by all shareholders of the Company then entitled to attend and vote at General Meetings or to which all such shareholders have given their written consent (by letter, telegram, telex, facsimile, e-mail or otherwise) shall be deemed to have been unanimously adopted by a General Meeting duly convened and held.

30.

POWER TO ADJOURN

(a)

The Chairman of a General Meeting at which a quorum is present may, with the consent of the holders of a majority of the voting power represented in person or by proxy and voting on the question of adjournment (and shall if so directed by the meeting), adjourn the meeting from time to time and from place to place, but no business shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting as originally called.

(b)

It shall not be necessary to give notice of an adjournment, whether pursuant to Article 26(c) or Article 30(a), unless the meeting is adjourned for twenty-one (21) days or more in which event notice thereof shall be given in the manner required for the meeting as originally called.

31.

VOTING POWER

Subject to the provisions of Article 32(a) and subject to any provision hereof conferring special rights as to voting, or restricting the right to vote, every shareholder shall have one vote for each share held by him of record, on every resolution, without regard to whether the vote thereon is conducted by a show of hands, by written ballot or by any other means.

32.

VOTING RIGHTS

(a)

No shareholder shall be entitled to vote at any General Meeting (or be counted as a part of the quorum thereat), unless all calls and other sums then payable by him in respect of his shares in the Company have been paid, but this Article 32(a) shall not apply to separate General Meetings of the holders of a particular class of shares pursuant to Article 6(b).

(b)

A company or other corporate body being a shareholder of the Company may duly authorize any person to be its representative at any meeting of the Company or to execute or deliver a proxy on its behalf. Any person so authorized shall be entitled to exercise on behalf of such shareholder all the power which the latter could have exercised if it were an individual shareholder. Upon the request of the Chairman of the meeting, written evidence of such authorization (in form acceptable to the Chairman) shall be delivered to him.

(c)

Any shareholder entitled to vote may vote either in person or by proxy (who need not be a shareholder of the Company), or, if the shareholder is a company or other corporate body, by a representative authorized pursuant to Article 32(b).

(d)

If two or more persons are registered as joint holders of any share, the vote of the senior who tenders a vote, in person or by proxy, shall be accepted to the exclusion of the vote(s) of the other joint holder(s). For the purpose of this Article 32(d), seniority shall be determined by the order of registration of the joint holders in the Shareholder Register.

PROXIES

33.

INSTRUMENT OF APPOINTMENTS

(a)

An instrument appointing a proxy shall be in writing and shall be substantially in the following form:

"I, [insert name of shareholder] of [insert address of shareholder], being a member of Silicom Ltd. (the "Company"), hereby appoint [insert name of proxy] or [insert address of proxy] as my proxy to vote for me and on my behalf at the [Annual / Extraordinary] General Meeting of the Company to be held on the ___ day of _______, 20__ and at any adjournment(s) thereof.

Signed this ____ day of ___________, 20__.

_____________________
(Signature of Appointor)"

or in any usual or common form or in such other form as may be approved by the Board of Directors, including appointment by telephone, Internet or any other electronic means. Such proxy shall be duly signed by the appointor or such person’s duly authorized attorney or, if such appointor is a company or other corporate body, under its common seal or stamp or the hand of its duly authorized agent(s) or attorney(s).

(b)

The instrument appointing a proxy (and the power of attorney or other authority, if any, under which such instrument has been signed) shall either be presented to the Chairman at the meeting at which the person named in the instrument proposes to vote or be delivered to the Company (at its Registered Office, at its principal place of business, or at the offices of its registrar or transfer agent, or at such place as the Board of Directors may specify) not less than two (2) hours before the time fixed for such meeting, except that the instrument shall be delivered (i) twenty-four (24) hours before the time fixed for the meeting where the meeting is to be held in the United States of America and the instrument is delivered to the Company at its Registered Office or principal place of business, or (ii) forty-eight (48) hours before the time fixed for the meeting where the meeting is to be held outside of the United States of America and Israel and the instrument is delivered to the Company’s registrar or transfer agent. Notwithstanding the above, the Chairman shall have the right to waive the time requirement provided above with respect to all instruments of proxies and to accept any and all instruments of proxy received prior to the beginning of a General Meeting.

34.

EFFECT OF DEATH OF APPOINTOR OR TRANSFER OF SHARE OR REVOCATION OF APPOINTMENT

(a)

A vote cast in accordance with an instrument appointing a proxy shall be valid notwithstanding the prior death or bankruptcy of the appointing member (or of his attorney-in-fact, if any, who signed such instrument), or the transfer of the share in respect of which the vote is cast, unless written notice of such matters shall have been received by the Company or by the Chairman of such meeting prior to such vote being cast.

(b)

An instrument appointing a proxy shall be deemed revoked (i) upon receipt by the Company or the Chairman, subsequent to receipt by the Company of such instrument, of written notice signed by the person signing such instrument or by the member appointing such proxy canceling the appointment thereunder (or the authority pursuant to which such instrument was signed) or of an instrument appointing a different proxy (and such other documents, if any, required under Article 33(b) for such new appointment), provided such notice of cancellation or instrument appointing a different proxy were so received at the place and within the time for delivery of the instrument revoked thereby as referred to in Article 33(b) hereof, or (ii) if the appointing shareholder is present in person at the meeting for which such instrument of proxy was delivered, upon receipt by the Chairman of such meeting of written notice from such member of the revocation of such appointment, or if and when such shareholder votes at such meeting. A vote cast in accordance with an instrument appointing a proxy shall be valid notwithstanding the revocation or purported cancellation of the appointment, or the presence in person or vote of the appointing shareholder at a meeting for which it was rendered, unless such instrument of appointment was deemed revoked in accordance with the foregoing provisions of this Article 34(b) at or prior to the time such vote was cast.

BOARD OF DIRECTORS

35.

POWERS OF BOARD OF DIRECTORS

(a)

General . The management of the business of the Company shall be vested in the Board of Directors, which may exercise all such powers and do all such acts and things as the Company is authorized to exercise and do, and are not by these Articles or by law required to be exercised or done by the Company by action of its shareholders at a General Meeting. The authority conferred on the Board of Directors by this Article 35 shall be subject to the provisions of the Companies Law, these Articles and any regulation or resolution consistent with these Articles adopted from time to time by the Company by action of its shareholders at a General Meeting, provided, however, that no such regulation or resolution shall invalidate any prior act done by or pursuant to a decision of the Board of Directors which would have been valid if such regulation or resolution had not been adopted.

(b)

Borrowing Power . The Board of Directors may from time to time, at its discretion, cause the Company to borrow or secure the payment of any sum or sums of money for the purposes of the Company, and may secure or provide for the repayment of such sum or sums in such manner, at such times and upon such terms and conditions as it deems fit, and, in particular, by the issuance of bonds, perpetual or redeemable debentures, debenture stock, or any mortgages, charges, or other securities on the undertaking or the whole or any part of the property of the Company, both present and future, including its uncalled or called but unpaid capital for the time being.

(c)

Reserves . The Board of Directors may, from time to time, set aside any amount(s) out of the profits of the Company as a reserve or reserves for any purpose(s) which the Board of Directors, in its absolute discretion, shall deem fit, including without limitation, capitalization and distribution of bonus shares, and may invest any sum so set aside in any manner and from time to time deal with and vary such investments and dispose of all or any part thereof, and employ any such reserve or any part thereof in the business of the Company without being bound to keep the same separate from other assets of the Company, and may subdivide or redesignate any reserve or cancel the same or apply the funds therein for another purpose, all as the Board of Directors may from time to time think fit.

36.

EXERCISE OF POWERS OF BOARD OF DIRECTORS

(a)

A meeting of the Board of Directors at which a quorum is present shall be competent to exercise all the authorities, powers and discretion vested in or exercisable by the Board of Directors, whether in person or by any other means by which the Directors may hear each other simultaneously.

(b)

A resolution proposed at any meeting of the Board of Directors shall be deemed adopted if approved by a majority of the Directors present when such resolution is put to a vote and voting thereon.

(c)

The Board of Directors may adopt resolutions without holding a meeting of the Board of Directors, provided that all of the Directors then in office and lawfully entitled to vote thereon shall have agreed to vote on the matters underlying such resolutions without convening a meeting of the Board of Directors. If the Board of Directors adopts resolutions as set forth in the immediately preceding sentence, minutes including such resolutions, including a resolution to vote on such matters without convening a meeting of the Board of Directors, shall be prepared and the Chairman of the Board of Directors (or in his or her absence the Co-Chairman) will sign such minutes.

37.

DELEGATION OF POWERS

(a)

The Board of Directors may, subject to the provisions of the Companies Law, delegate any or all of its powers to committees, each consisting of one or more persons (who are Directors), and it may from time to time revoke such delegation or alter the composition of any such committee. Any Committee so formed (in these Articles referred to as a “Committee of the Board of Directors”), shall, in the exercise of the powers so delegated, conform to any regulations imposed on it by the Board of Directors. The meetings and proceedings of any such Committee of the Board of Directors shall, mutatis mutandis , be governed by the provisions herein contained for regulating the meetings of the Board of Directors, so far as not superseded by any regulations adopted by the Board of Directors under this Article. Unless otherwise expressly provided by the Board of Directors in delegating powers to a Committee of the Board of Directors, such Committee shall not be empowered to further delegate such powers.

(b)

Without derogating from the provisions of Article 51, the Board of Directors may from time to time appoint a Secretary to the Company, as well as officers, agents, employees and independent contractors, as the Board of Directors deems fit, and may terminate the service of any such person. The Board of Directors may, subject to the provisions of the Companies Law, determine the powers and duties, as well as the salaries and emoluments, of all such persons, and may require security in such cases and in such amounts as it deems fit.

(c)

The Board of Directors may from time to time, by power of attorney or otherwise, appoint any person, company, firm or body of persons to be the attorney or attorneys of the Company at law or in fact for such purpose(s) and with such powers, authorities and discretions, and for such period and subject to such conditions, as it deems fit, and any such power of attorney or other appointment may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Board of Directors deems fit, and may also authorize any such attorney to delegate all or any of the powers, authorities and discretion vested in him.

38.

NUMBER OF DIRECTORS

The Board of Directors of the Company shall consist of not less than two (2) nor more than eight (8) Directors.

39.

ELECTION AND REMOVAL OF DIRECTORS

(a)

Directors shall be elected at the Annual General Meeting or an Extraordinary Meeting of the Company by the vote of the holders of a majority of the voting power represented at such meeting in person or by proxy and voting on the election of directors.

(b)

Nominations for the election of Directors may be made by the Board of Directors or a committee appointed by the Board of Directors or by any shareholder holding at least (i) five percent (5%) of the outstanding voting power in the Company and one percent (1%) of the outstanding voting power in the Company or (ii) five percent (5%) of the outstanding voting power in the Company. However, and without limitation of Sections 63 or 64 of the Companies Law, any such shareholder may nominate one or more persons for election as Directors at a General Meeting only if a written notice of such shareholder’s intent to make such nomination or nominations has been given to the Secretary of the Company not later than (i) with respect to an election to be held at an Annual General Meeting of shareholders, ninety (90) days prior to the anniversary date of the immediately preceding annual meeting, and (ii) with respect to an election to be held at a Extraordinary General Meeting of shareholders for the election of Directors, at least ninety (90) days prior to the date of such meeting. Each such notice shall set forth: (a) the name and address of the shareholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that the shareholder is a holder of record of shares of the Company entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) a description of all arrangements or understandings between the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the shareholder; and (d) the consent of each nominee to serve as a Director of the Company if so elected and a declaration signed by each of the nominees declaring that there is no limitation under the Companies Law for the appointment of such a nominee and that all the information that is required under the Companies Law to provided to the Company in connection with such an appointment has been provided. The Chairman of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure.

(c)

The General Meeting may, by a vote of the holders of at least a majority of the voting power represented at the meeting, remove any Director(s) from office, and elect Directors instead of Directors so removed or fill any Vacancy (as defined in Article 41), however created, in the Board of Directors unless such Vacancy was filled by the Board of Directors under Article 41.

(d)

In the event of any contradiction between the provisions of this Article 39 and the provisions of the Companies Law relating to the election and term of External Directors, the applicable provisions of the Companies Law shall govern, and the External Directors shall be elected and hold office in accordance with the provisions of the Companies Law.

40.

QUALIFICATION OF DIRECTORS

No person shall be disqualified to serve as a Director by reason of his not holding shares in the Company or by reason of his having served as a Director in the past.

41.

CONTINUING DIRECTORS IN THE EVENT OF VACANCIES

In the event that one or more vacancies is created in the Board of Directors, including without limitation, a situation in which the number of Directors is less than the minimum number permitted under Article 38 (a “Vacancy”), the continuing Directors may continue to act in every matter, and, may appoint Directors to temporarily fill any such Vacancy, provided, however, that if the number of Directors is less than two (2), they may only act in (i) an emergency; or (ii) to fill the office of director which has become vacant; or (iii) in order to call a General Meeting of the Company for the purpose of electing Directors to fill any or all Vacancies, so that at least two (2) Directors are in office as a result of said meeting. Notwithstanding the foregoing, in the event of Vacancy of an External Director, the Company shall call a General Meeting to elect a new External Director or take such other action as required under the Companies Law.

42.

VACATION OF OFFICE

(a)

The office of a Director shall be vacated, ipso facto , upon his or her death, or if he or she be found lunatic or become of unsound mind, or if he or she becomes bankrupt, or if the Director is a company, upon its winding-up, or if he is found by a court guilty of any of the felonies listed in Section 226 of the Companies Law.

(b)

The office of a Director may also be vacated by the written resignation of the Director. Such resignation shall become effective on the date fixed therein, or upon the delivery thereof to the Company, whichever is later. Such written resignation shall include the reasons that lead the Director to resign from his office.

43.

REMUNERATION OF DIRECTORS

A Director shall be paid remuneration by the Company for his services as Director to the extent such remuneration shall have been approved by the Company in accordance with the Companies Law.

44.

CONFLICT OF INTEREST

Subject to the provisions of the Companies Law, no Director shall be disqualified by virtue of his office from holding any office or place of profit in the Company or in any company in which the Company shall be a shareholder or otherwise interested, or from contracting with the Company as vendor, purchaser or otherwise, nor shall any such contract, or any contract or arrangement entered into by or on behalf of the Company in which any Director shall be in any way interested, be voided, nor, other than as required under the Companies Law, shall any Director be liable to account to the Company for any profit arising from any such office or place of profit or realized by any such contract or arrangement by reason only of such Director’s holding that office or of the fiduciary relations thereby established, but the nature of his interest, as well as any material fact or document, must be disclosed by him at the meeting of the Board of Directors (or a Committee of the Board of Directors) at which the contract or arrangement is first considered, if his interest then exists, or, in any other case, at no later than the first meeting of the Board of Directors (or a Committee of the Board of Directors) after the acquisition of his interest.

45.

ALTERNATE DIRECTORS

(a)

Subject to the provisions of the Companies Law and subject to the approval of the Board of Directors, a Director may appoint an alternate (in these Articles referred to an: “Alternate Director”). A person that is not qualified to serve as a Director or a person that is serving as a Director or Alternate Director shall not be appointed to serve as an Alternate Director.

(b)

An Alternate Director shall be deemed for all intents and purposes as the Director which appointed him as his alternate, and he shall be entitled to be present at meetings of the Board of Directors and/or Committees of the Board of Directors, to participate and vote thereat, as was the Director that appointed him was entitled.

(c)

A Director that appointed an Alternate Director may, subject to the provisions of the Companies Law, cancel the appointment at any time. Furthermore, the office of an Alternate Director shall be vacated, whenever the office of the Director that appointed him ceases to serve as a Director of the Company.

(d)

Any appointment of an Alternate Director or cancellation of the appointment, as aforementioned, shall be done by written notice which shall be delivered to the Alternate Director and to the Company, and shall come into force after delivery of the letter of appointment or cancellation as aforesaid, or on the date specified in the letter of appointment or letter of cancellation, whichever the later.

PROCEEDINGS OF THE BOARD OF DIRECTORS

46.

MEETINGS

(a)

The Board of Directors may meet and adjourn its meetings and otherwise regulate such meetings and proceedings as the Directors think fit.

(b)

Any Director may at any time, and the Secretary, upon the request of such Director, shall, convene a meetings of the Board of Directors, but not less than two (2) days’ notice shall be given of any meetings so convened. Notice of any such meeting shall be given to all the Directors and may be given orally, by telephone, in writing or by mail, email or facsimile. 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 notwithstanding such defective notice if such failure or defect 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.

47.

RESOLUTIONS IN WRITING

A resolution in writing signed by the Chairman of the Board of Directors, or of a Committee of the Board of Directors, provided that all the members of the Board of Directors or such Committee have agreed to adopt such resolution without convening a meeting, shall be valid for every purpose as a resolution adopted at a Board of Directors’ or Committee meeting, as the case may be, that was duly convened and held. In place of a Director the aforesaid resolution may be signed and delivered by his attorney.

48.

QUORUM

Until otherwise unanimously decided by the Board of Directors, a quorum at a meeting of the Board of Directors shall be constituted by the presence in person or by telephone conference of half (50%) of the Directors then in office who are lawfully entitled to participate in the meeting, including Alternate Directors, if there is a meeting at which an appointing Director is not present. No business shall be transacted at a meeting of the Board of Directors unless the requisite quorum is present (in person or by telephone conference or by other means by which all directors may hear and be heard) when the meeting proceeds to business.

49.

CHAIRMAN OF THE BOARD OF DIRECTORS

The Board of Directors may from time to time, elect one of its members to be the Chairman of the Board of Directors, and another of its members as Co-Chairman, remove such Chairman and Co-Chairman from office and appoint others in their place. The Chairman of the Board of Directors shall preside at every meeting of the Board of Directors, but if there is no such Chairman, or if at any meeting he is not present within fifteen (15) minutes of the time fixed for the meeting or if he is unwilling to take the chair, the Co-Chairman shall preside. If both the Chairman and the Co-Chairman are not present within such fifteen (15) minutes or are unwilling to take the chair the Directors present shall choose one of their number to be the Chairman of such meeting.

50.

VALIDITY OF ACTS DESPITE DEFECTS

All acts done bona fide at any meeting of the Board of Directors, or of a Committee of the Board of Directors, or by any person(s) acting as Director(s), shall, notwithstanding that it may afterwards be discovered that there was some defect in the appointment of the participants in such meetings or any of them or any person(s) acting as aforesaid, or that they or any of them were disqualified, be as valid as if there were no such defect or disqualification.

CHIEF EXECUTIVE OFFICER AND PRESIDENT

51.

CHIEF EXECUTIVE OFFICER AND PRESIDENT

The Board of Directors may from time to time appoint one or more persons, whether or not Directors, as Chief Executive Officer or Officers, General Manager or Managers, or President of the Company and may confer upon such person(s), and from time to time modify or revoke, such title(s) and such duties and authorities of the Board of Directors as the Board of Directors may deem fit, subject to such limitations and restrictions as the Board of Directors may from time to time prescribe. Unless otherwise determined by the Board of Directors, the Chief Executive Officer shall have authority with respect of the management of the Company in the ordinary course of business. Such appointment(s) may be either for a fixed term or without any limitation of time, and the Board of Directors may from time to time (subject to the provisions of the Companies Law and of any contract between any such person and the Company) fix his or their salaries and emoluments, remove or dismiss him or them from office and appoint another or others in his or their place or places.

MINUTES

52.

MINUTES

(a)

Minutes of each General Meeting and of each meeting of the Board of Directors or of any Committee of the Board of Directors shall be recorded and duly entered in books provided for that purpose, and shall be held by the Company at its principal place of office or its Registered Office or such other place as shall have been determined by the Board of Directors. Such minutes shall, in all events, set forth the names of the persons present at the meeting and all resolutions adopted thereat.

(b)

Any minutes as aforesaid, if purporting to be signed by the Director presiding over the meeting, shall constitute prima facie evidence of the matters recorded therein.

DIVIDENDS

53.

DECLARATION OF DIVIDENDS

The Board of Directors may, subject to the applicable provisions of the Companies Law, from time to time declare, and cause the Company to pay, such dividend as may appear to the Board of Directors to be justified by the profits of the Company. The Board of Directors shall determine the time for payment of such dividends, both interim and final, and the record date for determining the shareholders entitled thereto.

54.

FUNDS AVAILABLE FOR PAYMENT OF DIVIDEND

No dividend shall be paid otherwise than out of the profits of the Company.

55.

AMOUNT PAYABLE BY WAY OF DIVIDENDS

Subject to the provisions of these Articles and subject to any rights or conditions attached at that time to any share in the capital of the Company granting preferential, special or deferred rights or not granting any rights with respect to dividends, the profits of the Company which shall be declared as dividends shall be distributed according to the proportion of the nominal value paid up on account of the shares held at the date so appointed by the Company, without regard to the premium paid in excess of the nominal value, if any. No amount paid or credited as paid on a share in advance of calls shall be treated for purposes of this Article as paid on a share.

56.

INTEREST

No dividend shall carry interest as against the Company.

57.

PAYMENT IN SPECIE

Upon the determination of the Board of Directors, the Company (i) may cause any monies, investments, or other assets forming part of the undivided profits of the Company, standing to the credit of a reserve fund, or to the credit of a reserve fund for the redemption of capital, or in the hands of the Company and available for dividends, or representing premiums received on the issuance of shares and standing to the credit of the share premium account, to be capitalized and distributed among such of the shareholders as would be entitled to receive the same if distributed by way of dividend and in the same proportion, on the footing that they become entitled thereto as capital, or may cause any part of such capitalized fund to be applied on behalf of such shareholders in paying up in full, either at par or at such premium as the resolution may provide, any unissued shares or debentures or debenture stock of the Company which shall be distributed accordingly or in payment, in full or in part, of the uncalled liability on all issued shares or debentures or debenture stock if such liability exists, on a pro rata basis; and (ii) may cause such distribution or payment to be accepted by such shareholders in full satisfaction of their interest in the said capitalized sum.

58.

IMPLEMENTATION OF POWERS UNDER ARTICLE 57

For the purpose of giving full effect to any resolution under Article 57, and without derogating from the provisions of Article 7(b) hereof, the Board of Directors may settle any difficulty which may arise in regard to the distribution as it thinks expedient, and, in particular, may issue fractional certificates, and may fix the value for distribution of any specific assets, and may determine that cash payments shall be made to any members upon the footing of the value so fixed, or that fractions of less value than the nominal value of one share may be disregarded in order to adjust the rights of all parties, and may vest any such cash, shares, debentures, debenture stock or specific assets in trustees upon such trusts for the persons entitled to the dividend or capitalized fund as may seem expedient to the Board of Directors.

59.

DIVIDEND ON UNPAID SHARES

Without derogating from Article 54 hereof, the Board of Directors may give an instruction which shall prevent the distribution of a dividend to the registered holders of shares, the full nominal amount of which, has not been paid up.

60.

RETENTION OF DIVIDENDS

(a)

The Board of Directors may retain any dividend or other monies payable or property distributable in respect of a share on which the Company has a lien, and may apply the same in or towards satisfaction of the debts, liabilities, or engagements in respect of which the lien exists.

(b)

The Board of Directors may retain any dividend or other monies payable or property distributable in respect of a share in respect of which any person is, under Article 20 or 21, entitled to become a member, or which any person, is, under said Articles, entitled to transfer, until such person shall become a member in respect of such share or shall transfer the same.

61.

UNCLAIMED DIVIDENDS

All unclaimed dividends or other moneys payable in respect of a share may be invested or otherwise made use of by the Board of Directors for the benefit of the Company until claimed. The payment by the Directors of any unclaimed dividend or such other moneys into a separate account shall not cause the Company to be a trustee in respect thereof. The principal (and only the principal) of an unclaimed dividend or such other moneys shall be, if claimed, paid to the person entitled thereto.

62.

MECHANICS OF PAYMENT

The Board of Directors may fix the mechanics for payment of dividends as it deems fit. However, if nothing to the contrary is provided in the resolution of the Board of Directors, then all dividends, or other moneys payable in cash in respect of a share, may be paid by check or warrant sent through the post to, or left at, the registered address of the person entitled thereto or by transfer to a bank account specified by such person (or, if two or more persons are registered as joint holders of such share or are entitled jointly thereto in consequence of the death or bankruptcy of the holder or otherwise, to the joint holder whose name is registered first in the Shareholder Register or his bank account or the person who the Company may then recognize as the owner thereof or entitled thereto under Article 20 or 21 hereof, as applicable, or such person’s bank account), or to such person and at such other address as the person entitled thereto may by writing direct. Every such check or warrant shall be made payable to the order of the person to whom it is sent, or to such person as the person entitled thereto as aforesaid may direct, and payment of the check or warrant by the banker upon whom it is drawn shall be a good discharge to the Company.

63.

RECEIPT FROM A JOINT HOLDER

If two or more persons are registered as joint holders of any share, or are entitled jointly thereto in consequence of the death or bankruptcy of the holder or otherwise, any one of them may give effectual receipts for any dividend or other moneys payable or property distributable in respect of such share.

ACCOUNTS

64.

BOOKS OF ACCOUNT

The Board of Directors shall cause accurate books of account to be kept in accordance with the provisions of the Companies Law and of any other applicable law. Such books of account shall be kept at the Registered Office of the Company, or at such other place or places as the Board of Directors may think fit, and they shall always be open to inspection by all Directors. No member, not being a Director, shall have any right to inspect any account or book or other similar document of the Company, except as conferred by law or authorized by the Board of Directors or by resolution of the shareholders of the Company.

65.

AUDIT

At least once in every fiscal year the accounts of the Company shall be audited and the correctness of the profit and loss account and balance sheet certified by one or more duly qualified auditors.

66.

AUDITORS

The appointment, authorities, rights and duties of the auditor(s) of the Company, shall be regulated by applicable law, provided, however, that in exercising its authority to fix the remuneration of the auditor(s), the shareholders by resolution in a General Meeting may act (and in the absence of any action in connection therewith shall be deemed to have so acted) to authorize the Board of Directors or a Committee of the Board of Directors to fix such remuneration subject to such criteria or standards, if any, as may be provided in such resolution, and if no such criteria or standards are so provided, such remuneration shall be fixed in an amount commensurate with the volume and nature of the services rendered by such auditor(s).

BRANCH REGISTERS

67.

BRANCH REGISTERS

Subject to and in accordance with the provisions of Sections 130 to 139, inclusive, of the Companies Law and to all orders and regulation issued thereunder, the Company may cause branch registers to be kept in any place outside Israel as the Board of Directors may think fit, and, subject to all applicable requirements of law, the Board of Directors may from time to time adopt such rules and procedures as it may think fit in connection with the keeping of such branch registers.

INSURANCE, INDEMNITY AND EXEMPTION

68.

INDEMNITY, INSURANCE AND EXEMPTION

(a)

Subject to the provisions of the Companies Law, the Company may resolve in advance to exempt an Office Holder of the Company from all or any of his liability for damage in consequence of a breach of the duty of care vis-à-vis the Company.

(b)

Subject to the provisions of the Companies Law, the Company may enter into a contract to insure the liability of an Office Holder of the Company for an obligation imposed upon him in consequence of an act done in his capacity as an Office Holder, in any of the following cases:

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

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

(iii) a monetary obligation imposed on him in favor of another person;

(iv) any other incident for which it is or shall be permitted by law to insure the liability of an Office Holder.

(c)

Subject to the provisions of the Companies Law –

(i) The Company may give an undertaking in advance to indemnify an Office Holder of the Company for an obligation or expense as specified in sub-Article (d) below, imposed on or incurred by him in consequence of an act or omission to act in his capacity as an Office Holder, provided that the undertaking with respect to obligations specified in sub-Article (d)(i) below is limited to events which in the Board of Directors’ opinion are foreseeable in view of the Company’s activity at the time of the indemnity undertaking, and to an amount or degree which the Board of Directors has determined is reasonable in the circumstances of the case (hereinafter: “an indemnification undertaking”).

(ii) Without derogating from the provisions of sub-Article (c)(i) above, the Company may indemnify an Office Holder of the Company retroactively, for an obligation or expense as specified in sub-Article (d) below, imposed or incurred on him in consequence of an act done in his capacity as an Office Holder in the Company.

(d)

The indemnification undertaking or indemnity, as mentioned in sub-Article (c) above, may be given for an obligation or expense as specified in sub-Articles (d)(i) to (d)(iv) below, imposed on or incurred by the Office Holder of the Company in consequence of an act or omission to act in his capacity as an Office Holder, as follows:

(i) A monetary liability imposed by the Office Holder of the Company pursuant to a judgment in favor of another person, including a judgment imposed on such Office Holder in a compromise or an arbitration decision that was approved by a court of law;

(ii)Reasonable litigation expenses, including attorneys’ fees, incurred by the Office Holder of the Company due to an investigation or a proceeding instituted against the Office Holder by an authority competent to administrate such an investigation or proceeding, and that was “finalized without the filing of an indictment against the Office Holder” (as defined in the Companies Law) and without any “financial obligation imposed on the Office Holder in lieu of criminal proceedings” (as defined in the Companies Law); or that was “finalized without the filing of an indictment against the Office Holder” but with “financial obligation imposed on the Office Holder in lieu of criminal proceedings” with respect to an offence that does not require proof of criminal intent;

(iii) Reasonable litigation expenses, including attorneys’ professional fees, incurred by the Office Holder of the Company or which he is ordered to pay by a court in proceedings filed against him by the Company or on its behalf or by another person, or in a criminal indictment of which he is acquitted, or in a criminal indictment of which he is convicted of an offence that does not require proof of criminal intent.

(iv) Any other obligation or expense for which it is or shall be permitted by law to indemnify an Office Holder of the Company.

(e)

Any amendment to the Companies Law adversely affecting the right of any Office Holder to be indemnified or insured pursuant to this Article 68 shall be prospective in effect, and shall not affect the Company’s obligation or ability to indemnify or insure an Office Holder for any act or omission occurring prior to such amendment, unless otherwise provided by the Companies Law.

(f)

The provisions of this Article 68 are not intended, and shall not be interpreted so as to restrict the Company, in any manner, in respect of the procurement of insurance and/or indemnification and/or exculpation, in favour of any person who is not an Office Holder, including, without limitation, any employee, agent, consultant or contractor of the Company who is not an Office Holder.

WINDING UP

69.

WINDING UP

If the Company is wound up, then subject to applicable law and to the rights of the holders of shares with special rights upon winding up, the assets of the Company available for distribution among the shareholders shall be distributed to them in proportion to the respective holdings of the shares in respect of which such distribution is being made.

RIGHTS OF SIGNATURE, STAMP, AND SEAL

70.

RIGHTS OF SIGNATURE, STAMP, AND SEAL

(a)

The Board of Directors shall be entitled to authorize any person or persons (who need not be Directors) to act and sign on behalf of the Company, and the acts and signature of such person(s) on behalf of the Company shall bind the Company insofar as such person(s) acted and signed within the scope of his or their authority.

(b)

The Board of Directors may provide for a seal. If the Board of Directors so provides, it shall also provide for the safe custody thereof. Such seal shall not be used except by the authority of the Board of Directors and in the presence of the person(s) authorized to sign on behalf of the Company, who shall sign every instrument to which such seal is affixed.

NOTICES

71.

NOTICES

(a)

Any written notice or other document may be served by the Company upon any shareholder either personally or by sending it by prepaid mail (airmail if sent internationally) addressed to such member at his address as described in the Shareholder Register. Any written notice or other document may be served by any shareholder upon the Company by tendering the same in person to the Secretary or the General Manager or Chief Executive Officer of the Company at the principal office of the Company or by sending it by prepaid registered mail (airmail if posted outside Israel) to the Company at it Registered Address. Any such notice or other document shall be deemed to have been served two (2) business days after it has been posted (seven (7) business days if posted internationally), or when actually tendered in person, to such shareholder (or to the Secretary or the General Manager or the Chief Executive Officer), whichever is earlier. Notice sent by email or facsimile shall be deemed to have been served two business days after the notice is sent to the addressee, or when in fact received, whichever is earlier, notwithstanding that if it was defectively addressed or failed, in some other respect, to comply with the provisions of this Article 71(a).

(b)

All notices to be given to the shareholders shall, with respect to any share to which persons are jointly entitled, be given to whichever of such persons is named first in the Shareholder Register, and any notice so given shall be sufficient notice to the holders of such share.

(c)

If requested by the Company, each shareholder shall provide the Company with the shareholder’s full street and mailing address, as well, if available with facsimile number and email address. Any shareholder whose address is not set out in the Shareholder Register, and who shall not have designated in writing delivered to the Company an address for the receipt of notices, shall not be entitled to receive any notice from the Company.

Exhibit 4.2

SILICOM LTD.

U.S. SHARE OPTION PLAN (2000)

A. NAME AND PURPOSE

1. Name : This plan, as amended from time to time, shall be known as the Silicom Ltd. U.S. Share Option Plan (2000) (the “Plan”).

2. Purpose : The purpose and intent of the Plan is to provide incentives to officers, consultants and certain other present and future employees and directors (each, a “Service Provider”) of Silicom Ltd. (the “Company”) and its subsidiaries by providing them with opportunities to purchase shares in the Company, pursuant to a plan approved by the Board of Directors of the Company (the “Plan”). The Plan is intended to comply with the provisions of the United States Internal Revenue Code, as amended from time to time, and any successor statute thereto (the “Code”). The Options to purchase Ordinary Shares of the Company (the “Options”) granted under the Plan may contain such terms as will qualify the Options as Incentive Stock Options (“ISO”) within the meaning of Section 422(b) of the Code.

The word “Company” when used in the Plan with reference to employment or retention of Service Providers, shall include subsidiaries of the Company. The word “subsidiary”, when used in the Plan, shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the time of the granting of the option, each of the corporations other than the last corporation in the unbroken chain owns shares possessing 50 percent or more of the total combined voting power of all classes of shares in one of the other corporations in such chain.

B. GENERAL TERMS AND CONDITIONS OF THE PLAN

3. Administration :

3.1 The Plan will be administered by the Board of Directors of the Company, either directly or upon the recommendation of a share option advisory committee appointed and maintained by the Board for such purpose (the “Committee” ). If appointed, the Committee will consist of such number of Directors of the Company (not less than two (2) in number), as may be fixed from time to time by the Board of Directors of the Company. The Board of Directors shall appoint the members of the Committee, may from time to time remove members from, or add members to, the Committee and shall fill vacancies in the Committee however caused. The Board of Directors shall automatically have residual authority if no Committee is appointed, or if such Committee ceases to operate for any reason whatsoever. In such events, the term Committee, whenever used herein, shall mean the Board of Directors of the Company.

3.2 Subject to the general terms and conditions of this Plan, the Board of Directors shall have sole authority, in its absolute discretion, to determine, and the Committee, if any, shall have full power and authority to make recommendations to the Board concerning (i) the Service Providers to whom Option Awards (as hereinafter defined) shall be granted (“Grantees”), (ii) the number of shares to be covered by each Option Award, (iii) the time or times at which the same shall be granted, (iv) the schedule and conditions on which such Option Awards may be exercised and on which such shares shall be paid for, and/or (v) any other matter which is necessary or desirable for, or incidental to, the administration of the Plan. In determining the number of shares covered by the Option Awards to be granted to each Grantee, the Committee shall consider, among other things, the Grantee’s salary and the duration of the Grantee’s employment by the Company.

3.3 The Board may from time to time adopt such rules and regulations for carrying out the Plan as it may deem best. No member of the Board of Directors or of the Committee, if any, shall be liable for any action or determination made in good faith with respect to the Plan or any Option Award granted thereunder.

3.4 The interpretation and construction by the Committee of any provision of the Plan or of any Option Award thereunder shall be final and conclusive unless otherwise determined by the Board of Directors.

4. Eligible Grantees :

4.1 NISOs (as defined in Section 6.3 below) may be granted to employees, Directors or consultants of the Company or any parent or subsidiary of the Company (“Service Providers”). ISOs (as defined in Section 6.3 below) may be granted only to employees. Each Option shall be designated in the Option Agreement as either an ISO or a NISO. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value (as hereinafter defined) of the Shares with respect to which ISOs are exercisable for the first time by the Grantee during any calendar year (under all plans of the Company and any parent or subsidiary) exceeds $100,000, such Options shall be treated as NISOs. For purposes of this Section 4.1, ISOs shall be taken into account in the order in which they were granted.

4.2 Subject to any restriction imposed by applicable law, Option Awards may be granted to any officer, key employee or other employee, consultant or contractor of the Company or any of its subsidiaries, whether or not a Director of the Company or a subsidiary. The grant of an Option Award to a Grantee hereunder, shall neither entitle such Grantee to participate, nor disqualify the Grantee from participating, in any other grant of options pursuant to this Plan or any other share incentive or share option plan of the Company or any of its subsidiaries.

4.3 The “Fair Market Value” shall mean the last reported sales price (as expressed in dollars on the trading day immediately preceding the date of grant) of the Ordinary Shares on the principal United States national securities exchange on which the Ordinary Shares are designated for trading, or if the Ordinary Shares are not designated for trading on a United States national securities exchange, on the National Association of Securities Dealers Automated Quotations (“NASDAQ”) National Market System or the SMALLCAP Market System, or, if the Ordinary Shares are not designated for trading on the NASDAQ National Market System or the SMALLCAP Market System, the average of the closing bid and asked prices as reported on the NASDAQ System or, if not so reported, as furnished by the National Quotation Bureau.

5. Reserved Shares : The Company has reserved 200,000 authorized but unissued Ordinary Shares (nominal value NIS 0.01 per share) for purposes of the Plan, subject to adjustment as provided in paragraph 11 hereof. Any shares under the Plan, in respect of which the right hereunder of a Grantee to purchase the same shall for any reason terminate, expire or otherwise cease to exist, shall again be available for grant through Option Awards under the Plan.

6. Option Awards :

6.1 The Board in its discretion may award to Grantees options to purchase shares in the Company available under the Plan (“Option Awards”). Option Awards may be granted at any time after this Plan has been approved by the Board of Directors of the Company and the shares reserved for the Plan effectively created. The date of grant of each Option Award shall be the date specified by the Board at the time such award is made.

6.2 The instrument granting an Option Award shall state, inter alia, the number of shares covered thereby, the dates when it may be exercised, the option price, the schedule on which such shares may be paid for and such other terms and conditions as the Board in its discretion may prescribe, provided that they are consistent with this Plan.

6.3 Option Awards granted under the Plan may be of two types: (i) Incentive Stock Options (“ISO”) and (ii) Non-Incentive Stock Options (“NISO”). ISO means any stock option intended to be and designated as an “Incentive Stock Option” within Section 422 of the Code; NISO means any stock option that is not an ISO. To the extent that any Stock Option does not qualify as an ISO, it shall constitute a corporate NISO.

Anything in the Plan to the contrary notwithstanding, no term of this Plan relating to an ISO shall be interpreted, amended, or altered, nor shall any discretion or authority granted under the Plan be so exercised, so as to disqualify the Plan under Section 422 of the Code, or, without the consent of the participant(s) affected, to disqualify any ISO under such Section 422.

Options granted under the Plan shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem appropriate:

(a) Option Price. The per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Committee in accordance with applicable law. Notwithstanding the foregoing, the option price per share purchasable under an ISO shall be not less than 100% of the Fair Market Value of the stock at the time of grant. However, any ISO granted to any participant who, at the time the option was granted owns, in accordance with Section 424(d) of the Code, more than 10% of the voting power of all classes of stock of the Company or of a parent or subsidiary corporation shall have an exercise price of no less than 110% of the Fair Market Value of the Stock at the time of grant.

(b) Option Term. The term of each ISO shall be fixed by the Committee, but no ISO shall be exercisable more than ten years after the date the ISO is granted. However, any ISO granted to any participant who, at the time the option is granted owns, in accordance with Section 424(d) of the Code, more than 10% of the voting power of all classes of stock of the Company or of a parent or subsidiary corporation may not have a term of more than five years. No option may be exercised by any person after expiration of the term of the option.

(c) Exercisability. ISO’s shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee at or after grant. If the Committee provides, in its discretion, that any ISO is exercisable only in installments, the Committee may waive such installment exercise provisions at any time at or after grant in whole or in part, based on such factors as the Committee shall determine in its sole discretion.

(d) Non-Transferability of Options. No stock option (whether an ISO or NISO) shall be transferable by the participant otherwise than by will or by the laws of descent and distribution, and all stock options shall be exercisable, during the participant’s lifetime, only by the participant.

(e) Incentive Stock Option Limitations. To the extent required for “Incentive Stock Option” status under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the stock with respect to which ISO’s are exercisable for the first time by the participant during any calendar year under the Plan and/or any other stock option plan of the Company and its parent or subsidiary, if any, shall not exceed $100,000.

7. Option Prices : Subject to Section 6.3, the price per share covered by each Option Award shall be as determined by the Board.

8. Exercise of Option Award :

8.1 Option Awards shall be exercisable pursuant to the terms under which they were awarded, as set forth in the Option Agreement, and subject to the terms and conditions of this Plan. Unless the Board provides otherwise, vesting of Options granted hereunder shall be tolled during any unpaid leave of absence. An Option may not be exercised for a fraction of a Share.

8.2 An Option Award, or any part thereof, shall be exercisable by the Grantee’s signing and returning to the Company at its principal office, a “Notice of Exercise” in such form and substance as may be prescribed by the Company from time to time from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. The optionee shall sign and deliver to the company, upon its request, a separate investment representation, certificate or such other document as may be required by the Company’s counsel. Furthermore, the Company may place a legend on any share certificate delivered to an optionee to the effect that such shares were acquired pursuant to such an investment representation without registration of the shares, if necessary.

8.3 Anything herein to the contrary notwithstanding, but without derogating from the provisions of paragraph 10 hereof, if any Option Award, or any part thereof, has not been exercised and the shares covered thereby not paid for within ten (10) years after the date of grant (or any other period set forth in the instrument granting such Option Award pursuant to Section 7) (the “Termination Date”), such Option Award, or such part thereof, and the right to acquire such shares shall terminate, all interests and rights of the Grantee in and to the same shall expire.

8.4 Payment for Ordinary Shares purchased under an option granted hereunder shall be made in full upon exercise of the option, by certified or bank cashier’s check payable to the order of the Company, or by any other means acceptable to the Company. The Ordinary Shares purchased shall thereupon be promptly delivered, provided, however, that the Company may, in its discretion require that an optionee pay to the Company, at the time of exercise, such amount as the Company deems necessary to satisfy its obligation to with hold taxes incurred by reason of the exercise or the transfer of shares thereupon. Each payment for shares under an Option Award shall be in respect of a whole number of shares.

8.5 An optionee or a transferee of an option shall have no rights as a shareholder with respect to any share covered by his option until he shall have become the holder of record of such share, and he shall not be entitled to any dividends or distributions or other rights in respect of such share for which the record date is prior to the date on which he shall have become the holder of record thereof.

9. Termination of Employment :

9.1 Resignation and Termination Without Cause . If an Optionee who is a Service Provider resigns, or is terminated without “cause” (as defined below), the Optionee may exercise the Option within such period of time as is specified in the Option Agreement to the extent the Option is vested on the date of cessation of such Optionee’s employment or service relationship with the Company (the “Cessation Date”), but in no event later than the Termination Date. In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for a period of three (3) months after the Cessation Date. All of such Optionee’s rights with respect to the options granted to him or her under the Plan that are not vested at the Cessation Date shall terminate and the underlying Shares shall revert to the Plan immediately upon the Cessation Date. If within three (3) months of the Cessation Date, such Optionee does not exercise his or her option awards, all of such Optionee’s rights with respect to any options that have not been exercised shall terminate and the underlying Shares shall revert to the Plan

9.2 Termination For Cause . If an Optionee who is a Service Provider is terminated for “cause” (as defined below), his options shall terminate immediately upon the date of such termination for cause. All of such Optionee’s rights with respect to the options granted to him or her under the Plan, whether vested or unvested at the Cessation Date, shall terminate and the underlying Shares shall revert to the Plan immediately upon the Cessation Date.

9.3 Death, Disability. If an Optionee ceases to be a Service Provider as a result of the Optionee’s disability, or dies while a Service Provider, the Optionee (or in the case of death, the Optionee’s estate or a person who acquires the right to exercise the Option by bequest or inheritance) may exercise the Option within such period of time as is specified in the Option Agreement to the extent the Option is vested on the date of disability or death (but in no event later than the Termination Date). In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following the Optionee’s date of disability or death. If, on the date of disability or death, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after the date of disability or death, the Optionee (or his estate or a person who acquires the right to exercise the Option by bequest or inheritance) does not exercise the Option within the time specified in the Option Agreement or this Plan, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. “Disability” shall mean a physical or mental infirmity which impairs the Optionee’s ability to substantially perform the duties of employment for a period of at least ninety (90) consecutive days.

9.4 Deemed Cessation. In the event of resignation or discharge of an Optionee from the employ of the Company or a subsidiary, such Optionee’s employment or termination of services shall, for the purposes of this Article, be deemed to have ceased upon the earlier of (a) the delivery to the employee of notice of discharge or the delivery to the Company or the subsidiary of the letter of resignation, as the case may be, or (b) the effective date of such resignation or discharge.

9.5 “Cause”. For the purposes of this Plan, “cause” shall mean reasons which, as determined by the Company in its discretion, amount to untrustworthiness, bad faith or fraud.

10. Adjustments : Upon the happening of any of the following described events, a Grantee’s rights to purchase shares under the Plan shall be adjusted as hereinafter provided:

10.1 Changes in Capitalization. Subject to any required action by the shareholders of the Company, the number of Ordinary Shares covered by each outstanding Option, and the number of Ordinary Shares which have been authorized for issuance under the Plan but as to which no Options have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option, as well as the price per share of Ordinary Shares covered by each such outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of issued Ordinary Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Ordinary Shares, or any other increase or decrease in the number of issued Ordinary Shares effected without receipt of consideration by the Company. The conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Ordinary Shares subject to an Option.

10.2 Merger, Acquisition, or Asset Sale .

(a) In the event of a merger or consolidation of the Company with or into another corporation resulting in such other corporation being the surviving entity or resulting in the Company being the surviving entity and any other person or entity owning fifty percent (50%) or more of the outstanding voting power of the Company’s securities, an acquisition of all or substantially all of the shares of the Company, or the sale of substantially all of the assets of the Company (each such event, a “Transaction”), each outstanding Option shall be assumed or an equivalent option or right shall be substituted by the successor corporation or a parent or subsidiary of the successor corporation.

(b) For the purposes of this sub-section 10.2, the Option shall be considered assumed if, following a Transaction, the option or right confers the right to purchase or receive, for each share subject to the Option immediately prior to the Transaction, the consideration (whether stock, cash, or other securities or property) received in the Transaction by holders of Ordinary Shares for each share held on the effective date of the Transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Transaction is not solely common stock of the successor corporation or its parent, the Board may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each share subject to the Option, to be solely ordinary shares 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 Transaction.

10.3 The foregoing adjustments and the manner of application of the foregoing provisions shall be determined by the Board in its sole discretion. Any such adjustment may provide for the elimination of any fractional share which might otherwise become subject to an option.

11. Assignability and Sale of Shares : No option shall be transferable except by will or the laws of descent and distribution. During the lifetime of the optionee, the option shall be exercisable only by him.

12. Term and Amendment of the Plan :

12.1 The Plan was adopted by the Board of Directors of the Company on October 24, 2000, and shall expire on October 24, 2010 (except as to Option Awards outstanding on that date).

12.2 The Board may, without the consent of the Company’s shareholders or optionees under the Plan, at any time terminate the Plan entirely and at any time, from time to time, amend or modify the Plan, provided that no such action shall adversely affect optionees theretofore granted hereunder without the optionee’s consent, and provided further that no such action by the Board, without approval of the shareholders, may (a) increase the total number of Ordinary Shares which may be purchased pursuant to options granted under the Plan; (b) expand the persons eligible to receive options under the Plan; (c) extend the maximum term of options granted hereunder; or (d) extend the term of the Plan.

13. Continuance of Employment : Neither the Plan nor the Agreement shall impose any obligation on the Company or a subsidiary thereof to continue any Grantee in its employ or service, and nothing in the Plan or in any Option Award granted pursuant thereto shall confer upon any Grantee any right to continue in the employ or service of the Company or a subsidiary thereof, or restrict the right of the Company or a subsidiary thereof, to terminate such employment or service at any time.

14. Governing Law : The Plan and all instruments issued thereunder or in connection therewith, shall be governed by, and interpreted in accordance with, the laws of the State of Israel, subject to the provisions of the applicable United States securities laws.

15. Application of Funds : The proceeds received by the Company from the sale of shares pursuant to Option Awards granted under the Plan will be used for general corporate purposes of the Company or any subsidiary thereof.

16. Tax Consequences : Any tax consequences arising from the grant or exercise of any Option Award, from the payment for shares covered thereby or from any other event or act (of the Company, the subsidiary that employs or engages the services of the Grantee, or the Grantee) hereunder, shall be borne solely by the Grantee. Furthermore, the Grantee shall agree to indemnify the Company, the subsidiary that employs or engages the services of the Grantee, and hold them harmless against and from any and all liability for any such tax or interest or penalty thereon, including without limitation, liabilities relating to the necessity to withhold, or to have withheld, any such tax from any payment made to the Grantee. Except as otherwise required by law, the Company shall not be obligated to exercise any Options on behalf of a Grantee until all tax consequences arising from the exercise of such Options are resolved in a manner reasonably acceptable to the Company. The Company or any of its subsidiaries may make such provisions and take such steps as it may deem necessary or appropriate for the withholding of all taxes required by law to be withheld with respect to Options granted under the Plan and the exercise thereof, including, but not limited, to (i) deducting the amount so required to be withheld from any other amount then or thereafter payable to a Grantee, and/or (ii) requiring a Grantee to pay to the Company or any of its subsidiaries the amount so required to be withheld as a condition of the issuance, delivery, distribution or release of any Shares.

17. Conditions Upon Issuance of Shares.

17.1 Legal Compliance . Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply with applicable laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.

17.2 Investment Representations . As a condition to the exercise of an Option, the Company may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required. The certificates for such Shares may include any legend which the Company deems appropriate to reflect any restrictions on transfer or any other restrictions required by applicable law or this Plan. All certificates for Shares issued pursuant to the Plan shall be subject to such stop transfer orders and other restrictions as the Company may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange or interdealer quotation system upon which the Shares are then listed or quoted, and any applicable federal or state securities laws.

18. Inability to Obtain Authority. The inability of the Company to obtain authority from or comply with the rules and regulations of any regulatory body having jurisdiction or any applicable laws, which authority or compliance is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority or compliance shall not have been obtained.

19. Reservation of Shares. The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

20. Stockholder Approval. The Plan shall be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted. Such stockholder approval shall be obtained in the degree and manner required under applicable laws.

Exhibit 4.3

SILICOM LTD.

SHARE OPTION PLAN (2004)

NAME.

This plan, as amended from time to time, shall be known as the Silicom Ltd. Share Option Plan (2004) (the “Plan”).

2.	PURPOSE AND DEFINITIONS.

2.1

The purposes of this Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to employees, directors, office holders and consultants of Silicom Ltd. (the “Company”) and of any Subsidiary (as defined below), and to promote the Company’s business by providing such individuals with opportunities to receive options (the “Options”) to purchase the Company’s Ordinary Shares, nominal value NIS 0.01 (the “Shares”) pursuant to the Plan.

2.2

Options granted pursuant to this Plan to individuals or entities that are subject to Israeli taxation may be granted (a) pursuant to Section 102 of the Ordinance (as defined below) and shall be held for the benefit of the Grantees and (b) pursuant to Section 3(i) of the Ordinance.

2.3

In the event that Options shall be granted under this Plan to Service Providers (as defined below) who are not deemed to be residents of Israel for Israeli tax law purposes, specific terms and conditions for such grants shall be set forth in an appendix to this Plan, approved by the Board of Directors of the Company (the “Board”).

2.4

Definitions . As used herein, the following definitions shall apply:

(a) “102 Capital Gains Track Grant” means a 102 Trustee Grant elected and designated to qualify under the capital gains tax treatment in accordance with the provisions of Section 102(b)(2) of the Ordinance.

(b) “102 Ordinary Income Track Grant” means a 102 Trustee Grant elected and designated to qualify under the ordinary income tax treatment in accordance with the provisions of Section 102(b)(1) of the Ordinance.

(c) “102 Trustee Grant” means Options granted pursuant to Section 102(b) of the Ordinance and held in trust by a Trustee for the benefit of the Grantee, and includes both 102 Capital Gains Track Grants and 102 Ordinary Income Track Grants.

(d) “3(i) Grant” means any Options granted pursuant to Section 3(i) of the Ordinance to any person who is not an Eligible 102 Grantee.

(e) “Cause” means any of the following: (i) the Grantee’s embezzlement of any Company property or asset, or any theft or intentional destruction of property, whether or not criminal action is brought against the Grantee; (ii) the Grantee’s negligently performing or neglecting his responsibilities as Service Provider, or failure or inability to perform any reasonable assigned duties, when such failure may harm the Company’s business or commercial relationships, after written notice from the Company of, and a reasonable opportunity to cure, such failure or inability; (iii) any material breach of the Grantee of any employment agreement between the Grantee and the Company, which breach is not cured after written notice from the Company of, and a reasonable opportunity to cure, such material breach; or (iv) the Grantee’s conviction of any criminal act which involves moral turpitude, or the Grantee’s concealment of such conviction prior to commencement of his or her relationship as Service Provider; (v) the Grantee’s breach of Company regulations which breach is not cured after written notice from the Company of, and a reasonable opportunity to cure, such breach; or (vi) Grantee’s destruction of Company materials, appliances or machines or reduction of yield or production. For purposes of the definition of Cause, the “Company” shall also refer to a Subsidiary for which a Grantee is employed or provides services.

(f) “Cessation” means termination of the Service Provider’s relationship with the Company. In the event of Cessation of a Grantee’s relationship with the Company, such Grantee’s relationship with the Company shall be deemed to have ceased upon the delivery to the Grantee of notice of discharge or the delivery to the Company of the letter of resignation, as the case may be, irrespective of the effective date of such resignation or discharge.

(g) “Companies Law” means the Israeli Companies Law 5759-1999, as amended from time to time.

(h) “Consultant” means any person who is engaged by the Company or by a Subsidiary to render consulting, advisory or other services to such entity who is not an Employee.

(i) “Controlling Shareholder” means, pursuant to Section 32(9) of the Ordinance, an employee who prior to the grant or as a result of the exercise of any Option, holds or would hold, directly or indirectly, in his name or with a relative (as defined in the Ordinance) either: (i) 10% of the outstanding shares of the Company, (ii) 10% of the voting power of the Company, (iii) the right to hold or purchase 10% of the outstanding equity or voting power, (iv) the right to obtain 10% of the “profit” of the Company (as defined in the Ordinance), or (v) the right to appoint a director of the Company, or as such definition is amended or replaced from time to time.

(j) “Eligible 102 Grantee” means an Employee deemed an Israeli resident for taxation purposes, who is not a Controlling Shareholder of the Company.

(k) “Employee” means an employee, officer or director of the Company or of a Subsidiary.

(l) “Grantee” means a person to whom Options shall be granted pursuant to this Plan.

(m) “Non-Trustee Grant” means an Option granted pursuant to Section 102(c) of the Ordinance to an Eligible 102 Grantee and not held in trust by a Trustee.

(n) “Ordinance” means the Israeli Income Tax Ordinance (New Version) 1961, as amended from time to time and, most recently, by the Law Amending the Income Tax Ordinance (Number 132) 2002 and any regulations, rules, orders, guidelines, interpretations or procedures promulgated thereunder by the Israeli Income Tax Authorities (the “ITA”), including but not limited to the Income Tax Rules (Tax Benefits in Stock Issuance to Employees) 5763-2003 (the “Rules”).

(o) “Required Holding Period” means the requisite period prescribed by the Ordinance (including the Rules) or such other period as may be required by the ITA, during which Options granted by the Company and/or the underlying Shares from a 102 Trustee Grant must be held by the Trustee for the benefit of the person to whom they were granted subject to the applicable laws.

(p) “Service Provider” means an Employee or Consultant.

(q) “Subsidiary” means (i) any entity that, directly or indirectly, is controlled by the Company or (ii) any entity in which the Company has a significant equity interest, in either case as determined by the Board.

(r) “Trustee” means a person or entity designated by the Company to serve as a trustee and who is approved by the ITA in accordance with the provisions of the Ordinance.

3.	ADMINISTRATION.

3.1

The Plan will be administered by the Board. The Board may, in its discretion, appoint and maintain a Share Option Committee (the “Committee”) to administer the Plan to the extent permissible under applicable law as may be amended from time to time, which will consist of such number of directors of the Company (not less than two (2) in number), as may be determined from time to time by the Board. The Board shall from time to time add, appoint or remove members of the Committee and shall fill vacancies in the Committee however caused.

3.2

The Committee shall select one of its members as its Chairman and shall hold its meetings at such times and places as it shall determine. Actions at a meeting of the Committee at which a majority of its members are present or acts approved in writing by all members of the Committee, shall be the valid acts of the Committee. The Committee may appoint a secretary, who shall keep records of its meetings and shall make such rules and regulations for the conduct of its business as it shall deem advisable.

3.3

Subject to the general terms and conditions of this Plan, the Board shall have full authority in its discretion, from time to time and at any time, to determine (i) the identity of the Grantees, (ii) the number of Shares to be covered by each Option, (iii) the time or times at which Options shall be granted, (iv) the schedule and conditions on which Options may be exercised and on which Shares shall be paid for including but not limited to vesting terms, acceleration terms, restrictions and transferability, and (v) any other matter which is necessary or desirable for, or incidental to, the administration of the Plan including the interpretation of the Plan. The Board may, in its sole discretion, delegate some or all of the powers listed above to the Committee to the extent permitted by applicable law. The Board may from time to time adopt such rules and regulations for carrying out the Plan as it may deem appropriate. Grants of Options shall be made pursuant to written notification to Grantees setting out the terms of the grant, all as further set forth below.

3.4

In the event that the Board appoints a Committee, the Committee shall not be entitled to grant Options to the Grantees unless permitted to do so under applicable law. However, in the event that the Committee is authorized to do so by the Board, it may issue Shares underlying Options which have been granted by the Board and duly exercised pursuant to the provisions hereof, in accordance with Section 112(a)(5) of the Companies Law.

3.5

No member of the Board or of the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Option granted thereunder. Each member of the Board or the Committee shall be indemnified and held harmless by the Company against any cost or expense (including counsel fees) reasonably incurred by him, or any liability (including any sum paid in settlement of a claim with the approval of the Company) arising out of any act or omission to act in connection with the Plan unless arising out of such member’s own fraud or bad faith, to the extent permitted by applicable law. Such indemnification shall be in in accordance with the rights of indemnification the member may have as a director or otherwise under the Company’s Articles of Association, any agreement, any vote of stockholders or disinterested directors, insurance policy or otherwise.

3.6

The interpretation and construction by the Board of any provision of the Plan or of any Option thereunder shall be final and conclusive unless otherwise determined by the Board. In the event that the Board appoints a Committee, the interpretation and construction by the Committee of any provision of the Plan or of any Option thereunder shall be final and conclusive unless otherwise determined by the Board.

3.7

Any additional costs associated in the administration and implementation of this Plan including but not limited to the costs involved in retaining a trustee, broker or any other third party desired by the Company to facilitate the transactions contemplated under this Plan, shall be borne solely by the Grantee unless determined otherwise by the Board or by the Committee.

4.	ELIGIBLE GRANTEES.

4.1

No Option may be granted pursuant to this Plan to any director of the Company at the time of the grant, unless such grant is approved in the manner prescribed for the approval of compensation of directors under the Companies Law.

4.2

Subject to the limitation set forth in Section 4.1 above and any restriction imposed by applicable law, Options may be granted to any Service Provider. The grant of an Option to a Grantee hereunder shall neither entitle such Grantee to participate, nor disqualify such Grantee from participating, in any other grant of Options pursuant to this Plan or any other share incentive or share option plan of the Company.

4.3

102 Trustee Grants may be granted to Eligible 102 Grantees only. Eligible 102 Grantees may receive only 102 Trustee Grants or Non-Trustee Grants. Grantees who are not Eligible 102 Grantees may only be granted 3(i) Options under this Plan.

4.4

Subject to the terms of the Plan, the Option Agreement (as defined below) and/or any other documents evidencing the Options granted pursuant to this Plan shall indicate whether the grant is a 102 Trustee Grant, a Non-Trustee Grant or a 3(i) Grant; and, if the grant is a 102 Trustee Grant, whether it is a 102 Capital Gains Track Grant or a 102 Ordinary Income Track Grant.

5.	TERMS AND CONDITIONS OF 102 TRUSTEE OPTIONS

5.1

Unless determined otherwise by the Board and to the extent permitted by applicable law, each 102 Trustee Grant will be deemed granted on the date stated in a written notice by the Company, provided that on or before such date (i) the Company has provided notification to the Trustee and (ii) the Grantee has signed all documents required pursuant to this Section 5.

5.2

Each 102 Trustee Grant made to a Grantee and each certificate for Shares acquired pursuant to the exercise thereof shall be issued to and registered in the name of a Trustee and shall be held in trust for the benefit of the Grantee for the Required Holding Period until the date in which the Grantee will decide to sell the Shares or release the Shares from the Trustee subject to the provisions of the Ordinance. After termination of the Required Holding Period, the Trustee may release such Option and any such Shares acquired pursuant to the exercise thereof, provided that (i) the Trustee has received an acknowledgment from the ITA that the Grantee has paid any applicable tax due pursuant to the Ordinance or (ii) the Trustee and/or the Company and/or its Subsidiary has withheld any applicable tax due pursuant to the Ordinance. The Trustee shall at no time release any 102 Trustee Grant or Shares issued upon exercise of such 102 Trustee Grant, prior to the full payment of the Grantee’s tax liabilities.

5.3

Each 102 Trustee Grant (whether a 102 Capital Gains Track Grant or a 102 Regular Income Track Grant, as applicable) shall be subject to the relevant terms of Section 102 of the Ordinance, which shall be deemed an integral part of the 102 Trustee Grant and which shall prevail over any term contained in the Plan or any Option Agreement which is not consistent therewith. Any provision of the Ordinance and any approval issued by the Income Tax Commissioner not expressly specified in this Plan or in an Option Agreement, that are necessary to receive or maintain any tax benefit pursuant to the Ordinance, shall be binding on the Grantee. Any 102 Trustee Grant made hereunder shall comply with the Ordinance and the terms and conditions of any trust agreement entered into between the Company and the Trustee. For avoidance of doubt, it is reiterated that compliance with the Ordinance specifically includes compliance with the Rules. Further, the Grantee agrees to execute any and all documents which the Company and/or the Trustee may reasonably determine to be necessary in order to comply with the Ordinance and, particularly, the Rules including but not limited to the entering into of a written undertaking to the Company stating among other things (a) the type of 102 Trustee Grant held or to be held by the Trustee for the benefit of the Grantee, (b) that the provisions of the Ordinance will apply to the 102 Trustee Grant and (c) that there are restrictions on the sale of the Shares (or release of Shares by the Trustee).

5.4

With respect to each 102 Trustee Grant and subject to the terms of the Ordinance, during the Required Holding Period, the Grantee shall not require the Trustee to release or sell the Shares including with respect to other shares received subsequently following any realization of rights derived from the Shares (including stock dividends), to the Grantee or to a third party, unless permitted to do so by applicable law. Notwithstanding the foregoing and subject to applicable law, the Trustee may, pursuant to a written request, release and transfer such Shares to the Grantee or to a designated third party, provided that both of the following conditions have been fulfilled prior to such transfer: (i) payment has been rendered to the tax authorities of all taxes required to be paid upon the release and transfer of the Shares, and confirmation of such payment has been received by the Trustee and (ii) the Trustee has received written confirmation from the Company that all requirements for such release and transfer have been fulfilled according to the terms of the Company’s corporate documents, the Plan, the Option Agreement and any applicable law. Notwithstanding anything herein to the contrary, any such sale or release during the Required Holding Period by the Grantee will result in adverse tax ramifications under the Ordinance and the Rules and such consequences shall be borne solely by the Grantee.

5.5

Each Grantee shall be entitled to receive dividends declared, if applicable, in accordance with the number of Shares allocated or acquired pursuant to the exercise of a 102 Trustee Grant, subject to any applicable taxation on distribution of dividends and when applicable subject to the provisions of the Ordinance. In the event that the dividend is paid in the form of Shares or such other form of equity, such Shares or equity must be first transferred to the Trustee and shall be subject to the provisions of the Ordinance including but not limited to the application of the Required Holding Period.

5.6

Notwithstanding anything herein to the contrary, if an Option granted as a 102 Trustee Grant is exercised by the Grantee during the Required Holding Period, the Shares issued upon such exercise shall be issued in the name of the Trustee for the benefit of the Grantee. If such an Option is exercised after the Required Holding Period ends, the Shares issued upon such exercise shall, at the election of the Grantee, either (i) be issued in the name of the Trustee or (ii) be transferred to the Grantee directly, provided that the Grantee first complies with all applicable provisions of the Plan, the Option Agreement and the Ordinance including with respect to the payment of all applicable taxes owed.

5.7

Notwithstanding anything herein to the contrary, in the case of a Non-Trustee Grant, if the Grantee ceases to be employed by the Company or the Subsidiary, as applicable, while such Option is still valid, the Grantee shall be obligated to deliver to the Company or the Subsidiary, as applicable, a security or guarantee for the payment of tax due at the time of the sale of the Shares, all in accordance with the provisions of the Ordinance.

6.	GRANTS MADE UNDER SECTION 3(I) OF THE ORDINANCE

The Board may choose to deposit Options from a 3(i) Grant with a trustee. In such event, the trustee shall hold such Options in trust, until exercised by the Grantee, pursuant to the Company’s instructions from time to time as set forth in a trust agreement which will be entered into between the Company and the trustee. If determined by the Board, the trustee shall be responsible for withholding any taxes to which a Grantee may become liable upon the exercise of Options.

7.	RESERVED SHARES.

7.1

Subject to adjustment from time to time as provided below (including but not limited to adjustments made pursuant to Section 12 below), five hundred eighty two thousand seven hundred and fifty (582,750) Shares shall be available for issuance under the Plan for as long as the Plan remains in effect. Shares issued under the Plan shall be drawn from authorized and unissued shares of the Company. Until termination of the Plan the Company shall at all times reserve a sufficient number of Shares to meet the requirements of the Plan. Should any Option for any reason expire or be canceled prior to its exercise or relinquishment in full, the Shares subject to such Option shall again be made available for issuance under the Plan.

7.2

No fractional shares shall be issued or delivered pursuant to the Plan, and the Committee shall determine whether cash, other securities or other property shall be paid or transferred in lieu of any fractional shares, or whether such fractional shares or any rights thereto shall be canceled, terminated or otherwise eliminated.

8.	GRANT OF OPTIONS.

8.1

The Board and/or the Committee, as applicable, in its discretion may award to Grantees, Options to purchase Shares in the Company available under the Plan. Subject to applicable law, the date of grant of each Option shall be the date specified by the Board and/or the Committee, as applicable, at the time such award is made.

8.2

The instrument/written document governing the granting and specific terms of an Option under this Plan as determined by the Board and/or the Committee (the “Option Agreement”), shall state, inter alia, the number of Shares at the type of option granted covered thereby, the dates when it may be exercised, the exercise price per Share subject to the Option, the schedule on which such Shares may be paid for and such other terms and conditions as the Board and/or the Committee, as applicable, in its discretion may prescribe, provided that they are consistent with this Plan.

9.	OPTION PRICES.

9.1

The exercise price of an Option shall be determined by the Board or by the Committee, in either case in its sole and absolute discretion in accordance with applicable law, subject to any guidelines as may be determined by the Board from time to time, and may be greater than, less than or equal to the “Fair Market Value” (as defined below) of each Share. Notwithstanding the foregoing, the exercise price shall not be less than the nominal value of each Share. Each Option Agreement will contain the exercise price determined for each Grantee.

9.2

"Fair Market Value" means, as of any date, the value of the Shares determined as follows:

(i) If the Shares are listed on any established stock exchange or a national market system, the Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Board or the Committee deems reliable;

(ii) If the Shares are regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value shall be the mean between the high bid and low asked prices for the Shares on the last market trading day prior to the day of determination; or

(iii) In the absence of an established market for the Shares, the Fair Market Value thereof shall be determined in good faith by the Board or the Committee.

10.

EXERCISE OF OPTION.

10.1

Options shall be exercisable pursuant to the terms under which they were awarded and subject to the terms and conditions of this Plan, the Option Agreement and the Ordinance.

10.2

An Option, or any part thereof, shall be exercisable by the Grantee’s signing and returning to the Company at its principal office (and to the Trustee, if applicable), a “Notice of Exercise” in such form and substance as may be prescribed by the Board or by the Committee from time to time, together with full payment for the Shares underlying such Option.

10.3

The exercise price shall be payable upon the exercise of the Option in a form satisfactory to the Board or by the Committee and subject to limitations set forth by applicable law, including without limitation, cash-less exercise (including on a net-issuance basis without any cost to the Grantee), by cash or by check. Subject to applicable law, the Board or the Committee shall have the authority to postpone the date of payment on such terms as it may determine.

10.4

Until the Shares are issued (as evidenced by the appropriate entry in the official share register of the Company or of a duly authorized transfer agent of the Company) no right to vote or right to receive dividends or any other rights as a shareholder shall exist with respect to such Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right the record date for which is prior to the date the Shares are issued, except as provided in Section 12 of the Plan.

10.5

If the Company’s Shares are publicly traded, payment for the Shares underlying an Option may be made all or in part by the delivery (on a form prescribed by the Company) of an irrevocable direction to a securities broker approved by the Company to sell Shares and to deliver all or part of the sales proceeds to the Company as payment of the exercise price (or the relevant portion thereof, as applicable) plus any withholding taxes and related fees.

11.

TERMINATION OF RELATIONSHIP AS SERVICE PROVIDER.

11.1

Resignation and Termination Without Cause. Unless otherwise stated in the Option Agreement, if a Grantee resigns, or is terminated without cause from his or her relationship as a Service Provider, such Grantee may, at any time prior to the expiration of the term of the Option Agreement, exercise any of his or her Options that are vested at the date of Cessation for a period of three (3) months from the Cessation. At the end of such three (3) month period, the Grantee’s rights shall terminate with respect to any Options vested on the date Cessation and not exercised, and the underlying Shares shall revert to the Plan. All of such Grantee’s rights with respect to the Options granted to him or her under the Plan that are not vested at the date of Cessation, shall terminate and the underlying Shares shall revert to the Plan immediately upon the Cessation.

11.2

Termination For Cause. Unless otherwise stated in the Option Agreement, if a Grantee’s relationship as a Service Provider is terminated for Cause, such Grantee shall no longer have the right to exercise his or her Options following the Cessation. All of such Grantee’s rights with respect to the Options granted to him or her under the Plan as of the date of Cessation shall terminate and the underlying Shares shall revert to the Plan immediately upon the Cessation.

11.3

Death and Disability. Unless otherwise stated in the Option Agreement, if a Grantee should die, or if a Grantee ceases to serve as a Service Provider by reason of such Grantee becoming incapacitated while a Service Provider as a result of an accident or illness or other cause which is approved by the Board or by Committee, such Grantee (or such Grantee’s successors, as the case may be) may, for a period of one (1) year from the Cessation, exercise any of his or her Options that are vested at the date of Cessation. At the end of such one (1) year period, the Grantee’s rights shall terminate with respect to any Options vested on the date Cessation and not exercised, and the underlying Shares shall revert to the Plan. All of such Grantee’s rights with respect to the Options granted to him or her under the Plan that are not vested at the date of Cessation, shall terminate and the underlying Shares shall revert to the Plan immediately upon the Cessation

11.4

Continuation of Relationship . A Service Provider’s relationship with the Company shall not be deemed to have ceased (i) with respect to an Employee, in the event of any leave of absence approved by the Company (or by the subsidiary that employs the Grantee) or (ii) in the event of employee transfers between the Company and a Subsidiary.

12.

ADJUSTMENTS.

Upon the occurrence of any of the following described events, a Grantee’s rights to purchase Shares under the Plan shall be adjusted as hereinafter provided:

12.1

Changes in Capitalization.

Subject to any required action by the shareholders of the Company and to the consent of the Board, the number of Shares covered by each outstanding Option, the number of Shares which have been reserved for issuance under the Plan but as to which no Options have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option, as well as the price per share of Shares covered by each such outstanding Option, may be proportionately adjusted for any increase or decrease in the number of issued Shares resulting from a share split, reverse share split, bonus shares (stock dividend), combination or reclassification of the Shares, or any other increase or decrease in the number of issued Shares effected for nominal or for no consideration to the Company. Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of any class, or securities convertible into shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to an Option.

12.2

Merger, Acquisition, or Asset Sale.

(a) In the event of a merger or consolidation of the Company with or into another corporation resulting in such other corporation being the surviving entity, or resulting in the Company being the surviving entity and any other person or entity owning fifty percent (50%) or more of the outstanding voting power of the Company’s securities, an acquisition of all or substantially all of the shares of the Company, or the sale of substantially all of the assets of the Company (each such event, a “Transaction”), each outstanding Option shall be assumed or an equivalent option or right shall be substituted by the successor corporation or a parent or subsidiary of the successor corporation.

(b) For the purposes of this sub-section 12.2, the Option shall be considered assumed if, following a Transaction, the option or right confers the right to purchase or receive, for each share subject to the Option immediately prior to the Transaction, the consideration (whether stock, cash, or other securities or property) received in the Transaction by holders of Ordinary Shares for each share held on the effective date of the Transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Transaction is not solely common stock of the successor corporation or its parent, the Board may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each share subject to the Option, to be solely ordinary shares 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 Transaction.

12.3

The foregoing adjustments and the manner of application of the foregoing provisions shall be determined by the Board in its sole discretion. Any such adjustment may provide for the elimination of any fractional share which might otherwise become subject to an option.

13.

NON-TRANSFERABILITY OF OPTIONS.

No Option may be transferred other than by will or by the laws of descent and distribution, and during the Grantee’s lifetime an Option may be exercised only by such Grantee.

14.

TERM AND AMENDMENT OF THE PLAN.

14.1

No Option may be granted by the Board under the Plan after the tenth (10 ^th ) anniversary of the Effective Date, provided however, that any Option granted by the Board prior to such date may extend beyond such date and the authority of the Board to amend, alter, adjust suspend, discontinue, or terminate any such Option, to waive conditions or rights attached to such Option and the authority of the shareholders to amend the Plan to the extent applicable, shall also extend beyond such date.

14.2

Subject to any requirements of applicable law and unless otherwise expressly provided for in an Option Agreement, the Board may at any time, but after notification to any trustee, if applicable, amend, alter, suspend or terminate the Plan. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Grantee, unless mutually agreed otherwise between the Grantee and the Company, which agreement must be in writing and signed by the Grantee and the Company. Termination of the Plan shall not affect the Board’s ability to exercise the powers granted to it hereunder with respect to any Option granted under the Plan prior to the date of such termination.

15.

TERM OF OPTION.

Anything herein to the contrary notwithstanding, but without derogating from the provisions of Section 11 and Section 14 hereof, if any Option, or any part thereof, has not been exercised and the Shares covered thereby not paid for within ten (10) years after the date of grant (or any shorter period set forth in the Option Agreement), such Option, or such part thereof, and the right to acquire such Shares shall terminate, and all interests and rights of the Grantee in and to the same shall expire.

16.

CONTINUANCE OF EMPLOYMENT OR SERVICE .

Neither this Plan nor any offer of Options to a Grantee shall impose any obligation on the Company or a Subsidiary, to continue to employ or engage the services of any Grantee, and nothing in the Plan or in any Option granted pursuant thereto shall confer upon any Grantee any right to continue in the employ or service of the Company or a Subsidiary or restrict the right of the Company or a Subsidiary thereof to terminate such employment or services at any time.

17.

COMPLIANCE WITH SECURITIES LAWS.

17.1

Notwithstanding any other provision of the Plan, the Board shall have no obligation to issue or deliver any Shares under the Plan or make any other distribution of benefits under the Plan unless, in the opinion of the Company’s counsel, such issuance, delivery or distribution would comply with all applicable laws (including, without limitation, the requirements of the United States Securities Act of 1933, as amended (the Securities Act”)), and the applicable requirements of any other securities laws, exchange or similar entity.

17.2

The Company shall be under no obligation to any Grantee to register for offering or resale or to qualify for exemption under the Securities Act or similar law of any foreign jurisdiction, or to register or qualify under state securities laws or foreign securities laws, any Shares, security or interest in a security paid or issued under, or created by, the Plan, or to continue in effect any such registrations or qualifications, if made.

17.3

As a condition to the exercise of an Option, the Company may require (a) that the Grantee represent and warrant at the time of any such exercise or receipt that such Shares are being purchased or received only for the Grantee’s own account and without any present intention to sell or distribute such Shares and (b) such other action or agreement by the Grantee as may from time to time be necessary to comply with applicable securities laws.

17.4

At the option of the Company, a stop-transfer order against any such Shares may be placed on the official share register of the Company, and a legend indicating that such Shares may not be pledged, sold or otherwise transferred, unless an opinion of counsel is provided (concurred in by counsel for the Company) stating that such transfer is not in violation of any applicable law or regulation, may be stamped on share certificates to ensure exemption from registration. The Board may also require that the Grantee execute and deliver to the Company a purchase agreement or such other agreement as may be in use by the Company at such time that describes certain terms and conditions applicable to the Shares.

18.

GOVERNING LAW.

The Plan and all instruments issued thereunder or in connection therewith, shall be governed by, and interpreted in accordance with, the laws of the State of Israel. without giving effect to the principles of conflict of laws. The competent courts of Tel-Aviv, Israel shall have sole jurisdiction in any matters pertaining to the Plan.

19.

TAXES.

19.1

Any tax consequences arising from the grant or exercise of any Option, from the payment for Shares covered thereby, or from any other related event or act (of the Company, and/or a Subsidiary, and/or the Trustee and/or the Grantee), hereunder, shall be borne solely by the Grantee, including but not limited to the ultimate liability for income tax, social insurance or other tax related liabilities or withholding obligations in connection with or derived from the grant of an Option. The Company and/or its Subsidiary, and/or the Trustee shall withhold taxes according to the requirements under the applicable laws, rules, and regulations, including withholding taxes at source. Furthermore, the Grantee shall agree to indemnify the Company and/or the Subsidiary and hold them harmless against and from any and all liability for any such tax or interest or penalty thereon, including without limitation, liabilities relating to the necessity to withhold, or to have withheld, any such tax from any payment made to the Grantee for which the Grantee is responsible, including specifically any additional tax liability the Company may incur as a result of an exercise in connection with a 102 Trustee Grant or any transfer effected prior to conclusion of the Required Holding Period. To the extent permitted by applicable law and provided that such implementation will not create variable accounting problems for the Company, the Company and/or the Subsidiary and/or the Trustee may make such provisions and take such steps as it/they may deem necessary or appropriate for the withholding of all taxes required by law to be withheld with respect to Options granted under the Plan and the exercise thereof, including, but not limited, to (i) deducting the amount so required to be withheld from any other amount then or thereafter payable to a Grantee, and/or (ii) requiring a Grantee to pay to the Company or any Subsidiary the amount so required to be withheld as a condition of the issuance, delivery, distribution or release of any Shares. In addition, the Grantee will be required to pay any amount that exceeds the tax to be withheld and transferred to the tax authorities, pursuant to applicable Israeli tax regulations.

19.2

The receipt of these Options and the acquisition of the shares to be issued upon the exercise of the Options may result in tax consequences for the Grantee. The description of tax consequences set forth in this Plan does not purport to be complete. THE GRANTEE IS ADVISED TO CONSULT WITH A TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF RECEIVING OR EXERCISING THE OPTIONS.

20.

NON-EXCLUSIVITY OF THE PLAN

The adoption of the Plan by the Company shall not be construed as amending, modifying or rescinding any previously approved incentive arrangements or as creating any limitations on the power of the shareholders to adopt such other incentive arrangements as it may deem desirable and in accordance with applicable law. Nothing contained in the Plan shall prevent the Company from adopting or continuing in effect other or additional incentive compensation arrangements for Service Providers of the Company or of any Subsidiary.

21.

MULTIPLE AGREEMENTS

The terms of each Option granted under the Plan may differ from any other Option granted at the same time or at any other time under the Plan and there shall be no obligation for uniformity of treatment of Service Providers with respect to any grant under the Plan.

22.

EFFECTIVE DATE

The effective date of the Plan is the date on which the shareholders of the Company ratify the adoption of the Plan, which was previously approved by the Board, at a duly convened meeting of the shareholders (the “ Effective Date ”).

Exhibit 5.1

February 11, 2008

Silicom Ltd.
8 Hanagar Street

Kfar Sava, Israel, 44000

Re:

Registration Statement on Form S-8

Dear Sirs:

We have acted as Israeli counsel for Silicom Ltd., a company organized under the laws of Israel (the “Company”), in connection with the Registration Statement on Form S-8 (the “Registration Statement”) being filed by the Company under the Securities Act of 1933 for the purposes of registering: (i) 191,200 of its Ordinary Shares, par value NIS 0.01 per share (each an “Ordinary Share”) that may be issued pursuant to future awards under the Company’s U.S. Share Option Plan (2000) (the “2000 Plan); (ii) 143,750 Ordinary Shares that may be issued pursuant to future awards under the Company’s Share Option Plan (2004) (the “2004 Plan” and together with the 2000 Plan, the “Plans”); (iii) 8,800 Ordinary Shares underlying options granted under the 2000 Plan; and (iv) 439,000 Ordinary Shares underlying options granted under the 2004 Plan (together the “Option Shares”).

On the basis of such investigation as we have deemed necessary, we are of the opinion that the Option Shares have been duly and validly authorized for issuance and, when issued upon due exercise of options granted or hereafter granted under the Plans in accordance with the provisions of the Plans and the related option agreements (including payment of the option exercise price provided for therein), will be fully paid and non-assessable.

We hereby consent to the filing of this opinion as an Exhibit to the Registration Statement. In giving this consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, or the Rules and Regulations of the Securities and Exchange Commission thereunder.

The above opinion is based on facts existing on the date hereof and of which we are aware. We express no opinion as to any laws other than the laws of the State of Israel as the same are in force on the date hereof and we have not, for purpose of giving this opinion, made any investigation of the laws of any other jurisdiction.

Very truly yours,

/s/ Yigal Arnon & Co.
——————————————
Yigal Arnon & Co.

Exhibit 23.2

Consent of Independent Registered Public Accounting Firm

The Board of Directors
Silicom Ltd.:

We consent to the use of our report dated May 29, 2007 with respect to the consolidated balance sheets of the Silicom Ltd. and its subsidiary (the Company) as of December 31, 2006 and 2005, and the related consolidated statements of income, changes in shareholders’ equity and cash flows for each of the years in the three year period ended December 31, 2006 incorporated by reference herein, which reports appears in the December 31, 2006 annual report on Form 20-F of Silicom Ltd.

Our report refers to a change in the method of accounting for share-based compensation upon adoption by the Company of Financial Accounting Standards Board Statement No. 123(R), “Share-Based Payment”, effective January 1, 2006.

Somekh Chaikin
Certified Public Accountants (Israel)
Member Firm of KPMG International

Tel Aviv, Israel
February 11, 2008

PART I

INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

PART II

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

POWER OF ATTORNEY

AMENDED AND RESTATED ARTICLES OF ASSOCIATION

OF

SILICOM LTD.

A COMPANY LIMITED BY SHARES

PRELIMINARY

SHARE CAPITAL

SHARES

TRANSFER OF SHARES

TRANSMISSION OF SHARES

GENERAL MEETINGS

PROCEEDINGS AT GENERAL MEETINGS

PROXIES

BOARD OF DIRECTORS

PROCEEDINGS OF THE BOARD OF DIRECTORS

CHIEF EXECUTIVE OFFICER AND PRESIDENT

MINUTES

DIVIDENDS

ACCOUNTS

BRANCH REGISTERS

INSURANCE, INDEMNITY AND EXEMPTION

WINDING UP

RIGHTS OF SIGNATURE, STAMP, AND SEAL

NOTICES

SILICOM LTD.

U.S. SHARE OPTION PLAN (2000)

SILICOM LTD.

SHARE OPTION PLAN (2004)

Exhibit 23.2

Consent of Independent Registered Public Accounting Firm

AMENDED AND RESTATED
ARTICLES OF ASSOCIATION