FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 by gmx42408

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									                                As filed with the Securities and Exchange Commission on March 23, 2010
                                                                                       Registration No. 333-_________

                                                          UNITED STATES
                                              SECURITIES AND EXCHANGE COMMISSION
                                                      WASHINGTON, DC 20549
                                                             ________________
                                                          FORM S-8
                                                  REGISTRATION STATEMENT
                                               UNDER THE SECURITIES ACT OF 1933
                                                             ________________
                                                   BLUEPHOENIX SOLUTIONS LTD.
                                                 (Exact Name of Registrant as Specified in Its Charter)
                         Israel                                                                                                       Not Applicable
             (State or other jurisdiction of                                                                                         (I.R.S. employer
            incorporation or organization)                                                                                          Identification no.)
                                                                   8 Maskit Street
                                                                Herzliya 46733, Israel
                                                                   972-9-952-6100
                                                  (Address of Principal Executive Offices) (Zip Code)

                                CRYSTAL 1996 EMPLOYEE SHARE OPTION PLAN – PART I
                              Renamed: BLUEPHOENIX 2003 EMPLOYEE SHARE OPTION PLAN
                                                                 (Full Title of the Plan)
                                                             ________________
                                                                   Varda Sagiv
                                                          BluePhoenix Solutions USA Inc.
                                                              8000 Regency Parkway
                                                           Cary, North Carolina 27511
                                                       (Name and Address of Agent for Service)

                                                                   (919) 380-5100
                                             (Telephone number, including area code, of Agent for Service)
                                                             ________________
                                                                 Copies to:
            Ernest Wechsler , Esq.                                 Yael Peretz, Adv.                                     Yael Bar-Shai, Adv.
      Kramer Levin Naftalis & Frankel LLP                      BluePhoenix Solutions Ltd.                               Herzog, Fox & Neeman
         1177 Avenue of the Americas                                8 Maskit Street                                          Asia House
          New York, New York 10036                               Herzliya 46733, Israel                                   4 Weizman Street
                (212)-715-9100                                      972-9-952-6100                                      Tel Aviv 64239, Israel
                                                                                                                           972-3-692-2020

    Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
    company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
    (Check one):

             Large accelerated filer                                                         Accelerated filer
             Non-accelerated filer      (Do not check if a smaller reporting company)        Smaller reporting Company

                                       CALCULATION OF REGISTRATION FEE
                                                                  Proposed                                            Proposed
                                                                  maximum                                             maximum              Amount of
       Title of Securities to be registered
                                                Amount to be offering price per                                       aggregate            registration
                                               registered (1) (2)   share                                           offering price              fee
Ordinary Shares, par value NIS 0.01 per share   307,674 shares     $5.50(3)                                          $1,692,207              $120.65
Ordinary Shares, par value NIS 0.01 per share        130,000 shares          $2.80(3)            $364,000           $25.95



Ordinary Shares, par value NIS 0.01 per share        532,326 shares          $2.55(4)           $1,357,431          $96.79



TOTAL                                                970,000 shares            ____             $3,413,638         $243.39




    (1)      The aggregate number of ordinary shares being registered are granted under BluePhoenix 2003 Employee
             Share Option Plan (prior to August 6, 2003, known as the "Crystal 1996 Employee Share Option Plan - Part
             One", as amended (the "BluePhoenix Plan"). The BluePhoenix Plan was amended by the BluePhoenix
             board of directors in February 2010 to increase the number of ordinary shares authorized for issuance under
             the plan to 4,200,000.

    (2)      Pursuant to Rule 416(c) of the Securities Act of 1933, as amended (the “Act”), an additional indeterminable
             number of shares are also being registered to cover any adjustments required by stock splits, stock
             dividends or similar transactions under the Plan.

    (3)      Calculated solely for purposes of this offering under Rule 457(h)(1) of the Act based on the price at which
             the options may be exercised. The Registrant has already granted 437,674 of the options related to the
             shares being registered under this registration statement.

    (4)      The price is estimated in accordance with Rules 457(c) under the Act solely for the purpose of calculating
             the registration fee and is the average of the high and low prices of Registrant’s Ordinary Shares as
             reported on the Nasdaq National Market on March 17, 2010.
                                        EXPLANATORY NOTE

        On February 12, 1999, BluePhoenix Solutions Ltd. (the “Registrant”) filed with the Securities and
Exchange Commission (the “Commission”) a registration statement on Form S-8 (File No. 333-10008)
(the “1999 Registration Statement”) relating to 903,767 ordinary shares, par value NIS 0.01 per share of
the Registrant (the “Ordinary Shares”), to be offered and sold to participants under the BluePhoenix 2003
Employee Share Option Plan, previously known as the Crystal 1996 Employees Share Option Plan – Part
One, as amended from time to time (the “Plan”) and 145,900 of its ordinary shares under the Crystal 1996
Employee Option Plan - Part II, both pursuant to the 1999 Registration Statement.

         On July 26, 2001, the Registrant filed with the Commission a registration statement on Form S-8
(File No. 333-13770) (the “2001 Registration Statement”, relating to an additional 1,421,233 Ordinary
Shares to be offered and sold to participants under the Plan and on October 31, 2007, the Registrant filed
with the Commission a registration statement on Form S-8 (File No. 333-147058) (the “2007 Registration
Statement”) relating to an additional 905,000 Ordinary Shares to be offered and sold to participants under
the Plan. The 1999 Registration Statement, 2001 Registration Statement and 2007 Registration Statement
are collectively referred to herein as the “Registration Statements.”

        The contents of these prior Registration Statements are incorporated herein by reference. This
Registration Statement is being filed to register an additional 970,000 Ordinary Shares to be offered and
sold under the Plan.

                                    PART II
              INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.         Incorporation of Documents by Reference

      The Registrant hereby incorporates by reference into this Registration Statement the following
documents previously filed with the Commission:

     (a)   The Registrant’s Annual Report on Form 20-F for the fiscal year ended December 31, 2008,
           filed with the Commission on March 31, 2009, as amended and filed with the Commission on
           November 24, 2009;


     (b) The Registrant’s reports on Form 6-K, filed with the Commission on January 6, 2009, January
         7, 2009, January 13, 2009, January 21, 2009, January 28, 2009, January 29, 2009,
         February 4, 2009, February 17, 2009, February 24, 2009, April 2, 2009, May 1, 2009, May 6,
         2009, May 12, 2009, May 18, 2009, May 20, 2009, June 12, 2009, July 7, 2009, July 9, 2009,
         July 15, 2009, August 11, 2009, August 26, 2009, September 15, 2009, September 22, 2009,
         October 13, 2009, October 20, 2009, October 22, 2009, November 12, 2009, November 17,
         2009, November 24, 2009, December 1, 2009, December 9, 2009, December 30, 2009,
         December 31, 2009, January 20, 2010, January 26, 2010, February 3, 2010, February 23, 2010,
         March 4, 2010, March 11, 2010 and March 15, 2010; and


     (c)   The description of the Registrant’s Ordinary Shares contained in the Registrant’s Registration
           Statement No. 00029082 on Form 8-A filed pursuant to Section 12(g) of the Securities
           Exchange Act of 1934, as amended (the “Exchange Act”), on January 21, 1997.
       (d) The contents of the prior Registration Statements are incorporated herein by reference.

         All documents subsequently filed by the Registrant with the Commission pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, after the date of this Registration Statement and prior to
the filing of a post-effective amendment which indicates that all securities offered have been sold or
which deregisters all securities then remaining unsold, and all Reports on Form 6-K submitted by the
Registrant to the Commission during such period, or portions thereof that are identified in such forms as
being incorporated into this Registration Statement, shall be deemed to be incorporated by reference in
this Registration Statement and to be a part hereof from the date of filing such documents.

        Any document, or 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 document or statement contained herein, or in any other
subsequently filed document that also is deemed to be incorporated by reference herein, modifies or
supersedes such document or statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration Statement. Subject to the
foregoing, all information appearing in this Registration Statement is qualified in its entirety by the
information appearing in the documents incorporated by reference.

          The contents of the prior Registration Statements are incorporated herein by reference.

Item 8.           Exhibits

4.1       BluePhoenix 2003 Employee Share Option Plan (prior to August 6, 2003, known as the Crystal
          1996 Employee Share Option Plan - Part One), as amended on January 28, 1997, December 5,
          1999, December 18, 2000, December 26, 2000, August 6, 2003, December 30, 2004 and February
          on 21, 2010*

5.1       Opinion of Herzog, Fox & Neeman*

23.1      Consent of Ziv Haft, Certified Public Accountants (Isr.) *

23.2      Consent of Herzog, Fox & Neeman (contained in their opinion constituting Exhibit 5.1) *

24.1      Power of Attorney (included in signature page) *

* Filed herewith.

Item 8.           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;

                  (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 thereof)
                          which, individually or in the aggregate, represent a fundamental change in the
                          information set forth in the 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 percent change in the maximum aggregate offering
                         price set forth in the “Calculation of Registration Fee” table in the effective
                         registration statement;

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

                Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not apply to information
contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in this Registration Statement.

                 (2)      That, for the purpose of determining any liability under the Securities Act, each
such post-effective amendment 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.

                 (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 of the Registrant under the
Securities Act 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:

                 (i)     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, each filing of the Registrant’s annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s
annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this
Registration Statement 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.

         (c)      Insofar as indemnification for liabilities arising under the Securities Act of 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 Securities 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 the Securities Act and will be governed by the final adjudication of such issue.
                                          SIGNATURES

        Pursuant to the requirements of the 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 the City of Herzliya, Israel on the 23rd day of March, 2010.



                                                           BLUEPHOENIX SOLUTIONS LTD.


                                                           By: /s/Varda Sagiv
                                                           Varda Sagiv
                                                           Chief Financial Officer
                                   POWER OF ATTORNEY

         KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Arie Kilman, Varda Sagiv, Yaron Tchwella and Gur
Shomron, or either of them, as his or her true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him or her and in his or her name, place and
stead, in any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and any registration statement relating to the
offering hereunder pursuant to Rule 462 under the Securities Act of 1933, as amended, and to
file the same, with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents, or either of them, or their or his or her substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.

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

Principal Executive Officer:

/s/Yaron Tchwella                                    Chief Executive Officer        March 23, 2010
Yaron Tchwella

Principal Financial Officer and Principal
Accounting Officer:

/s/Varda Sagiv                                       Chief Financial Officer        March 23, 2010
Varda Sagiv

Directors:

/s/Arie Kilman                                   Director, Chairman of the Board    March 23, 2010
Arie Kilman

/s/Sam Somech                                               Director                March 23, 2010
Sam Somech

/s/Amira Berkovitz-Amir                                     Director                March 23, 2010
Amira Berkovitz-Amir

/s/Michael Chill                                            Director                March 23, 2010
Michael Chill

/s/ Gur Shomron                                             Director                March 23, 2010
Gur Shomron
                     Name                 Title       Date



Authorized Representative in the United
States:
BLUEPHOENIX SOLUTIONS USA Inc.

/s/ Varda Sagiv                                   March 23, 2010
By: Varda Sagiv
Chief Financial Officer
INDEX TO EXHIBITS

Exhibit No.         Description

4.1                 BluePhoenix 2003 Employee Share Option Plan (prior to August 6, 2003, known as the
                    Crystal 1996 Employee Share Option Plan - Part One), as amended on January 28, 1997,
                    December 5, 1999, December 18, 2000, December 26, 2000, August 6, 2003, December 30,
                    2004 and on February 21, 2010 *

5.1                 Opinion of Herzog, Fox & Neeman *

23.1                Consent of Ziv Haft, Certified Public Accountants (Isr.) BDO member firm *

23.2                Consent of Herzog, Fox & Neeman. (contained in their opinion constituting Exhibit 5.1) *

24.1                Power of Attorney (included in signature page) *

* Filed herewith.
                                                                                       Exhibit 5.1
                               [Herzog, Fox & Neeman letterhead]


                                                                                          March 23, 2010
                                                                                      File No.
BluePhoenix Solutions Ltd.
8 Maskit Street
Herzliya 46733
Israel

Ladies and Gentlemen:

        We have acted as special Israeli counsel to BluePhoenix Solutions Ltd., an Israeli
company (the “Company”), in connection with the Registration Statement on Form S-8 (the
“Registration Statement”), filed by the Company with the Securities and Exchange Commission
on the date hereof. The Registration Statement relates to the registration under the Securities Act
of 1933, as amended, of 970,000 ordinary shares of the Company, par value NIS 0.01 per share
(“Ordinary Shares”), authorized for issuance under the Company’s 2003 Employee Share Option
Plan (the “Plan”).

         In so acting, we have examined such statutes, regulations, corporate records, documents
and other instruments, and such certificates or comparable documents of public officials and of
officers and representatives of the Company, and have made such inquiries of such officers and
representatives, as we have deemed relevant and necessary as a basis for the opinion hereinafter
set forth.

         In such examination, we have assumed the genuineness of all signatures, the legal
capacity of natural persons, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified, conformed or
photostatic copies and the authenticity of the originals of such latter documents. As to all
questions of fact material to this opinion that have not been independently established, we have
relied upon certificates or comparable documents of officers and representatives of the Company.
We have considered such questions of Israeli law as we have deemed necessary for the purpose of
rendering this opinion. We are members of the Bar of the State of Israel and, in rendering our
opinion, we do not pass (expressly or by implication) on the laws of any jurisdiction other than
the State of Israel. Our opinion relates only to Israeli laws.

         Based upon the foregoing, we are of the opinion that the Ordinary Shares have been duly
authorized and, when issued and paid for in the manner contemplated by the Plan, will be validly
issued, fully paid and nonassesable.

       We hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.

                                                                  Very truly yours,
                                                                  /s/ Herzog, Fox & Neeman
                                                                                    Exhibit 23.1


     CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



         We consent to the incorporation by reference in this Registration Statement on Form S-8
pertaining to the BluePhoenix 2003 Employee Share Option Plan (the “Plan”), of our report and
the effectiveness of internal control over financial reporting included in the annual report of
BluePhoenix Solutions Ltd. on Form 20/A- for the fiscal year ended December 31, 2008, as filed
with the Securities and Exchange Commission on November 24, 2009.




                                                        By: /s/ Ziv Haft
                                                        Ziv Haft
                                                        Certified Public Accountants (Isr.)
                                                        BDO MEMBER FIRM

Tel Aviv, Israel
March 23, 2010
        BLUEPHOENIX SOLUTIONS LTD
BLUEPHOENIX 2003 EMPLOYEE STOCK OPTION PLAN
         As amended on February 21, 2010

  (former name: CRYSTAL SYSTEMS SOLUTIONS LTD
 1996 EMPLOYEE SHARE OPTION PLAN - PART ONE)
                                                                            December 30, 2004

                          BLUEPHOENIX SOLUTIONS LTD.

                     2003 EMPLOYEE SHARE OPTION PLAN

A. NAME AND PURPOSE


Name. This plan, as amended from time to time, shall be known as the                           1.
                                 "BluePhoenix 2003 Employee Stock Option Plan” (the "Plan").


2.     Purpose. The purpose and intent of the Plan is to provide incentives to
employees, directors, officers and consultants of BluePhoenix Solutions Ltd. (the
"Company")     and   of    its    subsidiaries   and   affiliates   who   are   not   controlling
shareholders of the Company, by providing them with opportunities to purchase
Ordinary Shares, nominal value 0.01 New Israeli Shekels each (the "Shares"), of
the Company, pursuant to a plan approved by the Board of Directors of the
Company which with respect to employees of the Company, is designed to
benefit from, and is made pursuant to, the provisions of Section 102 of the Israeli
Income Tax Ordinance [New Version], 1961 (the “Tax Ordinance”), and the rules and
regulations promulgated thereunder (the “Regulations”). Grant of options to Non – Israeli
residents shall be in accordance with the provisions of Appendix A of this Plan.
B. GENERAL TERMS AND CONDTIONS OF THE PLAN
3.      Administration.


        3.1     The Plan will be administered by the Board of Directors of the Company
(the "Board") or by a committee appointed by the Board (the "Committee"),
which, if appointed, will consist of such number of Directors of the Company as
may be fixed, from time to time, by the Board.            If a Committee is not appointed,
or if it is required under any law the term Committee, whenever used herein,
shall mean the Board.        The Board 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.


        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 taken by
a majority of the members of the Committee, at a meeting at which a majority of
its members is present, or acts reduced to or 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 Committee
        shall have the full authority in its discretion, from time to time and at any time, to
        determine:
     (i) Whether the Options shall be issued to a trustee nominated by the
        Committee pursuant to Section 102(b) of the Tax Ordinance, or the
        Options shall issued without a trustee pursuant to Section 102(c) of the
        Tax Ordinance;
     (ii) The person to be nominated as a trustee pursuant to the Plan;
     (iii) In the event that the Company elects to grant Options pursuant to
        Section 102(b) of the Tax Ordinance – whether the Options be granted
        pursuant to Section 102(b)(1) of the Tax Ordinance (“Income Track
        Options”) or pursuant to Section 102(b)(2) of the Tax Ordinance
        (“Capital Gains Track Options”). (issuance of Income Track Options or
        Capital Gains Track Options shall be referred to herein as “Tax
        Track(s)”). In the event that the Company elects one of the Tax Tracks as
        described above, it may not grant Options pursuant to the other Tax
        Track during a period commencing on the end of the year in which the
        Options were granted until the end of the subsequent year;
     (iv) (a) The persons ("Grantees") to whom options to purchase Shares
        ("Option(s)") shall be granted, (b) the number of Options to be granted to
        each Grantee, (c) the time or times at which the same shall be granted,
        (d) the schedule and conditions on which such Options may be exercised
        and on which such Shares shall be paid for, and/or (e) any other matter
        which is necessary or desirable for, or incidental to, the administration of
        the Plan. In determining the number of Options to be granted to each
        Grantee, the Committee may consider, among other things, the Grantee's
        salary and the duration of the Grantee's employment by the Company.


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


        3.5 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.


4.      Eligible Grantees and General Terms.
        4.1   The Committee, at its discretion, may grant Options to
        employees, directors, officers and consultants of the Company
        and its subsidiaries and affiliates provided that such Grantees are
not controlling shareholders of the Company (as such term is
defined in Section 32(9) of the Tax Ordinance). Anything in this
Plan to the contrary, notwithstanding all grants of Options to
directors and officers -"Nosei Misra" - as such term is defined in
the Israeli Companies Law, 1999, (the "Companies Law") - shall
be authorized and implemented only in accordance with the
provisions of the Companies Law. The grant of an Option to a
Grantee hereunder, shall neither entitle such Grantee to
participate, nor disqualify him from participating, in any other
grant of options pursuant to this Plan or any other stock option
plan of the Company.
4.2   Each Option is exercisable into one Share.
5.   The Trust.

     5.1   The Trustee.
           (a) In the event that the Committee has elected to grant
                  Options to a trustee designated by the Board and
                  approved by the Israeli Commissioner of Income
                  Tax (the “Trustee”), as prescribed under Section
                  3.3(i) above, the Trustee shall hold each such
                  issued Option and the Shares issued upon exercise
                  thereof in trust (the "Trust") for the benefit of the
                  Grantee in respect of whom such Option was
                  granted (the "Beneficial Grantee").
           (b) Issuance of Options to a Trustee pursuant to any of
                  the Tax Tracks is subject to the completion and
                  execution of all procedures required under the Tax
                  Ordinance and/or the Regulations.
           (c) All certificates representing Shares issued to the
                  Trustee under the Plan shall be deposited with the
                  Trustee, and shall be held by the Trustee until such
                  time that such Shares are released from the Trust as
                  herein provided.
              (d) Pursuant to the provisions of Section 102 of the
                   Tax Ordinance and the Regulations, the taxation of
                   the Options or Shares issued upon the exercise of
                   Options pursuant to any of the Tax Tracks, are
                   subject to their deposition in Trust for the required
                   holding period (the “Required Holding Period”) as
                   follows: (i) in the event that the Company elects
                   the Income Tax Track - twelve (12) months after
                   the end of the year in which the Options were
                   granted and deposited in Trust; (ii) in the event that
                   the Company elects the Capital Gains Tax Track –
                   twenty four (24) months after the end of the year in
                   which the Options were granted and deposited in
                   Trust; or (iii) any other shorter period to be
                   determined by the Committee which was approved
                   by the tax authorities or in accordance with tax
                   regularization to be adopted from time to time.
No Options or Shares shall be released from the Trust until the later of

(i) the end of the Required Holding Period; and (ii) the vesting of such

          Options pursuant to Section 7.4 hereof (such later date being

                         hereinafter referred to as the "Release Date").



(e) Subject to the terms hereof, at any time after the Release Date
             with respect to any Options or Shares the following shall apply:


                  (i) Options and/or Shares issued to the Trustee
                      shall continue to be held by the Trustee, on
                      behalf of the Beneficial Grantee. From and
                      after the Release Date, upon the written
                      request of any Beneficial Grantee, the Trustee
   shall release from       the Trust the Options
   and/or the Shares issued, on behalf of such
   Beneficial    Grantee,    by    executing     and
   delivering to the Company such instrument(s)
   as the Company may require, giving due
   notice of such release to such Beneficial
   Grantee, provided, however, that the Trustee
   shall not so release any such Options and/or
   Shares to such Beneficial Grantee unless the
   latter, prior to, or concurrently with, such
   release, provides the Trustee with evidence,
   satisfactory in form and substance to the
   Trustee, that all taxes or other compulsory
   payments, if any, required to be paid upon
   such release have, in fact, been paid.
(ii) Alternatively, from and after the Release
   Date, upon the written instructions of the
   Beneficial Grantee to sell any Shares issued
   upon exercise of Options, the Trustee shall
   use its best efforts to effect such sale and shall
   transfer such Shares to the purchaser thereof
   concurrently with the receipt, or after having
   made suitable arrangements to secure the
   payment of the proceeds, of the purchase
   price in such transaction. The Trustee shall
   withhold from such proceeds any and all
   taxes or other       compulsory required to be
   paid in respect of such sale, shall remit the
   amount so withheld to the appropriate tax
   authorities and shall pay the balance thereof
   directly to the Beneficial Grantee, reporting to
                        such Beneficial Grantee and to the Company
                        the amount so withheld and paid to said tax
                        authorities.


        Should the Trustee sell Shares at the request of the Beneficial Grantee, the
        company shall pay the Trustee for his services and expenses incurred with respect
        to such sale of Shares, and the Trustee will be entitled to withhold such amounts
        and pay the balance thereof to said Beneficial Grantee.
        Notwithstanding the provisions of Subsection (d) above, Subject to the approval
        of the Committee, the Beneficial Grantee may sell or transfer the Options or
        Shares issued upon the exercise of Options prior to the end of the Required
        Holding Period, provided however that the Trustee shall withhold applicable tax
        or shall insure withholding of applicable tax in accordance with the provisions of
        the Regulations and Section 102 of the tax Ordinance relating to transfer prior to
        the end of the Required Holding Period.
5.2 Dividend and Voting Rights. All Shares issued upon the exercise of
 Options granted under the Plan shall entitle the Beneficial Grantee thereof to
receive dividends with respect thereto, and to vote the same at any meeting of the
shareholders of the Company. For so long as Shares issued to the Trustee on
behalf of a Beneficial Grantee are held in the Trust, the dividends paid or
distributed with respect thereto shall be remitted to the Trustee for the benefit of such
Beneficial Grantee, and the Trustee shall vote all such Shares in accordance with the
instructions of such Grantee.


    6. Reserved Shares. The Company has reserved 4,200,000 authorized but
       unissued Shares or treasury Shares for purposes of the Plan subject to
       adjustments as provided in Section 11 hereof. All Shares under the Plan
       or any previous option plan, in respect of which the right thereunder 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
       Options under the Plan or under any other plan.
7. Grant of Options.
   7.1    The effective date of the grant of an Option (the "Date of Grant") shall be
   the date specified by the Committee in its determination relating to the
   award of such Option. The Committee shall promptly give the Grantee
   written notice (the "Notice of Grant") of the grant of an Option. The
   Committee in its discretion may award to Grantees Options to purchase
   Shares in the Company available under the Plan. The execution of the
   Plan and issuance of Options pursuant thereto are subject to obtaining all
   permits and approvals by the appropriate authorities to which the Plan, the
   Options and Shares issuable upon exercise of the Options are subject.


   7.2    The Notice of Grant shall state, inter alia, the
   applicable tax Track (if any), the number of Shares covered
   thereby, the dates when the Option may be exercised, the
   exercise price, and such other terms and conditions as the
   Committee at its discretion may prescribe, provided that
   they are consistent with this Plan.
   7.3    The issuance of Options to a Grantee hereunder is
   subject to the signing of the Grantee on an application form
   to receive such Options (the “Application Form”) and
   returning such signed Application Form to the Company
   within the time schedule specified in the Notice of Grant.
   By affixing his signature on the Application Form, the
   Grantee shall confirm his consent to receive all the Options
   granted to him subject to the terms and conditions
   applicable to such Options pursuant to the Plan, the
   provisions of Section 102 of the Tax Ordinance and the
   Regulations and the provisions of the applicable Tax Track
   and shall represent and warrant that he acknowledges the
   provisions of Section 102 of the Tax Ordinance and the
applicable Tax Track and that he agrees to the trust
agreement between the Company and the Trustee, a copy of
which shall be enclosed to the Application Form. The
Grantee shall also sign an undertaking to release the
Trustee from any liability in respect of any action or
decision duly taken and bona fide executed in relation to
the Plan, such Options or any shares acquired upon the
exercise thereof.
7.4    Vesting Period and date of Exercise.
       (a) The term “Vesting Period” shall mean the period
           commencing on the Date of Grant until the first date
           on which the Option may be exercised, namely, after
           the Release Date as defined in Section 5.1(d) above.
           The Vesting Period shall be determined by the
           Committee from time to time. The committee may
           decide on different vesting Periods applicable to
           different Grantees.
       (b) The Committee may, at its sole discretion, accelerate
           the Vesting Period with respect to certain Options
           granted pursuant to the Plan, subject to the provisions
           of Section 5.1(d) above.
       (c) Without derogating from the provisions of Section
           5.1(d) and 10 hereof and the rights and powers of the
           Committee under Sections 3.3 and 7.2 hereof, unless
           otherwise specified in the Notice of Grant (a) each
           Option under the Plan shall be exercisable following
           the end of the Vesting Period , and (b) the schedule
           pursuant to which such Options shall vest, and the
           Beneficial Grantee thereof shall be entitled to pay for,
           and acquire, the Shares, shall be such that one-third of
                   such Options shall vest on each of the first, second
                   and third anniversaries of the Date of Grant.

8.     Exercise Price. The exercise price per Share covered by each Option shall be
determined by the Committee in its sole and absolute discretion.


9.     Exercise of Options.


9.1    Options shall be exercisable pursuant to the terms under which they were
granted and subject to the terms and conditions of the Plan.

9.2    The exercise of an Option shall be made by a written notice of exercise
(the "Notice of Exercise") delivered by the Beneficial Grantee (or, with
respect to Options held in the Trust, by the Trustee upon receipt of written
instructions from the Beneficial Grantee) to the Company at its principal
executive office, specifying the number of Shares to be purchased and
accompanied by the payment therefor, and containing such other terms
and conditions as the Committee shall prescribe from time to time.


9.3 Anything herein to the contrary notwithstanding, but without derogating
from the provisions of Section 10 hereof, if any Option 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 Notice
of Grant), such Option and the right to acquire such Shares shall
terminate, all interests and rights of the Grantee in and to the same shall
ipso facto expire, and, in the event that in connection therewith any
Options are still held in the Trust as aforesaid, the Trust with respect
thereto shall ipso facto expire and the Trustee shall thereafter hold such
Options in an unallocated pool until instructed by the Company that
some or all of such Options are again to be held in trust for one or more
Grantees.

9.4    Each payment for Shares shall be in respect of a whole number of
Shares, and shall be effected in cash or by a cashier's check payable to the
order of the Company, or such other method of payment acceptable to the
Company.
10.    Termination of Employment.
In the event that a Grantee ceases, for any reason, to be employed by
the Company or by any of its subsidiaries or affiliates (or with
respect to a Grantee who is a director, officer or consultant, if his
service with the Company or with any of its subsidiaries or affiliates,
terminates for any reason), all Options theretofore granted to such
Grantee shall terminate As follows:


      10.1
      (a)      If the Grantee's termination of employment is
              due to such Grantee's death or "Disability" (as
              hereinafter defined), such Options (to the
              extent exercisable at the time of the Grantee's
              termination of employment or provision of
              services, namely, Options with respect to
              which the Release Date has occurred) shall be
              exercisable by the Grantee's legal
              representative, estate manager or any other
              person to whom the Grantee's rights are
              transferred by will or by laws of descent or
              distribution, or the Grantee, as the case might
              be, for a period of six (6) months following
              such termination of employment or provision
              of services (but in no event after the
              expiration date of such Option), and shall
              thereafter terminate. For purposes hereof ,
              “Disability” shall mean the inability, due to
              illness, injury or mental condition to engage
              in any gainful occupation for which the
              individual is qualified by education, training
             or experience, and such condition continues
             for at least six (6) months.


(b)     If the Grantee's termination of employment or
             provision
        of services is due to, or connected with, one of the following
instances,
        the trust with respect to said Grantee's options shall ipso facto expire ,
        the options already vested shall automatically expire and the Grantee
        shall not be entitled to exercise any of the Options notwithstanding
they
        were already vested at that time. The said instances are as follows:


       (i)         The Grantee commits a criminal offense (whether against the
                   Company or any other person or entity);
       (ii)        The Grantee is dishonest or breaches his fiduciary duties or
                   duty of loyalty towards the Company and/or its subsidiaries;
       (iii)       The Grantee intentionally or recklessly damages the
                   Company's and/or its subsidiaries' property and/or good name
                   and/or business;
       (iv)        The Grantee is grossly negligent in fulfilling his duties
                   towards the Company and/or its subsidiaries;
       (v)         The Grantee deviates intentionally in a material way from
                   his authority and/or instructions given to him by the
                   Company's and/or its subsidiaries' competent organs;
       (vi)        The Grantee breaches intentionally in a material way the
                   terms of his employment agreement, or other agreement with
                   the Company and/or its subsidiaries.


(c)          If the Grantee's termination of employment is
             for any reason other than those described in
                       sub-sections (a) and (b) above, such Options
                       (to the extent exercisable at the time of the
                       Grantee's termination of employment) may be
                       exercisable for a period of thirty (30) days
                       following such termination of employment or
                       provision of services, and shall thereafter
                       terminate .Options which are not exercisable
                       at the time of the Grantee's termination of
                       employment (namely, which are not yet so
                       vested in such Grantee), shall expire upon the
                       termination of employment.

10.2    Notwithstanding the foregoing provisions of Section 10.1, the
Committee may provide, either at the time an Option is granted or
thereafter, that such Option may be exercised after the periods provided
for in Section 10.1, but in no event beyond the term of the Option.


11.     Adjustment Upon Changes in Capitalization.


11.1    Subject to any required action by the shareholders of the Company, the
number of Shares covered by each outstanding Option, and the number of
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 Shares covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock
dividend, combination or reclassification of the Shares or the payment of a
stock dividend (bonus shares) with respect to the Shares or any other
increase or decrease in the number of issued Shares effected without
receipt of consideration by the Company; provided, however, that
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 Committee, 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 Shares subject to an Option.


11.2    Unless otherwise determined by the Committee, in the event of the
proposed dissolution or liquidation of the Company, to the extent it has
not been previously exercised, each Option will terminate immediately
prior to the consummation of such proposed action. In the event of a
consolidation or the merger of the Company with or into another
corporation, each Option shall be assumed or an equivalent option shall
be substituted by such successor corporation or a parent or subsidiary of
such successor corporation.




12.     Non-Transferability.


Unless permitted by the Committee, no Option shall be assignable or transferable by the
Grantee to whom granted otherwise than by will or the laws of descent and distribution, and
an Option may be exercised during the lifetime of the Grantee only by such Grantee or by
such Grantee's guardian or legal representative. The terms of such Option shall be binding
upon the beneficiaries, executors, administrators, heirs and successors of such Grantee.
13.     Term and Amendment of the Plan.


13.1    The Plan was authorized by the Company on August 6, 2003, and shall
expire on August 6, 2013 (except as to Options outstanding on that date), but
such expiration shall not affect the instructions contained herein or in any
applicable law with respect to the Options and Shares held in the Trust at such
time of expiration. The Committee may decide upon the extension of the Plan.


13.2    Subject to applicable laws, the Board may, at any time and from time to
time, terminate or amend the Plan in any respect. In no event may any action of
the Company alter or impair the rights of a Grantee, without his consent, under
any Option previously granted to him.


14.     Tax Consequences. All tax consequences and obligations regarding any other
compulsory payments arising from the grant or exercise of any Option, from the
payment for, or the subsequent disposition of, Shares covered thereby or from
any other event or act (of the Company or the Grantee) hereunder, shall be borne
solely by the Grantee, and the Grantee shall indemnify the Company and the
Trustee and hold them harmless against and from any and all liability for any
such tax or other compulsory payment, or interest or penalty thereon, including
without limitation, liabilities relating to the necessity to withhold, or to have
withheld, any such tax or other compulsory payment from any payment made to
the Grantee.


15.     Miscellaneous.


15.1    Continuance of Employment: Neither the Plan nor the grant of an
Option thereunder shall impose any obligation on the Company or on any of its
subsidiaries or affiliates to continue the employment or service 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 as aforesaid, or
restrict the right of the Company or of any of its subsidiaries or affiliates to
terminate such employment or service at any time.


15.2    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. Any action related to this Plan shall be venued
solely in the competent courts in Tel Aviv.
15.3 Application of Funds: The proceeds received by the Company from the sale of
Shares pursuant to Options granted under the Plan will be used for general purposes of the
Company, as may be determined by the Board or the Company from time to time.


15.4    Multiple Agreements: The terms of each Option may differ from other
Options granted under the Plan at the same time, or at any other time. The
Committee may also grant more than one Option to a given Grantee during the
term of the Plan, either in addition to, or in substitution for, one or more Options
previously granted to that Grantee.The grant of multiple Options may be
evidenced by a single Notice of Grant or multiple Notices of Grant, as
determined by the Committee.


15.5    Non-Exclusivity of the Plan: The adoption of the Plan by the Board
shall not be construed as amending, modifying or rescinding any previously
approved incentive arrangement or as creating any limitations on the power of the
Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than under
the Plan, and such arrangements may be either applicable generally or only in
specific cases.


_____________________
                                     Appendix A
                                           to
                     BluePhoenix 2003 Employee Stock Option Plan
                                     (the "Plan")

The Committee of Board of Directors of BluePhoenix Solutions Ltd. (the "Company") may
grant options from time to time to any employees, officers, consultants or directors of the
Company or any of its subsidiaries who are not residents of Israel. Any such option shall be
evidenced by a stock option agreement ("Stock Option Agreement") between the
Company and the option recipient.

The Stock Option Agreements shall contain provisions covering matters substantially as
prescribed under Sections 7.4(c), 9.2-9.4, 10.1, 11, 12 and 15.1. Notwithstanding the
foregoing, the Stock Option Agreements may contain different language and deviate from
the language which is used in the Plan.

In addition to the aforementioned provisions, the Stock Option Agreement shall state that
the agreement is governed by the law of the State of Israel and that all tax consequences
shall be borne by the Grantee.

The provisions of Section 15.4 of the Plan, which allows that the terms of each option
grant may differ from other options granted under the Plan at the same time, or at any other
time, shall apply also to grant of options pursuant to this Appendix A.

The terms in this Appendix shall have the meaning ascribed to them in the Plan, unless
otherwise expressly stated.

								
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