ADVANCED VISION TECHNOLOGY (A.V.T.) LTD. · 1 November 16, 2016 ADVANCED VISION TECHNOLOGY (A.V.T.) LTD. 6 Hanagar Street Hod Hasharon Israel NOTICE ANNUAL GENERAL MEETING OF SHAREHOLDERS

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November 16, 2016

ADVANCED VISION TECHNOLOGY (A.V.T.) LTD. 6 Hanagar Street

Hod Hasharon

Israel

NOTICE

ANNUAL GENERAL MEETING OF SHAREHOLDERS

TO BE HELD ON DECEMBER 21, 2016

This Notice is being given by the board of directors (the “Board of Directors” or the “Board”) of

Advanced Vision Technology (A.V.T.) Ltd. (the “Company” or “AVT”) with respect to the

Company‟s 2016 Annual General Meeting of Shareholders (the “Meeting”), to be held on

Wednesday, December 21, 2016, at the Company‟s headquarters at 6 Hanagar Street, Hod Hasharon,

Israel, at 2:30 p.m. (Israel time), including any postponement or adjournment thereof.

The agenda for the Meeting is to consider the approval of the following:

1. To re-elect Mr. Yeoshua Agassi, Mr. Ofer Ne‟eman, Ms. Adina Shorr and Mr. Yariv Avisar to

serve as members of the Board of Directors until the next annual meeting of shareholders.

2. To re-elect Mr. Arie Weisberg and Mr. Ytzhak Edelman to serve as external directors for an

additional term of three years and to approve their remuneration.

3. To re-appoint Kost Forer Gabay & Kasierer, a member firm of Ernst and Young Global Limited,

as the Company‟s auditors for the fiscal year ending December 31, 2016 and until the next annual

general meeting of shareholders.

4. To approve a revised Compensation Policy with respect to the Company‟s directors‟ and officers‟

terms of office and employment.

5. Director Remuneration:

a. To approve the remuneration of the Company‟s directors;

b. To approve the remuneration of the Chairman of the Board; and

c. To approve the 2016 Non-Employee Directors Annual Equity Award Plan.

6. To approve the annual cash bonus, related objectives and terms thereof to the Company‟s

President and Chief Executive Officer, Mr. Jaron Lotan.

7. Insurance, exemption and indemnification of Office Holders:

a. To amend the Articles of Association with respect to insurance, exemption and

indemnification of Office Holders;

b. Subject to approval of the amendment to the Articles of Association, to approve the

exemption and indemnification of the directors and of the Company‟s President and Chief

Executive Officer and to approve the provision of letters of indemnification and release to

the directors and the Company‟s President and Chief Executive Officer.

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In addition, shareholders will receive and consider the Company‟s annual consolidated financial

statements for the year ended December 31, 2015.

Record Date; Entitlement to Vote

The record date for determining shareholders entitled to notice of, and to vote at, the Meeting has

been established as of the close of trading on the Frankfurt Stock Exchange on Monday, November

21, 2016 (the “Record Date”).

As of November 1, 2016 there were 6,109,742 ordinary shares of the Company, nominal (par)

value of 2.00 New Israeli Shekels each (the “Ordinary Shares”), outstanding each of which is

entitled to one vote upon the matters to be presented at the Meeting. This number does not include, as

of that date: (i) Ordinary Shares that were subject to outstanding equity awards granted pursuant to

equity remuneration plans; and (ii) a total of 819,122 Ordinary Shares held as treasury shares.

Voting Procedures

Shareholders who are unable to attend the Meeting, or any adjournment thereof, in person, are

requested to complete, date and sign the enclosed form of proxy which to be counted, must be

received by Deutsche Bank AG not later than December 20, 2016 at 2:30 p.m., Central European

Time, by the settlement system of Clearstream Banking AG (“CBF”), Frankfurt am Main, by a holder

of shares as of the Record Date with the CBF via the custodian bank, or alternatively present such

form of proxy to the Chairman of the Meeting at the Meeting. Shares represented by proxies received

after the times specified above will not be counted as present at the Meeting and thus will not be

voted.

Co-owners of the registered shares of the Company, which are registered in the name of CBF and

are deposited in the form of a global certificate at CBF have to take note of the following:

CBF will not execute the right to attend and to vote at the Meeting which is given to CBF due to

the registered shares in the name of CBF. Upon request, CBF will offer to attend the Meeting and/or

to vote in the name of CBF on behalf of the co-owners on behalf of which the registered shares are

booked, or on behalf of which a person has been named. The authorized co-owner is asked to apply

for a power of attorney (or any other valid proof of ownership) from CBF, up to the amount of the

respective co-ownership as of the Record Date until the close of business on December 14, 2016 via

the custodian bank at Deutsche Bank AG, Frankfurt am Main. Instructions received after this

date will be processed on a “best-effort-basis”.

Quorum

Two or more shareholders on the Record Date (not in default in payment of any sum referred to in

Article 34(a) of the Company‟s Articles of Association (the “Articles”)), present in person or by proxy,

shall constitute a quorum at the Meeting. No business shall be transacted at the Meeting, or at any

adjournment thereof, unless the requisite quorum is present when the meeting proceeds to business.

Should no quorum be present within half an hour from the time set for the Meeting, the Meeting shall

be adjourned to the same day in the next week, at the same time and place. No further notice will be

given or publicized with respect to such adjourned meeting.

Joint holders of shares should take note that, pursuant to Article 34(d) of the Articles, the vote of

the senior holder who tenders a vote, whether in person or by proxy, will be accepted to the exclusion

of the vote(s) of the other joint holder(s), and for this purpose seniority will be determined by the

order in which the names appear in the Company‟s shareholder register.

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Required Vote

The affirmative vote of a simple majority of the voting rights of the Company represented and

voting at the Meeting, in person or by proxy, is required to adopt each of the proposed resolutions

with respect to Items 1-6 and 7(b) to be presented at the Meeting, provided however, that:

(a) with respect to Item 2, either (i) such majority includes at least a majority of the votes cast by

shareholders who are not controlling shareholders and who do not have a personal interest in the

matter as a result of a relationship with the controlling shareholder, and who are present and voting

(abstentions are disregarded); or (ii) the non-controlling shareholders or shareholders who do not have

a personal interest in the matter as a result of a relationship with the controlling shareholder who are

present and voted against the proposed resolution constitute two percent (2%) or less of the voting

power of the Company (the “External Director Majority”); and

(b) with respect to Items 4, 51(a) and (c), 6 and 7(b) either (i) such majority includes at least a

majority of the votes cast by shareholders who are not controlling shareholders and who do not have a

personal interest in the matter, and who are present and voting (abstentions are disregarded); or (ii)

that the votes cast by the shareholders who are non-controlling shareholders or shareholders who do

not have a personal interest in the matter who are present and voting against such proposed

resolutions hold two percent (2%) or less of the voting power of the Company (the “Compensation

Majority”).

With respect to the proposal to amend the Articles in Item 7(a)2, the required majority is at least

75% of the Ordinary Shares participating and voting at the Meeting, in person or by proxy (the

“Special Majority”), provided that it is also approved by the Compensation Majority.

Pursuant to the Israeli Companies Law, 5759-1999, as amended (the “Companies Law”), in order

for your vote to be counted with respect the External Director Majority and the Compensation

Majority, you must indicate on your proxy or inform the Company at the Meeting and prior to voting

thereon, (i) if you are a controlling shareholder of the Company, (ii) with respect to the External

Director Majority, if you have personal interest in the matter as a result of a relationship with the

controlling shareholder, and (iii) with respect to the Compensation Majority, if you have a „personal

interest‟ in the approval of the items on the agenda (any of whom shall be referred to hereinafter as an

“Interested Party”).

Under the Companies Law, the term „personal interest‟ is defined as a shareholder‟s personal

interest in an action or a transaction of a company (i) including the personal interest of the

shareholder‟s spouse, siblings, parents, grandparents, descendants, spouse‟s descendants, siblings or

parents or the spouse of any of such persons, and the personal interest of any entity in which the

shareholder or one of the aforementioned relatives of the shareholder serves as a director or chief

executive officer, owns 5% or more of such entity‟s outstanding shares or voting rights or has the

right to appoint one or more directors or the chief executive officer, and (ii) excluding a personal

interest arising solely from holding the Company‟s shares. Under the Companies Law, in the case of

1 The definition of a „controlling shareholder‟ under Israeli law for the purposes hereof, includes a statutory presumption

that any “interested party” (as defined in Israeli law) in a controlling shareholder entity is presumed to be a holder of its

shares in a company together with the controlling shareholder. Since Mr. Agassi is an interested party (a director) in the

Company‟s controlling shareholder for these purposes and although the foregoing statutory presumption may be

contested, in order to approve the proposals with respect to directors‟ remuneration in Item 5, the amendment of the

Company‟s Articles of Association pursuant to Item 7(a) and the exemption and indemnification of directors pursuant to

Item 7(b) at the Meeting, from which Mr. Agassi will benefit, the Company is requiring, as a cautionary measure, that

these matters be approved by the Compensation Majority (in addition to the majority otherwise required). 2 See previous footnote.

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a person voting by proxy, „personal interest‟ includes the personal interest of either the proxy holder

or the shareholder granting the proxy, whether or not the proxy holder has discretion over how to

vote.

In the attached form of proxy you will be requested to indicate whether you or any of the persons

or entities described above is an Interested Party with respect to those items that require approval by

the External Director Majority or the Compensation Majority.

In order to provide for proper counting of shareholder votes, if you have not marked “NO” on the

proxy (or in your electronic submission), thereby confirming that you are not an Interested Party with

respect to those items that require approval by the External Director Majority or the Compensation

Majority, your vote will not be counted for purposes of the External Director Majority or the

Compensation Majority, and your signature on the enclosed proxy (or the submission of an electronic

vote) will constitute a certification that you are an Interested Party with respect to those items that

require such indication.

Ordinary Shares represented by executed and unrevoked proxies will be voted in the manner

instructed by the executing shareholder, or if no specific instructions are given, will be voted FOR the

items set forth in this Notice. The Company is not currently aware of any other matters to be

presented at the Meeting. If other matters properly come before the Meeting, it is the intention of the

persons designated as proxies to vote in accordance with their judgment on such matters.

The English version of this Notice shall be the sole binding version, and may be obtained free of

charge at the registered office of the Company and at Deutsche Bank AG, Global Securities Services,

Issuer Services, Post IPO Services, 60262 Frankfurt am Main, e-mail: [email protected].

[Explanatory Notes]

ITEMS 1 & 2

ELECTION OF DIRECTORS AND EXTERNAL DIRECTORS

Membership of the Board

All of the directors of the Company (other than external directors whose terms are determined in

accordance with applicable law) are elected on an annual basis to hold office until the end of the next

annual general meeting of shareholders and until any such director‟s appointment terminates as

provided for under applicable law or in the Articles.

At the Meeting, four of the Company‟s current six directors and both external directors are

candidates for re-election. The Board is recommending to the Company‟s shareholders to re-elect the

proposed nominees as members of the Board, so that the non-external directors will hold office until

the 2017 annual general meeting of shareholders unless such office is earlier vacated under any

relevant provisions of the Articles or the Companies Law, and the external directors will hold office

for a term of three years until December 21, 2019, as set forth in the Companies Law.

Set forth below is information concerning the directors of the Company as of the date hereof:

mailto:[email protected]

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Name Position Tenure

Yariv Avisar Chairman of the Board *

Yeoshua Agassi Director 8

Ofer Ne‟eman(2)

Director 8

Adina Shorr(1)

Director 2

Ytzhak Edelman(1)(2)

External Director; Chairman of the Audit Committee 6

Arie Weisberg(1)(2)

External Director; Chairman of the Compensation Committee 6

* less than a year.

(1) A member of the Audit Committee.

(2) A member of the Compensation Committee.

Yariv Avisar, joined AVT‟s Board in August 2016 and appointed as its Chairman on October 31,

2016. Mr. Avisar brings over 16 years of global business management, building strong, winning

teams, scaling up organizations, growing businesses globally and corporate strategic planning

expertise. Mr, Avisar serves as the CEO of S.C.R Milking Systems Ltd., as chairman of GlucoMe

Ltd. and as a director at HumanEyes Technologies Ltd. and Unitronics (1989) (R”G) Ltd. Prior to

joining S.C.R Milking Systems Ltd. Mr. Avisar‟s career featured a history of leadership, go-to-market

and corporate roles in Hewlett Packard‟s Scitex division and M-Systems, where he strategically

increased sales and profits. Mr. Avisar holds a B.A. in Business Administration and International

Marketing from the Tel Aviv Business Management College.

Yeoshua Agassi, joined AVT‟s Board in May 2008 and served as the Company‟s Chairman of the

Board from 2008 and until the end of 2014. Mr. Agassi currently serves as a director of Union

Investments and Development Ltd., the Company‟s controlling shareholder. Mr. Agassi has served as

CEO & President of Scitex Corporation (2001-2003) and Executive Vice President of Clal Industries

and Investments, one of Israel‟s leading investment and holding companies. In 2000, Mr. Agassi held

the position of General Manager, Leumi Card, one of Israel‟s foremost credit card services owned by

Bank Leumi. Earlier in his career (1993-1998), he served as General Manager of Tel Aviv-based

Israeli Direct Insurance (IDI) which he co-founded in 1993. Mr. Agassi holds an MBA in Marketing

from Bar Ilan University and a BA in Economics from Tel Aviv University.

Ytzhak Edelman, joined AVT‟s Board as an external director in December 2010. He currently

serves as a director on the boards of Bezeq, The Israeli Telecommunication Corporation and

Swiftness. Mr. Edelman also serves as a member of The Supervisory Council of the Bank of Israel.

Prior thereto, Mr. Edelman served as a Chief Financial Officer and Vice President at Ness

Technologies and as Chief Financial Officer at Cellcom Israel. Mr. Edelman holds a BA in Finance

and Economics from Tel Aviv University, and is a graduate of the General Manager Program,

Harvard Business School.

Ofer Ne’eman, joined AVT‟s Board in April 2008. Mr. Nee‟man holds the position of CEO &

President of Evergreen, a leading private equity firm in Israel, and since 1998, he has been a co-

owner with the firm‟s founder, Jacob Burak. Mr. Neeman is currently Chairman of “Beterem” (Safe

Kids Israel). Mr. Neeman holds a BA in Accounting and Economics from Tel Aviv University and is

a graduate of the Executive Program, Harvard Business School

Adina Shorr, joined AVT‟s Board in June 2014. She currently serves as the CEO and Chairman of

the Board of Lucidlogix, a leading technology developer of mobile software implementation. Ms.

Shorr brings extensive experience in management of technology, systems and solutions stemming

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from over two decades in the hi-tech sector in the U.S. and Israel. Earlier, Ms. Shorr was the CEO of

CellGuide and was President and CEO of Objet. She served as Corporate Vice President of Creo,

Leaf Products and during her tenure at Scitex she also served as the President of Scitex Input

Division. Prior to her return to Israel, Ms. Shorr was employed by IBM USA and Unisys in Corporate

Program Management and sales. Ms. Shorr holds an MBA and a BA, both with honors, from

Michigan State University.

Arie Weisberg, joined AVT‟s Board as an external director in December 2010. Mr. Weisberg

currently serves as a director of the Board of Directors at Orbotech Ltd., and as an independent

advisor. Earlier in his career, Mr. Weisberg held several executive management positions, including

President & Chief Operating Officer at Orbotech, and Chairman of the Board at Orbograph and

Frontline. Mr. Weisberg holds a BSc. in Agricultural Economics from The Hebrew University of

Jerusalem.

Directors’ Remuneration

As approved by the Company‟s shareholders at the 2014 annual general meeting, each of the

directors who are nominees for re-election (other than Mr. Avisar, the Chairman of the Board), is

entitled to an annual fee of NIS 63,145 (equivalent to approximately $16,487, based on an exchange

rate of NIS3.83=$1.00, as of November 1, 2016, the “Exchange Rate”), plus a per-meeting fee of

NIS 3,274 (equivalent to approximately $855, based on the Exchange Rate), plus value added tax, as

applicable, or 60% of such per-meeting fee for meetings in which the director participated by

teleconference or similar means of communication, in each case as adjusted based on the Israel

Consumer Price Index.

With respect to Mr. Avisar, the Chairman of the Board, see Item 5(b) below.

Each of the directors who are nominees for re-election, except for Mr. Avisar, has also been

granted equity-based remuneration. These grants vest over a three-year period, beginning in 2013

with respect to Messrs. Ne‟eman, Edelman and Weisberg, and in 2014 with respect to Mr. Agassi and

Ms. Shorr.

In addition, the Compensation Committee, the Board and the shareholders of the Company

have previously resolved to approve the purchase, and the periodic renewal, by the Company of

insurance coverage in respect of the liability of its Office Holders, including the directors; to

undertake in advance to indemnify all directors for certain matters, costs and expenses as set forth in a

letter of indemnification and exemption and release approved for issuance to them by the Company‟s

shareholders; and to exempt and release all directors of the Company from and against all liability for

monetary or other damages due to, or arising or resulting from, a breach of their duty of care to the

Company, and to provide them with letters in this regard. See Item 7 below with respect to a proposal

to amend the Articles with respect to insurance, indemnification and release to approve new letters of

indemnification and release to the directors and the Company‟s President and CEO.

Subject to the foregoing, any director elected at the Meeting, including external directors

would be remunerated in the manner described above or, if approved at the Meeting, in the manner

described in Item 5 below, and would benefit from the insurance, indemnification and release

discussed above or, if approved at the Meeting, in the manner described in Item 7 below.

It is proposed that the following resolutions be adopted at the Meeting:

“RESOLVED that:

(a) Yeoshua Agassi, be, and he hereby is, re-elected for a term of approximately one year

expiring at the end of the annual general meeting of shareholders to be held in 2017;

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(b) Ofer Ne‟eman, be, and he hereby is, re-elected for a term of approximately one year

expiring at the end of the annual general meeting of shareholders to be held in 2017;

(c) Adina Shorr, be, and she hereby is, re-elected for a term of approximately one year expiring

at the end of the annual general meeting of shareholders to be held in 2017;

(d) Yariv Avisar, be, and he hereby is, re-elected for a term of approximately one year expiring

at the end of the annual general meeting of shareholders to be held in 2017;

(e) Arie Weisberg, be, and he hereby is, re-elected as an external director as defined in the

Companies Law for a term of three years, and that his remuneration as presented in the

Company‟s Notice for its 2016 Annual General Meeting of Shareholders be ratified and

approved; and

(f) Ytzhak Edelman be, and he hereby is, re-elected as an external director as defined in the

Companies Law, for a term of three years, and that his remuneration as presented in the

Company‟s Notice for its 2016 Annual General Meeting of Shareholders be ratified and

approved.”

The Board recommends that the shareholders vote ”FOR“ the proposed resolutions.

ITEM 3

RE-APPOINTMENT OF AUDITORS

At the 2016 Annual General Meeting of Shareholders, Kost Forer Gabay & Kasierer,

independent registered public accountants in Israel and a member firm of Ernst and Young Global

Limited, will be nominated for re-appointment as the auditors of the Company for the fiscal year

ending December 31, 2016 and until the next annual general meeting of shareholders.

The Audit Committee has reviewed, and is satisfied with, the performance of Kost Forer

Gabay & Kasierer, and has approved and is recommending to shareholders to approve, their re-

appointment as the Company‟s external auditors.

The Articles provides that the Board is authorized to fix the remuneration of the external

auditors for auditing services. The Board has delegated its authority to approve the compensation of

external auditors for non-audit services to the Audit Committee.

The following table provides information regarding fees paid by the Company to Kost Forer

Gabay & Kasierer and/or other member firms of Ernst and Young Global Limited for all services,

including audit services, for the years ended December 31, 2015 and 2014:

2015

2014

(US$ in thousands)

Audit Fees(1)

106 108

All other Fees (2)

86 59

Total 192 167

(1) Includes professional services rendered, including by Ernst and Young in Belgium, in

connection with the audit of our annual financial statements and the review of our interim

financial statements.

(2) Includes professional services rendered, including by Ernst and Young in Belgium, in

connection mainly with tax issues.

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It is proposed that the following resolution be adopted at the Meeting:

“RESOLVED, that the Company‟s auditors, Kost Forer Gabay & Kasierer, an independent

registered public accountant in Israel and a member firm of Ernst and Young Global Limited, be, and

they hereby are reappointed as auditors of the Company for the fiscal year ending December 31, 2016

and until the next annual general meeting of shareholders.”

The Board recommends that the shareholders vote “FOR” the proposed resolution.

ITEM 4

APPROVAL OF A REVISED COMPENSATION POLICY

As required by the Companies Law, AVT has adopted a compensation policy regarding the

terms of office and employment of its Office Holders (as defined below) (the “Compensation

Policy”). The Compensation Policy was approved at Company‟s 2013 annual general meeting of

shareholders, and an amendment thereto was approved at the Company‟s 2014 annual general

meeting of shareholders.

The term “Office Holder” as used in this Notice is as defined in the Companies Law and

includes a general manager, chief executive officer, executive vice president, vice president, any other

person fulfilling or assuming any of the foregoing positions without regard to such person‟s title, as

well as a director, or a manager directly subordinate to the general manager or the chief executive

officer.

The term “terms of office and employment” as used in this Notice is as defined in the

Companies Law and includes any arrangement between a public company and an Office Holder with

respect to his or her terms of office and employment, including, without limitation, any exemption or

release of the Office Holder from liability for breach of his or her duty of care to the company, an

undertaking to indemnify, whether prospective or retrospective, the Office Holder and the purchase of

insurance with respect thereto, any grant, payment, remuneration, compensation or other benefit

provided in connection with the employment of or services provided by an Office Holder and the

termination thereof or any benefit, other payment or undertaking to provide any such grant or

payment.

The Compensation Policy must be reviewed from time to time by our Compensation

Committee and Board, to ensure its alignment with the Company‟s compensation philosophy and to

consider its continued appropriateness. Pursuant to the Companies Law, the Compensation Policy

must generally be re-approved once every three years by the Board, after considering the

recommendations of the Compensation Committee, and by the Company‟s shareholders, by the

Compensation Majority. Any amendment or revision to the Compensation Policy requires approval in

the same manner.

To the extent not approved by shareholders, the Compensation Committee and the Board may

nonetheless approve the Compensation Policy, following re-discussion of the matter and for specified

reasons, provided such approval is in the best interests of the Company. If the revised Compensation

Policy is approved, then according to the Companies Law, the revised Compensation Policy shall be

in effect as of its adoption and will need to be re-approved by shareholders within three years.

When considering the revised Compensation Policy, the Compensation Committee and the

Board considered numerous factors, including, the changes in the Company‟s business activities and

in market practices since then, as well as legislative changes, and reviewed various data and other

information they deemed relevant, with the advice and assistance of legal advisors.

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Similar to our current Compensation Policy, the revised Compensation Policy continues to

link pay to performance and align our executive officers‟ interests with those of the Company and its

shareholders. It allows us to provide meaningful incentives that reflect both the Company‟s short-

term and long-term goals and performance, as well as the executive officers‟ individual performance

and impact on shareholder value, while providing compensation that is supportive of AVT‟s

strategies and designed to reduce incentives to take excessive risks.

Following the recommendation of the Compensation Committee, the Board has approved, and

recommends that shareholders approve, a revised Compensation Policy, substantially in the form

attached to this Notice as Exhibit A.


“RESOLVED, to approve the “Directors and Officers Compensation Policy” in the form

attached as Exhibit A to the Company‟s Notice for its 2016 Annual General Meeting of

Shareholders.”


ITEM 5

DIRECTOR REMUNERATION

Proposal for Director Remuneration

Pursuant to the Companies Law, any arrangement between the Company and a director

relating to his or her compensation as a director or other position with the Company generally must be

consistent with the Compensation Policy and must be approved by the Compensation Committee, the

Board and shareholders by, generally, a simple majority. For the reasons described in footnote 1

above, at the Meeting, shareholders will be required to approve proposals 5(a) and 5(c) by the

Compensation Majority.

As part of the ongoing review by the Company of its compensation practices, the

Compensation Committee and the Board have reviewed the compensation package of the directors as

described above in Items 1 and 2.

Consistent with the Compensation Policy (including the policy as proposed to be revised as

set forth in Item 4 above), the Board, following the approval of the Compensation Committee, has

resolved to approve, and recommends that shareholders approve, the below remuneration to be

granted to each member of the Company‟s Board, including external directors (whether currently in

office or as may be appointed from time to time in the future), and including directors appointed by

the Board pursuant to its authority under the Article 44 of the Articles, as of the date of their

appointment, and excluding the Chairman of the Board unless otherwise indicated, without the need

for further act or approval, with effect on and from January 1, 2017.

(a) Remuneration of the Company‟s Directors

Annual and per meeting fees. Each of the members of the Board who is not, or will in the

future cease to be, an employee of the Company, including external directors, as of the date of their

appointment, will be remunerated, as of January 1, 2017, as follows: (i) an annual payment to each

such director of NIS 65,000 (equivalent to approximately $16,971, based on the Exchange Rate) plus

applicable value added tax (“VAT”); and (ii) participation compensation to each such director of NIS

3,200 (equivalent to approximately $835, based on the Exchange Rate) plus VAT for every meeting

of the Board or any committee thereof that the director attends.

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In addition: (iii) the annual payment and the participation compensation of all such directors

will be adjusted annually to reflect changes in the Israeli Consumer Price Index (the “CPI”) in the

manner provided in the regulations promulgated under the Companies Law and governing the

compensation of external directors (the “Compensation Regulations”); (iv) in the event that a

director participates in a meeting by means of communication pursuant to Section 101 of the

Companies Law, the Company shall pay 60% of the participation compensation; (v) in the event a

resolution is adopted by the Board without a meeting pursuant to Section 103 of the Companies Law,

the Company shall pay 20% of the participation compensation; and (vi) the annual payment shall be

paid in four equal installments, and the participation compensation shall be remitted to the directors

on a quarterly basis, in each case at the beginning of each calendar quarter with respect to the

previous quarter, all as provided for in the Compensation Regulations.

Provided, however, that any such compensation as set forth above shall not be less than the

„minimum amount‟ as defined in the Compensation Regulations.

Relative remuneration. External directors‟ remuneration will be relative to that of „other

directors‟, as such term is defined in the Compensation Regulations, so that, in the event that during

their term as external directors, the Company increases the remuneration payable, whether the annual

payment or the participation compensation, to any „other directors‟, or grants additional equity-based

compensation to „other directors‟, each external director will receive, without further approval,

additional remuneration, so that his or her annual compensation and/or compensation for participation

in meetings, as the case may be, will be equivalent to the average compensation payable to such

„other directors‟ as annual payment or as participation compensation, respectively, or be granted

additional equity-based compensation as is equal to the average additional equity-based compensation

being granted to such „other directors‟ and on substantially similar terms, as applicable. In addition,

pursuant to the Compensation Regulations, the Company may also change the amount or form of

remuneration payable to its then-serving external directors at the time of appointment of an external

director, provided however that such change is to the benefit of the then-serving external directors.


“RESOLVED, to approve the remuneration of the members of the Company‟s Board of

Directors, whether currently in office or as may be appointed from time to time in the future,

including external directors but excluding the Chairman of the Board of Directors, without the need

for further act or approval, with effect on and from January 1, 2017, as set forth in the Company‟s

Notice for its 2016 Annual General Meeting of Shareholders.”


(b) Remuneration of the Chairman of the Board

Since the announcement of his appointment as Chairman of the Board on October 31, 2016,

2016, Mr. Avisar has presided, and continues to preside, as Chairman of the Board of Directors. In

recognition of his duties, the Compensation Committee and the Board have approved, and

recommend that shareholders approve, that Mr. Avisar, as Chairman of the Board, will be entitled to a

monthly fee of NIS 20,000, plus value added tax as applicable, in lieu of the annual and per-meeting

fees payable to the other directors who are nominees for re-election, as of November 1, 2016, and for

as long as he will continue serving as Chairman of the Board. In addition, if Mr. Avisar will terminate

his service as Chairman of the Board, for any reason, but will continue to serve as a director, he will

be entitled to the remuneration approved for the other directors, and if approved at this Meeting, as

provided in Item 5(a) above.

In addition, it is proposed to approve that with respect to the period commencing as of his

appointment as a member of the Board, on August 15, 2016, and until his appointment as Chairman

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of the Board, on October 31, 2016, Mr. Avisar will be entitled to a pro-rated cash payment based on

the remuneration paid to the Company‟s other directors in 2016.


“RESOLVED, to approve the remuneration of the Chairman of the Board, as set forth in the

Company‟s Notice for its 2016 Annual General Meeting of Shareholders.”


(c) 2016 Non-Employee Directors Annual Equity Award Plan

As discussed above, the Company is subject to the provisions of the Companies Law, under

which arrangements between the Company and its directors as to their terms of office and

employment must generally be consistent with the Compensation Policy and generally require the

approval of the Compensation Committee, the Board and the shareholders.

In view of the value placed upon the role of the Chairman of the Board and of the other

members of the Board, the Compensation Committee and the Board have resolved, and propose that

the shareholders approve, to adopt the 2016 Non-Employee Directors Annual Equity Award Plan

attached to this Notice as Exhibit B (the “Directors Equity Plan”).

Under these proposed terms effective as of this Meeting, (a) equity awards to directors under

the Directors Equity Plan would no longer include options to purchase Ordinary Shares and would

consist of restricted share units (“RSUs”) only; (b) each year, at the end of the Company‟s annual

general meeting of shareholders, beginning with this Meeting, each “eligible director” (as defined

therein) will be awarded 1,200 RSUs as equity-based remuneration, and the Chairman of the Board

will be awarded 2,400 RSUs as equity-based remuneration (the “Awards”); (c) the Awards will vest

in full on September 30th

of the calendar year following the date of grant (approximately yearly from

the grant dates); (d) Awards to eligible directors who are Israeli residents for tax purposes will be

made pursuant to the capital gains route provisions pursuant to Section 102 of the Israeli Income Tax

Ordinance 1961; and (e) the directors will not be required to remit payments of the nominal (par)

value of the Company shares issued pursuant to the Awards, rather, the Company shall take all steps

required in order to capitalize such amounts from funds legally available for such purposes and credit

them as payment on account of the nominal (par) value of such shares and record them as appropriate

accounting entries in its books of account.


“RESOLVED, to approve the 2016 Non-Employee Directors Annual Equity Award Plan

attached as Exhibit B to the Company‟s Notice for its 2016 Annual General Meeting of

Shareholders.”


12

ITEM 6

APPROVAL OF ANNUAL CASH BONUS, RELATED OBJECTIVES AND TERMS

THEREOF TO THE COMPANY’S PRESIDENT AND CHIEF EXECUTIVE OFFICER, MR.

JARON LOTAN

Subject to the adoption of the Compensation Policy as set forth in Item 4 above, and

consistent therewith, the Compensation Committee and the Board have approved, and are

recommending that the shareholders approve, the following annual bonuses for 2016 and subsequent

years for the President and the CEO of the Company, Mr. Jaron Lotan, and the following proposed

related objectives and terms.

Eligibility. Mr. Lotan shall be eligible to receive an annual cash bonus for the calendar year

2016 and for subsequent years without the need for further shareholder approval, subject to the

following: (i) achievement of the objectives using the pre-defined key performance indicators as set

forth below with respect to each year; (ii) the limitations of the Compensation Policy and applicable

law; and (iii) all other terms as set forth below.

Payout terms. The payout terms for Mr. Lotan‟s annual cash bonus objectives for 2016 and

thereafter are as follows:

Level of Achievement

of Objectives

% Achievement of

Objectives

Potential Annual Bonus

as no. of Monthly Base

Salaries

Threshold 80%(1)

2 monthly base salaries

Target 100%(1)


Maximum 120%(2)


(1) Payouts for performance between the Threshold and Target are determined linearly based

on a straight line interpolation of the applicable payout range between 80% and 100%, and

up to 100% of the relevant bonus amount.

(2) Payouts for performance between the Target and Maximum are determined linearly based

on a straight line interpolation of the applicable payout range between 100% and up to

140% of the relevant bonus amount.

No additional payout is made for performance in excess of 120% achievement of the

performance criteria.

Key Performance Indicators for 2016 and subsequent years. The Compensation Committee

and the Board have approved, and are recommending that the shareholders approve, the following

objectives and weights for 2016 and for subsequent years for the Company's President and CEO:

Key Performance Indicator

Weight(1)

Company‟s pre-tax profits 40%-60%

Organic growth of the Company‟s revenues 20%-40%

Discretionary evaluation of individual performance 0-20%

(1) To be determined each year by the Compensation Committee and the Board within the specified ranges.

Subject to receipt of shareholder approval at this Meeting to the above annual cash bonuses and

related objectives and terms thereof for the President and CEO, the Compensation Committee and the

13

Board will determine (a) annually the parameters underlying the key performance indicators; and (b)

at the end of each year whether and to what extent the objectives have been met, and following

approval by the Board of the Company‟s audited financial statements for each fiscal year, will

determine the actual bonus to be paid, if any, to Mr. Lotan with respect to such year; in each case,

without the need for further shareholder act or approval.


“RESOLVED, to approve the annual cash bonuses, related objectives and terms thereof for

the Company‟s President and CEO, as set forth in the Company‟s Notice for its 2016 Annual General

Meeting of Shareholders.”


ITEM 7

INSURANCE, EXEMPTION AND INDEMNIFICATION OF DIRECTORS AND THE

PRESIDENT AND CEO

Under the Companies Law, procurement of insurance coverage for an Office Holder of a

company, the indemnification of an Office Holder and the exemption of an Office Holder from

liability for breach of his or her duty of care to a company form part of the terms of office and

employment of an Office Holder and require the approval of the Compensation Committee and the

Board, and, if the Office Holder is a director or chief executive officer, the approval of the

Company‟s shareholders.

At the 2010 annual general meeting of shareholder, the shareholders approved the

indemnification and exemption of its directors and chief executive officer. In addition, at the 2014

annual general meeting, the shareholders approved the procurement of liability insurance coverage in

the amount of $15 million.

In the course of formulating the Compensation Policy and in the light of certain changes in the

Companies Law and in other laws, the Compensation Committee and the Board have approved and

are recommending that the shareholders approve, the exemption and release of its current directors

and chief executive officer and of any additional or other directors and of any additional or other chief

executive officer(s) who may be appointed from time to time in the future, without the need for any

further act or approval, including external directors, and including directors appointed by the Board

pursuant to its authority under the Article 44 of the Articles, as of the date of their appointment, from

liability for breach of his or her duty of care to the Company and to revise the current undertaking in

advance to indemnify them by increasing the indemnification amount as described below and by

adding reference to additional matters for which an undertaking in advance to indemnify may be

given under current Israeli law, by updating the events and circumstances which in the Board‟s

opinion are foreseeable in light of the Company‟s current activities and in connection with which

indemnification may be given, and by making certain other changes, all as set forth in the proposed

Letter of Indemnification and Release attached to this Notice as Exhibit C (the “Letter of

Indemnification and Release”).

It is proposed that the total amount of indemnification that the Company undertake towards all

Office Holders, jointly and in the aggregate, shall not exceed an amount equal to the higher of: (i)

$5,000,000 (instead of $2,000,000), or (ii) 25% of the Company‟s shareholder equity, as of the date

of the event triggering the indemnification, as set forth in the Company‟s most recent audited

consolidated financial statements at such time.

If approved, the proposed Letter of Indemnification and Release will replace the letters of

indemnification and exemption which were approved by the shareholder at the Company‟s 2010

14

annual general meeting of shareholders and referenced in the Compensation Policy.

Under the Companies Law, it is required to adopt certain amendments to the Company‟s

Articles of Association to enable the approval and issuance of the Letter of Indemnification and

Release. The proposed amendments to the Articles are as set forth in the in Exhibit D to this Notice.

In addition, as part of the revised Compensation Policy as set forth in Item 3 above, and

subject to its approval, the Compensation Committee and the Board are authorized to increase, at the

Company‟s expense, the insurance coverage in respect of the liability of its Office Holders currently

in office and any additional or other Office Holders as may be appointed from time to time in the

future, including external directors, from $15 million to $25 million and, in certain circumstances as

described therein, beyond that amount.

It is proposed that the following resolutions be adopted at the Meeting:

“RESOLVED:

(a) that the current Articles of Association of the Company be, and they hereby are, amended

so that Article 74 thereof shall be replaced in its entirety with a new Article 74 in the form

attached as Exhibit D to the Company‟s Notice for its 2016 Annual General Meeting of

Shareholders;

(b) to exempt and release to the maximum extent permitted by law all directors of the

Company and the chief executive officer of the Company currently in office, and any

additional or other directors and chief executive officer(s) as may be appointed from time

to time in the future, including external directors, without the need for further act or

approval, from and against all liability for monetary or other damages due to, or arising or

resulting from, a breach of their duty of care to the Company, including, with respect to

directors, in their capacity as officers of the Company to the extent they also serve as

officers of the Company, including with respect to any such breach in their capacity as

Office Holders of the Company which occurred prior to the date hereof;

(c) that the Company undertake to indemnify all directors and the chief executive officer of

the Company currently in office, and any additional or other directors and chief executive

officer(s) as may be appointed from time to time in the future, including external directors,

without the need for further act or approval, to the extent, for such matters, costs and

expenses and as set forth in the form of Letter of Indemnification and Release attached as

Exhibit C to the Company‟s Notice for its 2016 Annual General Meeting of Shareholders,

including with respect to any acts or omissions made in their capacity as Office Holders of

the Company prior to the date hereof, all subject to and as set forth in said Exhibit C; and

(d) to issue letters of indemnification and exemption and release to all directors and to the

chief executive officer of the Company currently in office, and to any additional or other

directors or chief executive officer(s) as may be appointed from time to time in the future,

including external directors, without the need for further act or approval, in the form of

Exhibit C to the Company‟s Notice for its 2016 Annual General Meeting of Shareholders,

and that each of the chairman of the Company‟s board of directors and the chief executive

officer of the Company as shall be in office from time to time and/or any person

designated by him or her, be, and each of them hereby is, authorized to execute and deliver

any such letters of indemnification and exemption and release in the name of the Company

and on its behalf.”

The Board recommends that the shareholders vote “FOR” the proposed resolutions.

15

PRESENTATION OF THE 2015 FINANCIAL STATEMENTS

The Board has approved, and is presenting to shareholders for receipt and consideration at the

Meeting, the Company‟s annual consolidated financial statements for the year ended December 31,

2015, available on the Company‟s website at www.avt-inc.com.

16

INDIVIDUAL COMPENSATION OF COVERED EXECUTIVE

The following table sets forth the compensation granted to the Company‟s five most highly compensated Office Holders

(as such term is defined in the Companies Law) with respect to the year ended December 31, 2015. The five individuals

for whom disclosure is provided are referred to herein as “Covered Executives”.

Information Regarding the

Covered Executives

Compensation for Services ($)(1)

Name and Principal

Position(1)

Base

Salary

Benefits and

Perquisites (2)

Cash

Bonus (3)

Equity-Based

Compensation (4)

Total

Current Executive Officers:

Jaron Lotan

President and CEO

278 61 22 72 433

Koby Shtaierman

Chief Business Officer

192 63 64 13 332

Barry Ben Ezra

Vice President Research &

Development

166 55 10 14 245

Yair Shaharabany

Chief Operations Officer

168 41 14 8 231

Former Executive Officer:

Windell McGill

Former President AVT Inc.

150 30 85 5 270

(1) All amounts reported in the table reflect the cost to the Company, as recognized in its financial statements for

the year ended December 31, 2015; All Covered Executives listed in the table are, or with respect to Mr.

McGill were, full-time employees of the Company. Cash compensation amounts denominated in currencies

other than the Dollar were converted into Dollars at an exchange rate of NIS3.89 = US$1.00, which reflects the

average conversion rate for 2015.

(2) Amounts reported in this column include benefits and perquisites, including those mandated by applicable law.

Such benefits and perquisites may include, to the extent applicable to the Covered Executives, payments,

contributions and/or allocations for savings funds, pension, severance, vacation, car or car allowance, medical

insurance and benefits, risk insurance (e.g., life, disability, accident), phone, payments for social security, tax

gross-up payments and other benefits and perquisites consistent with AVT‟s guidelines.

(3) Amounts reported in this column refer to the cash bonuses provided by the Company with respect to 2015,

including cash bonuses for 2015, which have been recorded in the Company‟s financial statements for the year

ended December 31, 2015 but paid in 2016.

(4) Amounts reported in this column represent the expense recorded in the Company‟s financial statements for the

year ended December 31, 2015 with respect to equity-based compensation. Assumptions and key variables

used in the calculation of such amounts are discussed in Note 11 to the financial statements.

**

17

OTHER BUSINESS

Other than as set forth above, management knows of no other business to be transacted at the

Meeting; but, if any other matters are properly presented at the Meeting, Ordinary Shares represented

by executed and unrevoked proxies will be voted by the persons named in the enclosed form of proxy

upon such matters in accordance with their best judgment.

By Order of the Board of Directors,

YARIV AVISAR

Chairman of the Board

JARON LOTAN

President and Chief Executive Officer

Hod Hasharon, Israel

November 16, 2016

y:\cohen\1253 - avt\1.3 - shareholder meetings\2016 agm\notice\avt agm 2016 notice 07c(tsmcl november 14, 2016).docx

18

ADVANCED VISION TECHNOLOGY (A.V.T.) LTD.

Form of Proxy

For use by holders of Ordinary Shares at the Annual General Meeting of Shareholders to be held on December 21, 2016,

at the Company‟s headquarters at 6 Hanagar Street, Hod Hasharon, Israel, at 2:30 p.m. (Israel time), or at any

postponement or adjournment thereof (the “Meeting”).

I/We _________________________________________________________________________________

Of ___________________________________________________________________________________

The undersigned, being a shareholder of the Company, holding _________________________________Ordinary Shares

of the Company, hereby appoints Adv. David Cohen and/or Adv. Lior Etgar from the Company‟s general outside Israeli

counsel, Tulchinsky Stern Marciano Cohen Levitski & Co., Law Offices, and/or _____________ as my/our proxy to vote

on my/our behalf at the Meeting.

I/We direct that my/our vote(s) be cast on the resolution as indicated by a [X] in the appropriate spaces:

Please vote by marking “X”

in the correct box

For Against Abstain

1. Election of Directors and approval of their remuneration:

(a) Mr. Yeoshua Agassi

(b) Mr. Ofer Ne‟eman

(c) Ms. Adina Shorr

(d) Mr. Yariv Avisar

2. Election of external directors and approval of their remuneration:

(a) Mr. Arie Weisberg

(b) Mr. Ytzhak Edelman

Are you an Interested Party in this matter for purposes of the External

Director Majority? *

Yes No

3. To re-appoint Kost Forer Gabay & Kasierer, a member firm of Ernst and

Young Global Limited, as the Company‟s auditors for the fiscal year

ending December 31, 2016 and until the next annual general meeting of

shareholders, and to authorize the Board of Directors to fix their

remuneration.

4. Approval of a revised Compensation Policy.

Are you an Interested Party in this matter for purposes of the

Compensation Majority? *

Yes No

5. Director Remuneration:

a. Approval of a remuneration of the Company‟s directors



Yes No

b. Approval of the remuneration of the Chairman of the Board

c. Approval of the 2016 Non-Employee Directors Annual Equity Award

Plan.



19

Yes No

6. To approve the annual cash bonus, related objectives and terms thereof to

the Company‟s President and Chief Executive Officer.



Yes No

7. To approve insurance, exemption and indemnification of Office Holders:

(a) To amend the Articles of Association with respect to insurance,

exemption and indemnification of Office Holders.



Yes No

(b) Subject to the approval of resolution 7(a) above, to approve the

exemption and indemnification of the directors and the Company‟s

President and Chief Executive and to approve the provision of letters

of indemnification and exemption to the directors and the Company‟s

President and CEO.



Yes No

* See pages 3-4 of the Notice for more information.

If you have not marked “NO” on the proxy (or in your electronic submission), thereby confirming that you are not an

Interested Party with respect to those items that require approval by the External Director Majority or the Compensation

Majority, your vote will not be counted for purposes of the External Director Majority or the Compensation Majority, and

your signature on the enclosed proxy (or the submission of an electronic vote) will constitute a certification that you are an

Interested Party with respect to those items that require such indication.

__________________________ ____________________

Signature Date

**

20

Exhibit A

Directors and Officers Compensation Policy

- 1 -

Adopted on December 21, 2016

ADVANCED VISION TECHNOLOGY (A.V.T) LTD.

Directors and Officers Compensation Policy

(the “ Policy” )

I. GENERAL

As a publicly-traded entity incorporated under the laws of the State of Israel, Advanced Vision

Technology (A.V.T) Ltd. (herein “AVT” or the “Company”) is subject to the Israeli Companies Law,

5759-1999 and the regulations promulgated thereunder (the “Companies Law”), which mandates the

adoption of a policy regarding the compensation of the Company’s officers and directors. The purpose

of this Policy is to formalize AVT’s compensation philosophies, practices and policies, as they apply

to its officers and directors and is designed to allow AVT to be responsive to marketplace changes with

respect to compensation levels and pay practices.

The term “officers”, as used herein, includes the President and Chief Executive Officer of AVT (the

“CEO”) and all employees in management positions that report directly to the CEO (whether in Israel

or outside of Israel). The term “directors”, as used herein, includes all members of the Board of

Directors of AVT (the “Board”), including the “external directors”, whose appointment and

compensation are subject to regulations promulgated under the Companies Law. To the extent that

the chairman of the Board is an active chairman (an “Active Chairman”), the term “directors” shall

also refer to such Active Chairman. Officers and directors shall be referred to herein collectively by

the term “Office Holders”, which is the term used by the Companies Law.

AVT’s philosophies, practices and policies, as detailed herein, have been approved by the Board,

following the recommendation of the Compensation Committee of the Board (the “Compensation

Committee”), and will periodically be reviewed by the Compensation Committee and the Board in order

to ensure they provide appropriate motivation for Company performance and increased shareholder value

and that they meet the requirements of applicable law, as may be amended from time to time.

This policy will apply to all compensation by AVT to its Office Holders during, or in respect of, the 3-

year period starting on January 1, 2017. Any amendment to this Policy shall require the approvals as set

forth in the Companies Law.

This policy provides the Compensation Committee and the Board with adequate measures and

flexibility to formulate tailored compensation packages for each of the Company’s Office Holders, and

therefore all amounts and figures mentioned hereunder are intended solely to set the outside parameters

of the Compensation Committee and the Board’s discretion with respect to compensation of Office

Holders. It is hereby clarified, that nothing contained herein purports to create or creates any right or

privilege of the Company’s Office Holders or of any other third party, and nothing herein shall obligate

the Company to grant any particular type or amount of compensation to any Office Holder, nor shall it

derogate from any approval procedures mandated by the Companies Law.

II. OVERVIEW

The principal objectives of AVT’s compensation policies and practices are:

1. Linking pay to performance: by aligning a significant portion of an officer’s compensation with

- 2 -

the Company’s short and long-term goals and performance.

2. Attracting and retaining talented officers: by providing officers with fair and reasonable

compensation that is also competitive with practices of other companies.

3. Aligning compensation with shareholder interests: by providing equity-based compensation

which is designed to reward Office Holders for increase in long-term shareholder value.

4. Supporting AVT’s mission and vision: by incentivizing officers to pursue strategies which

promote the Company’s goals.

5. Risk Management: by creating a balance between short and long-term goals, quantitative and

qualitative criteria and various other considerations, as well as an appropriate balance between

Company wide and individual goals and by avoiding undue pressure to take excessive risks.

III. OFFICERS’ COMPENSATION PACKAGE

The elements of officers’ compensation packages will generally consist of one or more of the following

components: (a) base salary; (b) benefits and perquisites; (c) cash incentives (bonuses); (d) equity-based

compensation; and (e) termination payments.

Ratio between elements: each element is intended to support one or more of the objectives detailed in

Section II above. The ratio, or “mix”, between such elements for each officer will reflect AVT’s objective

of correlating between the success of the Company and the total value of compensation that an officer

receives, while recognizing that the ratio, or mix, may vary from officer to officer and from time to time

and at times, including in years when the Company performance is poor, officers may receive reduced,

or may not receive any, cash or equity-based incentives.

Limitation: Notwithstanding the foregoing, the aggregate value of cash incentives and equity-based

compensation (valued at grant, and with respect to equity-based compensation paid in cash – valued at

payment) with respect to any given calendar year (excluding one-time cash or equity awards granted

upon recruitment or promotion and excluding the Special Long-Term Bonus), may not exceed 90% of

the value of an officer’s total compensation package, which may include his or her annual base salary

and benefits, cash incentives and equity-based compensation, with respect to such year.

Considerations for determining compensation: when considering compensation of officers, the

Company will consider the principal objectives detailed above and will also take into account:

Individual characteristics: such as an officer’s education, skills, experience, expertise and

achievements, as well as such officer’s position, responsibilities, location, past performance,

expected future contributions, prior compensation arrangements and seniority.

Competitiveness: the Company’s compensation practices and the level of compensation of

its officers are, inevitably, influenced by the compensation practices of other companies which

compete with the Company for similar talent, and the influence these have on the

expectations of the officers of the Company. Therefore, the Company may, from time to time,

review its compensation practices in comparison with those of other leading high technology

companies of comparable size and nature (e.g, in terms of revenues, market cap, number of

employees, global operations and the like), and/or companies which compete with the Company

for similar talent, generally and in the geographies relevant to the Company.

- 3 -

Overall Company considerations: such as providing fair and reasonable pay, taking into account

the Company’s size, business situation and the nature of its activities, while meeting budgetary

constraints and regulatory requirements and motivating officers to pursue innovative strategies

which promote the Company’s business and financial objectives without incentivizing officers to

take excessive risks which may increase the Company’s short-term performance at the expense of

its long-term goals.

Internal equity: paying officers equitably relative to one another based on their individual

characteristics, while considering the relationship between officers’ compensation packages and

the salaries of AVT’s other employees (including those employed by manpower contractors) and

specifically, the average and median salaries and the effect of such relationship on work relations

in AVT.

Sections IV to VII below describe each of the primary elements detailed above.

The approval procedures of officers’ compensation terms and of any amendments thereto shall be

governed by the provisions of the Companies Law.

IV. BASE SALARY AND BENEFITS

Purpose and Determinations. Base salaries are intended to compensate officers for their time and

services and are initially negotiated and generally set forth in officers’ employment or service

agreements. Base salaries and any adjustments thereto, will be considered based on the objectives and

considerations detailed above, and consequently, will vary between officers. Accordingly, the main

considerations for a salary adjustment will be similar to those used in initially determining base salary,

but may also include change of role or responsibilities, recognition for professional achievements,

regulatory or contractual requirements, budgetary constraints or market trends.

One-time Grant. In addition to other compensation elements comprising the compensation package of

an officer (such as base salary, benefits, annual, special or ad hoc bonuses and equity-based

compensation), new-hires or promoted employees may be granted fixed amount, one-time cash or

equity-based awards upon recruitment, promotion or due to special retention needs, in circumstances

deemed appropriate by the Compensation Committee and the Board.

Benefits and Perquisites. In addition to base salary, officers will be provided with benefits as

mandated by applicable law, and may be provided with further benefits and perquisites that are

generally acceptable in the local market and/or generally available to other Company employees (e.g.,

study fund, car, phone, medical benefits) and/or otherwise deemed appropriate by the Compensation

Committee and the Board taking into consideration the relevant objectives and considerations set forth

in Sections II and III above. Provided, however, that the cost to the Company of all non-mandatory

benefits and perquisites (other than the cash bonuses, equity-based compensation and the costs

associated with termination as detailed in Section VII below) shall not exceed 30% of an officer’s

annual base salary in any given calendar year.

Unless otherwise determined by the Compensation Committee and the Board, the Compensation

Committee only will be authorized to approve benefits and perquisites following the recommendation

of the CEO for any officer who is not the CEO, provided however, that the value of such benefits and

perquisites with respect to any calendar year does not exceed 5% of such officer’s annual base salary

with respect to such year.

- 4 -

In addition to the foregoing, officers are also entitled to reimbursement of expenses and for business

travel, including per diem expenses, room and board in accordance with Company policies and for

membership fees in professional organizations and professional liability insurance.

In the event an officer is engaged outside of Israel or is relocated to another geography the benefits

provided will include customary benefits associated with such location and may exceed 30% of the

officer’s annual base salary.

V. CASH BONUSES

Purpose. Officers may be granted cash bonuses, at the discretion of the Company, taking into

consideration the relevant objectives and considerations set forth in Sections II and III above, and

subject to the conditions set forth below, as well as any additional terms and conditions or criteria for

entitlement thereof that may be determined by the Company from time to time.

The Company may determine, with respect to any or all officers, that any annual cash bonus, special or

ad hoc cash bonus, or any other cash incentive whose date of payment falls following termination of

such officer’s employment by or service to the Company, however arising, will not be paid and such

officer will not be eligible to receive such bonus. Such determination may be made as part of an

officer’s employment agreement or otherwise.

In determining the amount or method of calculation of any bonus, the Board may take into

consideration the period of service of the officer during the calendar year with respect to which such

bonus relates.

Annual Cash Bonuses:

Annual cash bonuses are intended to promote the Company’s work plan and business strategy by

rewarding officers for their contribution and support to the Company’s business and financial goals

through individual efforts, strong performance, team work and collaboration. It is the Company’s

viewpoint that due to their direct line-of-sight and influence on the Company’s performance and

results, officers’ annual cash bonuses should generally be directly linked to the Company’s

performance and results, while additional criteria, such as an officer’s individual performance or his or

her expected future contributions, as well as achievement of additional objectives as the Company may

determine, may be used to reflect the officer’s contribution.

To the extent not otherwise determined (in employment or service agreements or otherwise),

subsequently to or concurrently with the approval of the budget with respect to any calendar

year, the Company will determine, following recommendation of the chairman of the Board with

respect to the CEO, and following recommendation of the CEO with respect to all other officers, each

officer’s target and maximum annual cash bonus amounts with respect to such calendar year and may

determine other terms with respect thereto, including applicable thresholds, the relative weights of any

objectives and any other matters with respect thereto, subject to the following general terms:

Maximum Bonus: The maximum bonus, which is the maximum annual cash bonus amount that

an officer will be entitled to receive with respect to any given calendar year, will not exceed 12

monthly base salaries of such officer.

Measurement Criteria: The Company believes that quantitative and qualitative performance

measures are the appropriate tools to determine annual cash bonus eligibility, but that eligibility

- 5 -

can also be based on the discretion of the Compensation Committee and of the Board, and with

respect to officers other than the CEO, on the discretion of the CEO as well. Accordingly, the

Compensation Committee and the Board will generally determine measurement criteria to

determine annual cash bonus eligibility for any given calendar year; provided however, that,

unless a lower percentage is permissible by applicable law, at least 80% of the total annual cash

bonus amount of the CEO and of each other officer (excluding sales commissions, if any), shall

be comprised of quantitative and qualitative performance measures, using key performance

indicators, and the eligibility for the remaining portion of the annual cash bonus shall be based on

discretionary personal evaluation.

It is hereby clarified that the Company may determine that, with respect to any specific year, all or any

particular officers shall not be entitled to an annual cash bonus.

Special and Ad Hoc Cash Bonuses:

In addition to the annual cash bonus, an officer may be granted a special or ad hoc cash bonus, at the

discretion of the Company. Such special or ad hoc cash bonuses are intended to enable the Company to

retain executives by providing that such bonuses be subject to their continued employment in the

Company, as well as to enable the Company to adapt to specific or unaccounted for changes or events

that may occur during the year, including in special circumstances or for completion of certain

achievements or assignments.

The objectives, thresholds (if any), maximum amount, discretionary component and method of

calculation will, to the extent required by the Companies Law and to the extent feasible, be determined

for each special cash bonus in advance, following the recommendation of the CEO (and, with respect

to the CEO, following the recommendation of the chairman of the Board). The Company may also

grant an officer an ad hoc cash bonus for special achievements, based solely on its discretion.

Limitation: The total amount of all special and ad hoc cash bonuses in the aggregate of each officer,

with respect to any given calendar year, may not exceed 6 monthly base salaries of such officer.

Sales Commissions:

In addition to the foregoing, the Compensation Committee and the Board may determine that certain

officers, who are responsible for sales, may be granted cash commissions based on sales criteria with

respect to any given calendar year, in the amount of up to 6 monthly base salaries and determine the

terms of eligibility and method of payment thereof.

Special Long-Term Bonus:

In addition to the annual cash bonus and/or any special or ad hoc cash bonus, if any, the Compensation

Committee and the Board only shall be authorized to determine, with respect to any or all officers,

including the CEO, that each such officer may receive a special cash incentive (the “Special Long-

Term Bonus”) subject to the achievement of quantitative performance measures using key

performance indicators linked to the Company’s long-term strategic plan for the years 2016-2018 (the

“Performance Period”), as set forth below and subject to the following terms and conditions:

1. Eligibility. Eligible officers shall include the CEO and all other officers that will be employed by

the Company or its subsidiaries on December 31, 2018 (i.e., the last day of the Performance

Period). The Compensation Committee and the Board shall be authorized to determine the

eligibility, if any, of any officer joining the Company during the Performance Period and/or whose

employment was terminated prior to the date of payment.

- 6 -

2. Total aggregate amount. The total aggregate gross amount of the Special Long-Term Bonus for all

eligible officers as a group shall not exceed 4.0% of the cumulative operating income of the

Company during the Performance Period, as reflected in the Company’s audited financial

statements for each of the three years during such period.

3. Allocation. The Compensation Committee and the Board shall determine the allocation of the total

aggregate amount between the CEO and the other officers and, among and between the other

officers other than the CEO, following the recommendation of the CEO, based on individual

contribution and performance, provided however, that not more than 20% of the Special Long-

Term Bonus may be allocated to the CEO.

4. Key Performance Indicators. The Compensation Committee and the Board shall approve the

specific parameters and performance goals of the following key performance indicators with

respect to the Special Long-Term Bonus:

Key Performance Indicator

Level of

Target

Achievement

GAAP annual revenues in 2018 100%

GAAP cumulative operating income during the Performance Period 100%

The Compensation Committee and the Board will determine at the end of the Performance Period

whether and to what extent the key performance indicators have been met, and following approval

by the Board of the Company’s audited financial statements for 2018, will determine the actual

bonus to be paid, if any, to all eligible officers, including the CEO, without the need for further

shareholder act or approval

5. Payout terms. Payment of the Special Long-Term Bonus for all officers, including the CEO, will be

subject to achievement of at least 100% of both of the performance goals.

6. Change in control. The Compensation Committee and the Board only shall be authorized to make

adjustments to the Special Long-Term Bonus in the event of a change in control event, including

accelerating the payment of the Special Long-Term Bonus on a pro rata basis with respect to the

Performance Period.

VI. EQUITY-BASED COMPENSATION

Purpose. Equity-based compensation is intended to attract and retain officers and align their

interests with shareholders’ interests to maximize creation of long-term economic value for the

Company.

Equity awards determinations. Equity-based awards will generally be granted on an annual basis,

subject to the discretion of the Company. In certain circumstances, the Company may grant awards on

an ad hoc basis. Equity-based awards may include, without limitation, one or more of the following

types of awards: options to purchase shares, restricted shares, restricted share units, performance

shares, performance share units and/or share appreciation rights.

- 7 -

The Company will determine the type and amount of equity-based awards to be granted to each officer,

as well as any combination between such awards, based on the relevant objectives and considerations set

forth in Sections II and III above (e.g., size and value of awards already held by officers, balancing

effective risk management, retention and rewarding for performance).

The passage of time will generally be sufficient criteria for the vesting of equity-based awards.

The Company may determine other or additional specific terms and conditions or criteria, whether for

the vesting of all or any part of such awards or for entitlement thereof, and whether generally or with

respect to specific grants, specific officers or otherwise.

The monetary value of officers’ equity-based awards as of the date of grant will be determined by the

Compensation Committee and the Board. The value of each type of equity-based vehicle will be

determined in accordance with the valuation method used by the Company at the time in preparing its

financial statements.

Equity-based awards will be granted pursuant to the Company’s equity-based incentive plan(s) as shall

be in effect from time to time, subject to availability thereunder, and generally on the terms provided

for therein and as determined by the Company. Any equity-based awards to officers must include a

minimum vesting period of not less than one year from the date of grant and with respect to options to

purchase shares, an exercise period of no more than ten years from the date of grant. The Compensation

Committee and the Board may provide for shorter vesting periods in special circumstances and when

deemed appropriate.

Until otherwise determined, and to the extent legally available and applicable, equity-based awards to

officers will be granted through a trustee pursuant to the provisions of Section 102 of the Israeli Income

Tax Ordinance (New Version), 5721-1961 (the “Income Tax Ordinance”), under the capital gains

route.

Accelerated vesting. The Company may approve the accelerated vesting of equity-based awards upon

termination of service or employment and/or upon a change of control, and may provide for continued

vesting of, or an extended exercise period for, equity-based awards beyond those generally applicable

pursuant to the relevant plan in such circumstances, provided such extended exercise period does

not extend beyond the original exercise period set forth in the terms of the grant.

Maximum share limitation. The Company may award as equity-based compensation to its employees,

officers and directors (including to persons who are not subject to this Policy) during any calendar year,

awards with respect to such number of shares as is equal to up to 2.5% of the total number of shares of

AVT outstanding on January 1st of said calendar year, excluding the shares held in treasury by the

Company on that day (herein: “Total Net Shares”).

To the extent that less than 2.5% of Total Net Shares are awarded as equity-based compensation during

any calendar year, the unused portion (in percentages) may be awarded in the following year or years.

The foregoing allocation percentage shall be calculated based on options granted with an exercise price

at fair market value, and in general, the Company will deem one restricted share, or one restricted share

unit, or one option with a zero (or nominal (par) value) exercise price as equivalent to the grant of an

option to purchase between 2.5-3.5 shares with an exercise price reflecting the fair market value of the

shares at the date of grant, as determined by the Board, taking into account the value of such awards in

accordance with the valuation method used by the Company at the time in preparing its financial

statements.

- 8 -

Individual limitation. Subject to the foregoing, in no event shall the value of all annual equity-based

awards granted to any officer (in addition to and beyond any equity awards granted upon recruitment,

promotion or special retention needs, as set forth under “One-time Grant” above), calculated as of the

date of their grant (and with respect to equity-based awards paid in cash – at the date of their payment),

exceed 250% of such officer’s annual base salary, and with respect to the CEO, 400% of his or her

annual base salary, and in no event will the value of equity-based awards as aforesaid, together with

any annual cash bonus and together with any special, or ad hoc, cash bonus with respect to any given

calendar year, exceed the cap determined by the limitation under “Ratio between elements” in Section

III above.

VII. TERMINATION PAYMENTS

Termination payments will generally be set forth in officers’ employment or service agreements and are

intended to comply with applicable laws, and to provide officers with compensation in the event of

termination in circumstances determined by the Company, including voluntary termination.

When considering termination payments, the Company will generally consider, among other

things, the officer’s term of service or employment, his or her remuneration during such term,

Company performance during such term and the contribution of such officer to the achievement of the

Company’s goals and maximization of its profits, as well as the circumstances of termination.

The Company will generally link the payment of termination payments, which are not mandatory (per

applicable law and/or the departing officer’s employment or service agreement) to the consent of the

departing officer to undertake and/or extend, as the case may be, his or her non-compete and non-

solicitation obligations towards the Company.

Officers’ termination payments may include one or more of the following: advance notice; adaptation

payment; severance payment; change in control payment; and/or discretionary payment; provided

however, that total termination payments to any officer shall not exceed the sum of: (i) 100% of the

amount of severance pay payable pursuant to the Israeli Severance Pay Law, 5723-1963, had the officer

been entitled to severance pay pursuant to such law, inclusive of any amounts accumulated in such

officer’s pension fund and/or managers insurance and/or provident fund on account of severance and

released or transferred to the officer; and (ii) 24 monthly base salaries.

VIII. DIRECTORS

The Company’s philosophy is to provide fair and reasonable compensation to its directors, taking into

account the Company’s business environment, its size and the nature of its operations. The terms of this

policy with respect to cash compensation of directors will apply only to non-employee directors; any

director who is also an employee or service provider of the Company or of any subsidiary thereof will

not receive separate cash compensation for their service as a director of the Company.

With respect to external directors and in accordance with the Companies Regulations (Rules Regarding

Compensation and Expenses to an External Director), 5760-2000, as amended by the Companies

Regulations (Reliefs for Companies whose Shares are Registered for Trading on an Exchange Outside of

Israel), 5760-2000, as such regulations may be amended from time to time (the “Compensation

Regulations”), compensation of the Company’s external directors may be determined relative to that of

“other directors”, as such term is defined in the Compensation Regulations, and may include equity-

- 9 -

based compensation.

Accordingly, Directors’ compensation will be comprised of the following:

Annual Payment: directors will generally be entitled to receive an annual payment with respect

to their service as directors as approved by the Company’s shareholders from time to time.

Participation Compensation: directors will generally be entitled to receive a fee with respect to

their participation in meetings of the Board and of committees thereof, as approved by the

Company’s shareholders from time to time.

Equity-based Compensation: directors will be entitled to receive equity-based awards, as

approved by the Company’s shareholders from time to time. A distinction may be made between

the Chairman of the Board (including an Active Chairman, if any) and the other eligible

directors with respect to the value of the equity-based awards, in light of his or her position.

Such awards are intended to align directors’ interests with the interests of shareholders and to

promote creation of long term value for the Company.

Awards will be granted pursuant to the Company’s equity-based incentive plan(s), as shall be in

effect from time to time, subject to availability thereunder, and generally on the terms provided

for therein and pursuant to an award agreement setting forth the terms of the award; provided

however, that equity-based awards may be granted on an annual basis or as otherwise approved

by the shareholders and may be designed so as to vest monthly, quarterly or annually, including

so as to vest in full prior to the first annual general meeting to be held following their date of

grant, provided further, that any such equity-based awards granted as options to purchase shares

will have an exercise period of no more than ten years from the date of grant.

Until otherwise determined, and to the extent legally available and applicable, equity-based awards

to directors will be granted through a trustee pursuant to the provisions of Section 102 of the

Income Tax Ordinance, under the capital gains route.

The Chairman of the Board (including an Active Chairman, if any) and any other director who takes on

increased duties may receive different or additional cash payments and/or equity-based awards, in

recognition of their increased duties. External directors and independent directors may be entitled to a

higher remuneration if classified as “experts”, as defined in the Compensation Regulations.

Directors will also be entitled to reimbursement of expenses and for business travel, in accordance with

Company policies.

The annual and participation fees may be adjusted based on the Israeli Consumer Price Index.

Applicable value added tax will be added to the above compensation in accordance with applicable law.

IX. D&O INSURANCE, INDEMNIFICATION AND RELEASE

The Company will release all Office Holders currently in office and any additional or other Office

Holders, as may be appointed from time to time in the future from liability for a breach of their duty

of care to the Company and provide them with indemnification to the fullest extent permitted by law

and the Company’s Articles of Association.

Until otherwise determined, with the adoption of this Policy: the exemption and release from liability for

- 10 -

a breach of their duty of care to the Company, indemnification and insurance, as approved by the

shareholders of the Company at the Company’s 2010 annual general meeting of shareholders, shall

apply to all officers and directors, currently in office and/or as may be appointed from time to time in

the future.

In addition, until otherwise determined, the Company will purchase and periodically renew, at the

Company’s expense, insurance coverage in respect of the liability of its Office Holders currently in

office and any additional or other Office Holders as may be appointed from time to time in the future,

to the maximum extent permitted by law providing for up to US$25 million in coverage. The

Compensation Committee and the Board only may approve a greater amount of coverage; provided

however, that any such greater amount of coverage shall not exceed 15% of the Company’s market

capitalization, calculated based on the closing price of the Company’s shares, as quoted on the

Frankfurt Stock Exchange (Xetra list), at the close of business on December 31st of the calendar year

preceding such approval. Such insurance coverage may include “run off” provisions covering an Office

Holder’s liability following termination of employment or service and will include coverage with

respect to any public offering of shares or other securities of the Company. Each of the chairman of the

Board and the CEO, as shall be in office from time to time and/or any other person designated by them,

shall have the authority to obtain, renew and keep in force and effect such insurance.

X. RECOUPMENT AND REDUCTION OF COMPENSATION

An Office Holder will be required to return any compensation paid to him or her, including sales

commissions, that was paid on the basis of data which turned out to be erroneous , including if it was

restated in the Company’s financial statements , to the extent the compensation paid exceeds the

compensation that would otherwise have been paid had the correct data been available at the time

compensation based on such data was originally calculated.

In addition, the Company shall have the authority to stipulate that, as a condition to the grant of any

variable compensation to an Office Holder, that such variable compensation may be reduced in

circumstances where such Office Holder’s conduct would justify termination for “cause” or in other

circumstances determined by the Company as warranting such reduction.

** y:\cohen\1253 - avt\1.3 - shareholder meetings\2016 agm\notice\exhibits\avt 2016 compensation policy (tsmcl november 10, 2016).docx

21

Exhibit B

2016 Non-Employee Directors Annual Equity Award Plan

1

ADVANCED VISION TECHNOLOGY (A.V.T) LTD.

(the “Company” or “AVT”)

2016 Non-Employee Directors Annual Equity Award Plan

(the “2016 Directors Plan”)

1. Consistent with the Company’s Directors and Officers Compensation Policy (the “Compensation

Policy”), each non-employee director who is in office immediately following any annual general

meeting of shareholders of the Company, including the Chairman of the Board, and including any

external director (each an “Eligible Director”), will, in addition to his or her cash remuneration,

as approved by the Company (in accordance with Israeli law), receive annual equity-based

remuneration, which will be awarded at the end of each such annual general meeting of

shareholders (the “Date of Grant”).

2. Such equity-based remuneration, or “Awards”, will consist of restricted share units or “RSUs”,

which are an unfunded and unsecured promise to deliver Ordinary Shares of the Company of NIS

2.00 nominal (par) value per share (“Ordinary Shares”) subject to certain terms and conditions,

for a consideration of no more than the nominal (par) value of the underlying Ordinary Shares.

3. Each year, on the Date of Grant, each Eligible Director (other than the Chairman of the Board)

will be awarded 1,200 RSUs as equity-based remuneration (the “Directors’ Annual Grant”), and

the Chairman of the Board will be awarded 2,400 RSUs as equity-based remuneration (the

“Chairman Annual Grant”, and together with the Directors’ Annual Grant, the “Annual

Grant”).

4. Awards will be granted as part of, and out the shares available for grant under the AVT 2009

Israeli Incentive Plan or any other equity remuneration plan of the Company currently existing or

which may be adopted in the future, as they may be amended from time to time (the “Equity

Plans”) and will generally be granted on terms and conditions applicable to grants made under the

applicable Equity Plan, subject to the limitations set forth in the Compensation Policy.

5. Awards will be granted to the extent that there are sufficient Ordinary Shares authorized or

reserved under the then applicable Equity Plan, provided however, that if at the time of any

Annual Grant there are insufficient Ordinary Shares available for such grant, then the numbers of

Awards granted to each Eligible Director shall be reduced proportionately on a pro rata basis and

based on the Ordinary Shares then available.

6. Awards will vest in full on September 30th of the calendar year following the Date of Grant

(approximately yearly from the grant dates) (the “Vesting Date”).

7. In the event that, between AVT’s annual general meetings of shareholders, a new Eligible

Director joins the Board or an existing director becomes an Eligible Director (or a director

becomes the Chairman of the Board) (the “Eligibility Date”), such Eligible Director, including

the Chairman of the Board, will be entitled to:

a. the Annual Grant, as of the first AVT annual general meeting of shareholders to be held

following the Eligibility Date, as applicable to such Eligible Director; and

b. a pro-rated Annual Grant, for the interim period between the Eligibility Date and the date of

AVT’s annual general meeting of shareholders convened following the Eligibility Date, in an

amount equal to the difference between the Annual Grant and the product of the Annual

Grant divided by 12 and the number of months (including partial months) passed between the

last annual general meeting of shareholders and the Eligibility Date.

2

8. In the event that an Eligible Director (including the Chairman of the Board) ceases to serve as a

director of the Company for any reason, other than dismissal pursuant to Section 231 of the Israeli

Companies Law, 5759-1999 (the “Companies Law”) ceasing to serve as a director pursuant to

Section 232 of the Companies Law, or voluntary resignation from office, all of such Eligible

Director’s unvested Awards granted under this 2016 Directors Plan shall immediately become

vested as of the date of such cessation of service, and all unvested RSUs shall immediately be

settled. In the event that an Eligible Director (including the Chairman of the Board) ceases to

serve as a director of the Company due to dismissal pursuant to Section 231 or pursuant to Section

232 of the Companies Law, or voluntary resignation from office, all unvested Awards granted

under the 2016 Directors Plan shall immediately terminate and expire and be cancelled and

forfeited as of the date of such cessation of service.

9. If an Eligible Director ceases to be an Eligible Director but remains a director of the Company,

any Award awarded to him or her pursuant to this 2016 Directors Plan shall continue to vest under

the same terms and conditions granted. In the event that such director ceases to be a director of the

Company thereafter, the provisions of Section 8 above shall apply.

10. Awards to Eligible Directors who are Israeli residents for tax purposes will be made pursuant to

the capital gains route provisions pursuant to Section 102 of the Israeli Income Tax Ordinance

1961.

***

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22

Exhibit C

Letter of Indemnification and Release

1

TO:

____________

____________

____________

Dear Sir/Madam,

Indemnification, Exemption and ReleaseRe:

This letter (the “Letter of Indemnification and Release”) is being issued to you pursuant to

resolutions adopted by the Compensation Committee of the Board of Directors of Advanced Vision

Technology (A.V.T.) Ltd. (the “Company” and the “Board”, respectively), by the Board and by the

shareholders of the Company.

In consideration of your service to the Company, the Company hereby agrees as follows:

1. The Company hereby undertakes to indemnify you, to the fullest extent permitted by law and the

Company’s Articles of Association as shall be in effect from time to time (the “Articles of

Association”), for the following liabilities and expenses incurred by you, arising from or as a

result of, any act or omission (“action”) carried out by you in your capacity as an Office Holder of

the Company (as such term is defined in the Israel Companies Law, 5759-1999 (the “Companies

Law”)):

1.1. Monetary liabilities or obligations imposed on you in favor of another person by a court

judgment, including a compromise judgment or an arbitrator’s award approved by a court.

1.2. Reasonable litigation expenses, including attorney’s fees, incurred by you in consequence of

an investigation or proceeding conducted against you by an authority that is authorized to

conduct such investigation or proceeding, and which was concluded without the submission

of an indictment against you and without imposing on you any financial obligation in lieu of

criminal proceedings (as such terms are defined in the Companies Law), or which was

concluded without the submission of an indictment against you but with imposing on you a

financial obligation in lieu of criminal proceedings in respect of an offense that does not

require proof of criminal intent or in connection with a monetary sanction.

1.3. Reasonable litigation expenses, including attorney’s fees, incurred by you or imposed upon

you by a court in a proceeding brought against you by the Company or on its behalf or by any

other person, or in a criminal action in which you are acquitted, or in a criminal action in

which you are convicted of an offense that does not require proof of criminal intent.

1.4. Payments which you are obligated to make to an injured party as set forth in

Section 52BBB(a)(1)(a) of the Israel Securities Law, 5728-1968 (the “Securities Law”) and

expenses that you incur in connection with a proceeding under Chapters Eight “C”, Eight

“D”, or Nine “A” of the Securities Law, including reasonable litigation expenses, including

attorney’s fees, or in connection with Article D of Chapter Four of Part Nine of the

Companies Law.

1.5. Expenses incurred by you in connection with a proceeding under Chapter G’1, of the Israel

Restrictive Trade Practices Law, 5748-1988, including reasonable litigation expenses,

including attorney’s fees.

The above indemnification will also apply with respect to your service as, at the request of the

Company, and to any action taken by you in your capacity as, an Office Holder or board observer of

any other company controlled, directly or indirectly, by the Company (a “Subsidiary”) or in which the

Company has an equity interest (an “Affiliate”) and references herein to the Company shall include

Subsidiaries and Affiliates where appropriate.

2. The Company will not indemnify you for any amount you may be obligated to pay in respect of:

2.1. A breach of your duty of loyalty to the Company, except for a breach committed in good faith

and

with

2

a reasonable basis to believe that such action would not prejudice the interests of the

Company or as otherwise permitted by law.

2.2. A breach of your duty of care to the Company committed intentionally or recklessly, unless

the breach was committed only in negligence.

2.3. An action taken with the intent of unlawfully realizing personal gain.

2.4. A fine, forfeit, monetary sanction or penalty imposed upon you.

2.5. A counterclaim made by the Company or in its name in connection with a claim or

proceedings against the Company filed voluntarily by you, other than by way of defense or

by way of countersuit or third party notice in connection with a claim brought against you by

the Company, or in specific cases in which the Company’s Board has approved the initiation

or bringing of such suit by you, which approval shall not be unreasonably withheld.

3. The Company will make available all amounts needed in accordance with paragraph 1 above on

the date on which such amounts are first payable by you (“Time of Indebtedness”), and with

respect to items referred to in paragraphs 1.2, 1.3, 1.4 and 1.5 above, even prior to a court

decision, but in any event the Company has no duty to advance payments earlier than four

(4) business days following receipt by the Company of a written request therefor from you.

Advances given to cover legal expenses in criminal proceedings will be repaid by you to the

Company if you are found guilty (other than with respect to criminal proceedings regarding a

crime which does not require criminal intent) and the applicable appeal period has lapsed. Other

advances will be repaid by you to the Company if it is determined that you are not lawfully

entitled to such indemnification.

As part of the aforementioned undertaking, the Company will make available to you any security

or guarantee that you may be required to post in accordance with an interim decision given by a

court or an arbitrator, including for the purpose of substituting liens imposed on your assets.

4. The Company will indemnify you even if at the relevant Time of Indebtedness you are no longer

an Office Holder of the Company, provided that the obligations are in respect of actions taken by

you while you were an Office Holder and in your capacity as an Office Holder of the Company,

including if taken prior to the above resolutions.

5. The indemnification will be limited to the expenses mentioned in paragraphs 1.2, 1.3, 1.4, 1.5

(pursuant and subject to paragraph 3 and insofar as indemnification with respect thereto is not

restricted by law or by the provisions of paragraph 2 above) and to the matters mentioned in

paragraph 1.1 above insofar as they result from or are connected to events and circumstances set

forth in Appendix A hereto which are deemed by the Board, in light of the current activities of the

Company, to be foreseeable as of the date hereof.

6. The total amount of indemnification that the Company undertakes towards all persons whom it has

resolved to indemnify for the matters and in the circumstances described herein, jointly and in the

aggregate, shall not exceed an amount equal to the higher of: (i) US$5,000,000, or (ii) 25% of the

Company’s shareholder equity, as of the date of the event triggering the indemnification, as set

forth in the Company’s most recent audited consolidated financial statements at such time.

7. The Company will not indemnify you for any liability with respect to which you have received

payment by virtue of an insurance policy or another indemnification agreement other than for

amounts which are in excess of the amounts actually paid to you pursuant to any such insurance

policy or other indemnity agreement (including deductible amounts not covered by insurance

policies), within the limits set forth in paragraph 6 above.

8. Subject to the provisions of paragraphs 6 and 7 above, the indemnification will, in each case,

cover all sums of money (100%) that you will be obligated to pay, in those circumstances for

which indemnification is permitted under applicable law and the Articles of Association and this

Letter of Indemnification and Release.

9. In order to eliminate any duplication of benefits, the Company will be entitled to receive any

3

amount collected by you from a third party in connection with liabilities actually indemnified

hereunder, up to the amount actually paid to you by the Company as indemnification hereunder, to

be transferred by you to the Company within fifteen (15) days following the receipt of the said

amount. By accepting this Letter of Indemnification and Release, you assign all rights thereto to

the Company. In the event of payment by the Company pursuant to this Letter of Indemnification

and Release, the Company shall be subrogated to the extent of such payment to all of your rights

of recovery, and you shall execute all documents required, and shall do everything that may be

necessary, to secure such rights, including the execution of such documents necessary to enable

the Company effectively to bring suit to enforce such rights.

10. In all indemnifiable circumstances indemnification will be subject to the following:

10.1. You shall promptly notify the Company of any legal proceedings initiated against you and

of all possible or threatened legal proceedings without delay, and in any event within seven

(7) days following your first becoming aware thereof, however, your failure to notify the

Company as aforesaid shall not derogate from your right to be indemnified as provided

herein (except to the extent that such failure to notify causes the Company damages). You

shall transfer to the Company, or to such person as it shall advise you, without delay all

documents you receive in connection with such proceedings or threatened proceedings.

Similarly, you must advise the Company on an ongoing and current basis concerning all

events which you suspect may give rise to the initiation of legal proceedings against you in

connection with your actions as an Office Holder of the Company. Notice to the Company

shall be directed to the Chairman of the Board, and in the event you are the Chairman of

the Board, to the Chairman of the Audit Committee, at the address of the Company’s

principal office (or at such other address as the Company shall advise you).

10.2. Other than with respect to proceedings that have been initiated against you by the Company

or in its name, the Company shall be entitled to undertake the conduct of your defense in

respect of such legal proceedings and/or to hand over the conduct thereof to any attorney

which the Company may choose for that purpose, except to an attorney who is not, upon

reasonable grounds, acceptable to you. In such case, the Company shall pay the fees and

expenses of such counsel. The Company shall notify you of any such decision to defend

within ten (10) calendar days of receipt of notice of any such proceeding.

The Company and/or the attorney as aforesaid shall be entitled, within the context of the

conduct as aforesaid, to conclude such proceedings, all as it shall see fit, including by way

of compromise. At the request of the Company, you shall execute all documents required to

enable the Company and/or its attorney as aforesaid to conduct your defense in your name,

and to represent you in all matters connected therewith, in accordance with the aforesaid.

For the avoidance of doubt, in the case of criminal proceedings the Company and/or the

attorneys as aforesaid will not have the right to plead guilty in your name or to agree to a

plea-bargain in your name without your consent. However, the aforesaid will not prevent

the Company and/or its attorneys as aforesaid, with the approval of the Company, to come

to a financial arrangement with a plaintiff in a civil proceeding without your consent so

long as such arrangement will not be an admittance of an occurrence not indemnifiable

pursuant to this Letter of Indemnification and Release and/or pursuant to law. The

Company shall not, without your prior written consent, consent to the entry of any

judgment against you or enter into any settlement or compromise which (i) includes an

admission of your fault, (ii) does not include, as an unconditional term thereof, the full

release of you from all liability in respect of such proceeding, or (iii) is not fully

indemnifiable pursuant to this Letter of Indemnification and Release and pursuant to law.

This paragraph shall not apply to a proceeding brought by you under Section 10.7 below.

10.3. You will fully cooperate with the Company and/or any attorney as aforesaid in every

reasonable way as may be required of you within the context of their conduct of such legal

proceedings, including but not limited to the execution of power(s) of attorney and other

4

documents required to enable the Company or its attorney as aforesaid to conduct your

defense in your name, and to represent you in all matters connected therewith, in

accordance with the aforesaid and will give the Company all information and access to

documents, files and your advisors and representatives as shall be within your power, in

every reasonable way as may be required by the Company with respect to any such legal

proceedings, provided that the Company shall cover all costs incidental thereto such that

you will not be required to pay the same or to finance the same yourself.

10.4. Notwithstanding the provisions of Sections 10.2 and 10.3 above, (i) if in a proceeding to

which you are a party by reason of your status as an Office Holder of the Company and the

named parties to any such proceeding include both you and the Company, a conflict of

interest or potential conflict of interest (including the availability to the Company, on the

one hand, and you, on the other hand, of different or inconsistent defenses or

counterclaims) exists between you and the Company, or (ii) if the Company fails to assume

the defense of such proceeding in a timely manner, you shall be entitled to be represented

by separate legal counsel, which shall represent other persons similarly situated, of the

Company’s choice and reasonably acceptable to you and such other persons, at the expense

of the Company. In addition, if the Company fails to comply with any of its material

obligations under this Letter of Indemnification and Release or in the event that the

Company or any other person takes any action to declare this Letter of Indemnification and

Release void or unenforceable, or institutes any action, suit or proceeding to deny or to

recover from you the benefits intended to be provided to you hereunder, you shall have the

right to retain counsel of your choice, and reasonably acceptable to the Company, to

represent you in connection with any such matter and, except with respect to such actions,

suits or proceedings brought by the Company that are resolved in favor of the Company, at

the expense of the Company.

10.5. If, in accordance with paragraph 10.2, the Company has taken upon itself the conduct of

your defense, the Company will have no liability or obligation pursuant to this Letter of

Indemnification and Release or the above resolutions to indemnify you for any legal

expenses, including any legal fees, that you may expend in connection with your defense.

10.6. The Company will have no liability or obligation pursuant to this Letter of Indemnification

and Release or the above resolutions to indemnify you for any amount expended by you

pursuant to any compromise or settlement agreement reached in any suit, demand or other

proceeding as aforesaid if the Company’s consent to such compromise or settlement was

not given in advance.

10.7. That, if required by law, the Company’s authorized organs will consider the request for

indemnification and the amount thereof and will determine if you are entitled to

indemnification and the amount thereof. In the event that you make a request for payment

of an amount of indemnification hereunder or a request for an advancement of

indemnification expenses hereunder and the Company fails to timely determine your right

to indemnification hereunder or fails to make such payment or advancement, you may

petition any competent court to enforce the Company’s obligations hereunder. The

Company agrees to reimburse you in full for any reasonable expenses incurred by you in

connection with investigating, preparing for, litigating, defending or settling any action

brought by you under the immediately preceding sentence, except where such action or any

claim or counterclaim in connection therewith is resolved in favor of the Company.

11. The Company hereby exempts and releases you, to the maximum extent permitted by law,

including in advance, from and against any liability for monetary or other damages due to, or

arising or resulting from, a breach of your duty of care to the Company as an Office Holder of the

Company.

12. If for the validation of any of the undertakings in this Letter of Indemnification and Release any

act, resolution, approval or other procedure is required the Company undertakes to cause them to

be done or adopted in a manner which will enable the Company to fulfill all its undertakings as

5

aforesaid; provided that nothing in this Letter of Indemnification and Release shall require the

Company to amend the Articles of Association.

13. For the avoidance of doubt, it is hereby clarified that nothing contained in this Letter of

Indemnification and Release derogates from the Company’s right (but the Company shall in no

way be obligated) to indemnify you post factum for any amounts which you may be obligated to

pay as set forth in paragraph 1 above without the limitations set forth in paragraphs 5 and 6 above.

14. If any undertaking included in this Letter of Indemnification and Release is held invalid or

unenforceable, such invalidity or unenforceability will not affect any of the other undertakings

which will remain in full force and effect. Furthermore, if such invalid or unenforceable

undertaking may be modified or amended so as to be valid and enforceable as a matter of law,

such undertakings will be deemed to have been modified or amended, and any competent court or

arbitrator are hereby authorized to modify or amend such undertaking, so as to be valid and

enforceable to the maximum extent permitted by law.

15. This Letter of Indemnification and Release and the agreements herein shall be governed by and

construed and enforced in accordance with the laws of the State of Israel, without regard to the

rules of conflict of laws, and the competent courts in Tel Aviv, Israel will have the sole and

exclusive jurisdiction over any dispute arising from or in connection with this Letter of

Indemnification and Release.

16. Neither the settlement nor termination of any proceeding nor the failure of the Company to award

indemnification or to determine that indemnification is payable shall create an adverse

presumption that you are not entitled to indemnification hereunder. In addition, the termination of

any proceeding by judgment or order (unless such judgment or order provides so specifically) or

settlement, shall not create a presumption that you did not act in good faith and in a manner which

you reasonably believed to be in or not opposed to the best interests of the Company or, with

respect to any criminal action or proceeding, had reasonable cause to believe that your action was

unlawful.

17. This Letter of Indemnification and Release shall be (a) binding upon all successors and assigns of

the Company (including any transferee of all or a substantial portion of the business, shares and/or

assets of the Company and any direct or indirect successor by merger or consolidation or

otherwise by operation of law), and (b) binding on and shall inure to the benefit of your heirs,

personal representatives, executors and administrators. This Letter of Indemnification and Release

shall continue for your benefit and your heirs’, personal representatives’, executors’ and

administrators’ benefit after you cease to be an Office Holder of the Company.

18. In the event of any change, after the date of this Letter of Indemnification and Release in any

applicable law, statute or rule which expands the right of the Company to indemnify its Office

Holders, it is the intent of the parties hereto that you shall enjoy by this Letter of Indemnification

and Release the greater benefits so afforded by such change and such changes shall, to the fullest

extent permitted by law, be, ipso facto, within the purview of your rights and the Company’s

obligations pursuant to this Letter of Indemnification and Release.

19. No waiver of any of the provisions of this Letter of Indemnification and Release shall be deemed

or shall constitute a waiver of any other provisions hereof (whether or not similar), nor shall such

waiver constitute a continuing waiver. Any waiver shall be in writing.

20. All notices and other communications required or permitted under this Letter of Indemnification

and Release shall be in writing and shall be deemed delivered (i) if mailed, three (3) business days

after mailing (unless mailed internationally, in which case it shall be deemed delivered five

(5) business days after mailing), (ii) if by air courier, two (2) business days after delivery to the

courier service, (iii) if sent by messenger, upon delivery, (iv) if sent via facsimile, upon

transmission and electronic (or other) confirmation of receipt or (if transmitted and received on a

non-business day) on the first business day following transmission and electronic (or other)

confirmation of receipt, and (iv) if sent by email, on the date of transmission or (if transmitted and

received on a non-business day) on the first business day following transmission, except where a

6

notice is received stating that such mail has not been successfully delivered.

21. This Letter of Indemnification and Release replaces any preceding letter of indemnification or

letter of exemption and release that may have been issued to you. Notwithstanding the foregoing,

the indemnification obligations and exemptions and releases set forth in this Letter of

Indemnification and Release will also apply, subject to the terms, conditions and limitations set

forth herein with respect to actions carried out by you, in your capacity as an Officer Holder of the

Company prior to the date of this Letter of Indemnification and Release and no previous

exemption or release from or against any liability for monetary or other damages due to, or arising

or resulting from, a breach of your duty of care to the Company as an Office Holder of the

Company that was provided to you will be adversely affected.

Sincerely,

Advanced Vision Technology (A.V.T.) Ltd.

Name:_____________________________

Title:______________________________

Date:_________________________________

Accepted and agreed to:

Name: _______________________

Date: ___________________

7

APPENDIX A

1. The offering and/or issuance of securities by the Company and/or by a shareholder to the public

and/or to private investors or the buy-back of Company securities or the offer by the Company to

purchase securities from the public and/or from private investors pursuant to a prospectus,

registration statements, agreements, notices, reports, tenders and/or other proceedings, whether in

Germany, in Israel or elsewhere.

2. Occurrences resulting from the Company’s status as a public company, and/or from the fact that

the Company’s securities were offered to the public and/or are traded on a stock exchange,

whether in Israel or abroad, including occurrences resulting from the Company’s public filings or

omissions to make a public filing or related to the failure to disclose any information in the

manner or time such information is required to be disclosed pursuant to any securities laws or the

rules or regulations of any securities authority or stock exchange, or any other claims relating to

relationships with investors, debt holders, shareholders and the investment community, or related

to inadequate or improper disclosure of information to investors, debt holders, shareholders and

the investment community.

3. Actions in connection with the financial statements and reports of the Company, including the

preparation thereof.

4. Occurrences in connection with investments the Company makes in other corporations whether

before and/or after the investment is made, entering into the transaction, the execution,

development and monitoring thereof, including actions taken by you in the name of the Company

as an Office Holder and/or board observer of the corporation the subject of the transaction and the

like.

5. The sale, purchase and holding of negotiable securities or other investments for or in the name of

the Company.

6. Actions in connection with an actual or anticipated change in ownership, control or structure of

the Company, including, without limitation, the merger of the Company with or into another

entity.

7. Without derogating from the generality of the above, actions in connection with any actual or

proposed transaction with respect to the purchase, sale or lease of any assets, operations,

companies, legal entities or business activities, and the division or consolidation thereof, whether

or not in the ordinary course of business of the Company.

8. Actions in connection with labor relations and/or employment matters in the Company and trade

relations of the Company, including with employees, independent contractors, customers,

suppliers and various service providers.

9. Actions in connection with work safety and/or working conditions.

10. Actions in connection with products or services developed by the Company or in connection with

the distribution, sale, license or use of such products including, without limitation, in connection

with professional liability and product liability claims and/or in connection with the procedure of

obtaining regulatory or other approvals regarding such products, whether in Israel or abroad

and/or in connection with liabilities arising out of advertising or marketing, including without

limitation, misrepresentations regarding the Company’s products and unlawful distribution of

emails and/or any claim or demand made by purchasers, holders or users of products or services of

the Company or individuals exposed to such products, for damages or losses related to such use or

service.

11. Claims or demands made by any third party suffering any personal injury and/or bodily injury

and/or property damage to business or personal property through any act or omission attributed to

the Company, or its employees, agents or other persons acting or allegedly acting on their behalf.

12. Any claim or demand made by a customer, supplier, agent, contractor or other third party

8

transacting any form of business with the Company, in the ordinary course of their business,

relating to the negotiations or performance of such transaction, or representations or inducements

provided in connection therewith or otherwise.

13. Actions in connection with the intellectual property of the Company and its protection, including

the registration or assertion of rights to intellectual property and the defense of claims related to

intellectual property including, without limitation, any assertion that the Company’s products

violate, infringe, misappropriate or misuse the intellectual property rights of others.

14. Actions pursuant to or in accordance with the policies and procedures of the Company, whether

such policies and procedures are published or not.

15. Claims relating to or arising out of financing arrangements, any breach of financial covenants or

other obligations towards lenders or debt holders of the Company.

16. Actions concerning the approval of transactions of the Company with Office Holders and/or

holders of controlling interests in the Company, and any other transactions referred to in Sections

267A and/or 270 of the Companies Law.

17. Claims of failure to exercise business judgment and a reasonable level of proficiency, expertise

and care with respect to the Company’s business.

18. Violations of laws requiring the Company to obtain regulatory and/or governmental licenses,

permits and authorizations in any jurisdiction.

19. Any administrative, regulatory or judicial actions, orders, decrees, suits, demands, demand letters,

directives, claims, liens, investigations, proceedings or notices of noncompliance or violation by

any governmental entity, including without limitation, the Israel Innovation Authority of the

Israeli Ministry of Economics and Industry, the Israeli Antitrust Authority, the Israel Securities

Authority, the German Federal Financial Supervisory Authority (BaFin), or any other person

alleging the failure to comply with any statue, law, ordinance, rule, regulation, order or decree of

any governmental entity applicable to the Company, or any of its businesses, subsidiaries, assets

or operations, or the terms and conditions of any licenses or operating certificate or licensing

agreement.

20. Any claim or demand made directly or indirectly in connection with complete or partial failure, by

the Company, or their respective directors, officers and employees, to pay, report, keep applicable

records or otherwise, any state, municipal, federal, county, local, city or foreign taxes or other

mandatory payments of any nature whatsoever, including, without limitation, income, sales, use,

transfer, excise, value added, registration, severance, stamp, occupation, customs, duties, real

property, personal property, capital stock, social security, unemployment, disability, payroll or

employee withholding or other withholding, including without limitation, any interest, penalty or

addition thereto, whether disputed or not.

21. Claims in connection with antitrust laws and regulations and laws and regulations regarding

commercial wrongdoing.

22. Any administrative, regulatory, civil or judicial actions, orders, decrees, suits, demands, demand

letters, directives, claims, liens, investigations, proceedings or notices of noncompliance or

violation by any governmental entity or other person alleging potential responsibility or liability

(including without limitation, potential responsibility or liability for costs of enforcement,

investigation, cleanup, governmental response, removal or remediation, for natural resources

damages, property damage, personal injuries or penalties or for contribution, indemnification, cost

recovery, compensation, or injunctive relief) arising out of, based on or related to (x) the presence

of, release, spill, emission, leaking, dumping, pouring, deposit, disposal, discharge, leaching or

migration into the environment (each a “Release”) or threatened Release of, or exposure to, any

hazardous, toxic, explosive or radioactive substances, wastes or other pollutants and all other

substances or wastes of any nature regulated pursuant to any environmental law, at any location,

whether or not owned, operated, leased or managed by the Company, or any of its subsidiaries, or

(y) circumstances forming the basis of any violation of any environmental law, environmental

9

permit, license, registration or other authorization required under applicable environmental and/or

public health laws.

23. Claims in connection with breach of confidentiality obligations, actions regarding invasion of

privacy, including with respect to databases, and actions in connection with slander and

defamation.

24. An announcement or statement, including without limitation, a position taken, or an opinion made

or vote cast in good faith by an Office Holder in the course of his or her duties and in conjunction

with his or her duties, including without limitation, during a meeting of the Board or one of the

committees of the Board.

25. Actions in connection with negotiating, signing and performing an insurance policy or any claim

relating to a failure to maintain appropriate insurance and/or adequate safety measures.

26. Class actions or derivative actions regarding the Company.

23

Exhibit D

Amended Article 74 of the Company’s Articles of Association

Excerpt from AVT’s Articles of Association:

74. INSURANCE, INDEMNITY AND EXEMPTION

74.1 For purposes of these Articles, the term “Office Holder” shall mean a general

manager, chief executive officer, executive vice president, vice president, any

other person fulfilling or assuming any of the foregoing positions without

regard to such person’s title, as well as a director, or a manager directly

subordinate to the general manager or the chief executive officer.

The Company shall not insure the liability of, indemnify or exempt, an Office

Holder, other than in accordance with the following provisions of this Article

74.

Insurance

74.2 The Company may, subject and pursuant to the provisions of the Companies

Law, enter into contracts to insure the liability of Office Holders of the

Company for any liabilities or expenses incurred by or imposed upon them

arising from or as a result of any act (or omission) carried out by them as

Office Holders of the Company, to the fullest extent permitted by law,

including in respect of any liability imposed on any Office Holder with respect

to any of the following:

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

(b) a breach of his duty of loyalty to the Company, provided that the Office

Holder acted in good faith and had a reasonable basis to believe that

such act would not prejudice the interests of the Company;

(c) monetary liabilities or obligations imposed on him in favor of another

person;

(d) a payment which the Office Holder is obligated to make to an injured

party as set forth in Section 52BBB(a)(1)(a) of the Israel Securities Law,

5728-1968 (the “Securities Law”) and expenses that the Office Holder

incurred in connection with a proceeding under Chapters Eight “C”,

Eight “D”, or Nine “A”, of the Securities Law, including reasonable

litigation expenses, including attorney’s fees, or in connection with

Article D of Chapter Four of Part Nine of the Companies Law; or

(e) expenses incurred by the Office Holder in connection with a proceeding

under Chapter G’1, of the Israel Restrictive Trade Practices Law, 5748-

1988 (the “Restrictive Trade Law”), including reasonable litigation

expenses, including attorney’s fees.

Indemnity

74.4 The Company may, subject and pursuant to the provisions of the Companies

Law, indemnify an Office Holder of the Company for all liabilities and

expenses incurred by him arising from or as a result of any act (or omission)

carried out by him as an Office Holder of the Company and which is

indemnifiable pursuant to applicable law, to the fullest extent permitted by

law, including as specified below:

(i) monetary liabilities or obligations imposed on him in favor of another

person by a court judgment, including a compromise judgment or an

arbitrator’s award approved by court;

(ii) reasonable litigation expenses, including attorney’s fees, incurred by the

Office Holder in consequence of an investigation or proceeding

conducted against the Office Holder by an authority that is authorized to

conduct such investigation or proceeding, and which was concluded

without the submission of an indictment against the Office Holder and

without imposing on the Office Holder any financial obligation in lieu of

criminal proceedings, or which was concluded without the submission of

an indictment against the Office Holder but with imposing on such

Office Holder a financial obligation in lieu of criminal proceedings in

respect of an offense that does not require proof of criminal intent or in

connection with a monetary sanction,

For the purposes hereof: (i) “a proceeding concluded without the

submission of an indictment in a matter in respect of which a criminal

investigation was conducted”; and (ii) “financial obligation in lieu of a

criminal proceeding”, shall have the meanings specified in Section

260(a)(1A) of the Companies Law;

(iii) reasonable litigation expenses, including attorneys’ fees, incurred by the

Office Holder or imposed upon him by a court, in a proceeding instituted

against him by the Company or on its behalf or by another person, or in

a criminal action in which he is acquitted, , or in a criminal action in

which he is convicted of an offense that does not require proof of

criminal intent;

(iv) payments which the Office Holder is obligated to make to an injured

party as set forth in Section 52BBB(a)(1)(a) of the Securities Law and

expenses the Office Holder incurred in connection with a proceeding

under Chapters Eight “C”, Eight “D”, or Nine “A” of the Securities Law,

including reasonable litigation expenses, including attorney’s fees, or in

connection with Article D of Chapter Four of Part Nine of the

Companies Law;

(v) expenses incurred by the Office Holder in connection with a proceeding

under Chapter G’1, of the Restrictive Trade Law, including reasonable

litigation expenses, including attorney’s fees; and

(vi) any other liability, obligation or expense indemnifiable or which may

from time to time be indemnifiable by law.

74.5 The Company may indemnify an Office Holder post-factum and may also

undertake in advance to indemnify an Office Holder, provided that: (1) an

undertaking in advance to indemnify an Office Holder with respect to the

matters specified in Article 74.4(1) above is limited to types of occurrences

which, in the opinion of the Board of Directors, in light of the Company’s

actual activities at the time of the undertaking, are foreseeable and to an

amount or to criteria the Board of Directors has determined to be reasonable in

the circumstances; and (2) in the undertaking in advance to indemnify an

Office Holder, the types of occurrences that the Board of Directors believes to

be foreseeable in light of the Company’s actual activities at the time the

undertaking to indemnify was given are mentioned, as is the amount or criteria

that the Board of Directors determined to be reasonable in the circumstances.

Exemption

74.6 The Company may, to the fullest extent permitted by law, exempt and release

an Office Holder of the Company, including in advance, from and against all

or part of his liability for monetary or other damages due to, or arising or

resulting from, of a breach of his duty of care to the Company. The directors

of the Company are released and exempt from all liability as aforesaid to the

fullest extent permitted by law with respect to any such breach, which has

been or may be committed.

74.7 The Company may, subject to the provisions of the Companies Law, procure

insurance for, indemnify and/or exempt and release 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.

74.8 The Company may, as aforesaid, indemnify, insure and exempt from liability

any Office Holder to the fullest extent permitted by applicable law.

Accordingly: (i) any amendment to the Companies Law, the Securities Law,

the Restrictive Trade Law or any other applicable law expanding the ability of

the Company to indemnify, insure or exempt from liability any Office Holder,

or expanding the right of any Office Holder to be indemnified, insured or

exempted from liability, beyond or in addition to the provisions of these

Articles, shall, to the fullest extent possible, automatically and immediately

apply to the Office Holders of the Company and be deemed as included in

these Articles to the fullest extent permitted by applicable law; and (ii) any

amendment to the Companies Law, the Securities Law, the Restrictive Trade

Law or any other applicable law adversely affecting the ability of the

Company to indemnify, insure or exempt from liability any Office Holder or

adversely affecting the right of any Office Holder to be indemnified, insured

or exempted from liability as provided for in these Articles shall have no effect

post factum and shall not affect the Company’s obligations or ability to

indemnify, insure or exempt from liability an Office Holder for any act (or

omission) carried out prior to such amendment, unless otherwise provided by

applicable law.

Documents

ADVANCED VISION TECHNOLOGY (A.V.T.) LTD. · 1 November 16, 2016 ADVANCED VISION TECHNOLOGY (A.V.T.) LTD. 6 Hanagar Street Hod Hasharon Israel NOTICE ANNUAL GENERAL MEETING OF SHAREHOLDERS