This is an unofficial translation of the 2006 Employees Directors and Officers Incentive Plan of Elbit
Imaging Ltd. from the Hebrew language. This translation is made for convenience purposes only and the
Hebrew version is the binding version of the Plan.

1

Introduction and Definitions

1.1

Any expression in this Plan referring to the singular shall also apply to the plural and vice versa and any expression referring to one gender shall also apply to the other gender, unless the context otherwise requires.

1.2

The terms specified below shall, in this Plan, have the meaning set out opposite them unless the context otherwise requires:

"Option" -

Non-negotiable Option, exercisable into Ordinary Shares of the

Company, all pursuant and subject to the provisions of this Plan;

The "Ordinance" and/or the

The Income Tax Ordinance [New Version], 5721-1961, as shall be

"Income Tax Ordinance" -

amended from time to time, including regulations and/or rules

and/or orders and/or any other directives issued and/or to be

issued by virtue thereof;

The "Company's Group" -

The Company and companies under its control, directly and/or

indirectly;

The "102 Section Rules" or

Income Tax Rules (Tax benefits in Stock Issuance to Employees)

the "Rules" -

5763-2003;

"Share" -

Ordinary Share of NIS 1 par value of the Company;

"Grantee" -

Within the meaning of this term in Section 102 of the Ordinance,

to whom Options were granted pursuant to the provisions of this

Plan;

The "Plan" or the "Incentive Plan"

This Plan as shall be amended from time to time;

The "Exercise Shares" -

As defined in section 11.1 below;

The "Stock Exchange" -

Tel Aviv Stock Exchange Ltd.;

"NASDAQ"

NASDAQ Global Select Market;

"Trading Day" -

A day on which trading takes place on the Stock Exchange;

2.

Capital Gain Tax Track

2.1

This Plan shall be subject to, interpreted in accordance with and comply with all the requirements of Section 102 of the Ordinance and any written approval of the Tax Authorities in Israel.

2.2

This Plans and the allocations thereunder shall be subject to the provisions of Section 102 of the Ordinance – Capital Gains Tax Track, as shall be in effect from time to time, and the rules by virtue thereof, and the Grantees shall be obligated to act pursuant to the provisions of the Ordinance and such rules.

2.3

The allocation of Options under this Plan shall be effected to an employee incentive trust company (hereinafter: the “ Trustee ”), as trustee for each Grantee, or any other trustee to be elected by the Company. The trust terms are specified in a trust agreement to be signed by and between the Company and the Trustee (hereinafter: the “ Trust Agreement ”), attached hereto as an appendix.

2.4

In order for the Grantee to pay the tax rates stipulated for the Capital Gains Tax Track, the Grantee may not transfer and/or sell the Exercise Shares in the Trustee’s possession up to the end of 24 months from the date of allocation of the Options to the Trustee for the Grantee, or any other term, which shall be approved by the Tax Authorities in Israel (hereinafter: the “Lock-Up Period” ).

2.5

In any event of distribution of bonus shares and/or in the event of offering of rights by virtue of the Options and/or the Exercise Shares (hereinafter: the “ Additional Rights ”), all the Additional Rights shall be allocated to the Trustee for the Grantees and shall be held by the Trustee up to the end of the Lock-Up Period of the Options in respect of which the rights were allocated and the terms of the tax track shall apply to such Additional Rights.

2.6

In the event that the Grantee transfers and/or sells the Exercise Shares in the possession of the Trustee prior to the end of the Lock-Up Period (hereinafter: the “ Violation ”), the Grantee shall pay all taxes required to be paid in the wake of committing the Violation, pursuant to the provisions of section 7 of the Rules, and shall indemnify the Company for any expense incurred by the Company due to such Violation, including payment of the employer’s contribution to the National Insurance Institute in the wake of the Violation.

2.7

To remove any doubts, the provisions of Section 102 of the Ordinance are intended to add to any other provision stipulated in this Plan and nothing in the provisions of section 102 of the Ordinance shall derogate from the provisions of this Plan, including provisions as to the Period of Consolidation of Entitlement, as defined in section 7 below and/or any other provisions limiting the Grantee’s option to exercise the Options or transfer the Shares from the possession of the Trustee.

3.

Number of Options to be Allocated under the Plan

The total number of Options to be allocated under this Plan shall be one million (2,000,000) non-negotiable Options of the Company, exercisable into Company Ordinary Shares of NIS 1 par value each, pursuant to the specification in this Plan below. The number of the Shares arising from the exercise of the Options shall be subject to the exercise formula and to adjustments as set out in sections 8.2 and 4 below.

4.

Adjustments

4.1

In the event that the Company distributes a cash dividend, the effective date for the distribution thereof, will take place after the date of the allocation of the Options to the Trustee for a Grantee, but before the exercise or expiry of the Options, the Exercise Price, as defined in section 6.4 below, shall be decreased in respect of each Option by the amount of the dividend per share, less the tax payable thereon.

4.2

In the event that the Company distributes bonus shares, the effective date for the distribution of which takes place after the date of the allocation of the Options to the Trustee for the Grantee, but before the exercise or expiry of the Options, the number of Shares to which the Grantee is entitled upon the exercise of the Options shall increase by the number of the Shares that the Grantee would have been entitled to as bonus shares, had he exercised the Options prior to the effective date for the distribution of the bonus shares. The Exercise Price of each Option shall not vary as a result of the increase in the number of Exercise Shares to which the Grantee is entitled in the wake of the distribution of bonus shares.

4.3

If rights to acquire any securities whatsoever are offered to Company shareholders by way of rights, the Company shall act with a view that the rights be offered under the same terms, mutatis mutandis , also to holders of the Options not yet exercised or expired, as though the holders of such Options have exercised their Options on the eve of the effective date for the right to participate in the said issuance of rights. The number of the Exercise Shares shall not increase as a result of the said issuance of rights.

4.4

In any event of division or consolidation of the Company’s share capital, or any other corporate capitalization event of a significantly similar nature, the Company shall effect such changes or adjustments as are required to prevent dilution or increase in a Grantee’s rights, pursuant to the Plan with respect to the number and class of the Exercise Shares in relation to the Options not yet exercised by the Grantee and/or the Exercise Price of each Option.

4.5

In any event of a merger, spin-off and/or any other structural change, Options which have been granted under this Plan, shall be replaced by, or converted to, an alternative option in the Company after such structural change, all at the absolute discretion of the Company’s Board of Directors.

5.

Management of the Plan

The Company’s Board of Directors has the absolute discretion to manage the Plan, adopt resolutions with respect to the Plan, interpret same and introduce changes therein, as it deems fit, including a change in the Exercise Price of all or any of the Options, all subject to the provisions of any law. The Company’s Board of Directors shall not be obligated to treat all Grantees in an equal manner.

6.

Allocation of Options

6.1

Any allocation of Options under the Plan shall only be implemented upon fulfillment of all the following conditions:

A.

The passage of 30 days from the date of submitting the application for approval of the Plan to the Tax Authorities in Israel, pursuant to the provisions of Section 102 of the Ordinance;

B.

Obtaining all the approvals required for allocation under the Plan at the authorized organs of the Company, pursuant to any law;

C.

Obtaining the Stock Exchange’s approval for the listing of the Exercise Shares for trading on the Stock Exchange;

D.

Filing an application with NASDAQ for listing the Exercise Shares for trading on the NASDAQ;

6.2

The Options allocation date shall be the date on which the Company allocated Options in the name of the Trustee for each Grantee, in accordance with the provisions of this Plan.

6.3

The Options to be allocated to the Trustees for the Grantees under this Plan, shall be allocated without consideration.

6.4

The Exercise Price for any Option to be allocated under this Plan shall be the average of the closing rates of the Company Share on the Stock Exchange during the 30 trading days preceding the Option allocation date (hereinafter: the “ Exercise Price ”).

6.5

The Options allocated under this Plan may not be transferred to any Grantee and/or third party whatsoever, other than transfer by virtue of a Last Will and Testament or under law and, in such an event, the provisions of Section 102 of the Ordinance and the Rules shall apply to the Grantee’s heirs and/or transferees.

7.

Entitlement Consolidation Period

7.1

Without derogating from any of the provisions hereunder, the entitlement of each Grantee to exercise the Options allocated to the Trustee on his behalf shall be consolidated on the following dates (hereinafter: “ Entitlement Consolidation Dates ”):

A.

The Grantee shall be entitled to exercise one third of the number of the Options allocated to the Trustee on his behalf, at the end of one year from the date of allocation of the Options to the Trustee for the Grantee.

B.

The Grantee shall be entitled to exercise another third of the number of the Options allocated to the Trustee on his behalf, at the end of two years from the date of allocation of