Federal Taxation in the United States. This clause summarizes the various tax implications of the revenue tax and the federal inheritance tax in the United States on property, the holding and sale of the proposed securities (“the (A Series) bonds”), including regular shares of the company (in the case of bond conversion), warrants for the purchase of regular shares of the company, and regular shares that were purchased when realizing warrants (together, “the proposed securities”). This clause is relevant only and if it is for “an Israeli holder” (as defined hereinafter), who holds the proposed securities as a capital asset for the purchase of tax in the United States. This clause does not constitute a complete description of all of the possible tax implications. This clause is based on the compilation of American tax laws of 1986, as it has been amended (“the compilation”), the legislative history of the compilation, existing or proposed regulations, the charter between the government of the United States and the government of Israel regarding taxation on income that was signed on the 20th day of November 1975, as it has been amended in the protocols dated 30th May 1980 and of the 26th January 1993 (“the charter”), the decisions of the tax authorities and the courts of law in the United States as they have been published, all of them as they are, and valid as of the date of signing this writ. These laws are subject to changes which might be made retroactively. For the purpose of this clause, “Israeli holder” is any holder (including an Israeli association and an individual Israeli resident for the purpose of tax in Israel) which is a resident of Israel for the purposes of the charter, entitled to benefits by power of the charter, is the beneficiary of the proposed securities unless he is one of the following: (a) a citizen or a resident of the United States; (b) a prior citizen or resident of the United States and subject to special rules in accordance with clause 877 of the compilation; (c) a corporation that has incorporated according to the laws of the United States or one of the states within the United States; (d) trusteeship that is subject both to supervision of the United States Court of Law, and also that all of the fundamental decisions therein are under American control, one or more, or that have been chosen in accordance with the Treasury regulations of the United States, to be American; or (e) inheritance, the revenue from which is subject to revenue tax in the United States withou...
