1. Subscription - Morgan Stanley · 3 to, withhold from my compensation the amount necessary to...

Table of content

1. Subscription

Agreement………………………………………………………2

2. Varonis Employee Stock Purchase Plan…………………15

3. Israel sub plan…………………………………………………23

4. S-8 prospectus.....…….………………………………………29

5. Varonis - EIS - ESPP – Canada……………………….…….45

6. Varonis - EIS - ESPP – France………………………………48

7. Varonis - EIS - ESPP – Germany……………………………51

8. Varonis - EIS – ESPP – Israel……………………….………54

9. Varonis - EIS - ESPP - United Kingdom…………..……….57

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VARONIS SYSTEMS, INC.

2015 EMPLOYEE STOCK PURCHASE PLAN

SUBSCRIPTION AGREEMENT

__x__ Original Application Offering Date: September 1, 2015

_____ Change in Payroll Deduction Rate

1. I hereby elect to participate in the Varonis Systems, Inc. 2015 Employee Stock

Purchase Plan (the “Plan”) and subscribe to purchase shares of the Company’s Stock in accordance

with this Subscription Agreement and the Plan. Capitalized terms used but not otherwise defined

herein shall have the meanings assigned to them in the Plan.

2. I hereby authorize payroll deductions from each paycheck in the amount of a specified

percentage of my Compensation which will be selected by myself via the Morgan Stanley

StockPlan Connect website and transmitted to the Company prior to each payday (from 1% to

15%) during the Offering Period in accordance with the Plan (Please note that no fractional

percentages are permitted) (the "Payroll Deductions"). I hereby confirm that neither I nor anyone

on my behalf will have any claim or demand of any kind whatsoever against the Company, its

subsidiaries or any of their affiliates connected to, or arising out of, the Payroll Deductions and/or

the Company's reliance on the information transmitted to it by the Morgan Stanley StockPlan

Connect website.

3. I understand that said payroll deductions will be accumulated for the purchase of shares

of Stock at the applicable Option Price determined in accordance with the Plan. I understand that

if I do not withdraw from an Offering Period, any accumulated payroll deductions will be used to

automatically exercise my option and purchase Stock under the Plan.

4. I understand that the Company may elect to terminate, suspend or modify the terms of

the Plan at any time. I agree to be bound by such termination, suspension or modification

regardless of whether notice is given to me of such event, subject in any case to my right to timely

withdraw from the Plan in accordance with the Plan withdrawal procedures then in effect.

5. I have received a copy of the complete Plan and its accompanying prospectus. I

understand that my participation in the Plan is in all respects subject to the terms of the Plan.

6. I understand that if I am a U.S. taxpayer and I dispose of any shares purchased under

the Plan within two (2) years of the Offering Date (the first trading day of the Offering Period

during which I purchased such shares) or one (1) year of the Exercise Date, I will be treated for

U.S. federal income tax purposes as having received ordinary income at the time of such

disposition in an amount equal to the excess of the fair market value of the shares at the time such

shares were purchased over the Option Price that I paid for the shares. I hereby agree to notify the

Company in writing within ten (10) days after the date of any disposition of my shares, and I will

make adequate provision for U.S. federal, state, foreign or other tax withholding obligations, if

any, which arise upon the disposition of the Stock. The Company may, but will not be obligated

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to, withhold from my compensation the amount necessary to meet any applicable withholding

obligation including any withholding necessary to make available to the Company any tax

deductions or benefits attributable to sale or early disposition of Stock by me. If I dispose of such

shares at any time after the expiration of the two-year and one-year holding periods, I understand

that I will be treated for U.S. federal income tax purposes as having received income only at the

time of such disposition, and that such income will be taxed as ordinary income only to the extent

of an amount equal to the lesser of (a) the excess of the fair market value of the shares at the time

of such disposition over the Option Price which I paid for the shares, or (b) 15% of the fair market

value of the shares on the first day of the Offering Period. The remainder of the gain, if any,

recognized on such disposition will be taxed as capital gain.

7. I acknowledge that, regardless of any action taken by the Company or, if different, my

employer (the “Employer”) with respect to any or all income tax, social security, payroll tax, fringe

benefit, or other tax-related items related to my participation in the Plan and legally applicable to

me (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains my

responsibility and may exceed the amount actually withheld by the Company or the Employer.

Furthermore, I acknowledge that the Company and/or the Employer (i) make no representations

or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect

of the options under the Plan, including the grant of such options, the purchase and sale of shares

of Stock acquired under the Plan and/or the receipt of any dividends on such shares, and (ii) do not

commit to and are under no obligation to structure the terms of the grant of options or any aspect

of my participation in the Plan to reduce or eliminate my liability for Tax-Related Items or achieve

any particular tax result. Further, if I am or become subject to Tax-Related Items in more than one

jurisdiction, I acknowledge that the Company and/or the Employer (or former employer, as

applicable) may be required to withhold or account for Tax-Related Items in more than one

jurisdiction.

8. Prior to the purchase of shares of Stock under the Plan or any other relevant taxable or

tax withholding event, as applicable, I agree to make adequate arrangements satisfactory to the

Company and/or the Employer to satisfy all Tax-Related Items. In this regard, I authorize the

Company and/or the Employer, or their respective agents, at their discretion, to satisfy any

withholding obligations with regard to all Tax-Related Items by one or a combination of the

following: (1) withholding from my Compensation or other amounts paid to me by the Company

and/or the Employer; or (2) withholding from proceeds of the sale of the shares of Stock purchased

under the Plan either through a voluntary sale or through a mandatory sale arranged by the

Company (on my behalf pursuant to this authorization). Depending on the withholding method,

the Company may withhold or account for Tax-Related Items by considering applicable maximum

rates, in which case I will receive a cash refund of any over-withheld amount not remitted to tax

authorities on my behalf and will have no entitlement to the Stock equivalent. Finally, I agree to

pay to the Company or the Employer any amount of Tax-Related Items that the Company or the

Employer may be required to withhold as a result of my participation in the Plan that cannot be

satisfied by the means previously described. The Company may refuse to purchase shares of Stock

under the Plan on my behalf and/or refuse to issue or deliver the shares or the proceeds of the sale

of shares if I fail to comply with my obligations in connection with the Tax-Related Items.

9. The Company may, in its sole discretion, decide to deliver any documents related to

current or future participation in the Plan by electronic means. I hereby consent to receive such

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documents by electronic delivery and agree to participate in the Plan through an on-line or

electronic system established and maintained by the Company or another third party designated

by the Company.

10. The Subscription Agreement is governed by the internal substantive laws but not the

choice of law rules of Delaware. Any and all disputes, controversies or issues arising out of,

concerning or relating to the option, this Subscription Agreement or the relationship between the

parties evidenced by this Subscription Agreement, including, without limitation, disputes,

controversies or issues arising out of, concerning or relating to the construction, interpretation,

breach or enforcement of this Subscription Agreement, shall be brought exclusively in the courts

in the State of New York, City and County of New York, including the Federal Courts located

therein (should Federal jurisdiction exist). Each of the parties hereby expressly represents and

agrees that it/he/she is subject to the personal jurisdiction of said courts, irrevocably consents to

the personal jurisdiction of such courts; and waives to the fullest extent permitted by law any

objection which it/he/she may now or hereafter have that the laying of the venue of any legal

lawsuit or proceeding related to such dispute, controversy or issue that is brought in any such court

is improper or that such lawsuit or proceeding has been brought in an inconvenient forum.

11. Notwithstanding any provision of this Subscription Agreement, I understand that if I

am working or resident in a country other than the United States, my participation in the Plan also

shall be subject to the additional terms and conditions for participants outside the U.S. set forth in

Appendix A attached hereto and any special terms and conditions for my country set forth in

Appendix B attached hereto. Further, I understand that if I relocate to one of the countries included

in Appendix B, the special terms and conditions for such country will apply to me to the extent the

Company determines that the application of such terms and conditions is necessary or advisable

for legal or administrative reasons. Appendix A and Appendix B constitute part of this

Subscription Agreement.

12. The provisions of this Subscription Agreement are severable and if any one or more

provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the

remaining provisions nevertheless shall be binding and enforceable.

13. I acknowledge that a waiver by the Company of breach of any provision of the

Subscription Agreement shall not operate or be construed as a waiver of any other provision of the

Subscription Agreement, or of any subsequent breach by me or any other participant.

14. The Company is not providing any tax, legal or financial advice, nor is the Company

making any recommendations regarding my participation in the Plan, or my acquisition or sale of

the underlying shares of Stock. I am hereby advised to consult with my own personal tax, legal

and financial advisors regarding my participation in the Plan before taking any action related to

the Plan.

15. I hereby agree to be bound by the terms of the Plan. The effectiveness of this

Subscription Agreement is dependent upon my eligibility to participate in the Plan.

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I UNDERSTAND THAT MY PARTICIPATION UNDER THE TERMS OF THIS SUBSCRIPTION AGREEMENT WILL

REMAIN IN EFFECT THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME OR IF I

CEASE TO BE AN EMPLOYEE.

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APPENDIX A



ADDITIONAL TERMS AND CONDITIONS FOR PARTICIPANTS OUTSIDE THE U.S.

Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the

Varonis Systems, Inc. 2015 Employee Stock Purchase Plan

1. Terms of Plan Participation for Participants Outside the U.S. I understand that this Appendix A contains additional terms and conditions that, together with the Plan and the Subscription Agreement, govern my participation in the Plan if I am working or resident in a country other than the United States. I further understand that my participation in the Plan also will be subject to any terms and conditions for my country set forth in Appendix B attached hereto.

2. Conversion of Payroll Deductions. I understand that if my payroll deductions under the Plan are made in any currency other than U.S. dollars, such payroll deductions will be converted to U.S. dollars on or prior to the Exercise Date using a prevailing exchange rate in effect at the time such conversion is performed, as determined by the Plan Administrator in its sole discretion. I understand and agree that neither the Employer nor the Company (nor any Subsidiary) will be liable for any foreign exchange rate fluctuation between my local currency and the U.S. dollar that may affect the amount of my contributions, the value of the options granted to me under the Plan or the value of any amounts due to me under the Plan, including the amount of proceeds due to me upon the sale of any shares of Stock acquired under the Plan.

3. Nature of Grant. By electing to participate in the Plan, I acknowledge, understand and agree that:

(a) the Plan is established voluntarily by the Company and it is discretionary in nature;

(b) all decisions with respect to future grants of options under the Plan, if any, will be at the sole discretion of the Company;

(c) the grant of options under the Plan shall not create a right to employment or be interpreted as forming an employment or service contract with the Company, the Employer, or any other Subsidiary and shall not interfere with the ability of the Company or the Employer, as applicable, to terminate my employment (if any);

(d) I am voluntarily participating in the Plan;

(e) the options granted under the Plan and the shares of Stock underlying such options, and the income and value of same, are not intended to replace any pension rights or compensation;

(f) the options granted under the Plan and the shares of Stock underlying such options, and the income and value of same, are not part of my normal or expected compensation for any purpose, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal,

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end-of-service payments, bonuses, long-service awards, pension or retirement benefits or similar payments;

(g) the future value of the shares of Stock underlying the options granted under the Plan is unknown, indeterminable and cannot be predicted with certainty;

(h) the shares of Stock that I acquire under the Plan may increase or decrease in value, even below the Option Price;

(i) no claim or entitlement to compensation or damages shall arise from the forfeiture of options granted to me under the Plan as a result of the termination of my status as an Employee (for any reason whatsoever, and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where I am employed or the terms of my employment agreement, if any) and, in consideration of the grant of options under the Plan to which I otherwise am not entitled, I irrevocably agree never to institute a claim against the Company, the Employer, or any other Subsidiary, waive my ability, if any, to bring such claim, and release the Company, the Employer, and any other Subsidiary from any such claim that may arise; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, I shall be deemed irrevocably to have agreed not to pursue such claim, and I agree to execute any and all documents necessary to request dismissal or withdrawal of such claim; and

(j) in the event of the termination of my status as an Employee (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where I am employed or the terms of my employment agreement, if any), my right to participate in the Plan and any options granted to me under the Plan, if any, will terminate effective as of the date that I no longer am actively employed by the Company or one of its Subsidiaries and, in any event, will not be extended by any notice period mandated under the employment laws in the jurisdiction in which I am employed or the terms of my employment agreement, if any (e.g., active employment would not include a period of “garden leave” or similar period pursuant to the employment laws in the jurisdiction in which I am employed or the terms of my employment agreement, if any); the Company shall have the exclusive discretion to determine when I no longer am actively employed for purposes of my participation in the Plan (including whether I still may be considered to be actively employed while on a leave of absence).

4. Data Privacy.

(a) I hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of my personal data as described in the Subscription Agreement and any other Plan materials (“Data”) by and among, as applicable, the Employer, the Company and its Subsidiaries for the exclusive purpose of implementing, administering and managing my participation in the Plan. I understand that Data may include certain personal information about me, including, but not limited to, my name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of Stock or directorships held in the Company, details of all options granted under the Plan or any other entitlement to shares of Stock awarded, canceled, exercised, vested, unvested or outstanding in my favor.

(b) I understand that Data will be transferred to such stock plan service provider as may be designated by the Company from time to time (the “Designated Broker”), which is assisting the Company with the implementation, administration and management of the Plan. I understand that the recipients of Data may be located in the United States or elsewhere, and that a recipient’s country of operation (e.g., the United States) may have different data privacy laws and protections than my country.

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I understand that I may request a list with the names and addresses of any potential recipients of Data by contacting my local human resources representative.

(c) I authorize the Company, the Designated Broker and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer Data, in electronic or other form, for the sole purpose of implementing, administering and managing my participation in the Plan. I understand that Data will be held only as long as is necessary to implement, administer and manage my participation in the Plan. I understand that I may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing my local human resources representative. Further, I understand that I am providing the consents herein on a purely voluntary basis. If I do not consent, or if I later seek to revoke my consent, my employment status or career with the Company or the Employer will not be affected; the only consequence of refusing or withdrawing my consent is that the Company would not be able to grant me options under the Plan or other equity awards, or administer or maintain such awards. Therefore, I understand that refusing or withdrawing my consent may affect my ability to participate in the Plan. For more information on the consequences of my refusal to consent or withdrawal of consent, I understand that I may contact my local human resources representative.

(d) Finally, upon request of the Company or the Employer, I agree to provide an executed data privacy consent form to the Company and/or the Employer (or any other agreements or consents that may be required by the Company and/or the Employer) that the Company and/or the Employer may deem necessary to obtain from me for the purpose of administering my participation in the Plan in compliance with the data privacy laws in my country, either now or in the future. I understand and agree that I will not be able to participate in the Plan if I fail to provide any such consent or agreement requested by the Company and/or the Employer.

5. Compliance with Law. Notwithstanding any other provision of the Plan or the Subscription Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the shares of Stock, the Company shall not be required to deliver any shares issuable upon purchase of shares under the Plan prior to the completion of any registration or qualification of the shares under any local, state, federal or foreign securities or exchange control law or under rulings or regulations of the U.S. Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any local, state, federal or foreign governmental agency, which registration, qualification or approval the Company shall, in its absolute discretion, deem necessary or advisable. I understand that the Company is under no obligation to register or qualify the shares of Stock with the SEC or any state or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the shares. Further, I agree that the Company shall have unilateral authority to amend the Plan and the Subscription Agreement without my consent to the extent necessary to comply with securities or other laws applicable to issuance of shares.

6. Language. If I have received the Subscription Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

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7. Insider Trading. By participating in the Plan, I agree to comply with the Company’s policy on insider trading (to the extent that it is applicable to me). Further, I acknowledge that my country of residence also may have laws or regulations governing insider trading and that such laws or regulations may impose additional restrictions on my ability to participate in the Plan (e.g., acquiring or selling shares of Stock) and that I am solely responsible for complying with such laws or regulations.

8. Imposition of Other Requirements. The Company reserves the right to impose other requirements on my participation in the Plan, on any shares of Stock purchased under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require me to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

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APPENDIX B



COUNTRY-SPECIFIC PROVISIONS FOR PARTICIPANTS OUTSIDE THE U.S.

Capitalized terms used but not otherwise defined herein shall have the meaning given to such terms in the


Terms and Conditions

I understand that this Appendix B includes additional terms and conditions that govern the options to

purchase shares of Stock granted to me under the Plan if I work or reside in one of the countries listed

below. If I am a citizen or resident of a country other than the one in which I currently am working (or if I

am considered as such for local law purposes), or if I transfer employment or residence to another country

after enrolling in the Plan, I acknowledge and agree that the Company, in its discretion, will determine the

extent to which the terms and conditions herein will be applicable to me.

Notifications

This Appendix B also includes information regarding securities laws, exchange controls and certain other

issues of which I should be aware with respect to my participation in the Plan. The information is based

on the securities, exchange control and other laws in effect in the respective countries as of June 2015.

Such laws are often complex and change frequently. As a result, the Company recommends that I do not

rely on the information in this Appendix B as the only source of information relating to the consequences

of my participation in the Plan because the information included herein may be out of date at the time

that I acquire shares of Stock under the Plan or subsequently sell such shares.

In addition, the information contained herein is general in nature and may not apply to my particular

situation and the Company is not in a position to assure me of any particular result. Accordingly, I am

advised to seek appropriate professional advice as to how the relevant laws in my country may apply to

my individual situation.

Finally, if I am a citizen or resident of a country other than the one in which I currently am working or

residing (or if I am considered as such for local law purposes), or if I transfer employment or residence to

another country after options have been granted to me under the Plan, the information contained herein

may not be applicable to me in the same manner.

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CANADA


Labor Law Acknowledgement. The following provisions replace the acknowledgement contained in

Section 3(j) of Appendix A to the Subscription Agreement:

In the event of termination of my status as an Employee (for any reason whatsoever, whether or not later

found to be invalid or in breach of employment laws in the jurisdiction where I am employed or the terms

of my employment agreement, if any), my right to participate in the Plan, if any, will terminate effective

as of the date that is the earlier of: (i) the date that I receive written notice of termination of my

employment from the Employer or (ii) the date that I am no longer actively employed by the Employer,

with such date being determined by the Company in its sole discretion, regardless of any notice period or

period of pay in lieu of such notice required under local law (including, but not limited to statutory law,

regulatory law and/or common law).

The following provisions will apply if I am a resident of Quebec:

Authorization to Release Necessary Personal Information. I hereby authorize the Company (including any

Subsidiary) and the Company’s representatives to discuss with and obtain all relevant information from

all personnel, professional or not, involved in the administration and operation of the Plan. I further

authorize the Company and any Subsidiary and the Company’s Designated Broker to disclose and discuss

the Plan with their advisors. I further authorize the Employer to record such information and to keep such

information in my employee file.

French Language Provision. I hereby provide my consent to receive Plan information in English through

my enrollment in the Plan. Specifically, I acknowledge as follows:

The parties acknowledge that it is their express wish that the Subscription Agreement, as well as all

documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating

directly or indirectly hereto, be drawn up in English.

Les parties reconnaissent avoir exigé la redaction en anglais de cette convention (“Subscription

Agreement”), ainsi que de tous documents exécutés, avis donnés et procedures judiciaries intentées,

directement ou indirectement, relativement à la présente convention.

Notifications

Securities Law Information. I understand that there may be securities law implications if I sell shares of Stock

acquired through the Plan through a broker other than a Designated Broker or the sale does not take place

through the facilities of a stock exchange outside Canada on which the shares of Stock are listed. The shares

of Stock are currently listed on the NASDAQ Global Select Market.

Foreign Asset/Account Reporting Information. Foreign property (including options granted under the Plan

and shares of Stock) held by Canadian residents must be reported annually on Form T1135 (Foreign

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Income Verification Statement) if the total value of such foreign property exceeds C$100,000 at any time

during the year. The form must be filed by April 30th of the following year.

FRANCE


Payroll Deduction Authorization.

Section 2 of the Subscription Agreement has been translated into French in order for you to expressly

authorize the payroll deductions under the Plan.

La Section 2 du Contrat d’Inscription a été traduite ci-dessous en français afin que vous puissiez autoriser

de manière expresse les prélèvements sur votre salaire dans le cadre du Plan d’Achat d’Actions.

I hereby authorize payroll deductions from each paycheck in the percentage entered in the first page of this Subscription Agreement in an amount from 0 to 15% of my Compensation on each payday during the Offering Period in accordance with the Plan. (Please note that no fractional percentages are permitted.)

Par la présente, j'autorise les prélèvements sur mon salaire sur chacune de mes fiches de paie d’un pourcentage qui figure sur la première page de ce contrat de souscription dont le montant est de 0 à 15% de mon Salaire et ce chaque jour de paie pendant la Periode d'Offre en vertu du Plan. (Veuillez noter que les pourcentages ne peuvent contenir des décimales).

Language Consent. By signing and returning or by otherwise accepting the Subscription Agreement, I

confirm having read and understood the documents relating to this grant of the right to purchase shares

of Stock (the Plan, the Subscription Agreement and this Appendix B) which were provided to me in the

English language, except with respect to the payroll deduction authorization above. I accept the terms of

those documents accordingly.

Consentement Relatif à la Langue Utilisée. En signant et renvoyant, ou autrement acceptant, les termes

et conditions du Contrat de Souscription, je confirme ainsi avoir lu et compris les documents relatifs à cette

attribution du droit d'achat d'Actions Cotées en Bourse (le Plan d’Achat d’Actions, le Contrat de

Souscription, et la présente Annexe B) qui m’ont été fournis dans la langue anglaise, sauf en ce qui

concerne l'autorisation de retenues salariales ci-dessus. J’accepte les termes de ces documents en

connaissance de cause.

Notifications

Foreign Asset / Account Reporting Information. If I maintain a foreign bank account, I am required to

report the account to the French tax authorities when filing my annual tax return. Failure to comply could

trigger significant penalties.

GERMANY

Notifications

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Exchange Control Information. I understand that cross-border payments in excess of €12,500 must be

reported monthly to the German Federal Bank (Bundesbank). In addition, in the unlikely event that I hold

shares of Stock exceeding 10% of the total capital of the Company, I must report my holdings in the

Company to the Bundesbank on an annual basis. All reports must be filed electronically using the “General

Statistics Reporting Portal” available via the Bundesbank’s website (www.bundesbank.de).

ISRAEL

Sub-Plan for Israeli Participants: I am aware that my participation in the Plan shall also be governed by

the Sub-Plan for Israeli Participants (the “Israeli Sub-Plan”), which is considered part of the Plan. The terms

used herein shall have the meaning ascribed to them in the Plan or Israeli Sub-Plan. In the event of any

conflict, whether explicit or implied, between the provision of this Subscription Agreement and the Israeli

Sub-Plan, the provisions set out in the Israeli Sub-Plan shall prevail.

I hereby confirm that the Payroll Deductions made pursuant to this Subscription Agreement are in

accordance sections 25(A) and 25(B) to the Wage Protection Law-1958.

Taxation and Trustee Arrangement: I understand that for Israeli tax purposes my participation in the Plan

and the Shares purchased under the Plan for my benefit are meant to be subject to the capital gains route

under section 102(c)(3) of the Ordinance subject to compliance with the requirements under Section 102

of the Ordinance and any rules or regulations thereunder, and further subject to compliance with the tax

ruling received by the Company and my employer regarding the taxation of the Plan in Israel on 3 August

2015 – the Tax Ruling. The option to purchase Shares under the Plan including the Shares purchased for

my benefit and/or any additional rights, including without limitation any right to receive any dividends or

any shares received as a result of an adjustment made under the Plan (the “Additional Rights”) shall be

issued to or controlled by the Trustee for my benefit under the provisions of the 102 Capital Gains Route

for at least the period stated in Section 102 of the Ordinance and the Income Tax Rules (Tax Benefits in

Share Issuance to Employees) 5763-2003 (the “Rules”). In the event that I or my Shares do not meet the

requirements of Section 102 of the Ordinance, my Shares shall not qualify for the favorable tax treatment

under the Capital Gains Route of Section 102 of the Ordinance. Any fees associated with my participation

in the Plan shall be borne by me and the Trustee and/or the Company and/or any Affiliate shall be entitled

to withhold or deduct such fees from payments otherwise due to/from the Company or an Affiliate or the

Trustee. In accordance with the requirements of Section 102 of the Ordinance and the Capital Gains

Route, I shall not sell nor transfer the Shares or Additional Rights from the Trustee until the end of the

required Holding Period. Notwithstanding the above, if any such sale or transfer occurs before the end of

the required Holding Period, I shall bear the sanctions under Section 102. Notwithstanding anything

mentioned in the Plan or this Subscription Agreement and in addition thereto, as long as the Shares issued

pursuant thereto are held or controlled by the Trustee on my behalf, all of my rights over the Shares are

personal, cannot be transferred, assigned, pledged or mortgaged, other than by will or laws of descent

and distribution.

I hereby agree, declare and acknowledge as follows: (i) I am familiar with Section 102 and the regulations

and rules promulgated thereunder, including without limitations the provisions of the applicable tax

route, and agrees to comply with such provisions, as amended from time to time, provided that if such

terms are not met, Section 102 may not apply; (ii) to the terms and conditions of the trust deed signed

between the Trustee and the Company and/or my employer, including but not limited to the control of

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the Shares by the Trustee; (iii) releasing the Shares from the control or holding of the Trustee prior to the

termination of the Holding Period constitutes a violation of the terms of Section 102 and agrees to bear

the relevant sanctions; (iv) authorize the Company and my employer to provide the Trustee with any

information required for the purpose of administering the Plan including executing its obligations under

the Ordinance, the trust deed and the trust agreement, including without limitation information about

my Shares, income tax rates, salary bank account, contact details and identification number; (v) I am a

resident of the State of Israel for tax purposes on the enrollment date and shall notify the Company upon

any change in the residence address indicated below; (vi) if I cease to be an Israeli resident or if my

engagement with the Company or Affiliate is terminated, the Shares shall remain subject to Section 102,

the trust agreement, the Plan, this Subscription Agreement and the Tax Ruling; and (vii) I have read the

Tax Ruling, I agree to the provisions of the Tax Ruling and I shall not ask to amend or alter its provisions.

Securities Law: I am aware that the Company has obtained an exemption from the requirement to file

and publish a prospectus in Israel regarding the Plan from the Israeli Securities Authority. Copies of the

Plan and the Form S-8 registration statement for the Plan filed with the U.S. Securities and Exchange

Commission will be made available by request from the Company’s Legal Department.

UNITED KINGDOM


Tax-Related Items. The following provisions supplement Sections 7 and 8 of Appendix A to the

Subscription Agreement:

If payment or withholding of any income tax liability arising in connection with my participation in the

Plan is not made by me to the Employer within ninety (90) days of the end of the U.K. tax year in which

the event giving rise to such income tax liability occurred or such other period specified in Section

222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), I understand and

agree that the amount of any uncollected income tax will constitute a loan owed by me to the Employer,

effective on the Due Date. I understand and agree that the loan will bear interest at the then-current

official rate of Her Majesty’s Revenue and Customs, it will be immediately due and repayable by me, and

the Company and/or the Employer may recover it at any time thereafter by any of the means referred to

in the Plan or Section 8 of Appendix A to the Subscription Agreement.

Notwithstanding the foregoing, I understand and agree that if I am a director or an executive officer of

the Company (within the meaning of such terms for purposes of Section 13(k) of the Exchange Act), I will

not be eligible for such a loan to cover the income tax liability. In the event that I am a director or executive

officer and the income tax is not collected from or paid by me by the Due Date, I understand that the

amount of any uncollected income tax may constitute an additional benefit to me on which additional

income tax and National Insurance contributions may be payable. I understand and agree that I will be

responsible for reporting and paying any income tax due on this additional benefit directly to Her

Majesty’s Revenue and Customs under the self-assessment regime and for reimbursing the Company or

the Employer (as appropriate) for the value of any National Insurance contributions due on this additional

benefit, which the Company or the Employer may recover from me by any of the means referred to in

Section 8 of Appendix A to the Subscription Agreement.

15



Section 1. Purpose of the Plan

The Varonis Systems, Inc. Employee Stock Purchase Plan is intended to

encourage employee participation in the ownership and economic progress of the Company

pursuant to a plan that is designed to qualify as an "employee stock purchase plan" within the

meaning of Section 423(b) of the Code.

Section 2. Definitions

Unless the context clearly indicates otherwise, the following terms have the

meaning set forth below:

(a) "Board of Directors" or "Board" shall mean the Board of Directors of the Company.

(b) "Code" shall mean the United States Internal Revenue Code of 1986, as amended from time to time, together with any applicable regulations issued thereunder.

(c) "Committee" shall mean the Board, or a committee designated by the Board to administer the Plan, which Committee shall administer the Plan as provided in Section 3 hereof.

(d) "Company" shall mean Varonis Systems, Inc. or any successor corporation.

(e) "Compensation" shall mean the fixed salary or base hourly wage paid by the Company or a Designated Subsidiary, as applicable, to an Employee as reported by the Company (or by a Designated Subsidiary) to the United States government (or other applicable government) for income tax purposes, including an Employee's portion of salary deferral contributions pursuant to Section 401(k) of the Code and any amount excludable pursuant to Section 125 of the Code, but excluding items such as commissions, bonuses, fees, overtime pay, severance pay, expenses, stock option or other equity incentive income, or other special emolument or any credit or benefit under any employee plan maintained by the Company.

(f) "Continuous Status as an Employee" means the absence of any interruption or termination of service as an Employee. Continuous Status as an Employee shall not be considered interrupted in the case of a leave of absence agreed to in writing by the Company (including, but not limited to, military or sick leave), provided that such leave is for a period of not more than 90 days or reemployment upon the expiration of such leave is guaranteed by contract or statute.

(g) "Designated Subsidiary" shall mean any Subsidiary of the Company that has been designated by the Committee to participate in the Plan.

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(h) "Employee" shall mean any employee of the Company or a Designated Subsidiary who is scheduled to work for the Company or such Designated Subsidiary, as the case may be, for a minimum of twenty hours per week.

(i) "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder.

(j) "Exercise Date" shall mean the last trading day of each Offering Period, unless otherwise determined by the Committee.

(k) "Fair Market Value" shall mean, with respect to a share of Stock, as of a date of determination, shall mean (1) the closing sales price per share of the Stock on the national securities exchange on which such Stock is principally traded on the relevant date, or (2) if the shares of Stock are not then listed on a national securities exchange or traded in an over-the-counter market or the value of such shares is not otherwise determinable, such value as determined by the Committee in good faith upon the advice of a qualified valuation expert.

(l) "Offering Date" shall mean the first trading day of each Offering Period, unless otherwise determined by the Committee.

(m) "Offering Period" or "Period" shall mean the Plan Half-Year beginning on an Offering Date and ending on the next succeeding Exercise Date, or such other period as determined by the Committee. As used herein, the term "Offering Period" shall refer to all Offering Periods under the Plan as the context requires.

(n) "Option Price" shall mean the purchase price of a share of Stock hereunder as provided in Section 7(a) hereof.

(o) "Participant" shall mean any Employee who (i) is eligible to participate in the Plan under Section 6(a) hereof and (ii) elects to participate in the Plan with respect to any Offering Period.

(p) "Plan" shall mean the Varonis Systems, Inc. 2015 Employee Stock Purchase Plan, as the same may be amended from time to time.

(q) "Plan Account" or "Account" shall mean an account established and maintained in the name of each Participant.

(r) "Plan Administrator" shall mean any Employee or Employees or a third party qualified to act as the Plan Administrator appointed pursuant to Section 3 hereof.

(s) "Plan Half-Year" shall mean each six (6) month period during the term of the Plan, commencing on June 30, 2015.

(t) "Stock" means the common stock, par value $0.001 per share, of the Company.

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(u) "Subsidiary" shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the time of granting an option, each of the corporations other than the last corporation in the unbroken chain owns shares possessing fifty percent (50%) or more of the total combined voting power of all classes of shares in one of the other corporations in such chain.

Section 3. Administration of Plan

Subject to oversight by the Board of Directors, the Committee shall have the sole

authority and complete discretion to administer the Plan and to make and adopt rules and

regulations not inconsistent with the provisions of the Plan or the Code. Further, the Committee

shall have the sole authority to prescribe, amend and rescind rules and regulations relating to

sub-plans established for the purpose of satisfying applicable foreign laws or for qualifying for

favorable tax treatment under applicable foreign laws, which rules and regulations may be set

forth in an appendix or appendixes to the Plan. Its interpretations and decisions in respect of the

Plan shall, subject to the aforesaid, be final and conclusive. The Committee shall have the

authority to appoint a Plan Administrator and to delegate to the Plan Administrator such

authority with respect to the administration of the Plan as the Committee, in its sole discretion,

deems advisable from time to time.

Section 4. Effective Date of the Plan

The Plan shall become effective on June 30, 2015, subject to the approval of the

Company's stockholders.

Section 5. Term of the Plan

The Plan shall continue in effect until the earlier of (i) the date when no shares of

Stock are available for issuance under the Plan (at which time the Plan shall be suspended as set

forth in Section 8(c)), or (ii) the tenth anniversary of the Effective Date, unless terminated prior

thereto by the Board of Directors or the Compensation Committee of the Board, each of which

shall have the right to terminate the Plan at any time. Upon any such termination, the balance, if

any, in each Participant's Account shall be refunded to him, or otherwise disposed of in

accordance with the policies and procedures prescribed by the Committee in cases where such a

refund is not possible.

Section 6. Participation

(a) Eligibility. Participation in the Plan is limited to Employees who also meet the requirements of this Section 6(a). Each Employee may become a Participant by completing the enrollment procedures prescribed by, or on behalf of, the Plan Administrator, as revised from time to time. An Employee may enroll upon the commencement of employment or prior to the Offering Date of the next Plan Half-Year during the term of the Plan. For new Employees, such enrollment shall be effective for the next Offering Period, subject to such administrative rules as the Committee or Plan Administrator may establish. Notwithstanding any provisions of the Plan to the contrary, no Employee shall be granted an option to purchase Stock under the

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Plan if, immediately after the grant, such Employee (or any other person whose shares would be attributed to such Employee pursuant to Section 424(d) of the Code) would own shares and/or hold outstanding options to purchase shares possessing five percent (5%) or more of the total combined voting power or value of all classes of shares of the Company or of any Subsidiary or parent of the Company. Any amounts received from an Employee which cannot be used to purchase Stock as a result of this limitation will be returned as soon as practicable to the Employee without interest.

(b) Payroll Deductions. Payment for shares of Stock purchased hereunder shall be made by authorized payroll deductions from each payment of Compensation in accordance with instructions received from a Participant. Such deductions shall be expressed as a whole number percentage which shall not be more than fifteen percent (15%) of the Participant's Compensation as in effect at the start of such Offering Period. A Participant may not increase the deduction during an Offering Period. However, a Participant may change the percentage deduction for any subsequent Offering Period by filing notice thereof with the Company prior to the Offering Date on which such Period commences. Employee contributions are accumulated during the Offering Period and used to purchase shares on the Exercise Date. During an Offering Period, a Participant may decrease the percentage deduction in effect for the remainder of such Offering Period (subject to such administrative rules as the Committee or Plan Administrator may establish), withdraw entirely from participation or discontinue payroll deductions but have the payroll deductions previously made during that Offering Period remain in the Participant's Account to purchase Stock on the next Exercise Date, provided that he or she is an Employee as of that Exercise Date. Any amount remaining in the Participant's Account after the purchase of Stock may be refunded without interest upon the written request of the Participant. Any Participant who discontinues payroll deductions during an Offering Period may again become a Participant for a subsequent Offering Period upon completion of the enrollment procedures prescribed by, or on behalf of, the Plan Administrator, as revised from time to time. Amounts deducted from a Participant's Compensation pursuant to this Section 6(b) shall be credited to such Participant's Account.

(c) Account Statements. An individual Plan Account will be maintained for each Participant. Account statements will be given to Participants as soon as practicable following each Offering Period, which statements will set forth the amounts of payroll deductions, the per share Option Price, the number of shares of Stock purchased, the aggregate number of shares in the Participant's Account following the purchase and the remaining cash balance, if any.

Section 7. Purchase of Shares

(a) Option Price. The Option Price per share of the Stock sold to Participants hereunder shall be not less than 85% of the Fair Market Value of such share (the "Discounted

Fair Market Value") on the Exercise Date of the applicable Offering Period, and in no event shall the Option Price per share be less than the par value of the Stock. No Offering Period may exceed five years from the Offering Date. Notwithstanding the foregoing, the Committee may

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determine prior to the commencement of an Offering Period that the Option Price per share of the Stock sold to Participants hereunder in such Offering Period shall be the lesser of the Discounted Fair Market Value of such share on (A) the Exercise Date of the applicable Offering Period or (B) the Offering Date for such Offering Period, but in no event shall the Option Price per share be less than the par value of the Stock; provided that, in such case, the Offering Period may not exceed twenty-seven months from the Offering Date.

(b) Purchase of Shares. On each Exercise Date, the amount in a Participant's Account shall be charged with the aggregate Option Price of the largest number of shares of Stock which can be purchased with such amount, including fractional shares, if so authorized by the Committee, and such shares will be purchased by the Participant hereunder. The balance, if any, in such Account following the purchase shall be carried forward to the next succeeding Offering Period.

(c) Limitations on Purchase. Notwithstanding any provisions of the Plan to the contrary, no Participant shall be granted an option under the Plan which permits such Participant's right to purchase shares of Stock under all employee stock purchase plans (as described in Section 423 of the Code) of the Company and any Subsidiary to accrue at a rate which exceeds twenty-five thousand dollars ($25,000) of the Fair Market Value of such shares of Stock (determined as of the first date of the Offering Period) for any calendar year in which such option would be outstanding at any time. Any amounts received from a Participant which cannot be used to purchase Shares as a result of this limitation will be returned as soon as possible to the Participant without interest.

To the extent necessary to comply with Section 423(b)(8) of the Code and the

limitations on purchase in this Section 7(c), a Participant's payroll deductions may be decreased

to 0% during any Offering Period which is scheduled to end during any calendar year, such that

the aggregate of all payroll deductions accumulated with respect to such Offering Period and any

other Offering Period ending within the same calendar year does not exceed the twenty-five

thousand dollar ($25,000) limit described above. Payroll deductions shall re-commence at the

rate provided for by the Participant's prior election at the beginning of the first Offering Period

which is scheduled to end in the following calendar year, unless suspended by the Participant

pursuant to Section 6(b) of the Plan.

(d) Transferability of Rights. Neither payroll deductions credited to a Participant’s Account nor any rights with regard to the exercise of an option or to receive shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way by the Participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds in accordance with Section 9(a).

Section 8. Shares Reserved for Issuance Under the Plan

(a) Shares Reserved; Delivery of Stock. Subject to Section 8(b), the number of shares of Stock that are initially reserved and available for issuance pursuant to purchases by

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Participants under the Plan shall be equal to five hundred thousand (500,000) shares of Stock. The number of shares available for issuance under the Plan shall be increased on January 1, 2016, and on each January thereafter, by an amount equal to the lesser of (i) one percent (1%) of the number of shares of Stock issued and outstanding on each December 31 immediately prior to the date of increase, except that the amount of each such increase will be limited to the number of shares of Stock necessary to bring the total number of shares of Stock available for issuance under the Plan to two percent (2%) of the number of shares of Stock issued and outstanding on each such December 31 or (ii) 400,000 shares of Stock. Notwithstanding the foregoing, the Board or the Compensation Committee of the Board may act prior to any January 1 to provide that there shall be no increase in the share reserve for such calendar year or that the increase in the share reserve for such calendar year shall be a lesser number of shares of Stock than would otherwise occur pursuant to the preceding sentence.

(b) Equitable Adjustments. In the event that adjustments are made in the number of outstanding shares of Stock or such shares are exchanged for a different class of stock of the Company or for shares of stock of any other corporation by reason of merger, consolidation, stock dividend, stock split or otherwise or there occurs such other event involving the Company which in the discretion of the Committee requires adjustment hereunder, the Committee may make appropriate adjustments in (i) the number and class of shares or other securities that may be reserved for purchase, or purchased, hereunder, and (ii) the Option Price, provided that in no event shall the Option Price be reduced to an amount that is lower than the par value of a share. All such adjustments shall be made in the sole discretion of the Committee, and its decision shall be binding and conclusive.

(c) Insufficient Shares. If the aggregate funds available for the purchase of Stock on any Exercise Date would cause an issuance of shares in excess of the number provided for in Section 8(a) hereof, (i) the Committee shall proportionately reduce the number of shares which would otherwise be purchased by each Participant in order to eliminate such excess and (ii) the Plan shall automatically be suspended immediately after such Exercise Date until such time when additional shares of Stock may be added to the Plan.

(d) Confirmation. Confirmation of each purchase of Stock hereunder shall be made available to the Participant in either written or electronic format as provided by Section 6(c). A record of purchases shall be maintained by appropriate entries on the books of the Company or Plan Administrator.

(e) Rights as Stockholders. The shares of Stock purchased by a Participant on an Exercise Date shall, for all purposes, be deemed to have been issued and sold as of the close of business on such Exercise Date. Prior to that time, none of the rights or privileges of a stockholder of the Company shall exist with respect to such shares.

Section 9. Termination of Participation

(a) Voluntary Withdrawal. A Participant may withdraw from the Plan at any time by filing notice of withdrawal prior to the close of business on the business day

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immediately prior to an Exercise Date. Upon withdrawal, the entire amount, if any, in a Participant's Account shall be refunded to him without interest. Any Participant who withdraws from the Plan may again become a Participant in accordance with Section 6(a).

(b) Termination of Eligibility. If a Participant ceases to be eligible under Section 6(a) hereof for any reason, the dollar amount in such Participant's Account will be refunded or distributed to the Participant. Upon termination of a Participant's Continuous Status as an Employee during the Offering Period for any reason, including involuntary or voluntary termination, retirement or death, the payroll deductions credited to such Participant's account (that have not been used to purchase shares of Common Stock) will be returned to such Participant or, in the case of such Participant's death, the Participant's designated beneficiary on file or estate, or otherwise disposed of in accordance with policies and procedures prescribed by the Committee in cases where such a refund or distribution may not be possible.

Section 10. General Provisions

(a) Notices. Any notice which a Participant files pursuant to the Plan shall be made on forms prescribed by the Committee and shall be effective only when received by the Company.

(b) No Right to Employment. Neither the creation of the Plan nor participation therein shall be deemed to create any right of continued employment or in any way affect the right of the Company or a Designated Subsidiary to terminate the employment of an Employee.

(c) Tax Matters; Interpretation. If a Participant makes a disposition, within the meaning of Section 424(c) of the Code and regulations promulgated thereunder, of any share of Stock issued to such Participant hereunder, and such disposition occurs within the two-year period commencing on the day of the Offering Date or within the one-year period commencing on the day of the Exercise Date, such Participant shall, within ten (10) days of such disposition, notify the Company thereof and, thereafter, immediately deliver to the Company any amount of Federal, state or local income taxes and other amounts which the Company informs the Participant the Company is required to withhold.

The Plan is intended to comply with Section 423 of the Code and Rule 16b-3

under the Exchange Act, and the Committee shall interpret and administer the provisions of the

Plan in a manner consistent therewith. Any provisions inconsistent with such Rule shall be

inoperative and shall not affect the validity of the Plan.

(d) Amendment of the Plan. The Board of Directors or the Compensation Committee of the Board may at any time, or from time to time, amend the Plan in any respect, except that, without approval of the stockholders, no amendment may increase the aggregate number of shares reserved under the Plan other than as provided in Section 4.2 hereof, materially increase the benefits accruing to Participants or materially modify the requirements as to eligibility for participation in the Plan. Any amendment of the Plan must be made in

22

accordance with applicable provisions of the Code and/or any regulations issued thereunder, any other applicable law or regulations, and the requirements of the principal exchange upon which the Stock is listed. Without limiting the foregoing, the Board or the Compensation Committee of the Board may, at any time, terminate the Plan and refund (without interest) amounts in Participant's Accounts or shorten any ongoing or future Offering Period.

(e) Application of Funds. All funds received by the Company by reason of purchases of Stock hereunder may be used for any corporate purpose.

(f) Conditions on Issuance. The Company shall not be obligated to sell shares of Stock hereunder if the Company determines that such sale would violate any applicable law or regulation. Furthermore, the Company shall not be obliged to issue or deliver any shares until all legal and regulatory requirements associated with such issue or delivery have been complied with to the satisfaction of the Committee. In addition, notwithstanding any provision of the Plan to the contrary, the Committee may establish such special rules as the Committee determines are necessary to comply with the laws of a foreign jurisdiction with respect to citizens or residents of such foreign jurisdiction, provided that any such special rules shall comply with the requirements of Section 423 of the Code and the regulations and guidance promulgated thereunder.

(g) Governing Law. The Plan and all rights and obligations thereunder shall be constructed and enforced in accordance with the laws of the State of Delaware and any applicable provisions of the Code and the related regulations.

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2015 EMPLOYEE STOCK PURCHASE PLAN – ISRAELI SUBPLAN

1. GENERAL 1.1 This Sub-Plan (the “Sub-Plan”) is adopted pursuant to the authority under Section 3 of

the Varonis Systems, Inc. 2015 Employee Stock Purchase Plan (the "Plan") and shall be

an integral part thereof. This Sub-Plan shall apply only to Participants who are residents

of the State of Israel upon the Exercise Date, or those who are deemed to be residents

of the State of Israel for tax purposes upon the Exercise Date (collectively, “Israeli

Participants”).

1.2 This Sub-Plan is to be read as a continuation of the Plan and includes additional

conditions which will apply to Israeli Participants participating in the Plan, only to the

extent necessary to comply with the requirements set by the Israeli law in general, and

in particular, with the provisions of the Israeli Income Tax Ordinance [New Version] 1961,

as may be amended or replaced from time to time and in order to comply with any

approval or ruling received by the Company or any Subsidiary in relation thereof. This

Sub-Plan does not apply to or modify the Plan in respect of any other category of

Participants.

1.3 The Plan and this Sub-Plan are complementary to each other and shall be deemed as one.

In the event of any conflict, whether explicit or implied, between the provisions of this

Sub-Plan and the Plan, the provisions set out in this Sub-Plan shall prevail.

1.4 Any capitalized term not specifically defined in this Sub-Plan shall be construed according

to the interpretation given to it in the Plan.

2. DEFINITIONS 2.1 “102 Stock Purchase Right” means the option to purchase Stock under the Plan, granted

to an Approved Israeli Participant pursuant to Section 102.

2.2 “Approved Israeli Participant” means an Israeli Participant who is an employee, director

or officer of an Employing Company, excluding any Controlling Stockholder.

2.3 “Capital Gain Stock Purchase Right” means a Trustee 102 Stock Purchase Right elected

and designated by the Company to qualify under the capital gain tax treatment in

accordance with the provisions of Section 102(b)(2).

2.4 "Control" as such term is defined in Section 32(9) of the Ordinance.

2.5 “Controlling Stockholder” shall mean a stockholder of the Company who has Control of

the Company.

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2.6 “Employing Company” means corporate entities who are related to the Company by way

of common ownership or control, as such term is defined in section 32(9) of the

Ordinance, either directly or indirectly, either partially or entirely, including, but not

limited to, any “employing company” and "employer" as defined in Section 102(a) of the

Ordinance.

2.7 “ITA” means the Israeli Tax Authority.

2.8 “Non-Trustee 102 Stock Purchase Right” means a 102 Stock Purchase Right granted

pursuant to Section 102(c) and not held in trust by, or under the control or supervision

of, a Trustee.

2.9 “Ordinance” means the Israeli Income Tax Ordinance [New Version] 1961 as now in

effect or as hereafter amended.

2.10 “Ordinary Income Stock Purchase Right” means a Trustee 102 Stock Purchase Right

elected and designated by the Company to qualify under the ordinary income tax

treatment in accordance with the provisions of Section 102(b)(1).

2.11 “Section 102” means section 102 of the Ordinance and any regulations, rules, orders or

procedures promulgated thereunder as now in effect or as hereafter amended.

2.12 “Tax” means any applicable tax and other compulsory payments such as social security

and health tax contributions under any applicable law.

2.13 “Trustee” means any person or entity appointed by the Company or any Employing

Company to serve as a trustee and approved by the ITA, all in accordance with the

provisions of Section 102(a).

2.14 “Trustee 102 Stock Purchase Right” means a 102 Stock Purchase Right granted pursuant

to Section 102(b) and held in trust by, or under the control or supervision of, a Trustee,

for the benefit of an Approved Israeli Participant.

2.15 “Unapproved Israeli Participant” means an Israeli Participant who is a Controlling

Stockholder.

3. GRANT OF OPTIONS TO PURCHASE STOCK 3.1 The persons eligible for participation in the Plan as Israeli Participants shall include only

Approved Israeli Participants.

3.2 The Company may designate 102 Stock Purchase Rights granted to Approved Israeli

Participants pursuant to Section 102 as Trustee 102 Stock Purchase Rights or Non-Trustee

102 Stock Purchase Rights.

3.3 The grant of Trustee 102 Stock Purchase Rights shall not be made under this Sub-Plan

until 30 days from the date the Plan has been submitted for approval by the ITA and shall

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be conditioned upon the approval of the Plan and the Sub-Plan by the ITA. Upon such

submission the Company shall elect whether the Trustee 102 Stock Purchase Rights shall

be classified as Capital Gain Stock Purchase Rights or Ordinary Income Stock Purchase

Rights (the “Election”). Such Election shall become effective beginning the first date of

grant of a Trustee 102 Stock Purchase Right under the Plan and this Sub-Plan and shall

remain in effect at least until the end of the year following the year during which the

Company first granted Trustee 102 Stock Purchase Rights. The Election shall obligate the

Company to grant only the type of Trustee 102 Stock Purchase Right it has elected and

shall apply to all Israeli Participants who are granted Trustee 102 Stock Purchase Rights

during the period indicated herein, all in accordance with the provisions of Section

102(g). The Election shall not prevent the Company from granting Non-Trustee 102 Stock

Purchase Rights simultaneously.

3.4 Any Trustee 102 Stock Purchase Rights shall be subject to any tax ruling received by the

Company or any Employing Company in relation to the Plan ("Tax Ruling").

3.5 The designation of Non-Trustee 102 Stock Purchase Rights and Trustee 102 Stock

Purchase Rights shall be subject to the terms and conditions set forth in Section 102 and

the Tax Ruling.

4. TRUSTEE 4.1 Trustee 102 Stock Purchase Rights which shall be granted under this Sub-Plan and/or any

Stock allocated or issued in relation to such Trustee 102 Stock Purchase Right, including

following any realization of rights under the Plan, shall be allocated or issued to the

Trustee or controlled by the Trustee (subject to the receipt of a tax ruling), for the benefit

of the Approved Israeli Participants, in accordance with the provisions of Section 102 and

the Tax Ruling. In the event that the requirements for Trustee 102 Stock Purchase Rights

are not met, the Trustee 102 Stock Purchase Rights may be regarded as Non-Trustee 102

Stock Purchase Rights, all in accordance with the provisions of Section 102.

4.2 With respect to any Trustee 102 Stock Purchase Right, subject to the provisions of Section

102, an Approved Israeli Participant shall not sell or release from trust any Stock received

in relation to the Trustee 102 Stock Purchase Right including following any realization of

rights or stock dividends, until the lapse of the period of time required under Section 102

or any other period of time determined by the ITA in the Tax Ruling (the “Holding

Period”). Unless otherwise determined in the Tax Ruling, the Holding Period shall

commence on each Exercise Date in relation to the Stock purchased on such date for the

Approved Israeli Participant. Notwithstanding the above, if any such sale or release

occurs during the Holding Period, the sanctions under Section 102 shall apply to and shall

be borne by such Approved Israeli Participant.

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4.3 The Plan Account or the Account shall be in the name of the Trustee for the benefit of

the Approved Israeli Participant or shall be controlled by the Trustee, subject to the

receipt of a tax ruling.

4.4 Notwithstanding anything to the contrary, the Trustee shall not release or sell any Stock

allocated or issued in relation to the Trustee 102 Stock Purchase Right unless the

Company, the Employing Company and the Trustee are satisfied that the full amounts of

Tax due have been paid or will be paid.

4.5 Upon receipt of any Trustee 102 Stock Purchase Right, the Approved Israeli Participant

will consent to the grant of the Trustee 102 Stock Purchase Right and to the Election

under Section 102 and undertake to comply with the terms of Section 102, the trust

arrangement between the Company and the Trustee and the Tax Ruling.

4.6 Should the Trustee 102 Stock Purchase Rights or any Stock issued in connection with such

Trustee 102 Stock Purchase Rights be transferred by power of a last will or under laws of

decent, the provisions of Section 102 shall apply to the heirs or transferees of the

deceased Israeli Participant.

5. ASSIGNABILITY, DESIGNATION AND SALE 5.1. Notwithstanding any other provision of the Plan, no Trustee 102 Stock Purchase Right or

any right with respect thereto, or purchasable hereunder, whether fully paid or not, shall

be assignable, transferable or given as collateral, or given to any third party whatsoever,

and during the lifetime of the Israeli Participant, each and all of such Israeli Participant’s

rights with respect to a Trustee 102 Stock Purchase Right shall belong only to the Israeli

Participant. Any such action made directly or indirectly, for an immediate or future

validation, shall be void.

5.2 As long as Trustee 102 Stock Purchase Rights or Stock purchased hereunder are held by

the Trustee on behalf of the Israeli Participant, all rights of the Israeli Participant over the

Stock cannot be transferred, assigned, pledged or mortgaged, other than by will or laws

of descent and distribution.

6. INTEGRATION OF SECTION 102 AND TAX ASSESSING OFFICER’S

APPROVAL 6.1. With regard to Trustee 102 Stock Purchase Rights, the provisions of the Plan and/or the

Sub-Plan shall be subject to the provisions of Section 102, the Tax Ruling and any approval

issued by the ITA and the said provisions shall be deemed an integral part of the Plan and

the Sub-Plan.

6.2. Any provision of Section 102 and/or said approval issued by the ITA which must be

complied with in order to receive and/or to maintain any tax benefit pursuant to Section

102, which is not expressly specified in the Plan or the Sub-Plan shall be considered

binding upon the Company, the Employing Company and the Israeli Participants.

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7. DIVIDEND Subject to the provisions of the Plan, with respect to all Stock allocated or issued to the Israeli

Participant and held by the Israeli Participant or by the Trustee, as the case may be, the Israeli

Participant shall be entitled to receive dividends, if any, in accordance with the quantity of Stock,

subject to the provisions of the Company’s Amended and Restated Certificate of Incorporation

(and all amendments thereto) and subject to any applicable taxation on distribution of dividends,

and when applicable subject to the provisions of Section 102 and the Tax Ruling.

8. TAX CONSEQUENCES

8.1 Any tax consequences arising from the grant of any option to purchase Stock, from the

purchase of Stock, from the sale of Stock purchased or received otherwise or from any

other event or act (of the Company and/or the Employing Company and/or the Trustee

and/or the Israeli Participant) shall be borne solely by the Israeli Participant. The

Company and/or the Employing Company and/or the Trustee shall withhold Tax

according to the requirements under the applicable laws, rules and regulations, including

withholding taxes at source. Furthermore, the Israeli Participant agrees to indemnify the

Company and/or the Employing Company and/or the Trustee and hold them harmless

against and from any and all liability for any such Tax or interest or penalty thereon,

including, without limitation, liabilities relating to the necessity to withhold, or to have

withheld, any such Tax from any payment made to the Israeli Participant.

8.2 The Company and/or, when applicable, the Trustee shall not be required to release any

Stock to an Israeli Participant until all required Tax payments have been fully made.

8.3 With respect to Non-Trustee 102 Stock Purchase Rights, in case of termination of

employment, or otherwise if so requested by the Company or the Employing Company,

the Israeli Participant shall extend to the Company and/or the Employing Company a

security or guarantee for the payment of Tax due at the time of sale of Stock, in

accordance with the provisions of Section 102.

8.4 For avoidance of doubt, it is clarified that the tax treatment of any option to purchase

Stock granted under the Plan is not guaranteed, and, although the Company may intend

to grant the options under a certain tax route, they may become subject to a different tax

route in the future.

8.5 Section 409A of the United States Internal Revenue Code and the guidance thereunder

governs nonqualified deferred compensation arrangements. If an Israeli Participant is

subject to U.S. taxation and Section 409A of the United States Internal Revenue Code is

not satisfied, such Israeli Participant will incur adverse tax consequences, including

interest and penalties.

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Despite Section 1.3 above, notwithstanding anything in this Sub-Plan to the contrary, the

Plan will be administered, in a manner that is consistent with the Company’s good faith

interpretation of Section 409A of the United States Internal Revenue Code and the

guidance thereunder. None of the Company, any Designated Subsidiary, the

Administrator nor any of their agents shall have any liability to any Participant or

beneficiary as a result of any tax, interest, penalty or other payment required to be paid

or due pursuant to, or because of a violation of, Section 409A of the United States

Internal Revenue Code.

9. ONE TIME BENEFIT, NOT A SALARY COMPONENT The option to purchase Stock granted under the Plan are extraordinary, one-time benefits granted

to the Israeli Participants and are not and shall not be deemed a salary component for any purpose

whatsoever, including, without limitation, in connection with calculating severance compensation

under any applicable law.

10. TERM OF PLAN AND SUB-PLAN Notwithstanding anything to the contrary in the Plan and in addition thereto, the Company shall

obtain all approvals for the adoption of this Sub-Plan or for any amendment to this Sub-Plan as

are necessary to comply with (i) any applicable law, including, without limitation, U.S. securities

laws and the securities laws of any other jurisdiction applicable to options granted to Israeli

Participants under the Plan and this Sub-Plan, (ii) any national securities exchange on which the

Stock is traded, and (iii) any applicable rules and regulations promulgated by the U.S. Securities

and Exchange Commission.

11. GOVERNING LAW This Sub-Plan shall be governed by, and construed and enforced in accordance with, the laws of

the State of Israel, without giving effect to the principles of conflict of laws.

29

Prospectus

Varonis Systems, Inc.

__________________


__________________

This prospectus relates to the offering by Varonis Systems, Inc., a Delaware corporation (“Varonis,” the

“Company,” “we” or “us”), of a maximum of 500,000 shares of its common stock (subject to certain adjustments as

set forth below), par value $0.001 per share, to employees of the Company and its subsidiaries who are eligible to

participate in the Varonis Systems, Inc. 2015 Employee Stock Purchase Plan (the “Plan”).

Awards under the Plan will be in the form of options to purchase shares of common stock of the Company,

as further described in this prospectus.

This prospectus may not be used for reoffers or resales of shares of common stock acquired pursuant to the

Plan by persons who are affiliates of the Varonis within the meaning of Rule 405 under the U.S. Securities Act of

1933, as amended (the “Securities Act”). Under existing laws and regulations, any such reoffers or resales by affiliates

must be made (i) pursuant to Rule 144 under the Securities Act, (ii) pursuant to an exemption from the registration

requirements of the Securities Act or (iii) by means of a separate prospectus relating to a registration statement that

has been declared effective under the Securities Act.

The Company’s principal executive offices are located at 1250 Broadway, 29th Floor, New York, New York

10001, and its telephone number at that address is (877) 292-8767. __________________

THIS DOCUMENT CONSTITUTES A PROSPECTUS COVERING

SECURITIES THAT HAVE BEEN REGISTERED UNDER

THE U.S. SECURITIES ACT OF 1933. __________________

NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION

NOR ANY FOREIGN OR STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED

OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS

PROSPECTUS.

ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this prospectus is July 9, 2015.

30

TABLE OF CONTENTS

ABOUT THIS PROSPECTUS 31

GENERAL INFORMATION ABOUT THE PLAN 31

General Information 31

Purpose of the Plan 31

Plan Term 31

Administration of the Plan 31

Amendment and Termination of the Plan 32

Shares Reserved for Issuance 32

Eligibility, Participation in the Plan 32

OPERATION OF THE PLAN 33

Offerings Under the Plan 33

Payroll Deductions and Payroll Deduction Accounts 33

Options 33

Option Price 33

Purchase of Stock 33

Limitations on Purchase; Obligation to Notify the Company of Disqualifying Dispositions 34

Withdrawal; Termination of Employment 34

Nontransferability 34

No Rights as a Stockholder 34

No Right to Continued Employment 35

Conditions on Issuance 35

Governing Law 35

Equitable Adjustments 35

Compliance With Section 423 of the Code and Rule 16b-3 35

SUMMARY U.S. TAX INFORMATION 35

WHERE YOU CAN FIND MORE INFORMATION 36

EXHIBIT A – PLAN DOCUMENT

___________________

31

ABOUT THIS PROSPECTUS

This prospectus provides you with a general description of the securities the Company may offer pursuant to

the Varonis Systems, Inc. 2015 Employee Stock Purchase Plan. To obtain additional information that may be

important to you, you should read this prospectus and the exhibit to this prospectus together with the additional

information described under the heading “Where You Can Find More Information.”

You should rely only on the information contained or incorporated by reference in this prospectus or in any

prospectus supplement. We have not authorized anyone to provide you with different information. If anyone provides

you with different or inconsistent information, you should not rely on it.

The Company is not making an offer to sell, or soliciting an offer to buy, any securities other than those

described in this prospectus. In addition, the Company is not making an offer to sell, or soliciting an offer to buy,

securities in any jurisdiction where the offer and sale is not permitted.

You should assume that the information appearing or incorporated by reference in this prospectus is accurate

only as of the date of the documents containing the information, regardless of the time of its delivery or of any sale of

the Company’s securities. The Company’s business, financial condition, results of operations and prospects may have

changed since those dates.

GENERAL INFORMATION ABOUT THE PLAN

The following is a summary of the material information regarding the Plan and its operations. However, this

summary may not contain all of the information that may be important to you. In addition, this summary is subject in

its entirety to the actual terms of the Plan. Therefore, the Company urges you to read the entire Plan document, a copy

of which is attached hereto as Exhibit A.

General Information

The Plan provides employees of Varonis and its subsidiaries with an opportunity to purchase shares of

common stock at a discount. The effective date of the Plan is June 30, 2015. The Plan is not subject to any provisions

of the U.S. Employee Retirement Income Security Act of 1974, as amended, nor is the Plan a qualified plan within

the meaning of Section 401(a) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”). The Plan and

each offering under the Plan is intended to qualify as an “employee stock purchase plan” within the meaning of Section

423 of the Code, and transactions under the Plan by or with respect to participants who are subject to Section 16(b) of

the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), are generally intended to qualify for

exemption under Rule 16b-3 of the Exchange Act (“Rule 16b-3”).

Purpose of the Plan

The purpose of the Plan is to provide employees of Varonis and its subsidiaries with the opportunity to

purchase shares of common stock at a discount on a basis that qualifies for the favorable tax treatment prescribed by

Section 423 of the Code.

Plan Term

The Plan will remain in effect until the earlier of (i) the date when no shares of common stock are available

for issuance under the Plan or (ii) the tenth anniversary of June 30, 2015, unless terminated prior to such date by the

Company’s Board of Directors (the “Board of Directors”) or the Compensation Committee of the Board of Directors

(the “Compensation Committee”).

Administration of the Plan

The Board of Directors administers the Plan, and the Board of Directors may delegate its authority to the

Compensation Committee. Subject to the terms and conditions of the Plan, the Board of Directors or Compensation

Committee has authority to (i) manage and control the operation of the Plan, (ii) conclusively interpret and construe

32

the provisions of the Plan, (iii) prescribe, amend and rescind rules, regulations and procedures relating to the Plan, (iv)

correct any defect or omission and reconcile any inconsistency in the Plan, and (v) make all other determinations and

take all other actions as it deems necessary or desirable for implementation and administration of the Plan.

The Board of Directors or Compensation Committee may, in their discretion, appoint a “Plan Administrator”

and to grant the Plan Administrator such authority to administer the plan as the Board of Directors or Compensation

Committee deems necessary or desirable.

Amendment and Termination of the Plan

The Board of Directors or the Compensation Committee may at any time, or from time to time, amend the

Plan in any respect but may not, without approval of the stockholders, amend the Plan to (i) increase the aggregate

number of shares of common stock reserved under the Plan, (ii) materially increase the benefits accruing to Plan

participants, or (iii) materially modify the requirements as to eligibility for participation in the Plan. The Plan may

not be amended in any way that will cause rights issued under the Plan to fail to meet the requirements for employees

stock purchase plans as defined in Section 423 of the Code. Without limiting the foregoing, the Board of Directors or

the Compensation Committee may, at any time, terminate the Plan and refund, without interest, the amounts in the

Participants’ individual bookkeeping accounts or shorten any ongoing or future offering period.

Shares Reserved for Issuance

As of the date of this prospectus, the aggregate number of shares of common stock that may be issued under

the Plan is 500,000 shares. The number of shares of common stock that are available for issuance under the Plan will

be increased on January 1, 2016, and each January thereafter, by an amount equal to the lesser of (i) 1% of the number

of shares of common stock issued and outstanding on each December 31 immediately prior to the date of increase,

except that the amount of each such increase will be limited to the number of shares of common stock necessary to

bring the total number of shares of common stock available for issuance under the Plan to 2% of the number of shares

of common stock issued and outstanding on each such December 31, or (ii) 400,000 shares of common stock. For

example, if on December 31, 2015, the number of shares of common stock available for issuance under the Plan

remains equal to 2% (or more) of the number of shares of common stock issued and outstanding on that date, then no

increase will be made as of January 1, 2016. If, however, the number of shares of common stock available for issuance

under the Plan remains equal to 1.5% of the number of shares of common stock issued and outstanding on

December 31, 2015, then the increase on January 1, 2016, will be limited to an additional 0.5%, but in no event will

the annual increase exceed 400,000 shares of common stock.

The shares of common stock that may be issued under the Plan may be made available from treasury shares,

shares purchased on the open market, and newly authorized shares.

Eligibility, Participation in the Plan

All employees of the Company and participating subsidiaries who are regularly scheduled to work 20 hours

or more per week are eligible to participate in the Plan, unless otherwise required by applicable law. In order to be a

participating subsidiary, a subsidiary must be a present or future subsidiary of the Company as defined under

applicable Code rules. No employee may be granted an option under the Plan if such employee, immediately after

the option is granted, owns stock (including stock which the employee may purchase under outstanding options)

possessing 5% or more of the total combined voting power or value of all classes of stock of his or her employer

corporation or any parent or subsidiary corporation. All participating employees will generally have the same rights

and privileges under the Plan.

Participation in the Plan is discretionary. Eligible employees may elect to become participants in the Plan by

completing enrollment procedures in the time, form and manner specified by the Board of Directors, Compensation

Committee or Plan Administrator. The enrollment procedures will authorize after-tax payroll deductions from a

participant’s compensation in such amounts as authorized by the participant. Participants may contribute up to 15% of

their compensation except as may be specified in the enrollment form or other rules prescribed by the Plan

Administrator. Accumulated payroll deductions are credited to a participant’s individual bookkeeping account under

the Plan.

33

OPERATION OF THE PLAN

Offerings Under the Plan

The Plan permits participants to purchase shares of the Company’s common stock using amounts deducted

from their base rate of pay during each applicable offering period. An offering period under the Plan means the six

month offering period commencing on September 1, 2015, and the successive six-month periods commencing on each

March 1 and September 1 thereafter, or such other period as determined by the Compensation Committee.

Payroll Deductions and Payroll Deduction Accounts

To participate in the Plan, an eligible employee must authorize a payroll deduction of at least 1% and up to

a maximum of 15% of his or her base compensation earned during each payroll period (or such lesser amount as the

Compensation Committee may prescribe). A participant’s initial payroll deduction election will remain in effect for

successive offering periods unless modified or terminated by the participant.

All payroll deductions authorized by a participant (and any other elective contributions made during an

offering period) will be credited to a payroll deduction account that the Company maintains on its books for each

participating employee. Unless otherwise required by applicable law, no interest will accrue on the funds in a

participant’s payroll deduction account, and in the event that any amount in a participant’s payroll deduction account

is refunded in cash under the terms of the Plan, no interest will be paid on such amounts.

Options

Each participant in an offering under the Plan will be granted an option, upon the effective date of such

offering, for as many shares of common stock as the amount of his or her payroll deduction account can purchase at

the end of the offering period, based on option price.

Option Price

Unless the Compensation Committee determines otherwise before the effective date of an offering, the option

price of the shares of common stock which are to be sold under the offering shall not be less than an amount equal to

85% of the fair market value on the last trading day of the offering period. Notwithstanding the foregoing, the

Compensation Committee may determine prior to the effective date of an offering that the option price of the shares

of common stock which are to be sold under the offering shall be the lesser of (i) an amount equal to 85% of the fair

market value of a share of common stock at the time such option is granted, or (ii) an amount equal to 85% of the fair

market value of a share of common stock at the time such option is exercised at the end of the offering period.

“Fair market value” is defined under the Plan to mean (i) the closing sales price per share of the common

stock on the national securities exchange on which such common stock is principally traded on the relevant date, or

(ii) if the shares of common stock are not then listed on a national securities exchange or traded in an over-the-counter

market or the value of such shares is not otherwise determinable, such value as determined by the Compensation

Committee in good faith upon the advice of a qualified valuation expert.

Purchase of Stock

On the last trading day of each offering period, the payroll deduction account of each participant in the

offering is tallied, and the participant is deemed to have exercised an option to purchase the largest number of shares

of the amount in common stock (including partial shares, or, if required by the Compensation Committee, full shares

of common stock) that his or her payroll deduction account can purchase. The participant’s payroll deduction account

will be charged for the amount of the purchase on such date, and the employee will be deemed to have acquired the

shares of common stock on such date.

34

In the event that the Compensation Committee in its discretion only allows the purchase of full shares of

common stock, any cash balance in a participant’s payroll deduction account at the end of an offering period that is

not applied to the purchase of full shares of common stock will be carried forward into the participant’s payroll

deduction account for the following offering period. In the event that that the Compensation Committee in its

discretion allows the purchase of partial shares of common stock, such partial shares will not be distributed and will

instead be carried forward into the participant’s payroll deduction account for the following offering. Any payroll

deductions not applied on the last day of an offering period to the purchase of shares of common stock by reason of

the limitations on the total aggregate number of shares that may be purchased under the Plan will be promptly refunded.

Limitations on Purchase; Obligation to Notify the Company of Disqualifying Dispositions

In addition to any other limitations described in this prospectus, no participant may be granted an option

under the Plan which permits his or her rights to purchase stock under the Plan, and any other stock purchase plan of

his or her employer corporation and its parent and subsidiary corporations that is qualified under Section 423 of the

Code, to accrue at a rate which exceeds U.S. $25,000 of the fair market value of such stock (determined at the time

such option is granted) for each calendar year in which the option is outstanding at any time. To the extent necessary

to comply with the foregoing limitation, the affected participant’s payroll deductions may be decreased to 0% during

any offering period which is scheduled to end during any calendar year, such that the aggregate of all payroll

deductions accumulated with respect to such offering period and any other offering period ending within the same

calendar year does not exceed the U.S. $25,000 limit described above. Payroll deductions shall re-commence at the

rate provided for by the participant’s prior election at the beginning of the first offering period which is scheduled to

end in the following calendar year.

For U.S. taxpayers, in the event a participant makes a disqualifying disposition, within the meaning of Section

424(c) of the Code and regulations promulgated thereunder, of any share of common stock issued to the participant

under the Plan – meaning a disposition of ESPP shares that occurs within the two-year period commencing on the first

day of any offering period or within the one-year period following the last trading day of any offering period, the

participant is required to notify the Company within ten (10) days of the disqualifying disposition and immediately

deliver to the Company any amount of federal, state or local income taxes and other amounts the Company informs

the participant that the Company is required to withhold.

Withdrawal; Termination of Employment

A participant may generally withdraw from participation in a particular offering at any time, in which case

the balance of his or her payroll deduction account for that offering period will be refunded to the participant. Any

such withdrawal will be irrevocable with respect to such offering. A participant may re-enroll in the Plan for any

subsequent offering period.

In the event of the termination of a participant’s employment for any reason: (i) his or her participation in

any offering under the Plan will cease, (ii) no further payroll amounts will be deducted pursuant to the Plan, and (iii)

the balance in the employee’s payroll deduction account will be paid without interest to the employee, or, in the event

of the employee’s death, to the employee’s designated beneficiary or estate.

Nontransferability

No option, right or benefit under the Plan may be transferred by a participating employee, whether by will,

the laws of descent and distribution or otherwise, and all options, rights and benefits under the Plan may be exercised

during the participating employee’s lifetime only by such employee.

No person has a lien, or may create a lien, on any funds, securities or other property held under the Plan.

No Rights as a Stockholder

Participants in the Plan have no rights as a stockholder of the Company with respect to any options granted

under the Plan until the shares underlying such options have been purchased and issued to the participant.

35

No Right to Continued Employment

Participants in the Plan have no right to continued employment with the Company or one of its subsidiaries

as a result of their participation in the Plan. The Plan does not affect the employment relationship between the

employee and the Company or one of its subsidiaries.

Conditions on Issuance

The Company is not obligated to issue shares of common stock under the Plan if it determines that such

issuance would violate any applicable law or regulation. Furthermore, the Company is not obliged to issue or deliver

any shares of common stock until all legal and regulatory requirements associated with the issuance or delivery of

common stock has been complied with to the satisfaction of the Compensation Committee. In addition,

notwithstanding any provision of the Plan to the contrary, the Compensation Committee may establish such special

rules as it determines are necessary to comply with the laws of a foreign jurisdiction with respect to citizens or residents

of such foreign jurisdiction, provided that any such special rules shall comply with the requirements of Section 423

of the Code and the regulations and guidance promulgated thereunder.

Governing Law

The Plan and all rights and obligations under the Plan will be constructed and enforced in accordance with

the laws of the State of Delaware and any applicable provisions of the Code and the related regulations.

Equitable Adjustments

In the event that adjustments are made in the number of outstanding shares of common stock or such shares

of common stock are exchanged for a different class of stock of the Company or for shares of stock of any other

corporation by reason of merger, consolidation, stock dividend, stock split or otherwise or there occurs such other

event involving the Company which in the discretion of the Compensation Committee requires adjustment, the

Compensation Committee will make appropriate adjustments in (i) the number and class of shares or other securities

that may be reserved for issuance hereunder, and (ii) the option price, provided that in no event shall the option price

be reduced to an amount that is lower than the par value of a share. All such adjustments must be consistent with the

requirements of Sections 423 and 424 of the Code. All such adjustments will be made in the sole discretion of the

Compensation Committee, and its decision shall be binding and conclusive on all parties.

Compliance With Section 423 of the Code and Rule 16b-3

The Plan is intended to qualify with Section 423 of the Code and Rule 16b-3, and the Compensation

Committee will interpret and administer the provisions of the Plan in a manner consistent with Section 423 and Rule

16b-3.

SUMMARY OF U.S. TAX INFORMATION

THE FOLLOWING TAX INFORMATION IS ONLY A SUMMARY OF THE PRINCIPAL UNITED

STATES FEDERAL INCOME TAX LAW RELATING TO THE PLAN, DOES NOT PURPORT TO BE

COMPLETE AND DOES NOT COVER, AMONG OTHER THINGS, FOREIGN, STATE OR LOCAL TAX

TREATMENT OF PARTICIPATION IN THE PLAN. IF PARTICIPANT RESIDES OUTSIDE THE UNITED

STATES, PLEASE REFER TO THE TAX INFORMATION SUPPLEMENT FOR PARTICIPANT’S COUNTRY

OF RESIDENCE. FURTHERMORE, DIFFERENCES IN THE FINANCIAL SITUATIONS OF PARTICIPANTS

MAY CAUSE FOREIGN, FEDERAL, STATE AND LOCAL TAX CONSEQUENCES OF PARTICIPATION IN

THE PLAN TO VARY. THE TAX CONSEQUENCES DISCUSSED BELOW AND PROVIDED SEPARATELY

ARE SUBJECT TO CHANGE. THEREFORE, EACH PARTICIPANT IS URGED TO CONSULT WITH A

QUALIFIED TAX ADVISOR REGARDING INDIVIDUAL TAX CONSEQUENCES OF PARTICIPATION IN

THE PLAN. THIS SUMMARY IS NOT LEGAL ADVICE CONCERNING INDIVIDUAL TAX MATTERS AND

IS NOT INTENDED OR WRITTEN TO BE USED AND CANNOT BE USED FOR THE PURPOSE OF

AVOIDING PENALTIES THAT MAY BE IMPOSED ON A TAXPAYER.

36

The Plan is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code.

Certain U.S. federal income tax consequences to participants from such status under present law are described

below.

Neither the grant of an option under the Plan nor the purchase of shares of common stock upon exercise

of such option will result in an employee’s realization of taxable income, thus permitting employees to acquire

common stock under the Plan without immediate tax consequences. An employee who does not dispose of shares

of common stock purchased under the Plan until at least two years after the date of grant of such employee’s

option and one year after the date of exercise will receive capital gains tax treatment for any appreciation in the

value of the shares over the lower of (i) the fair market value of such shares at the time the option is granted or (ii)

the fair market value of such shares at the time the option is exercised. Capital gains treatment is not, however,

available for the discount at which the shares of common stock are initially purchased under the Plan, and an

employee who meets the holding requirements is required to include as ordinary income at the time of his death

or disposition of the shares the lesser of (i) the excess of the fair market value of the shares at the time the option

was granted over the option price or (ii) the excess of the fair market value of the shares at the time of disposition

or death over the amount such employee paid for the shares. If an employee sells shares of common stock under

such circumstances for less than the employee paid for the shares, there is no ordinary income, and such

employee will realize a capital loss of the difference. Any ordinary income realized by an employee will increase

the basis of the employee’s shares of common stock for purposes of determining the amount of any gain or loss

realized upon the disposition of the shares.

In general, an employee who fails to retain shares of common stock purchased under the Plan until at

least two years after the date the option with respect to the shares is granted and one year after the date the

option is exercised is considered to have made a “disqualifying disposition” and forfeits the special tax treatment

extended under Section 423 of the Code. In that case, generally, the employee realizes ordinary income at the

time of the disposition equal to the excess of the fair market value of the shares of common stock at the time of

purchase over the price paid for the shares. The fair market value becomes the basis for determining any further

gain or loss at the time of disposition of the shares of common stock. In determining whether that gain or loss is

long-term or short-term, the holding period is calculated from the date of purchase.

Varonis is entitled to a deduction equal to the amount of ordinary income realized by an employee who

makes a disqualifying disposition. Otherwise, Varonis is not entitled to any deduction on account of the grant or

exercise of options granted under the Plan or the subsequent sale by employees of shares of common stock

purchased pursuant to the Plan.

WHERE YOU CAN FIND MORE INFORMATION

The Company files annual, quarterly and special reports, proxy statements and other information with the

Securities and Exchange Commission. You can read and copy any materials the Company files with the Securities

and Exchange Commission at its Public Reference Room at 100 F St., N.E., Washington, D.C. 20549. You can obtain

information about the operations of the Securities and Exchange Commission Public Reference Room by calling the

Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission also maintains

a Web site that contains information the Company files electronically with the Securities and Exchange Commission,

which you can access over the Internet at http://www.sec.gov. In addition, the Company’s SEC filings are available

at www.varonis.com. The Company’s common stock is listed on the NASDAQ Global Select Market (NASDAQ:

37

VRNS), and you can obtain information about us at the offices of the NASDAQ Global Select Market, One Liberty

Plaza, 165 Broadway, New York, New York 10006.

The Securities and Exchange Commission allows the Company to “incorporate by reference” the information

the Company files with it, which means that the Company can disclose important information to you by referring you

to those documents. All information incorporated by reference is part of this document, unless and until that

information is updated and superseded by the information contained in this document or any information subsequently

incorporated by reference. The Company incorporates by reference the documents listed below.

The Company’s Annual Report on Form 10-K for the year ended December 31, 2014; and

Quarterly Report on Form 10-Q for the quarter ended March 31, 2015; and

Current Reports on Form 8-K filed on March 3, 2015, May 11, 2015 and June 3, 2015; and

The description of the Common Stock contained in the Registration Statement on Form 8-A, dated

February 25, 2014, filed with the SEC by the Company to register such securities under the Securities

Exchange Act of 1934, as amended (the “Exchange Act”), including any amendment or report filed for

the purpose of updating such description.

You may request a copy of these filings (other than an exhibit to the filings unless the Company has

specifically incorporated that exhibit by reference into the filing), at no cost, by writing or telephoning us at the

following address:

Varonis Systems, Inc.

1250 Broadway, 29th Floor

New York, New York 10001

Attention: Legal Department

Telephone: (877) 292-8767

The Company also incorporates by reference all future filings it makes with the Securities and Exchange Commission

under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act (other than current reports on Form 8-K furnished under

Item 2.02 or Item 7.01 and any related exhibits), on or after the date of this prospectus and prior to the filing of a

post-effective amendment to the registration statement relating to the Plan which indicates that all securities have been

sold or which deregisters all securities then remaining unsold. Those documents will become a part of this prospectus

from the date that those documents are filed with the Securities and Exchange Commission.

38

EXHIBIT A



Section 11. Purpose of the Plan

The Varonis Systems, Inc. Employee Stock Purchase Plan is intended to encourage employee

participation in the ownership and economic progress of the Company pursuant to a plan that is designed

to qualify as an “employee stock purchase plan” within the meaning of Section 423(b) of the Code.

Section 12. Definitions

Unless the context clearly indicates otherwise, the following terms have the meaning set forth

below:

(a) “Board of Directors” or “Board” shall mean the Board of Directors of the Company.

(b) “Code” shall mean the United States Internal Revenue Code of 1986, as amended from time to time, together with any applicable regulations issued thereunder.

(c) “Committee” shall mean the Board, or a committee designated by the Board to administer the Plan, which Committee shall administer the Plan as provided in Section 3 hereof.

(d) “Company” shall mean Varonis Systems, Inc. or any successor corporation.

(e) “Compensation” shall mean the fixed salary or base hourly wage paid by the Company or a Designated Subsidiary, as applicable, to an Employee as reported by the Company (or by a Designated Subsidiary) to the United States government (or other applicable government) for income tax purposes, including an Employee’s portion of salary deferral contributions pursuant to Section 401(k) of the Code and any amount excludable pursuant to Section 125 of the Code, but excluding items such as commissions, bonuses, fees, overtime pay, severance pay, expenses, stock option or other equity incentive income, or other special emolument or any credit or benefit under any employee plan maintained by the Company.

(f) “Continuous Status as an Employee” means the absence of any interruption or termination of service as an Employee. Continuous Status as an Employee shall not be considered interrupted in the case of a leave of absence agreed to in writing by the Company (including, but not limited to, military or sick leave), provided that such leave is for a period of not more than 90 days or reemployment upon the expiration of such leave is guaranteed by contract or statute.

(g) “Designated Subsidiary” shall mean any Subsidiary of the Company that has been designated by the Committee to participate in the Plan.

(h) “Employee” shall mean any employee of the Company or a Designated Subsidiary who is scheduled to work for the Company or such Designated Subsidiary, as the case may be, for a minimum of twenty hours per week.

(i) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations promulgated thereunder.

39

(j) “Exercise Date” shall mean the last trading day of each Offering Period, unless otherwise determined by the Committee.

(k) “Fair Market Value” shall mean, with respect to a share of Stock, as of a date of determination, shall mean (1) the closing sales price per share of the Stock on the national securities exchange on which such Stock is principally traded on the relevant date, or (2) if the shares of Stock are not then listed on a national securities exchange or traded in an over-the-counter market or the value of such shares is not otherwise determinable, such value as determined by the Committee in good faith upon the advice of a qualified valuation expert.

(l) “Offering Date” shall mean the first trading day of each Offering Period, unless otherwise determined by the Committee.

(m) “Offering Period” or “Period” shall mean the Plan Half-Year beginning on an Offering Date and ending on the next succeeding Exercise Date, or such other period as determined by the Committee. As used herein, the term “Offering Period” shall refer to all Offering Periods under the Plan as the context requires.

(n) “Option Price” shall mean the purchase price of a share of Stock hereunder as provided in Section 7(a) hereof.

(o) “Participant” shall mean any Employee who (i) is eligible to participate in the Plan under Section 6(a) hereof and (ii) elects to participate in the Plan with respect to any Offering Period.

(p) “Plan” shall mean the Varonis Systems, Inc. 2015 Employee Stock Purchase Plan, as the same may be amended from time to time.

(q) “Plan Account” or “Account” shall mean an account established and maintained in the name of each Participant.

(r) “Plan Administrator” shall mean any Employee or Employees or a third party qualified to act as the Plan Administrator appointed pursuant to Section 3 hereof.

(s) “Plan Half-Year” shall mean each six (6) month period during the term of the Plan, commencing on June 30, 2015.

(t) “Stock” means the common stock, par value $0.001 per share, of the Company.

(u) “Subsidiary” shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the time of granting an option, each of the corporations other than the last corporation in the unbroken chain owns shares possessing fifty percent (50%) or more of the total combined voting power of all classes of shares in one of the other corporations in such chain.

Section 13. Administration of Plan

Subject to oversight by the Board of Directors, the Committee shall have the sole authority and

complete discretion to administer the Plan and to make and adopt rules and regulations not inconsistent

with the provisions of the Plan or the Code. Further, the Committee shall have the sole authority to

prescribe, amend and rescind rules and regulations relating to sub-plans established for the purpose of

satisfying applicable foreign laws or for qualifying for favorable tax treatment under applicable foreign

laws, which rules and regulations may be set forth in an appendix or appendixes to the Plan. Its

40

interpretations and decisions in respect of the Plan shall, subject to the aforesaid, be final and conclusive.

The Committee shall have the authority to appoint a Plan Administrator and to delegate to the Plan

Administrator such authority with respect to the administration of the Plan as the Committee, in its sole

discretion, deems advisable from time to time.

Section 14. Effective Date of the Plan

The Plan shall become effective on June 30, 2015, subject to the approval of the Company’s

stockholders.

Section 15. Term of the Plan

The Plan shall continue in effect until the earlier of (i) the date when no shares of Stock are

available for issuance under the Plan (at which time the Plan shall be suspended as set forth in

Section 8(c)), or (ii) the tenth anniversary of the Effective Date, unless terminated prior thereto by the

Board of Directors or the Compensation Committee of the Board, each of which shall have the right to

terminate the Plan at any time. Upon any such termination, the balance, if any, in each Participant’s

Account shall be refunded to him, or otherwise disposed of in accordance with the policies and

procedures prescribed by the Committee in cases where such a refund is not possible.

Section 16. Participation

(a) Eligibility. Participation in the Plan is limited to Employees who also meet the requirements of this Section 6(a). Each Employee may become a Participant by completing the enrollment procedures prescribed by, or on behalf of, the Plan Administrator, as revised from time to time. An Employee may enroll upon the commencement of employment or prior to the Offering Date of the next Plan Half-Year during the term of the Plan. For new Employees, such enrollment shall be effective for the next Offering Period, subject to such administrative rules as the Committee or Plan Administrator may establish. Notwithstanding any provisions of the Plan to the contrary, no Employee shall be granted an option to purchase Stock under the Plan if, immediately after the grant, such Employee (or any other person whose shares would be attributed to such Employee pursuant to Section 424(d) of the Code) would own shares and/or hold outstanding options to purchase shares possessing five percent (5%) or more of the total combined voting power or value of all classes of shares of the Company or of any Subsidiary or parent of the Company. Any amounts received from an Employee which cannot be used to purchase Stock as a result of this limitation will be returned as soon as practicable to the Employee without interest.

(b) Payroll Deductions. Payment for shares of Stock purchased hereunder shall be made by authorized payroll deductions from each payment of Compensation in accordance with instructions received from a Participant. Such deductions shall be expressed as a whole number percentage which shall not be more than fifteen percent (15%) of the Participant’s Compensation as in effect at the start of such Offering Period. A Participant may not increase the deduction during an Offering Period. However, a Participant may change the percentage deduction for any subsequent Offering Period by filing notice thereof with the Company prior to the Offering Date on which such Period commences. Employee contributions are accumulated during the Offering Period and used to purchase shares on the Exercise Date. During an Offering Period, a Participant may decrease the percentage deduction in effect for the remainder of such Offering Period (subject to such administrative rules as the Committee or Plan Administrator may establish), withdraw entirely from participation or discontinue payroll deductions but have the payroll deductions previously made during that Offering Period remain in the Participant’s Account to purchase Stock on the next Exercise Date, provided that he or she is an Employee as of that Exercise Date. Any amount remaining in the Participant’s Account after the purchase of Stock may be

41

refunded without interest upon the written request of the Participant. Any Participant who discontinues payroll deductions during an Offering Period may again become a Participant for a subsequent Offering Period upon completion of the enrollment procedures prescribed by, or on behalf of, the Plan Administrator, as revised from time to time. Amounts deducted from a Participant’s Compensation pursuant to this Section 6(b) shall be credited to such Participant’s Account.

(c) Account Statements. An individual Plan Account will be maintained for each Participant. Account statements will be given to Participants as soon as practicable following each Offering Period, which statements will set forth the amounts of payroll deductions, the per share Option Price, the number of shares of Stock purchased, the aggregate number of shares in the Participant’s Account following the purchase and the remaining cash balance, if any.

Section 17. Purchase of Shares

(a) Option Price. The Option Price per share of the Stock sold to Participants hereunder shall be not less than 85% of the Fair Market Value of such share (the “Discounted Fair Market Value”) on the Exercise Date of the applicable Offering Period, and in no event shall the Option Price per share be less than the par value of the Stock. No Offering Period may exceed five years from the Offering Date. Notwithstanding the foregoing, the Committee may determine prior to the commencement of an Offering Period that the Option Price per share of the Stock sold to Participants hereunder in such Offering Period shall be the lesser of the Discounted Fair Market Value of such share on (A) the Exercise Date of the applicable Offering Period or (B) the Offering Date for such Offering Period, but in no event shall the Option Price per share be less than the par value of the Stock; provided that, in such case, the Offering Period may not exceed twenty-seven months from the Offering Date.

(b) Purchase of Shares. On each Exercise Date, the amount in a Participant’s Account shall be charged with the aggregate Option Price of the largest number of shares of Stock which can be purchased with such amount, including fractional shares, if so authorized by the Committee, and such shares will be purchased by the Participant hereunder. The balance, if any, in such Account following the purchase shall be carried forward to the next succeeding Offering Period.

(c) Limitations on Purchase. Notwithstanding any provisions of the Plan to the contrary, no Participant shall be granted an option under the Plan which permits such Participant’s right to purchase shares of Stock under all employee stock purchase plans (as described in Section 423 of the Code) of the Company and any Subsidiary to accrue at a rate which exceeds twenty-five thousand dollars ($25,000) of the Fair Market Value of such shares of Stock (determined as of the first date of the Offering Period) for any calendar year in which such option would be outstanding at any time. Any amounts received from a Participant which cannot be used to purchase Shares as a result of this limitation will be returned as soon as possible to the Participant without interest.

To the extent necessary to comply with Section 423(b)(8) of the Code and the limitations on

purchase in this Section 7(c), a Participant’s payroll deductions may be decreased to 0% during any

Offering Period which is scheduled to end during any calendar year, such that the aggregate of all payroll

deductions accumulated with respect to such Offering Period and any other Offering Period ending within

the same calendar year does not exceed the twenty-five thousand dollar ($25,000) limit described above.

Payroll deductions shall re-commence at the rate provided for by the Participant’s prior election at the

beginning of the first Offering Period which is scheduled to end in the following calendar year, unless

suspended by the Participant pursuant to Section 6(b) of the Plan.

(d) Transferability of Rights. Neither payroll deductions credited to a Participant’s Account nor any rights with regard to the exercise of an option or to receive shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way by the Participant. Any such attempt

42

at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds in accordance with Section 9(a).

Section 18. Shares Reserved for Issuance Under the Plan

(a) Shares Reserved; Delivery of Stock. Subject to Section 8(b), the number of shares of Stock that are initially reserved and available for issuance pursuant to purchases by Participants under the Plan shall be equal to five hundred thousand (500,000) shares of Stock. The number of shares available for issuance under the Plan shall be increased on January 1, 2016, and on each January thereafter, by an amount equal to the lesser of (i) one percent (1%) of the number of shares of Stock issued and outstanding on each December 31 immediately prior to the date of increase, except that the amount of each such increase will be limited to the number of shares of Stock necessary to bring the total number of shares of Stock available for issuance under the Plan to two percent (2%) of the number of shares of Stock issued and outstanding on each such December 31 or (ii) 400,000 shares of Stock. Notwithstanding the foregoing, the Board or the Compensation Committee of the Board may act prior to any January 1 to provide that there shall be no increase in the share reserve for such calendar year or that the increase in the share reserve for such calendar year shall be a lesser number of shares of Stock than would otherwise occur pursuant to the preceding sentence.

(b) Equitable Adjustments. In the event that adjustments are made in the number of outstanding shares of Stock or such shares are exchanged for a different class of stock of the Company or for shares of stock of any other corporation by reason of merger, consolidation, stock dividend, stock split or otherwise or there occurs such other event involving the Company which in the discretion of the Committee requires adjustment hereunder, the Committee may make appropriate adjustments in (i) the number and class of shares or other securities that may be reserved for purchase, or purchased, hereunder, and (ii) the Option Price, provided that in no event shall the Option Price be reduced to an amount that is lower than the par value of a share. All such adjustments shall be made in the sole discretion of the Committee, and its decision shall be binding and conclusive.

(c) Insufficient Shares. If the aggregate funds available for the purchase of Stock on any Exercise Date would cause an issuance of shares in excess of the number provided for in Section 8(a) hereof, (i) the Committee shall proportionately reduce the number of shares which would otherwise be purchased by each Participant in order to eliminate such excess and (ii) the Plan shall automatically be suspended immediately after such Exercise Date until such time when additional shares of Stock may be added to the Plan.

(d) Confirmation. Confirmation of each purchase of Stock hereunder shall be made available to the Participant in either written or electronic format as provided by Section 6(c). A record of purchases shall be maintained by appropriate entries on the books of the Company or Plan Administrator.

(e) Rights as Stockholders. The shares of Stock purchased by a Participant on an Exercise Date shall, for all purposes, be deemed to have been issued and sold as of the close of business on such Exercise Date. Prior to that time, none of the rights or privileges of a stockholder of the Company shall exist with respect to such shares.

Section 19. Termination of Participation

(a) Voluntary Withdrawal. A Participant may withdraw from the Plan at any time by filing notice of withdrawal prior to the close of business on the business day immediately prior to an Exercise Date. Upon withdrawal, the entire amount, if any, in a Participant’s Account shall be refunded to him without interest. Any Participant who withdraws from the Plan may again become a Participant in accordance with Section 6(a).

43

(b) Termination of Eligibility. If a Participant ceases to be eligible under Section 6(a) hereof for any reason, the dollar amount in such Participant’s Account will be refunded or distributed to the Participant. Upon termination of a Participant’s Continuous Status as an Employee during the Offering Period for any reason, including involuntary or voluntary termination, retirement or death, the payroll deductions credited to such Participant’s account (that have not been used to purchase shares of Common Stock) will be returned to such Participant or, in the case of such Participant’s death, the Participant’s designated beneficiary on file or estate, or otherwise disposed of in accordance with policies and procedures prescribed by the Committee in cases where such a refund or distribution may not be possible.

Section 20. General Provisions

(a) Notices. Any notice which a Participant files pursuant to the Plan shall be made on forms prescribed by the Committee and shall be effective only when received by the Company.

(b) No Right to Employment. Neither the creation of the Plan nor participation therein shall be deemed to create any right of continued employment or in any way affect the right of the Company or a Designated Subsidiary to terminate the employment of an Employee.

(c) Tax Matters; Interpretation. If a Participant makes a disposition, within the meaning of Section 424(c) of the Code and regulations promulgated thereunder, of any share of Stock issued to such Participant hereunder, and such disposition occurs within the two-year period commencing on the day of the Offering Date or within the one-year period commencing on the day of the Exercise Date, such Participant shall, within ten (10) days of such disposition, notify the Company thereof and, thereafter, immediately deliver to the Company any amount of Federal, state or local income taxes and other amounts which the Company informs the Participant the Company is required to withhold.

The Plan is intended to comply with Section 423 of the Code and Rule 16b-3 under the Exchange

Act, and the Committee shall interpret and administer the provisions of the Plan in a manner consistent

therewith. Any provisions inconsistent with such Rule shall be inoperative and shall not affect the validity

of the Plan.

(d) Amendment of the Plan. The Board of Directors or the Compensation Committee of the Board may at any time, or from time to time, amend the Plan in any respect, except that, without approval of the stockholders, no amendment may increase the aggregate number of shares reserved under the Plan other than as provided in Section 4.2 hereof, materially increase the benefits accruing to Participants or materially modify the requirements as to eligibility for participation in the Plan. Any amendment of the Plan must be made in accordance with applicable provisions of the Code and/or any regulations issued thereunder, any other applicable law or regulations, and the requirements of the principal exchange upon which the Stock is listed. Without limiting the foregoing, the Board or the Compensation Committee of the Board may, at any time, terminate the Plan and refund (without interest) amounts in Participant’s Accounts or shorten any ongoing or future Offering Period.

(e) Application of Funds. All funds received by the Company by reason of purchases of Stock hereunder may be used for any corporate purpose.

(f) Conditions on Issuance. The Company shall not be obligated to sell shares of Stock hereunder if the Company determines that such sale would violate any applicable law or regulation. Furthermore, the Company shall not be obliged to issue or deliver any shares until all legal and regulatory requirements associated with such issue or delivery have been complied with to the satisfaction of the Committee. In addition, notwithstanding any provision of the Plan to the contrary, the Committee may establish such special rules as the Committee determines are necessary to comply with the laws of a

44

foreign jurisdiction with respect to citizens or residents of such foreign jurisdiction, provided that any such special rules shall comply with the requirements of Section 423 of the Code and the regulations and guidance promulgated thereunder.

(g) Governing Law. The Plan and all rights and obligations thereunder shall be constructed and enforced in accordance with the laws of the State of Delaware and any applicable provisions of the Code and the related regulations.

45

Employee Information Supplement

Employee Stock Purchase Plan

CANADA

OVERVIEW

This supplement has been prepared to provide you with a general summary of the tax

consequences and other issues associated with your participation in the Varonis Systems, Inc.

(the “Company”) 2015 Employee Stock Purchase Plan (the “ESPP”).

This supplement is based on tax and other laws in effect in your country as of June 2015. It

does not necessarily address all local tax laws that may apply to you. Such laws often are

complex and can change frequently. As a result, the information contained in this supplement

may be outdated at the time you purchase shares of the Company’s common stock (“Shares”)

under the ESPP or at the time you sell such Shares.

Please note that this supplement is general in nature and does not discuss all of the various

laws, rules and regulations that may apply. It may not apply to your particular tax or financial

situation, and the Company is not in a position to assure you of any particular tax result.

Accordingly, you should seek appropriate professional advice as to how the tax or other laws

in your country apply to your specific situation.

If you are a citizen or resident of another country (or are considered as such for local law

purposes) or if you transfer employment to another country after enrolling in the ESPP, the

information contained in this supplement may not be applicable to you.

This document constitutes part of a prospectus covering securities

that have been registered with the U.S. Securities and Exchange

Commission under the Securities Act of 1933, as amended.

46

TAX INFORMATION

Enrollment in ESPP No taxation.

Purchase of Shares Taxation on the date of purchase.

Taxable Amount The difference between the fair market value of the Shares on the exercise date and the option price of the Shares (the "discount").

Income Tax Payable? Yes, at your marginal income tax rate.

Social Contributions

Payable?

Yes, the taxable amount will be subject to Canadian Pension Plan or Quebec Pension Plan contributions, as applicable, to the extent that your other income has not already exceeded the applicable income ceiling.

TAX WITHHOLDING AND REPORTING

Overview Your employer will report the discount at purchase as income to you to the Canada Revenue Agency ("CRA") on your T4 Statement of Remuneration Paid ("Form T4"). A copy of the Form T4 filed with the CRA will be delivered to you by the last day of February of each year for purchases of shares under the ESPP in the prior year.

Income Tax Your employer will withhold income tax due on the discount at purchase.

Social Contributions Your employer will withhold pension plan contributions due on the discount (to the extent that your other income has not already exceeded the applicable income ceiling).

OTHER TAX INFORMATION

Sale of Shares You will be subject to capital gains taxation when you sell Shares acquired under

the ESPP to the extent that the sale proceeds exceed your cost basis in the Shares

(i.e., the fair market value of the Shares on the exercise date).

The taxable capital gain will be equal to 50% of the difference between your sales

proceeds and your cost basis in the Shares and will be taxed at your marginal

income tax rate.

You will be personally responsible for reporting any income you realize from the

sale of Shares on your income tax return and for paying any applicable taxes due

on such income.

47


Foreign Asset/Account

Reporting

Foreign property (including Shares acquired under the ESPP) held by a Canadian resident employee generally must be reported annually on a form T1135 (Foreign Income Verification Statement) if the total cost of the employee's foreign property exceeds C$100,000 at any time in the year. When the underlying Shares are acquired, their cost ordinarily would equal the employee's adjusted cost base ("ACB") in the Shares. The ACB generally is the fair market value of the Shares at acquisition, but if the employee owns other Shares, this ACB may have to be averaged with the ACB of the other Shares. The form must be filed by April 30 of the following year. You should consult with your personal tax advisor to ensure that you comply with the applicable foreign asset reporting requirements.

OTHER INFORMATION

Securities Law You are permitted to sell Shares acquired under the ESPP through the designated broker appointed under the ESPP, provided that such sale takes place outside Canada through the facilities of a stock exchange on which such shares are listed (i.e., NasdaqGS).

48



FRANCE

OVERVIEW




















49

TAX INFORMATION




Income Tax Payable? Yes, at your progressive rate.


Payable?

Yes (including Contribution Généralisée ("CSG") and Contribution au Remboursement de la Dette Sociale (“CRDS”)).


Overview Your employer will report the discount as income paid to you, on your monthly pay slip and on its annual declaration of salaries.

Income Tax Your employer will not withhold income tax due on the discount at purchase, provided that you remain a French tax resident and have continuously worked in France and been subject to French tax from the date of enrollment to the exercise date.

Social Contributions Your employer will withhold social contributions due on the discount at purchase.


Wealth Tax Shares acquired under the ESPP are included in your personal estate and must

be declared to the tax authorities if the net amount of your taxable personal

estate exceeds the threshold amount for the applicable calendar year, as valued

on January 1 of each year. A partial exemption for the value of the Shares

included may apply if you hold the Shares for a certain number of years. You

should speak with your personal tax advisor for more information.

Exceptional Surtax for

High Earners

You may be required to pay surtax on your total income, including income

realized under the ESPP, if your total income exceeds certain thresholds. If these

thresholds are met for income received in the current tax year but were not met

for income received in the two prior tax years, you may be eligible for a surtax

reduction. You should speak with your personal tax advisor for more

information.

50


Sale of Shares You may be subject to additional taxation when you sell Shares acquired under

the ESPP to the extent that the sale proceeds exceed your cost basis in the Shares

(i.e., the fair market value of the Shares on the exercise date). Any gain will be

taxed at your progressive income tax rate, plus additional social taxes and surtax,

if applicable.

You should speak with your personal tax advisor to determine your tax liability

when you sell your Shares.

You will be personally responsible for reporting any income you realize from the sale of Shares acquired under the ESPP and paying any applicable taxes due on such income.

Foreign Asset/Account

Reporting

If you are a French resident, you must declare all of your foreign (i.e., non-French) bank and brokerage accounts in which you hold cash or securities, including the accounts that were opened and closed during the tax year, on an annual basis on a special form N° 3916, together with your income tax return. Failure to complete this reporting triggers penalties. Further, French residents with foreign account balances exceeding €1,000,000 may have additional monthly reporting obligations.

OTHER INFORMATION

Exchange Control

Information

You must report the value of any cash or securities that you bring into France or send out of France without the use of a financial institution to the French customs and excise authorities when the value of such cash or securities equals or exceeds the applicable threshold amount.

51



GERMANY

OVERVIEW




This supplement is based on tax and other laws in effect in your country as of July 2015. It does

not necessarily address all local tax laws that may apply to you. Such laws often are complex

and can change frequently. As a result, the information contained in this supplement may be

outdated at the time you purchase shares of the Company’s common stock (“Shares”) under

the ESPP or at the time you sell such Shares.












52

TAX INFORMATION



Effective April 1, 2009, pursuant to Section 3 No. 39 of the Einkommensteuergesetz (the "EStG"), benefits in the amount of up to €360 per year, in connection with the grant of certain qualifying shares for free or at an option price below the fair market value, will be tax exempt.

Taxable Amount The difference between the fair market value of the Shares on the exercise date and the option price paid to acquire the Shares (the "discount").

A small tax deduction per calendar year may be available pursuant to Section 3 No. 39 of the German Income Tax Act provided certain conditions are met. You should consult with your personal tax advisor for more information.



Payable?

Yes, (to the extent that your other income has not yet exceeded the applicable ceilings).

Other Taxes Payable? Solidarity Surcharge: A solidarity surcharge will be assessed on the amount of your income tax liability.

Church Tax: You may be subject to church tax on the amount of your income tax liability, depending on the tax district in which you reside and whether you are a registered member of a church.


Overview Your employer will report the discount at purchase as income paid to you, to the tax authorities.

Income Tax Your employer will withhold income tax due on the discount at purchase.

Social Contributions Your employer will withhold social contributions due on the discount at purchase (to the extent your other income has not yet exceeded the applicable ceilings).

Other Your employer will withhold solidarity surcharge and church tax, if applicable, due on the amount of your income tax liability.

Depending on your personal tax situation, you may be required to file a tax return with the German tax authorities, on which you must report any income you realize in connection with your participation in the ESPP. If applicable, you are responsible

53


for including the income realized under the ESPP in your annual tax return. Further, you are responsible for paying any difference between your actual tax liability and the amount withheld by your employer.


Sale of Shares You may be subject to capital gains tax when you sell Shares acquired under the

ESPP to the extent that the sale proceeds exceed your cost basis in the Shares

(i.e., the fair market value of the Shares on the exercise date).

Any gain you realize will be subject to capital gains tax at a flat rate plus solidarity

surcharge and church tax (if applicable) on the tax liability, provided that you do

not own 1% or more of the Company’s stated capital (and have not owned 1% or

more at any time in the last five years) and the Shares are not held as business

assets. You may deduct €801 (€1,602 for married couples filing jointly) from your

total capital gains and other income derived from capital investment earned in

the relevant tax year.

Alternatively, if the flat tax rate exceeds your personal income tax rate, you may

elect an assessment in order to have your marginal personal income tax rate

applied to the capital gain.

You will be responsible for declaring any capital gains you realize upon the sale

of Shares and paying applicable taxes due on such gains (unless your Shares are

held by a German financial institution in a custodial account at the time of sale

and the German financial institution withholds the applicable taxes due on the

capital gains).

If your sales proceeds are lower than your cost basis in the Shares sold, you will

realize a capital loss. Capital losses may be used to offset capital gains realized

from the sale of similar securities (i.e., Shares of the Company or of other

companies) in the same calendar year or in subsequent years, but cannot be

deducted from other types of income (e.g., salary/wages).

Exchange Control

Information

Cross-border payments in excess of €12,500 must be reported monthly to the German Federal Bank. If you make or receive a payment in excess of this amount, you must report the payment to Bundesbank electronically using the “General Statistics Reporting Portal” (“Allgemeines Meldeportal Statistik”) available via Bundesbank’s

website (www.bundesbank.de). You are responsible for making the report,

regardless of the entity you engage to transfer the payment.

http://www.bundesbank.de/

54



ISRAEL

OVERVIEW


consequences associated with your participation in the Varonis Systems, Inc. (the “Company”)

2015 Employee Stock Purchase Plan including its Israeli Sub-Plan (together the “ESPP”).

This supplement is based on tax and other laws in effect in Israel as of July 2015. This

supplement is based on the assumption that the ESPP has been filed for approval under the

provisions of the Trustee Capital Gains Route of Section 102(b) of the Israeli Income Tax

Ordinance [New Version] 1961 (the "Ordinance") and that all terms and conditions of such tax

route have been met including the provisions of the tax ruling obtained by the Company from

Israeli Tax Authority which determines the taxation of the shares purchased under the ESPP. It







situation, and the Company is not in a position to assure you of any particular tax result. We

urge you to review the terms and conditions of the Ruling as defined below. Accordingly, you

should seek appropriate professional advice as to how the tax or other laws in your country

apply to your specific situation.







55

SUMMARY OF TAX INFORMATION


Purchase of Shares No taxation.

Sale of Shares or release

from the Trustee

Tax will apply and withholding will be performed by the Trustee and your employer. A portion of the gain may be entitled to a reduced tax rate of 25% if the sale or release occurred after the lapse of the holding period under Section 102 of the Ordinance (currently 24 months from the date of purchase of the shares).


Overview The ESPP has been filed for approval with the Israeli Tax Authority under the Trustee Capital Gains Route of Section 102(b) of the Ordinance. The Company has also received a tax ruling from the Israeli Tax Authority which determines the taxation of the shares purchased under the ESPP Trustee Capital Gains Route of Section 102(b) of the Ordinance (the "Ruling"). The information below assumes full compliance with the terms and conditions of the Ordinance and the Ruling. In case of non-compliance the Shares purchased under the ESPP shall be taxed upon sale according to the Non-Trustee Route of Section 102 of the Ordinance. Anyone enrolling in the ESPP and who is an employee of an Israeli subsidiary of the Company will be required to consent to the Ruling.

Trust Arrangement In accordance with Section 102 and with the Ruling, following purchase, and provided that Shares were not immediately sold upon purchase, Shares purchased under the ESPP will be held or controlled by a trustee appointed by the Company or its Israeli affiliate (the “Trustee”) for the employee's benefit in accordance with the terms of the Ordinance and the Ruling.

Tax will be due upon the sale of the Shares or upon the release of the Shares from the control or holding of the Trustee.

Tax Calculation Tax will be due on the gain realized from the sale (generally, the sales proceeds minus the cost of acquisition of the shares). The tax rates will depend on the period of time Shares were under the control of the Trustee. Provided the Trustee held or controlled the Shares for the period required under section 102 of the Ordinance (i.e., currently 24 months from the date of exercise of the options and the acquisition of shares of the Company’s common stock (the “Grant Date”)) (the “Lock-Up Period”), the gain (that is, the sale price less the cost of acquisition adjusted for Israeli inflation) will be taxed as follows:

56


The difference between the fair market value of the Shares on the Grant Date calculated according to the average closing share price of one common stock of the Company on the 30 trading days preceding the Grant Date, and the purchase price of the Shares (the "discount") shall be taxed as ordinary income.

The difference between the fair market value the sale price shall be taxed at 25%.

If the sale or release occurs prior to the expiration of the Lock-up Period, all gain will be taxed as ordinary income.

Any income taxed as ordinary income shall be subject to social security and health tax contributions, up to the maximum amount as determined under law.

Tax withholding and

reporting

The employer and the Trustee are required to report the purchase of Shares and any taxable income arising from the sale of Shares acquired under the ESPP and will be required to withhold taxes including social insurance contributions and health tax contributions as detailed above. They are also required to report and withhold tax from any dividend paid in relation to the Shares.

Participants may be required to file an annual return with the Israeli tax authorities. You should consult with your personal tax advisor regarding your obligation to submit an annual tax return


Exchange Control

Information

In general, there are no foreign exchange requirements in connection with the acquisition or sale of Shares under the ESPP.

57



UNITED KINGDOM

OVERVIEW




















58

TAX INFORMATION






Payable?

Yes, employee's National Insurance Contributions ("NICs").


Overview Your employer will report the discount at purchase as taxable income paid to you to Her Majesty's Revenue and Customs ("HMRC") and will withhold all applicable taxes through the Pay as you Earn ("PAYE") system.

Income Tax Your employer will withhold income tax due on the discount from your salary using the PAYE system.

If your employer is unable to recover the income tax paid from you within 90 days of the end of the tax year in which the event giving rise to such income tax liability occurs, or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), any uncollected income tax will constitute a loan owed by you to your employer, effective on the Due Date. The loan will bear interest at the then-current Official Rate of HMRC, it will be immediately due and repayable by you, and the Company and/or your employer may recover it from you at any time thereafter by any of the means referred to in the ESPP or your subscription agreement.

Notwithstanding the foregoing, in the event that your subscription agreement does not provide for the loan feature described above or if you are a director or an executive officer of the Company (within the meaning of such terms for purposes of Section 13(k) of the United States (“U.S.”) Securities Exchange Act of 1934, as amended), you will not be eligible for such a loan to cover your income tax liability and the amount of any uncollected income taxes may constitute a benefit to you on which additional income tax and NICs may be payable. You will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing the Company or your employer (as appropriate) for the value of any NICs due on this additional benefit, which may be

59


recovered by the Company or your employer at any time thereafter by any of the means referred to in the ESPP or your subscription agreement.

Social Contributions Your employer will withhold NICs due on the discount at purchase.


Sale of Shares You may be subject to capital gains tax when you sell Shares acquired under the

ESPP to the extent that the sale proceeds exceed your cost basis in the Shares

(i.e., the fair market value of the Shares on the exercise date), but only to the

extent that your total taxable gains for the tax year exceed your annual personal

exempt amount. To the extent that your total capital gains for the tax year

exceed your annual personal exemption amount for the year of sale, the taxable

gain will equal the difference between the sale proceeds and the total adjusted

cost basis of the Shares. In general, your adjusted cost basis will equal the market

value of the shares on the exercise date.

You will be personally responsible for reporting any income you realize from the

sale of Shares acquired under the plan and paying any applicable taxes due on

such income.

When you sell any Shares acquired under the ESPP, you may need to take into

account the share identification rules in calculating your capital gains tax liability.

Please consult your personal tax advisor to determine how share identification

rules apply in your particular situation.

If the market value of the Shares on the day you sell the Shares is lower than the

market value of the Shares acquired at purchase, you will realize a capital loss.

You may deduct your capital loss from your capital gains, thus lowering your

overall capital gains tax. However, you must fully offset your current capital

losses against current capital gains before applying the annual exemption. Any

subsequently unused capital losses may then be carried forward to future years.

Exchange Control

Information

In general, you should not be subject to any foreign exchange requirements in connection with your acquisition or sale of shares of Stock under the ESPP.

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