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Exhibit 10.38

CELL CURE NEUROSCIENCES LTD.
 
SHARE OPTION PLAN

1.
Purpose: The purpose of this Share Option Plan is to provide an additional
incentive to Employees, officers, Directors, Consultants and certain other
Service Providers of the Company (as defined below) and any Affiliate of the
Company (as defined below) to further the growth, development and financial
success of the Company by providing them with opportunities to purchase Shares
(as defined below) of the Company pursuant to this Share Option Plan and to
promote the success of the Company's business.

2.
Definitions: For the purposes of this Share Option Plan, the following terms
shall have the meaning ascribed thereto below:

 
a)
"Additional Rights" means any distribution of rights, including an issuance of
bonus shares and stock dividends (but excluding cash dividends), in connection
with Section 102 Trustee Options (as defined below) and/or the Shares issued
upon exercise of such Options.

b)
“Affiliate(s)” means a present or future company that either (i) controls the
Company or is controlled by the Company; or (ii) is controlled by the same
person or entity that controls the Company, provided that for the purpose of
grants made under Section 102, such company is an "employing company" within the
meaning of Section 102(a) of the Tax Ordinance (as defined below).

c)
"Board" means the Board of Directors of the Company.

d)
"Cause" means any of the following: (i) a serious breach of trust, including but
not limited to, theft, embezzlement, self-dealing, and/or breach of fiduciary
duties; (ii) the Optionee (as defined below) has committed any flagrant criminal
offense; (iii) a material breach by the Optionee of any agreement between the
Optionee and the Company and/or any Affiliate, which has not been remedied
within thirty (30) days after the Optionee has received a written demand for
performance from the Committee (as defined below); or (iv) any other
circumstance justifying termination or dismissal without severance payment
according to Israeli law.

 

e)
"Committee" means a committee of Directors (as defined below) to which the Board
may delegate power to act under or pursuant to the provisions of the Plan. Until
such delegation (if any), the Committee will consist of the entire Board.

f)
"Company" means Cell Cure Neurosciences Ltd., a company incorporated under the
laws of the State of Israel.

g)
“Companies Law” means the Israeli Companies Law 5759-1999, as amended.

h)
“Consultant” means any person or entity that is engaged by the Company or any
Affiliate of the Company to render consulting or advisory services to such
entity.

i)
"Controlling Shareholder" has the meaning ascribed to it in Section 32(i) of the
Tax Ordinance.

j)
“Corporate Transaction” means the consummation of any of the following
transactions or series of related transactions to which the Company is a party:

 
i)
A merger, acquisition, reorganization or consolidation in which the Company is
not the surviving entity (or survives only as a subsidiary of another entity
whose shareowners did not own all or substantially all of the shares in
substantially the same proportions as immediately prior to such transaction),
except for a transaction the principal purpose of which is to change the
jurisdiction in which the Company is incorporated;

ii)
The sale, transfer, exchange or other disposition of all or substantially all of
the shares or assets of the Company (including, intellectual property rights
which, in the aggregate, constitute substantially all of the Company's material
assets), in a transaction not covered by the exception to clause (i) above.

 

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k)
“Director” means a member of the Board of Directors of the Company.

l)
"Disability" means a complete and permanent inability, due to illness or injury,
to perform the duties of the Optionee's engagement at such time when the
disability commenced, as determined by the Committee based on medical evidence
acceptable to it.

m)
"Employee" means any person, including officers and Directors, employed by the
Company or any Affiliate of the Company. A person employed by the Company or any
Affiliate of the Company shall not cease to be an Employee for the purposes of
the Plan in the case of (i) any leave of absence approved by the Company, or
(ii) transfer between locations of the Company, or (iii) transfer of employment
between the Company and any Affiliate or any successor thereto. With regard to
Section 102 Trustee Options and Section 102 Non-Trustee Options (as defined
below), “Employee” includes Directors and office holders ("Nosei Misra" as such
term is defined in the Israeli Companies Law), and excludes any person who is a
Controlling Shareholder prior to and/or after the issuance of the Shares issued
upon exercise of the Options.

n)
"Exercise Price" means the price per Share determined by the Committee in
accordance with Section 10 below, which is to be paid to the Company in order to
exercise an Option and purchase the Share(s) covered thereby.

o)
"Expiration Date" of an Option means the earlier of: (i) the lapse of ten (10)
years from the date such Option was granted; or (ii) the expiration date set
forth in the Option Agreement.

p)
"Fair Market Value" means, as of any date, the value of a Share determined as
follows:

i)
If the Shares are admitted to trading on any established stock exchange or a
national market system, including without limitation the Nasdaq National Market
or the Nasdaq Small Cap Market of the Nasdaq Stock Market, the Fair Market Value
shall be the closing sale price of a Share on the principal exchange on which
Shares are then trading (or as reported on any composite index which includes
such principal exchange), on the trading day immediately preceding such date, or
if Shares were not traded on such date, then on the next preceding date of which
a trade occurred, as reported in The Wall Street Journal or such other source as
the Committee deems reliable;

ii)
If the Shares are not traded on an exchange, but are admitted to quotation on
the Nasdaq or other comparable quotation system, the Fair Market Value shall be
the mean between closing representative bid and asked prices for the Shares on
the trading day immediately preceding such date or, if no bid and ask prices
were reported on such date, then on the last date preceding such date on which
both bid and ask prices were reported, all as reported by Nasdaq or such other
comparable quotation system; or

iii)
If the Shares are not publicly traded on an exchange and not quoted on Nasdaq or
a comparable quotation system, the Fair Market Value shall be determined in good
faith by the Committee.

iv)
Without derogating from the foregoing and solely for the purpose of determining
the tax liability, in the case of Capital Gain Option Through a Trustee (as
defined below), the Fair Market Value of a Share at grant shall be determined in
accordance with the provisions of Section 102(b)(3) of the Tax Ordinance as
further detailed in Section 16(b) below.

q)
"IPO" means an initial underwritten public offering of the Shares of the Company
pursuant to an effective registration statement under the United States
Securities Act of 1933, as amended or the Israeli Securities Law, 5728-1968, as
amended or equivalent law of another jurisdiction.

 
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r)
"Lock-up Period" means the period during which the Section 102 Trustee Options
granted to an Optionee or, upon exercise thereof the underlying Shares as well
as any Additional Rights distributed in connection therewith are to be held by
the Trustee (as defined below) on behalf of the Optionee, in accordance with
Section 102 (as defined below) and pursuant to the tax route which the Company
elects.

s)
"Notice of Exercise" has the meaning ascribed to it in Section 11 below.

t)
"Option(s)" means a right to purchase Shares granted under Section 8 below in
accordance with the provisions of the Option Agreement, and subject to the terms
specified in the Plan, whether Section 102 Trustee Option, Section 102
Non-Trustee Option, Section 3(i) Option or option issued under other tax
regimes.

u)
"Optionee(s)" means the holder of an outstanding Option granted under the Plan.

v)
"Option Agreement" means a written or electronic agreement between the Company
and the Optionee evidencing the terms and conditions of an individual grant of
Option, as further specified in Section 8 below. The Option Agreement is subject
to the terms and conditions of the Plan.

w)
"Plan" means this Share Option Plan, as amended from time to time.

x)
“Proxy Holder” means the Chairman of the Board, as shall be in office from time
to time or any other person designated by the Board to act as proxy holder.

y)
"Section 3(i)" means that certain Section 3(i) of the Tax Ordinance, and any
regulations, rules, orders or procedures promulgated thereunder, all as amended.

z)
"Section 3(i) Option" means an Option granted pursuant to Section 3(i).

aa)
"Section 102" means that certain Section 102 of the Tax Ordinance, and any
regulations, rules, orders or procedures promulgated thereunder, including the
Income Tax Rules (Tax Relief for Issuance of Shares to Employees), 2003, all as
amended.

bb)
“Section 102 Trustee Option" means an Option that by its terms qualifies and is
intended to qualify under the provisions of Section 102(b) of the Tax Ordinance
(including the Section 102(b) Route Election (as defined below)), as either:

i)
“Ordinary Income Option Through a Trustee” for the special tax treatment under
Section 102(b)(1) and the “Ordinary Income Route”, or

ii)
“Capital Gain Option Through a Trustee” for the special tax treatment under
Section 102(b)(2) and the “Capital Route”.

cc)
“Section 102(b) Route Election” means the right of the Company to choose either
the “Capital Route” (as set under Section 102(b)(2)), or the “Ordinary Income
Route” (as set under Section 102(b)(1)), but subject to the provisions of
Section 102(g) of the Tax Ordinance, as further specified in Section 6 below.

dd)
“Section 102 Non-Trustee Option” means an Option that by its terms does not
qualify or is not intended to qualify as a Section 102 Trustee Option and is
granted not through a trustee under the terms of Section 102(c) of the Tax
Ordinance.

ee)
"Service Provider" means an Employee, officer, Director or Consultant.

ff)
“Share(s)” means an Ordinary Share, nominal value NIS 0.01 of the Company, as
adjusted in accordance with Section 13 of the Plan.

gg)
“Tax Ordinance” means the Israeli Income Tax Ordinance (New Version), 1961, as
amended.

hh)
"Trust Agreement" means a written agreement between the Company and the Trustee,
which sets forth the terms and conditions of the trust and is in accordance with
the provisions of Section 102(b).

ii)
"Trustee" means a person or an entity, appointed by the Company and approved in
accordance with the provisions of Section 102, to hold in trust on behalf of the
Optionees the granted Options, or upon exercise thereof, the Shares, as well as
any Additional Rights granted in connection therewith, in accordance with the
provisions of Section 102.

 
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3.
Interpretation: Unless the context otherwise indicates, words expressed in the
singular shall include the plural and vice versa and the use of the neuter,
masculine, or feminine gender is for convenience only and shall be deemed to
mean and include the neuter, masculine or feminine gender, as appropriate.

4.
Administration:

a)
The Committee shall have the power to administer the Plan. Notwithstanding the
above, the Board shall automatically have a residual authority if no Committee
shall be constituted or if such Committee shall cease to operate for any reason
whatsoever.

b)
Subject to the terms and conditions of this Plan, and subject to the approval of
any relevant authorities and to applicable laws, the Committee shall have full
power and authority, at all times, to: (i) select the Service Providers to whom
Options may from time to time be granted hereunder, and to grant the Options to
the said Service Providers; (ii) determine the terms and provisions of the
Option Agreements (which need not be identical) including, but not limited to,
the type of Option to be granted, the number of Shares to be covered by an
Option, the Exercise Price, the times or conditions upon which and the extent to
which an Option shall be vested and may be exercised and the nature and duration
of any restrictions applicable to the Options or the underlying Shares,
including as to transferability or exercise of the same, or the Company’s right
of repurchase of the same; (iii) accelerate the right of an Optionee to
exercise, in whole or in part, any Option, or extend such right; (iv) approve
forms of Option Agreement for use under the Plan; (v) make a Section 102(b)
Route Election (subject to the limitations set under Section 102(g)); (vi)
interpret and construe the provisions of the Plan and the Option Agreements;
(vii) determine the Fair Market Value of the Shares; (viii) adopt sub- plans,
Plan addenda and appendices to the Plan as the Committee deems desirable, to
accommodate foreign laws, regulations and practice. The provisions of  such
sub-plans, Plan addenda and appendices to the Plan may take precedence over
other provisions of the Plan, but unless otherwise superseded by the terms of
such sub-plans, Plan addenda and appendices to the Plan, the provisions of the
Plan shall govern their operation; (ix) exercise such powers and perform such
acts as are deemed necessary or expedient to promote the best interests of the
Company with respect to the Plan, including but not limited to prescribe, amend
and rescind any rules and regulations relating to the Plan (including rules and
regulations relating to sub-plans, Plan addenda and appendices to the Plan
established for the purpose of satisfying applicable foreign laws); and (x) take
all other action and determine any other matter which is necessary or desirable
for, or incidental to, the administration of the Plan.

c)
The interpretation and construction by the Committee of any provision of the
Plan (including sub-plans, Plan addenda and appendices to the Plan), the Option
Agreement or of any Option thereunder shall be final and conclusive, unless
otherwise determined by the Board.

5.
Reserved Shares:

a)
The Company, during the term of this Plan, shall reserve and keep available such
number of Shares as shall be sufficient to satisfy the requirements of the Plan.
The Shares subject to the Plan may be either authorized but unissued Shares or
reacquired Shares, subject to applicable laws.

b)
Any Shares under the Plan, in respect of which the right hereunder of an
Optionee to purchase the same shall for any reason terminate, become cancelled,
expire or otherwise cease to exist, shall again be available for grant through
Options under the Plan (unless the Plan has terminated). No fraction of Shares
may be issued under the Plan.

c)
The Board may, at any time during the term of the Plan, increase the number of
Shares available for grant under the Plan. The approval of the Company’s
shareholders of such increase shall be obtained if so required under applicable
laws and/or the Company’s incorporation documents and/or any shareholders
agreement, as shall be in effect from time to time.

 
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6.
Section 102(b) Route Election: No Section 102 Trustee Options may be granted
under this Plan to any eligible Optionee, unless and until, the Company's
election of the type of Section 102 Trustee Options either as “Ordinary Income
Option Through a Trustee” or as “Capital Gain Option Through a Trustee” is
appropriately filed with the Income Tax Authorities. The Section 102(b) Route
Election shall obligate the Company to grant only the type of Section 102
Trustee Option it has elected, and shall apply to all Optionees who were granted
Section 102 Trustee Options during the period indicated herein, to the extent
required under and in accordance with the provisions of Section 102(g) of the
Tax Ordinance and the applicable regulations. For avoidance of doubt, it is
clarified that the Company does not obligate itself to file a Section 102(b)
Route Election, and in any case, such Section 102(b) Route Election shall be at
the sole discretion of the Company. It is further clarified that such Section
102(b) Route Election shall not prevent the Company from granting Section 102
Non-Trustee Options simultaneously.

7.
Eligible Optionees:

a)
Subject to the terms and conditions of the Plan and any restriction imposed by
applicable laws, Options may be granted to Service Providers, as selected by the
Committee in its sole discretion, provided however, that, (i) Section 102
Trustee Options and Section 102 Non-Trustee Options may be granted only to
Israeli Employees of the Company and any Affiliate thereof, and provided further
that, such Affiliate corporation is an "employing company" within the meaning of
Section 102(a) of the Tax Ordinance; and (ii) Section 3(i) Options may be
granted only to Israeli (a) Consultants; and/or (b) employees, Directors and/or
officers of the Company or any Affiliate who are Controlling Shareholders prior
to and/or after the issuance of the Shares underlying the Options.
Notwithstanding Options may be granted under sub-plans, Plan addenda and
appendices to the Plan, to accommodate foreign laws, regulations and practice
other tax jurisdictions.

b)
Eligibility to participate in the Plan does not confer any right to be granted
with Options under the Plan. Participation in the Plan is voluntary. The grant
of an Option to a Service Provider hereunder, shall neither entitle such Service
Provider to participate, nor disqualify him from participating, in any other
grant of Options pursuant to this Plan or any other share incentive or stock
option plan of the Company or any Affiliate of the Company.

8.
Issuance of Options:

a)
Options may be granted at any time after the Plan shall become effective as
specified in Section 17 hereof, subject to obtaining all the necessary approvals
(if any) from any regulatory body or governmental agency having jurisdiction
over the Company and/or any Affiliate and/or any Optionee. In the case of
Section 102 Trustee Options, Options may be granted only after the passage of
thirty (30) days (or a shorter period as and if approved by the tax authorities)
following the delivery by the Company to the appropriate Israeli Income Tax
Authorities of a request for approval of the Plan and the Trustee according to
Section 102. Notwithstanding the above, if within ninety (90) days of delivery
of the abovementioned request, the tax officer notifies the Company of its
decision not to approve the Plan, the Options, which were intended to be granted
as a Section 102 Trustee Options, shall be deemed to be Section 102 Non-Trustee
Options, unless otherwise was approved by the tax officer. The date of grant of
each Option shall be the date specified by the Committee at the time such Option
is granted and subject to the applicable laws and regulations.

b)
An Option Agreement shall evidence each Option granted pursuant to the Plan. The
Option Agreement shall state, inter alia, the number of Shares covered thereby,
the type of Option granted thereunder, the dates and schedule when the Option
may be exercised, the Exercise Price and such other terms and conditions as the
Committee in its discretion may prescribe, provided that they are consistent
with this Plan and applicable laws.

 
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9.
Trustee: In connection with the grant of any Section 102 Trustee Options, the
following shall apply:

a)
Section 102 Trustee Options which shall be granted under the Plan and any Shares
issued upon exercise of such Options shall be issued to the Trustee who shall
hold the same in trust for the benefit of the Optionee at least for the Lock-up
Period. Upon the conclusion of the Lock-up Period and subject to any further
period included in the Plan and/or in the Option Agreement, the Trustee may
release Section 102 Trustee Options or Shares issued upon exercise of such
Options to Optionee only after the Optionee's full payment of his tax liability
due in connection therewith pursuant to the Tax Ordinance.

b)
Notwithstanding the above, in the event an Optionee shall elect to release the
Section 102 Trustee Options and/or the Shares issued upon exercise of such
Options prior to the conclusion of the Lock-up Period, the sanctions under
Section 102 shall apply to and shall be borne solely by the Optionee.

c)
Any Additional Rights distributed to the Optionee on account of Section 102
Trustee Options shall be deposited with and/or issued to the Trustee for the
benefit of the Optionee, and shall be held by the Trustee for the applicable
Lock-up Period in accordance with the provisions of Section 102 and the elected
tax route.

d)
The Company, any Affiliate of the Company (if applicable), the Trustee and the
Optionee shall comply with the Tax Ordinance, Section 102 and the provisions of
the Trust Agreement.

e)
Upon receipt of Section 102 Trustee Options, Optionee will sign the Option
Agreement, which shall be deemed as the Optionee’s undertaking to exempt the
Trustee from any liability in respect of any action or decision duly taken and
bona fide executed in relation with the Plan and any Option, Share, Additional
Right or other rights received by the Optionee in connection therewith.

f)
The Committee shall determine and approve the terms of engagement of the
Trustee, and shall be authorized to designate from time to time a new Trustee
and replace either of them at its sole discretion, and in the event of
replacement of any existing Trustee, to instruct the transfer of all Options and
Shares held by such Trustee at such time to its successor.

g)
For as long as the Trustee holds Shares in trust for the benefit of the
Optionee, the Trustee shall not use the voting rights vested in such Shares, and
shall not exercise such rights in any way whatsoever. In the event the right to
vote such Shares is held by the Trustee pursuant to Section 102, then upon the
exercise of any Section 102 Trustee Option by the Optionee, the Trustee shall
execute an irrevocable voting proxy in such form as may be prescribed by the
Committee in accordance with the provisions of Section 11(f) of the Plan and the
provisions of Section 102.

10.
Option Exercise Price and Consideration:

a)
The Exercise Price shall be determined by the Committee on the date of grant of
an Option, on an individual basis, subject to any guidelines as may be
determined by the Board from time to time and any applicable law; provided,
however, that the Exercise Price shall be not less than the nominal value of the
Shares underlying the Option.

b)
The consideration to be paid for the Shares to be issued upon exercise of an
Option, including the method of payment, shall be determined by the Committee
subject to applicable laws. Such consideration may consist of, without
limitation, (1) cash, or (2) check or wire transfer, or (3) at the discretion of
the Committee, consideration received by the Company under a broker-assisted
sale and remittance program acceptable to the Committee, or (4) at the
discretion of the Committee, any combination of the foregoing methods of
payment.

 
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11.
Exercise of Options:

 

a)
Options shall be exercisable pursuant to the terms under which they were awarded
and subject to the terms and conditions of this Plan and the Option Agreement;
provided, however, that in no event shall an Option be exercisable after its
Expiration Date, as further specified in Section 11(b) below.

Unless the Committee provides otherwise, vesting of Options granted hereunder
shall be suspended during any unpaid leave of absence.

b)
Anything herein to the contrary notwithstanding, if any Option, or any part
thereof, has not been exercised prior to its Expiration Date and the Shares
covered thereby not paid for until such date, then such Option, or such part
thereof, and the right to acquire such Shares shall terminate, and all interests
and rights of the Optionee in and to the same shall expire.

c)
Options may be exercised only to purchase whole Shares, and in no case may a
fraction of a Share be purchased. If any fractional Share would be deliverable
upon exercise, including but not limited to, as a result of adjustments as
provided in Section 13 hereof, such fraction shall be rounded up one-half or
less, or otherwise rounded down, to the nearest whole number of Shares.

d)
An Option, or any part thereof, shall be exercisable by the Optionee's signing
and returning to the Company at its principal office, on any business day, a
"Notice of Exercise" in such form and substance as may be prescribed by the
Committee from time to time and in accordance with the requirements of
applicable laws, which exercise shall be effective upon receipt of such signed
notice by the Company at its principal office. The Notice of Exercise shall
specify the number of Shares with respect to which the Option is being exercised
and shall be accompanied by payment of the aggregate Exercise Price due with
respect to the Shares to be purchased. Such payment may consist of any
consideration and method of payment authorized by the Committee and permitted by
the Option Agreement and the Plan. If required under applicable laws, the Notice
of Exercise shall also be accompanied by payment of the aggregate withholding
taxes due with respect to the exercise of Options and/or purchased Shares.

e)
If applicable laws require the Company to take any action with respect to the
Shares specified in the Notice of Exercise before the issuance thereof, then the
date of their issuance shall be extended for the period necessary to take such
action.

f)
Prior to exercise, the Optionee shall have none of the rights and privileges of
a shareholder of the Company in respect to any Shares purchasable upon the
exercise of any part of an Option. Until the Shares are issued (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to receive dividends or any other
rights as a shareholder shall exist with respect to the Shares, notwithstanding
the exercise of the Option. The Company shall issue (or cause to be issued) such
Shares promptly after the Option is exercised, subject to the provisions of
Section 15 hereof. No adjustment will be made for a dividend or other right, for
which the record date precedes the date of issuance of the Shares, except as
provided in Section 13 hereof.

g)
Except and to the extent otherwise expressly provided herein, the Shares
acquired under an Option shall be subject to the provisions of the Company's
incorporation documents, as amended from time to time and/or any other
shareholders agreement in effect.

h)
To the extent permitted by applicable law, an Option Agreement may include a
requirement that concurrently with the exercise of any Option and as a condition
precedent to such exercise and the issuance of any Shares in respect thereof,
the Optionee shall sign and deliver to the Company an irrevocable power of
attorney and voting proxy in such form as may be prescribed by the Committee. By
this proxy, the Optionee’s right to vote any acquired Shares shall be assigned
to the Proxy Holder, who shall vote such Shares on any issue brought before the
shareholders of the Company in accordance with the majority vote of the
shareholders of the Company (as voted by the shareholders without taking such
acquired Shares in consideration). Such power of attorney and voting proxy shall
expire and be of no further force and effect upon the consummation of an IPO.

 
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12.
Termination of Relationship as a Service Provider:

a)
Except as provided below, an Option, or any part thereof, may not be exercised
unless the Optionee is then a Service Provider of the Company or any Affiliate
thereof, and unless the Optionee has remained continuously a Service Provider
since the date of grant of the Option, unless the Committee determines that a
longer period is applicable or such longer period is otherwise set forth in the
Option Agreement.

b)
Unless otherwise approved by the Committee or set forth in the Option Agreement,
if an Optionee ceases to be a Service Provider of the Company or any Affiliate
thereof for any reason (including, but not limited to, resignation and
retirement,  but excluding termination by reasons of Cause, Optionee's
Disability or death, for which events there are special rules in Subsections (c)
and (d) below), all Options granted to the Optionee, which are vested and
exercisable at the time of such termination, may be exercised within three (3)
months following the date of such termination, but in no event later than the
Expiration Date of such Option, as set forth in the Option Agreement. If, after
termination, the Option is not so exercised within the time specified herein,
the Option shall terminate, and the Shares covered by the unexercised portion of
such Option shall revert to the Plan. Unless the Committee or the Option
Agreement provide otherwise, any Options which are not vested and exercisable at
the date of such termination, shall terminate, and the Shares covered by such
unvested Option shall revert to the Plan.

c)
Unless otherwise approved by the Committee or set forth in the Option Agreement,
if an Optionee ceases to be a Service Provider of the Company or any Affiliate
thereof as a result of Optionee’s Disability or death, all Options granted to
the Optionee, which are vested and exercisable at the time of such termination,
may, unless earlier terminated in accordance with the Option Agreement, be
exercised within twelve (12)  months following the Optionee’s termination, but
in no event later than the Expiration Date of such Option, as set forth in the
Option Agreement. In the case of Optionee's death, such Option may be exercised
by the personal representative of the Optionee’s estate or by the person or
persons to whom the Option is transferred pursuant to the Optionee’s will or the
laws of inheritance or by the Optionee’s designated beneficiary or beneficiaries
of that Option. If, after termination, the Option is not so exercised within the
time specified herein, the Option shall terminate, and the Shares covered by the
unexercised portion of such Option shall revert to the Plan. Unless the
Committee or the Option Agreement provide otherwise, any Options which are not
vested and exercisable at the date of such termination, shall terminate and the
Shares covered by such unvested Option shall revert to the Plan.

d)
Notwithstanding the above, if an Optionee ceases to be a Service Provider of the
Company or any Affiliate thereof for Cause, all outstanding Options granted to
such Optionee (whether vested or not) shall, to the extent not theretofore
exercised, expire immediately upon the earlier of: (i) the date of such
termination; or (ii) the time of delivery of the notice of termination for
Cause, unless otherwise determined by the Committee. The Shares covered by such
expired Options shall revert to the Plan.

e)
In addition and notwithstanding Subsections (b) through (d) above, if after
termination of relationship as a Service Provider, Optionee does not comply in
full with any of non- compete, non solicitation, confidentiality or any other
requirement of any agreement between the Optionee and the Company (or any
Affiliate thereof engaging the Optionee), the Committee may, in its sole
discretion, refuse to allow the exercise of the Options.

f)
For the purpose of this Section 12, termination of relationship as a Service
Provider shall be deemed to be effective upon the date, which is designated by
the Company (or any Affiliate thereof engaging the Optionee) as the last day of
the Optionee’s service with the Company or any Affiliate thereof.

 
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g)
For the purpose of this Section 12, a transfer of the Optionee from the service
of the Company to any Affiliate (and vise versa) or between Affiliates shall not
be deemed a termination of relationship as a Service Provider, unless otherwise
determined by the Committee.

13.
Adjustments, Liquidation and Corporate Transaction: Upon the occurrence of any
of the following described events, an Optionee's right to purchase Shares under
the Plan shall be adjusted as hereinafter provided.

a)
Changes in Capitalization. The number and type of Shares which have been
authorized for issuance under the Plan but as to which no Option have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Option, and the number and type of Shares covered by each outstanding
Option, as well as the Exercise Price per Share covered by each such outstanding
Option, shall be proportionately adjusted for any increase or decrease in the
number or type of issued Shares resulting from a stock split, reverse stock
split, stock dividend, recapitalization, combination or reclassification of the
Shares, or any other increase or decrease in the number of issued Shares
effected without receipt of consideration by the Company, in order to prevent
diminution or enlargement of the benefits or potential benefits intended to be
made available under the Plan. The conversion of any convertible securities of
the Company shall not be deemed to have been “effected without receipt of
consideration”. Such adjustment shall be made by the Committee, in its sole
discretion. The Company shall not be required to issue fractional Shares or
other securities under the Plan as a result of such adjustment and any
fractional interest in a Share or other security that would otherwise be
delivered upon the exercise of an Option will be rounded, as detailed in Section
11(c) hereof.

b)
Dissolution or Liquidation. In the event of dissolution or liquidation of the
Company, the Company shall have no obligation to notify the Optionees of such
event and any Options that have not been previously exercised will terminate
immediately prior to such dissolution or liquidation. Notwithstanding the above,
in the event of a voluntary liquidation of the Company, which is not within the
frame of a Corporate Transaction, the Committee shall notify each Optionee as
soon as practicable prior to the effective date of such proposed transaction,
and any Options that have not been previously exercised will terminate
immediately prior to such proposed liquidation.

c)
Corporate Transaction. In the event of a Corporate Transaction, each outstanding
Option shall, be treated as the Committee determines, including, without
limitation, that each Option may (i) be assumed or substituted for an equivalent
option by the successor corporation or a parent or subsidiary of the successor
corporation. In the case of such assumption or substitution of Options,
appropriate adjustments shall be made in the number and type of Shares covered
by each outstanding Option, as well as the Exercise Price per Share covered by
each such outstanding Option, and all other terms and conditions of the Options,
such as the vesting dates, shall remain in force; or (ii) be terminated in
exchange for a cash payment (if any) equal to the excess of the Fair Market
Value of the Shares subject to such Option (either to the extent then
exercisable or, at the discretion of the Committee, the Option being made fully
exercisable for purposes of this Section 13(c)) over the Exercise Price thereof.

For the purposes of this Sub-Section 13(c), the Option shall be considered
assumed if, following the Corporate Transaction, the Option confers the right to
purchase or receive, for each Share covered by the Option immediately prior to
the Corporate Transaction, the consideration, if any, (whether stock, cash, or
other securities or property) received in the Corporate Transaction by holders
of Ordinary Shares for each Ordinary Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Ordinary
Shares); provided, however, that if such consideration received in the Corporate
Transaction is not solely in securities of the successor corporation or its
Parent or Subsidiary, the Committee may, with the consent of the successor
corporation, provide for the consideration to be received upon the exercise of
the Option, for each Ordinary Share subject to the Option, to be solely in
securities of the successor corporation or its Parent or Subsidiary equal in
fair market value to the per share consideration received by holders of Ordinary
Shares in the Corporate Transaction.
 
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Unless the Committee or the Option Agreement provide otherwise, in the event
that the Option is not assumed, substituted or exchanged during and/or
immediately following the Corporate Transaction, the Option shall terminate as
of the date of the closing of the Corporate Transaction and the Committee shall
notify the Optionee in writing or electronically of such termination.

The Committee shall not be required to treat all Options similarly in the
transaction.

14.
Limited Transferability and Restrictions on Sale of Options/Shares:

a)
No Option may be sold, pledged, assigned, hypothecated or transferred other than
by will or by the laws of descent and distribution, and may be exercised during
the lifetime of the Optionee, only by the Optionee. The terms of the Plan and
the Option Agreement shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee. Any attempted sale, transfer,
assignment, pledge, hypothecation or other disposition of any Option or of any
rights granted thereunder contrary to the provisions of this Plan shall be null
and void.

b)
Without derogating from the provisions of Section 14(a) above, with regard to
Section 102 Trustee Option and the Shares issued upon exercise of such Options,
as long as such Options and/or Shares are held by the Trustee on behalf of the
Optionee, all rights of the Optionee with respect thereto are personal and
cannot be transferred, assigned, pledged or mortgaged, other than by will or by
the laws of descent and distribution.

c)
Shares acquired upon exercise of an Option shall be subject to such 
restrictions on transfer and/or sale as are generally applicable to Ordinary
Shares of the Company, including but not limited to (i) restrictions detailed in
the Company's incorporation documents, as may be amended from time to time; (ii)
restrictions detailed in any shareholders agreements (as applicable to other
shareholders of Ordinary Shares of the Company), as amended from time to time,
regardless of whether or not the Optionee is a party to such agreements; and
(iii) restrictions under any applicable law.

d)
In the event the Shares shall be registered for trading in any public market, 
the Committee may impose certain limitations on the Optionee’s right to sell the
Shares (including a lock-up period) as may be requested by the Company’s
underwriters or as the Committee may, in its absolute discretion, determine to
be necessary or advisable, and Optionee shall unconditionally agree and accept
any such limitations.

15.
Conditions Upon Issuance of Shares:

a)
Shares shall not be issued pursuant to the exercise of an Option unless the
exercise of such Option and the issuance and delivery of such Shares shall
comply with applicable laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance. Without derogating from
the generality of the foregoing, the Company shall not be required to issue or
deliver any Shares (or any certificate or certificates for such Shares)
purchased upon exercise of any Option (or portion thereof) prior to the
completion of any registration or other qualification of such Shares, if so
required under any applicable law and/or under the rulings or regulations of any
governmental regulatory body which the Committee shall, in its absolute
discretion, determine to be necessary or advisable.

b)
As a condition to the exercise of an Option, the Committee may require the
Optionee exercising such Option to represent and warrant at the time of such
exercise, if, in the opinion of counsel for the Company such representation is
required in order to comply with any registration exemption requirement, that
(i) the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares; and (ii) the Optionee shall not
sell, transfer or otherwise dispose of any of the Shares  so purchased by him,
except in compliance with the applicable securities laws, and the rules and
regulations thereunder. Furthermore, the Company shall have the authority  to
endorse upon the certificate or certificates representing the Shares such
legends referring to the foregoing restrictions, and any other applicable
restriction, as it may deem appropriate.

 
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16.
Tax Consequences:

a)
Any tax consequences arising from the grant or exercise of any Option, from the
payment for Shares covered thereby, from the sale, transfer or disposition of
such Shares, the release of Options or Shares from Trust or from any other event
or act (of the Optionee, the Company or any Affiliate of the Company or the
Trustee (if applicable)) hereunder, shall be borne solely by the Optionee. The
Company or any Affiliate or the Trustee (if applicable) shall withhold taxes
according to the requirements under the applicable laws, and it may take steps
as it may deem necessary for withholding all due taxes, including, but not
limited to (i) to the extent permitted by applicable laws, deducting the amount
so required to be withheld from any other amount then or thereafter payable to
an Optionee, and/or (ii) requiring an Optionee to pay to the Company or any
Affiliate or to the Trustee (as the case may be) the amount so required to be
withheld as a condition  for the issuance, delivery, distribution or release of
any Shares. Furthermore, such Optionee shall agree to indemnify the Company, any
Affiliate that engages the Optionee and the Trustee, if applicable, 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 Optionee. Except as otherwise required by applicable laws, the
Company shall not be required to release any Share certificate to an Optionee
until all required payments have been fully made.

b)
Without derogating from the definition of Fair Market Value in Section 2(n)
above, and solely for the purpose of determining the tax liability with respect
to the grant of Capital Gain Option Through a Trustee pursuant to Section 102,
in the event the Shares of the Company are listed for trade on any established
stock exchange or  national market system or in the event the Shares of the
Company will be registered for trade within ninety (90) days following the date
of grant of such Options, the Fair Market Value of the Shares on the date of
grant shall be equal to the average value of the Company’s Shares on the thirty
(30) trading days preceding the date of grant or on the thirty (30) trading days
following the date of registration for trade, as the case may be, all in
accordance with the provisions of Section 102(b)(3) of the Tax Ordinance.

c)
With regard to Section 102 Non-Trustee Option, in the event an Optionee shall
cease to be employed by or, if applicable, cease to render his services to the
Company or any Affiliate, for any reason, the Optionee shall be obligated to
provide the Company and/or its Affiliate with a security or guarantee, in the
degree and manner satisfactory to them, to cover any future tax obligation
resulting from the disposition of the Options and/or the Shares acquired
thereunder.

d)
With regard to Section 102 Trustee Options, the provisions of the Plan and the
Option Agreement shall be subject to the provisions of Section 102 and the tax
officer's approval, which shall be deemed an integral part of the Plan and the
Option Agreement. To the extent that Section 102 and/or the tax officer's
approval require the Plan and/or the Option Agreement to contain specified
provisions in order to qualify the Options for preferential tax treatment, such
provisions shall be deemed to be stated herein and/or in the Option Agreement,
as applicable, and to be binding upon the Company, any Affiliate and the
Optionee.

17.
Term, Amendment and Termination of the Plan:

a)
The Plan shall become effective upon the later of: (i) its adoption by the
Board; or (ii) its approval by the Company's shareholders, but only if such
shareholders’ approval is required under applicable laws or under the Articles
of association and/or under any shareholder agreement then in effect.

 
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b)
The Committee, at any time and from time to time, may terminate, suspend or
amend the Plan. The Committee shall obtain approval from the Company’s
shareholders of any Plan amendment to the extent necessary to comply with
applicable laws or under the Articles of association and/or under any
shareholder agreement as then in effect. Other than in the event of a Corporate
Transaction (in which case, the provisions of Section 13(c) above shall govern),
no amendment, suspension or termination of the Plan shall impair the rights of
any Optionee, unless mutually agreed otherwise between the Optionee and the
Committee, which agreement must be in writing and signed by the Optionee and the
Company. Termination of the Plan shall not affect the Committee’s ability to
exercise the powers granted to it hereunder with respect to Options granted
under the Plan prior to the date of such termination.

18.
Inability to Obtain Authority: The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the
Company’s counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not have
been obtained.

19.
Continuance of Engagement: Neither the Plan nor any Option granted hereunder
shall impose any obligation on the Company or its Affiliates, to continue its
relationship with an Optionee as a Service Provider, and nothing in the Plan, in
any Option Agreement or in any Option granted pursuant thereto shall confer upon
any Optionee any right with respect to continuing the Optionee's relationship as
a Service Provider with the Company or its Affiliate nor shall it interfere in
any way with his right or the Company's or its Affiliate's right to terminate
such relationship at any time, with or without Cause, and with or without
notice.

20.
Non-Exclusivity of the Plan: The Plan shall not be construed as creating any
limitations on the power of the Board or the Committee to adopt such other
incentive arrangements as either may deem desirable, including without
limitation, the granting of stock options otherwise than under the Plan, and
such arrangements may be either generally applicable or applicable only in
specific cases.

21.
Governing Law and Jurisdiction: This Plan and all instruments issued thereunder
or in connection therewith 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 thereof. Any dispute arising out of this Plan and
all instruments issued thereunder or in connection therewith shall be resolved
exclusively by the appropriate court in the State of Israel.

22.
Application of Funds: The proceeds received by the Company from the sale of
Shares pursuant to Options will be used for general corporate purposes of the
Company.

23.
Severability: If any term or other provision of this Plan is determined to be
invalid, illegal or incapable of being enforced by any applicable laws, the
invalidity of such term or provision of the Plan shall not affect the validity
or enforceability of any other provision of the Plan, which shall remain in full
force and effect.

 
*          *          *

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