Exhibit 10.5

                         RADA ELECTRONIC INDUSTRIES LTD.

                       THE 2003 ISRAELI SHARE OPTION PLAN

   (*In compliance with Amendment No. 132 of the Israeli Tax Ordinance, 2002)

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                                TABLE OF CONTENTS

                                                                            Page

1.    PURPOSE OF THE ISOP....................................................1
2.    DEFINITIONS............................................................1
3.    ADMINISTRATION OF THE ISOP.............................................4
4.    DESIGNATION OF PARTICIPANTS............................................4
5.    DESIGNATION OF OPTIONS PURSUANT TO SECTION 102.........................5
6.    TRUSTEE................................................................6
7.    SHARES RESERVED FOR THE ISOP; RESTRICTION THEREON......................6
8.    PURCHASE  PRICE........................................................7
9.    ADJUSTMENTS............................................................7
10.   TERM AND EXERCISE OF OPTIONS...........................................8
11.   VESTING OF OPTIONS.....................................................9
12.   PURCHASE FOR INVESTMENT...............................................10
13.   DIVIDENDS.............................................................10
14.   RESTRICTIONS ON ASSIGNABILITY AND SALE OF OPTIONS.....................10
15.   EFFECTIVE DATE AND DURATION OF THE ISOP...............................10
16.   AMENDMENTS OR TERMINATION.............................................11
17.   GOVERNMENTAL REGULATIONS..............................................11
18.   CONTINUANCE OF EMPLOYMENT OR HIRED SERVICES...........................11
19.   GOVERNING LAW & JURISDICTION..........................................11
20.   TAX CONSEQUENCES......................................................11
21.   NON-EXCLUSIVITY OF THE ISOP...........................................12
22.   MULTIPLE AGREEMENTS...................................................12

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This plan, as amended from time to time, shall be known as Rada Electronic
Industries Ltd 2003 Israeli Share Option Plan (the "ISOP").

1.    PURPOSE OF THE ISOP

      The ISOP is intended to provide an incentive to retain, in the employ
and/or the service of the Company and its Affiliates (as defined below), persons
of training, experience, and ability, to attract new employees, directors,
consultants, service providers and any other persons and/or entity which the
Board (as such term is defined below) shall decide their services are considered
valuable to the Company, to encourage the sense of proprietorship of such
persons, and to stimulate the active interest of such persons in the development
and financial success of the Company by providing them with opportunities to
purchase shares in the Company, pursuant to the ISOP.

2.    DEFINITIONS

      For purposes of the ISOP and related documents, including the Option
Agreement, the following definitions shall apply:

      2.1 "Affiliate" means any "employing company" within the meaning of
Section 102(a) of the Ordinance.

      2.2 "Approved 102 Option" means an Option granted pursuant to Section
102(b) of the Ordinance and held in trust by a Trustee for the benefit of the
Optionee.

      2.3 "Articles" means the Articles of Association of the Company.

      2.4 "Board" means the Board of Directors of the Company.

      2.5 "Capital Gain Option" or CGO" as defined in Section 5.4 below.

      2.6 "Cause" means, (i) conviction of any felony involving moral turpitude
or affecting the Company; (ii) any refusal to carry out a reasonable directive
of the chief executive officer, the Board or the Optionee's direct supervisor,
which involves the business of the Company or its Affiliates and was capable of
being lawfully performed; (iii) embezzlement of funds of the Company or its
Affiliates; (iv) any breach of the Optionee's fiduciary duties or duties of care
to the Company; including without limitation disclosure of confidential
information of the Company; and (v) any conduct (other than conduct in good
faith) reasonably determined by the Board to be materially detrimental to the
Company.

      2.7 "Chairman" means the chairman of the Committee.

      2.8 "Committee" or the "Compensation Committee" means the compensation
committee of the Board, designated from time to time by the resolution of the
Board.

      2.9 "Company" means Rada Electronic Industries Ltd, an Israeli company.

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      2.10 "Companies Law" means the Israeli Companies Law 5759-1999, as may be
amended from time to time and any regulations, rules and orders promulgated
pursuant thereto or any successor act or regulation, as in effect from time to
time/.

      2.11 "Controlling Shareholder" shall have the meaning ascribed to it in
Section 32(9) of the Ordinance (as defined below).

      2.12 "Date of Grant" means, the date of grant of an Option, as determined
by the Board or authorized Committee and set forth in the Optionee's Option
Agreement.

      2.13 Employee" means a person who is employed by the Company or its
Affiliates, including an individual who is serving as a director or an office
holder, but excluding Controlling Shareholder.

      2.14 "Expiration Date" means the date upon which an Option shall expire,
as set forth in Section 10.2 of the ISOP.

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

      (i) If the Shares are listed on any established stock exchange or a
national market system, including without limitation the NASDAQ National Market
system, or the NASDAQ SmallCap Market of the NASDAQ Stock Market, the Fair
Market Value shall be the closing sales price for such Shares (or the closing
bid, if no sales were reported), as quoted on such exchange or system for the
last market trading day prior to time of determination, as reported in the Wall
Street Journal, or such other source as the Board deems reliable.

      Without derogating from the above, solely for the purpose of determining
the tax liability pursuant to Section 102(b)(3) of the Ordinance, if at the Date
of Grant the Company's shares are listed on any established stock exchange or a
national market system or if the Company's shares will be registered for trading
within ninety (90) days following the Date of Grant, the Fair Market Value of a
Share at the Date of Grant shall be determined in accordance with 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 trading, as the case may be;

      (ii) If the Shares are regularly quoted by a recognized securities dealer
but selling prices are not reported, the Fair Market Value shall be the mean
between the high bid and low asked prices for the Shares on the last market
trading day prior to the day of determination, or;

      (iii) In the absence of an established market for the Shares, the Fair
Market Value thereof shall be determined in good faith by the Board.

      2.16 "ISOP" means this 2003 Israeli Share Option Plan.

      2.17 "ITA" means the Israeli Tax Authorities.

      2.18 "Non-Employee" means a consultant, adviser, service provider,
Controlling Shareholder or any other person who is not an Employee.

      2.19 "Ordinary Income Option" or "OIO" as defined in Section 5.5 below.


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      2.20 "Option" means an option to purchase one or more Shares of the
Company pursuant to the ISOP.

      2.21 "102 Option" means any Option granted to Employees pursuant to
Section 102 of the Ordinance.

      2.22 "3(i) Option" means an Option granted pursuant to Section 3(i) of the
Ordinance to any person who is Non- Employee.

      2.23 "Optionee" means a person who receives or holds an Option under the
ISOP.

      2.24 "Option Agreement" means the Share Option Agreement between the
Company and an Optionee that sets out the terms and conditions of an Option
under this ISOP.

      2.25 "Ordinance" means the 1961 Israeli Income Tax Ordinance [New Version]
1961 as now in effect or as hereafter amended from time to time and any
regulation, rule, or order promulgated pursuant thereto or any successor act,
rule, order or regulation as in effect from time to time.

      2.26 "Purchase Price" or the "Exercise Price" means the exercise price for
each Share (as such terms is defined below) subject to an Option.

      2.27 "Section 102" means Section 102 of the Ordinance and the rules or
regulations issued thereunder, as now in effect or as hereafter amended.

      2.28 "Share" means the ordinary shares, NIS 1 par value each, of the
Company.

      2.29 "Successor Company" means any entity the Company is merged to or is
acquired by, in which the Company is not the surviving entity.

      2.30 "Transaction" means (i) merger, acquisition or reorganization of the
Company with one or more other entities in which the Company is not the
surviving entity, (ii) a sale of all or substantially all of the assets of the
Company.

      2.31 "Trustee" means any person appointed by the Company to serve as a
trustee and approved by the ITA, all in accordance with the provisions of
Section 102(a) of the Ordinance.

      2.32 "Unapproved 102 Option" means an Option granted pursuant to Section
102(C) of the Ordinance and not held in trust by a Trustee.

      2.33 "Vested Option" means any Option, which has already been vested
according to the Vesting Dates.

      2.34 "Vesting Dates" means, as determined by the Board or by the
Committee, the date as of which the Optionee shall be entitled to exercise the
Options or part of the Options, as set forth in section 11 of the ISOP.


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3.    ADMINISTRATION OF THE ISOP

      3.1 The Board shall have the power to administer the ISOP either directly
or upon the recommendation of the Committee, all as provided by applicable law
and in the Articles. Notwithstanding the above, the Board shall automatically
have residual authority: (i) if no Committee shall be constituted; (ii) if such
Committee shall cease to operate for any reason; (iii) with respect to the
rights not delegated by the Board to the Committee; or (iv) if in accordance
with Israeli Law the Committee is not permitted to administer such law..

      3.2 Subject to the Articles, the Committee shall select one of its members
as its Chairman and shall hold its meetings at such times and places as the
Chairman shall determine. The Committee shall keep records of its meetings and
shall make such rules and regulations for the conduct of its business, as it
shall deem advisable.

      3.3 The Committee shall have the power to recommend to the Board and the
Board shall have the full power and authority to: (i) designate participants;
(ii) determine the terms and provisions of the respective Option Agreements,
including, but not limited to, the number of Options to be granted to each
Optionee, the number of Shares to be covered by each Option, provisions
concerning the time and the extent to which the Options may be exercised and the
nature and duration of restrictions as to the transferability or restrictions
constituting substantial risk of forfeiture and to cancel or suspend awards, as
necessary; (iii) determine the Fair Market Value of the Shares covered by each
Option and the Purchase Price thereof; (iv) make an election as to the type of
Approved 102 Option; and (v) designate the type of Options.

      3.4 Subject to the Companies Law, and restrictions on delegations made by
the Board from time to rime, the Committee may :(i) alter any restrictions and
conditions of any Options or Shares subject to any Options (ii) interpret the
provisions and supervise the administration of the ISOP; (iii) prescribe, amend
and rescind rules and regulations relating to the ISOP; and (vi) make all other
determinations deemed necessary or advisable for the administration of the ISOP.

      3.5 Except to the extent permitted by the Companies Law, the Committee
shall not be entitled to grant Options to the Optionees.

      3.6 The interpretation and construction by the Committee of any provision
of the ISOP or of any Option Agreement shall be final and conclusive unless
otherwise determined by the Board.

4.    DESIGNATION OF PARTICIPANTS

      4.1 The persons eligible for participation in the ISOP as Optionees shall
include any Employees and/or Non-Employees of the Company or of any Affiliate;
provided, however, that (i) Employees may only be granted 102 Options; (ii)
Non-Employees may only be granted 3(i) Options; and (iii) Controlling
Shareholders may only be granted 3(i) Options.

      4.2 The grant of an Option hereunder shall neither entitle the Optionee to
participate nor disqualify the Optionee from participating in, any other grant
of Options pursuant to the ISOP or any other option or share plan of the Company
or any of its Affiliates.


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      4.3 Anything in this ISOP to the contrary notwithstanding, all grants of
Options to directors and office holders shall be authorized and implemented in
accordance with the provisions of the Companies Law.

5.    DESIGNATION OF OPTIONS PURSUANT TO SECTION 102

      5.1 The Company may designate Options granted to Employees pursuant to
Section 102 as Unapproved 102 Options or Approved 102 Options.

      5.2 The grant of Approved 102 Options shall be made under this ISOP
adopted by the Board as described herein, and shall be conditioned upon the
approval of this ISOP by the ITA as required by Section 102.

      5.3 Approved 102 Option may either be classified as Capital Gain Option or
Ordinary Income Option.

      5.4 Approved 102 Option elected and designated by the Company to qualify
under the capital gain tax treatment in accordance with the provisions of
Section 102(b)(2) shall be referred to herein as CGO.

      5.5 Approved 102 Option elected and designated by the Company to qualify
under the ordinary income tax treatment in accordance with the provisions of
Section 102(b)(1) shall be referred to herein as OIO.

      5.6 The Company's election of the type of Approved 102 Options as CGO or
OIO granted to Employees (the "Election"), shall be appropriately filed with the
ITA before the Date of Grant of an Approved 102 Option. Such Election shall
become effective beginning the first Date of Grant of an Approved 102 Option
under this ISOP and shall remain in effect until the end of the year following
the year during which the Company first granted Approved 102 Options. The
Election shall obligate the Company to grant only the type of Approved 102
Option it has elected, and shall apply to all Optionees who were granted
Approved 102 Options during the period indicated herein, all in accordance with
the provisions of Section 102(g) of the Ordinance. For the avoidance of doubt,
such Election shall not prevent the Company from granting Unapproved 102 Options
simultaneously.

      5.7 All Approved 102 Options must be held in trust by a Trustee, as
described in Section 6 below.

      5.8 For the avoidance of doubt, the designation of Unapproved 102 Options
and Approved 102 Options shall be subject to the terms and conditions set forth
in Section 102.

      5.9 With regard to Approved 102 Options, the provisions of the ISOP and/or
the Option Agreement shall be subject to the provisions of Section 102 and the
Tax Assessing Officer's permit, and the said provisions and permit shall be
deemed an integral part of the ISOP and of the Option Agreement. Any provision
of Section 102 and/or the said permit which is necessary in order to receive
and/or to keep any tax benefit pursuant to Section 102, which is not expressly
specified in the ISOP or the Option Agreement, shall be considered binding upon
the Company and the Optionees.


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6.    TRUSTEE

      6.1 Approved 102 Options which shall be granted under the ISOP and/or any
Shares allocated or issued upon exercise of such Approved 102 Options and/or
other shares received subsequently following any realization of rights,
including, without limitation, bonus shares, shall be allocated or issued to the
Trustee and held for the benefit of the Optionees for such period of time as
required by Section 102 (the "Holding Period"). In the case the requirements for
Approved 102 Options are not met, then the Approved 102 Options may be treated
as Unapproved 102 Options, all in accordance with the provisions of Section 102
and regulations promulgated thereunder.

      6.2 Notwithstanding anything to the contrary, the Trustee shall not
release any Shares allocated or issued upon exercise of Approved 102 Options
prior to the full payment of the Optionee's tax liabilities in connection with
such Options.

      6.3 Upon receipt of Approved 102 Option, the Optionee will sign an
undertaking to release the Trustee from any liability in respect of any action
or decision duly taken and bona fide executed in relation with the ISOP, or any
Approved 102 Option or Share granted to him thereunder.

      6.4 With respect to any Approved 102 Option, subject to the provisions of
Section 102 and any rules or regulation or orders or procedures promulgated
thereunder, an Optionee shall not sell or release from trust any Share received
upon the exercise of an Approved 102 Option and/or any share received
subsequently following any realization of rights, including without limitation,
bonus shares, until the lapse of the Holding Period required under Section 102
of the Ordinance. Notwithstanding the above, if any such sale or release occurs
during the Holding Period, the sanctions under Section 102 of the Ordinance and
under any rules or regulation or orders or procedures promulgated thereunder
shall apply to and shall be borne by such Optionee.

7.    SHARES RESERVED FOR THE ISOP; RESTRICTION THEREON

      7.1 The Company has reserved 1,234,000 (One Million Two Hundred Thirty
Four) authorized but unissued Shares, for the purposes of the ISOP and for the
purposes of any other share option plans which may be adopted by the Company in
the future, subject to adjustment as set forth in Section 9 below. Any Shares
which remain unissued and which are not subject to the outstanding Options at
the termination of the ISOP shall cease to be reserved for the purpose of the
ISOP, but until termination of the ISOP the Company shall at all times reserve
sufficient number of Shares to meet the requirements of the ISOP. Should any
Option for any reason expire or be canceled prior to its exercise or
relinquishment in full, the Shares subject to such Option may again be subjected
to an Option under the ISOP or under the Company's other share option plans.

      7.2 Each Option granted pursuant to the ISOP, shall be evidenced by a
written Option Agreement between the Company and the Optionee, in such form as
the Board or the Committee shall from time to time approve. Each Option
Agreement shall state, among other matters, the number of Shares to which the
Option relates, the type of Option granted thereunder (whether a CGO, OIO,
Unapproved 102 Option or a 3(i) Option), the Vesting Dates, the Purchase Price
per share, the Expiration Date and such other terms and conditions as the
Committee or the Board in its discretion may prescribe, provided that they are
consistent with this ISOP.


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8.    PURCHASE PRICE

      8.1 The Purchase Price of each Share subject to an Option shall be
determined by the Board, unless such authority is delegated to the Committee in
accordance with applicable law. Each Option Agreement will contain the Purchase
Price determined for each Option.

      8.2 The Purchase Price shall be payable upon the exercise of the Option in
a form satisfactory to the Committee, including without limitation, by cash or
check. The Committee shall have the authority to postpone the date of payment on
such terms as it may determine.

      8.3 The Purchase Price shall be denominated in the currency of the primary
economic environment of, either the Company or the Optionee (that is the
functional currency of the Company or the currency in which the Optionee is
paid) as determined by the Company.

9.    ADJUSTMENTS

      Upon the occurrence of any of the following described events and subject
to Section 102,, Optionee's rights to purchase Shares under the ISOP shall be
adjusted as hereafter provided:

      9.1 In the event of a Transaction, and subject to the applicable
transaction documents, the unexercised Options then outstanding under the ISOP
may be assumed or substituted with an appropriate number of shares of each class
of shares or other securities of the Successor Company (or a parent or
subsidiary of the Successor Company) as were distributed to the shareholders of
the Company in connection and with respect to the Transaction. In the case of
such assumption and/or substitution of Options, appropriate adjustments shall be
made to the Purchase Price so as to reflect such action and all other terms and
conditions of the Option Agreements shall remain unchanged, including but not
limited to the vesting schedule, all subject to the determination of the
Committee or the Board, which determination shall be in their sole discretion
and final. Unless otherwise required by any applicable law, the Company shall
notify the Optionee of the Transaction in such form and method as it deems
applicable at least ten (10) days prior to the effective date of such
Transaction.

      9.2 Notwithstanding the above and subject to any applicable law, the Board
or the Committee shall have full power and authority to determine that in
certain Option Agreements there shall be a clause instructing that, if in any
such Transaction as described in Section 9.1 above, the Successor Company (or
parent or subsidiary of the Successor Company) does not agree to assume or
substitute such Options, the Vesting Dates shall be accelerated so that any
unvested Option or any portion thereof shall be immediately vested as of the
date which is ten (10) days prior to the effective date of the Transaction.

      9.3 For the purposes of Section 9.1 above, an Option shall be considered
assumed or substituted if, following the Transaction, the Option confers the
right to purchase or receive, for each Share underlying an Option immediately
prior to the Transaction, the consideration (whether shares, options, cash, or
other securities or property) received in the Transaction by holders of shares
held on the effective date of the Transaction (and if such holders were offered
a choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding shares) in their capacity as holders of Shares of
the Company; provided, however, that if such consideration received in the
Transaction is not solely ordinary shares (or their equivalent) of the Successor
Company or its parent or subsidiary, the Board may, with the consent of the
Successor Company, provide for the consideration to


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be received upon the exercise of the Option to be solely ordinary shares (or
their equivalent) of the Successor Company or its parent or subsidiary equal in
Fair Market Value to the per Share consideration received by holders of a
majority of the outstanding Shares in the framework of the Transaction in their
capacity as holders of shares; and provided further that the Board may
determine, in its discretion, that in lieu of such assumption or substitution of
Options for options of the Successor Company or its parent or subsidiary, such
Options will be substituted for any other type of asset or property including
cash which is fair under the circumstances.

      9.4 If the Company is voluntarily liquidated or dissolved while
unexercised Options remain outstanding under the ISOP, the Company shall notify
all unexercised Optionees of such liquidation, and the Optionees shall then have
ten (10) days to exercise any unexercised Vested Option held by them at that
time, in accordance with the exercise procedure set forth herein. Upon the
expiration of such ten-days period, all remaining outstanding Options will
immediately terminate.

      9.5 If the outstanding shares of the Company shall at any time be changed
or exchanged by declaration of a share dividend (bonus shares), share split,
combination or exchange of shares, recapitalization, or any other like event by
or of the Company, and as often as the same shall occur, then the number, class
and kind of the Shares subject to the ISOP or subject to any Options therefore
granted, and the Purchase Prices, shall be appropriately and equitably adjusted
so as to maintain the proportionate number of Shares without changing the
aggregate Purchase Price, provided, however, that no adjustment shall be made by
reason of the distribution of subscription rights (rights offering) on
outstanding shares. Upon happening of any of the foregoing, the class and
aggregate number of Shares issuable pursuant to the ISOP (as set forth in
Section 7 hereof), in respect of which Options have not yet been exercised,
shall be appropriately adjusted, all as will be determined by the Board whose
determination shall be final.

10.   TERM AND EXERCISE OF OPTIONS

      10.1 Options shall be exercised by the Optionee by giving written notice
to the Company and/or to any third party designated by the Company (the
"Representative"), in such form and method as may be determined by the Company
and when applicable, by the Trustee in accordance with the requirements of
Section 102, which exercise shall be effective upon receipt of such notice by
the Company and/or the Representative and the payment of the Purchase Price at
the Company's or the Representative's principal office. The notice shall specify
the number of Shares with respect to which the Option is being exercised.

      10.2 Options, to the extent not previously exercised, shall terminate
forthwith upon the earlier of: (i) the date set forth in the Option Agreement;
and (ii) the expiration of any extended period in any of the events set forth in
section 10.5 below.

      10.3 The Options may be exercised by the Optionee in whole at any time or
in part from time to time, to the extent that the Options become vested and
exercisable, prior to the Expiration Date, and provided that, subject to the
provisions of section 10.5 below, the Optionee is employed by or providing
services to the Company or any of its Affiliates, at all times during the period
beginning with the granting of the Option and ending upon the date of exercise.

      10.4 Subject to the provisions of section 10.5 below, in the event of
termination of the


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Optionee's employment or services with the Company or any of its Affiliates, and
as of the effective date of such termination all Options granted to such
Optionee (Vested or Unvested Options) will immediately expire.

      10.5 Notwithstanding anything to the contrary hereinabove and unless
otherwise determined in the Optionee's Option Agreement or herein, an Option may
be exercised after the date of termination of Optionee's employment or service
with the Company or any Affiliates during an additional period of time beyond
the effective date of such termination, but only with respect to the number of
Vested Options at the effective date of such termination according to the
Vesting Dates of such Options, if:

      (i) termination is without Cause, in which event any Vested Option still
in force and unexpired may be exercised within a period of ninety (90) days
after the effective date of such termination; or-

      (ii) termination is the result of death or disability of the Optionee, in
which event any Vested Option still in force and unexpired may be exercised
within a period of twelve (12) months after the date of such termination; or -

      If termination of employment or service is for Cause, any outstanding
unexercised Option (whether vested or non-vested), will immediately expire and
terminate, and the Optionee shall not have any right in connection to such
outstanding Options.

      10.6 To avoid doubt, the Optionees shall not have any of the rights or
privileges of shareholders of the Company in respect of any Shares purchasable
upon the exercise of any Option, nor shall they be deemed to be a class of
shareholders or creditors of the Company for purpose of the operation of
sections 350 and 351 of the Companies Law or any successor to such section,
until registration of the Optionee as holder of such Shares in the Company's
register of shareholders upon exercise of the Option in accordance with the
provisions of the ISOP, but in case of Options and Shares held by the Trustee,
subject to the provisions of Section 6 of the ISOP.

      10.7 Any form of Option Agreement authorized by the ISOP may contain such
other provisions as the Board and the Committee may, from time to time, deem
advisable, all in accordance with and subject to the provisions of Section 102,
and further subject to the payment of any taxes due thereupon under any
applicable law by the Optionee in connection thereto.

      10.8 With respect to Unapproved 102 Option, if the Optionee ceases to be
employed by the Company or any Affiliate, the Optionee shall provide the Company
and/or its Affiliate security or guarantees for the payment of tax due at the
time of sale of Shares, all in accordance with the provisions of Section 102 and
the rules, regulation or orders promulgated thereunder.

11.   VESTING OF OPTIONS

      11.1 Subject to the provisions of the ISOP, each Option shall vest
following the Vesting Dates and for the number of Shares as shall be provided in
the Option Agreement. However, no Option shall be exercisable after the
Expiration Date.

      11.2 An Option may be subject to such other terms and conditions on the
time or times when it may be exercised, as the Board or Committee (if permitted
by law and the case may be) may deem appropriate all in accordance with and
subject to the provisions of Section 102.. The vesting provisions


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of individual Options may vary.

12.   PURCHASE FOR INVESTMENT

The Company's obligation to issue or allocate Shares upon exercise of an Option
granted under the ISOP is expressly conditioned upon: (a) the Company's
completion of any registration or other qualifications of such Shares under all
applicable laws, rules and regulations or (b) representations and undertakings
by the Optionee (or his legal representative, heir or legatee, in the event of
the Optionee's death) to assure that the sale of the Shares complies with any
registration exemption requirements which the Company in its sole discretion
shall deem necessary or advisable. Such required representations and
undertakings may include representations and agreements that such Optionee (or
his legal representative, heir, or legatee): (a) is purchasing such Shares for
investment and not with any present intention of selling or otherwise disposing
thereof; and (b) agrees to have placed upon the face and reverse of any
certificates evidencing such Shares a legend setting forth (i) any
representations and undertakings which such Optionee has given to the Company or
a reference thereto and (ii) that, prior to effecting any sale or other
disposition of any such Shares, the Optionee must furnish to the Company an
opinion of counsel, satisfactory to the Company, that such sale or disposition
will not violate the applicable laws, rules, and regulations, whether of the
State of Israel or of the United States or any other State having jurisdiction
over the Company and the Optionee.

13.   DIVIDENDS

      13.1 With respect to all Shares (but excluding, for avoidance of any
doubt, any unexercised Options) allocated or issued upon the exercise of Options
purchased by the Optionee and held by the Optionee or by the Trustee, as the
case may be, the Optionee shall be entitled to receive dividends in accordance
with the quantity of such Shares, subject to the provisions of the Articles (and
all amendments thereto) and subject further to any applicable taxation on
distribution of dividends.

      13.2 During the period in which Shares are held by the Trustee on behalf
of the Optionee, the cash dividends paid with respect thereto shall be paid
directly to the Optionee.

14.   RESTRICTIONS ON ASSIGNABILITY AND SALE OF OPTIONS

      14.1 No Option or any right with respect thereto, purchasable hereunder,
whether fully paid or not, shall be assignable, transferable or given as
collateral or any right with respect to it given to any third party whatsoever,
except as specifically allowed under the ISOP, and during the lifetime of the
Optionee each and all of such Optionee's rights to purchase Shares hereunder
shall be exercisable only by the Optionee.

      Any such action made directly or indirectly, for an immediate validation
or for a future one, shall be void.

      14.2 For so long as Options and/or Shares are held by the Trustee on
behalf of the Optionee, all rights of the Optionee over the Shares are personal,
can not be transferred, assigned, pledged or mortgaged, other than by will or
pursuant to the laws of descent and distribution.

15.   EFFECTIVE DATE AND DURATION OF THE ISOP


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      The ISOP shall be effective as of the day it was adopted by the Board and
shall terminate at the end of ten (10) years from such day of adoption.

16.   AMENDMENTS OR TERMINATION

      The Board may at any time, but when applicable, after consultation with
the Trustee, amend, alter, suspend or terminate the ISOP, provided that no.
amendment, alteration, suspension or termination of the ISOP shall impair the
rights of any Optionee, unless mutually agreed otherwise between the Optionee
and the Company, which agreement must be in writing and signed by both parties..
Termination of the ISOP shall not affect the Committee's ability to exercise the
powers granted to it hereunder with respect to Options granted under the ISOP
prior to the date of such termination.

17.   GOVERNMENTAL REGULATIONS

      The ISOP, and the granting and exercise of Options hereunder, and the
obligation of the Company to sell and deliver Shares under such Options, shall
be subject to all applicable laws, rules, and regulations, whether of the State
of Israel or of the United States or any other State having jurisdiction over
the Company and the Optionee, including the registration of the Shares under the
United States Securities Act of 1933, and the Ordinance and to such approvals by
any governmental agencies or national securities exchanges as may be required.
Nothing herein shall be deemed to require the Company to register the Shares
under the securities laws of any jurisdiction.

18.   CONTINUANCE OF EMPLOYMENT OR HIRED SERVICES

      Neither the ISOP nor the Option Agreement with the Optionee shall impose
any obligation on the Company or an Affiliate thereof, to continue any Optionee
in its employ or service, and nothing in the ISOP or in any Option granted
pursuant thereto shall confer upon any Optionee any right to continue in the
employ or service of the Company or an Affiliate thereof or restrict the right
of the Company or an Affiliate thereof to terminate such employment or service
at any time.

19.   GOVERNING LAW & JURISDICTION

      The ISOP shall be governed by and construed and enforced in accordance
with the laws of the State of Israel applicable to contracts made and to be
performed therein, without giving effect to the principles of conflict of laws.
The competent courts of Tel-Aviv, Israel shall have sole jurisdiction in any
matters pertaining to the ISOP.

20.   TAX CONSEQUENCES

      20.1 Any tax consequences arising from the grant or exercise of any
Option, from the payment for Shares covered thereby or from any other event or
act (of the Company and/or its Affiliates, the Trustee or the Optionee),
hereunder, shall be borne solely by the Optionee. The Company and/or its
Affiliates and/or the Trustee shall withhold taxes according to the requirements
under the applicable laws, rules, and regulations, including withholding taxes
at source. Furthermore, the Optionee shall agree to indemnify the Company and/or
its Affiliates 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 Optionee.


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      20.2 The Company and/or, when applicable, the Trustee shall not be
required to release any Share certificate to an Optionee until all required
payments have been fully made.

21.   NON-EXCLUSIVITY OF THE ISOP

      The adoption of the ISOP by the Board shall not be construed as amending,
modifying or rescinding any previously approved incentive arrangements or as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of Options otherwise than under the ISOP, and such arrangements may be
either applicable generally or only in specific cases.

22.   MULTIPLE AGREEMENTS

      The terms of each Option may differ from other Options granted under the
ISOP at the same time, or at any other time. The Board may also grant more than
one Option to a given Optionee during the term of the ISOP, either in addition
to, or in substitution for, one or more Options previously granted to that
Optionee.


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