Exhibit 10.6

                              2005 SPO MEDICAL INC.

                              EQUITY INCENTIVE PLAN

Section 1. Purpose of the Plan

The purpose of the SPO Medical Inc. Equity Incentive Plan, including Appendix I
attached hereto (the "Plan") is to further the interests of SPO Medical Inc.
(the "Company") and its shareholders by providing long-term performance
incentives to those key employees and consultants and Service Providers of the
Company and its Subsidiaries who are largely responsible for the management,
growth and protection of the business of the Company and its Subsidiaries.

Section 2. Definitions

For purposes of the Plan, the following terms shall be defined as set forth
below:

(a)   "Applicable Laws" means the requirement relating to the administration of
      employee stock option plans under the laws of the United States of America
      and of the State of Israel , any stock exchange or quotation system on
      which the shares shall be listed or quoted and the applicable laws of any
      country or jurisdiction where Options are granted under the Plan.

(b)   "Award" means any Option, Performance Unit, SAR (including a Limited SAR),
      Restricted Stock, Stock granted as a bonus or in lieu of other awards,
      other Stock-Based Award, Tax Bonus or other cash payments granted to a
      Participant under the Plan.

(c)   "Award Agreement" shall mean the written agreement, instrument or document
      evidencing an Award.

(d)   Cause" - shall mean (i) the willful failure by the Participant to perform
      substantially the Participant's duties (other than due to physical or
      mental illness) after reasonable notice to the Participant of such
      failure, (ii) the Participant's engaging in serious misconduct that is
      injurious to the Company or any Subsidiary, (iii) the Participant's having
      been convicted of, or entered a plea of nolo contendere to, a crime that
      constitutes a felony, or (iv) breach of a fiduciary duty, or (v) the
      breach by the Participant of any written covenant or agreement not to
      compete, in each case with respect to the Company or any Subsidiary,
      regarding confidentiality of information of the Company or any Subsidiary
      or nonsolicitation or hiring of employees of the Company or any
      Subsidiary, or (vi) any other act or omission which in the reasonable
      opinion of the Company could be financially injurious to the Company or
      any Subsidiary, their reputation or business including but not limited to
      any other breach of Participant's employment agreement with the Group.

(e)   "Change of Control" means and includes each of the following: (i) the
      acquisition, in one or more transactions, of beneficial ownership (within
      the meaning of Rule 13d-3 under the Exchange Act) by any person or entity
      or any group of persons or entities who constitute a group (within the
      meaning of Section 13(d)(3) of the Exchange Act), other than a trustee or
      other fiduciary holding securities under an employee benefit plan of the
      Company or a Subsidiary, of any securities of the Company such that, as a
      result of such acquisition, such person, entity or group either (A)
      beneficially owns (within the meaning of Rule l3d-3 under the Exchange
      Act), directly or indirectly, more than 50% of the Company's outstanding
      voting securities entitled to vote on a regular basis for a majority of
      the members of the Board of Directors of the Company or (B) otherwise has
      the ability to elect, directly or indirectly, a majority of the members of
      the Board; (ii) a change in the composition of the Board of Directors of
      the Company such that a majority of the members of the Board of Directors
      of the Company are not Continuing Directors; or (iii) the stockholders of
      the Company approve a merger or consolidation of the Company with any
      other corporation, other than a merger or consolidation which would result
      in the voting securities of the Company outstanding immediately prior
      thereto continuing to represent (either by remaining outstanding or by
      being converted into voting securities of the surviving entity) at least
      50% of the total voting power represented by the voting securities of the
      Company or such surviving entity outstanding immediately after such merger
      or consolidation, or the stockholders of the Company approve a plan of
      complete liquidation of the Company or an agreement for the sale or
      disposition by the Company of (in one or more transactions) all or
      substantially all of the Company's assets.

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      Notwithstanding the foregoing, the preceding events shall not be deemed to
      be a Change of Control if, prior to any transaction or transactions
      causing such change, a majority of the Continuing Directors shall have
      voted not to treat such transaction or transactions as resulting in a
      Change of Control.

(f)   "Code" means the Internal Revenue Code of 1986, as amended from time to
      time.

(g)   A "Continuing Director" means, as of any date of determination, any member
      of the Board of Directors of the Company who (i) was a member of such
      Board on the effective date of the Plan or (ii) was nominated for election
      or elected to such Board with the affirmative vote of a majority of the
      Continuing Directors who were members of such Board at the time of such
      nomination or election.

(h)   "Date of Grant" subject to Applicable Laws, is the date on which the
      Committee grants the Award.

(i)   "Eligible Employee" - shall mean each Executive Officer and any other
      employee or consultant of the Company or its Subsidiaries, but shall not
      include Directors who are not employees of any such entity.

(j)   "Employment" shall mean, continuous and regular salaried employment with
      the Company or a Subsidiary, which shall include (unless the Committee
      shall otherwise determine) any period of vacation, any approved leave of
      absence or any salary continuation or severance pay period and, at the
      discretion of the Committee, may include service with any former
      Subsidiary of the Company

(k)   "Executive Officer" - shall mean those persons who are officers of the
      Company within the meaning of Rule16a-1(f) of the Exchange Act.

(l)   "Exchange Act" means the Securities Exchange Act of 1934, as amended from
      time to time.

(m)   "Fair Market Value" means, with respect to Stock, Awards, or other
      property, the fair market value of such Stock, Awards, or other property
      determined by such methods or procedures as shall be established from time
      to time by the Committee in good faith and in accordance with applicable
      law. Unless otherwise determined by the Committee, the Fair Market Value
      of Stock shall mean the mean of the high and low sales prices of Stock on
      the relevant date as reported on the stock exchange or market on which the
      Stock is primarily traded, or if no sale is made on such date, then the
      Fair Market Value is the weighted average of the mean of the high and low
      sales prices of the Stock on the next preceding day and the next
      succeeding day on which such sales were made, as reported on the stock
      exchange or market on which the Stock is primarily traded..
      Notwithstanding the foregoing, (i) in the case of any Award made on the
      date of the initial public offering of the Company's Common Stock, "Fair
      Market Value" on such date shall be the price at which the Company's
      Common Stock is sold to the public in such initial public offering and
      (ii) in the case of any Award made prior to the date of the initial public
      offering of the Company's Common Stock, "Fair Market Value" on such date
      shall be as determined in good faith by the Board.

(n)   "Group" shall mean the Company's group of companies including, inter alia,
      its Parent or Subsidiary or any other affiliate or successor company as
      the Board shall determine

(o)   "ISO" means any Option designated as an incentive stock option within the
      meaning of Section 422 of the Code.

(p)   "Limited SAR" means an SAR exercisable only for cash upon a Change of
      Control or other event, as specified by the Committee.

(q)   "Option" means a right granted to a Participant pursuant to Section 6(b)
      to purchase Stock at a specified price during specified time periods. An
      Option may be either an ISO or a nonstatutory Option (an Option not
      designated as an ISO).


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(r)   "Performance Unit" means a right granted to a Participant pursuant to
      Section 6(c) to receive a payment in cash equal to the increase in the
      book value of the Company during specified time periods if specified
      performance goals are met.

(s)   "Participants" means key employees and consultants who will receive Awards
      pursuant to the Plan.

(t)   "Restricted Stock" means Stock awarded to a Participant pursuant to
      Section 6(d) that may be subject to certain restrictions and to a risk of
      forfeiture.

(u)   "Service Provider" - means an employee, Director, supplier, advisor or
      Consultant of the Company, provided, however, that a consultant or advisor
      must be an individual who is providing or will be providing bona fide
      services to the Company, with such services (1) not being in connection
      with the offer or sale of securities in a capital-raising transaction, and
      (2) not directly or indirectly promoting or maintaining a market for
      securities of the Company.

(v)   "Stock-Based Award" - means a right that may be denominated or payable in,
      or valued in whole or in part by reference to the market value of, Stock,
      including, but not limited to, any Option, SAR (including a Limited SAR),
      Restricted Stock, Stock granted as a bonus or Awards in lieu of cash
      obligations.

(w)   "SAR" or "Stock Appreciation Right" means the right granted to a
      Participant pursuant to Section 6(e) to be paid an amount measured by the
      appreciation in the Fair Market Value of Stock from the Date of Grant to
      the date of exercise of the right, with payment to be made in cash, Stock
      or as specified in the Award, as determined by the Committee.

(x)   "Subsidiary" shall mean any corporation, partnership, joint venture or
      other business entity of which 50% or more of the outstanding voting power
      is beneficially owned, directly or indirectly, by the Company.

(y)   "Tax Bonus" means a payment in cash in the year in which an amount is
      included in the gross income of a Participant in respect of an Award of an
      amount equal to the federal, foreign, if any, and applicable state and
      local income and employment tax liabilities payable by the Participant as
      a result of (i) the amount included in gross income in respect of the
      Award and (ii) the payment of the amount in clause (i) and the amount in
      this clause (ii). For purposes of determining the amount to be paid to the
      Participant pursuant to the preceding sentence, the Participant shall be
      deemed to pay, according to any applicable laws, income taxes at the
      highest marginal rate of tax imposed upon ordinary income for the year in
      which an amount in respect of the Award is included in gross income, after
      giving effect to any deductions therefrom or credits available with
      respect to the payment of any such taxes.

(z)   "Ten Percent Stockholder" means a person who owns shares possessing more
      than ten percent (10%) of the total combined voting power of all classes
      of shares of the Company or of any of its Subsidiaries immediately before
      such Option is granted.

Section 3. Administration of the Plan

The Plan shall be administered by the Board of Directors of the Company or, at
the discretion of the Board, by a committee composed of at least two non
employee members of the Board. Any such committee designated by the Board, and
the Board itself acting in its capacity as administrator of the Equity Incentive
Plan, is referred to herein as the "Committee." After any such designation, no
member of the Committee while serving as such shall be eligible for
participation in the Plan. Any action of the Committee in administering the Plan
shall be final, conclusive and binding on all persons, including the Company,
its Subsidiaries, employees, Participants, persons claiming rights from or
through Participants and stockholders of the Company.

Subject to the provisions of the Plan, the Committee shall have full and final
authority in its discretion:

      (a)   to select the Participants ;
      (b)   to determine the type or types of Awards to be granted to each
            Participant;
      (c)   to determine the number of shares of Stock to which an Award will
            relate, the terms and conditions of any Award granted under the Plan
            (including, but not limited to, restrictions as to transferability


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            or forfeiture, exercisability or settlement of an Award and waivers
            or accelerations thereof, and waivers of or modifications to
            performance conditions relating to an Award, based in each case on
            such considerations as the Committee shall determine) and all other
            matters to be determined in connection with an Award;
      (d)   to determine whether, to what extent, and under what circumstances
            an Award may be settled, or the exercise price of an Award may be
            paid, in cash, Stock, other Awards or other property, or an Award
            may be canceled, forfeited, or surrendered;
      (e)   to determine whether, and to certify that, performance goals to
            which the settlement of an Award is subject are satisfied;
      (f)   to correct any defect or supply any omission or reconcile any
            inconsistency in the Plan, and to adopt, amend and rescind such
            rules and regulations as, in its opinion, may be advisable in the
            administration of the Plan; and
      (g)   to make all other determinations as it may deem necessary or
            advisable for the administration of the Plan. The Committee may
            delegate to officers or managers of the Company or any Subsidiary or
            to unaffiliated Service Providers the authority, subject to such
            terms as the Committee shall determine, to perform administrative
            functions and to perform such other functions as the Committee may
            determine, to the extent permitted under Applicable Laws.

Section 4. Participation in the Plan

Participants in the Plan shall be selected by the Committee from among the key
employees and consultants of the Company and its Subsidiaries, provided,
however, that only key employees shall be eligible to receive ISOs under the
Plan.

Section 5. Plan Limitations; Shares Subject to the Plan

(a)   Subject to the provisions of Section 8(a) hereof, the aggregate number of
      shares of common stock, $0.01 par value, of the Company (the "Stock")
      available for issuance as Awards under the Plan shall not exceed 1,750,000
      shares.

(b)   Subject to the provisions of Section 8(a) hereof, the aggregate number of
      Performance Units which may be awarded under the Plan shall not exceed
      100,000. If any Performance Units awarded under the Plan shall be
      forfeited or canceled, such Performance Units shall thereafter be
      available for award under the Plan.

(c)   Subject to the provisions of Section 8(a) hereof, of the aggregate number
      of Options of the Company available as per Section 5(a) a maximum number
      of Shares in respect of which ISO can be awarded hereunder shall be
      700,000. If any Options awarded under the Plan shall be forfeited or
      canceled, such Options thereafter be available for award under the Plan.

      No Award may be granted if the number of shares to which such Award
      relates, when added to the number of shares previously issued under the
      Plan and the number of shares which may then be acquired pursuant to other
      outstanding, unexercised Awards, exceeds the number of shares available
      for issuance pursuant to the Plan. If any shares subject to an Award are
      forfeited or such Award is settled in cash or otherwise terminates for any
      reason whatsoever without an actual distribution of shares to the
      Participant, any shares counted against the number of shares available for
      issuance pursuant to the Plan with respect to such Award shall, to the
      extent of any such forfeiture, settlement, or termination, again be
      available for Awards under the Plan; provided, however, that the Committee
      may adopt procedures for the counting of shares relating to any Award to
      ensure appropriate counting, avoid double counting, and provide for
      adjustments in any case in which the number of shares actually distributed
      differs from the number of shares previously counted in connection with
      such Award.

(d)   To the extent required by Section 162(m) of the Code (as amended from time
      to time), the reprising of an Option shall be treated as the grant of a
      new option and the cancellation of the reprised Option.


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Section 6. Awards

(a)   General. Awards may be granted on the terms and conditions set forth in
      this Section 6. In addition, the Committee may impose on any Award or the
      exercise thereof, at the Date of Grant or thereafter (subject to Section
      8(a)), such additional terms and conditions, not inconsistent with the
      provisions of the Plan, as the Committee shall determine, including terms
      requiring forfeiture of Awards in the event of termination of employment
      by the Participant; provided, however, that the Committee shall retain
      full power to accelerate or waive any such additional term or condition as
      it may have previously imposed. All Awards shall be evidenced by a
      relevant Award Agreement.

(b)   Options. The Committee may grant Options to Participants on the following
      terms and conditions:

      (i)   The Incentive Stock Option price per share of Stock shall be set in
            the Award Agreement, but shall not be less than one hundred percent
            (100%) of the Fair Market Value of the Stock at the time of the
            Option Grant Date.

            The aggregate Fair Market Value, determined as of the Option Grant
            Date, of the shares of Stock with respect to which Incentive Stock
            Options are exercisable for the first time during any calendar year
            by any Eligible Participant shall not exceed one hundred thousand
            dollars ($100,000); provided, however, to the extent permitted under
            Section 422 of the Code:

            if a Participant's employment is terminated by reason of death,
            Disability or Retirement and the portion of any Incentive Stock
            Option that is otherwise exercisable during the post-termination
            period applied without regard to the one hundred thousand dollar
            ($100,000) limitation contained in Section 422 of the Code is
            greater than the portion of such option that is immediately
            exercisable as an Incentive Stock Option during such
            post-termination period under Section 422, such excess shall be
            treated as a Nonqualified Stock Option; and

            if the exercise of an Incentive Stock Option is accelerated by
            reason of an Acceleration Event, any portion of such Award that is
            not exercisable as an Incentive Stock Option by reason of the one
            hundred thousand dollar ($100,000) limitation contained in Section
            422 of the Code shall be treated as a Nonqualified Stock Option.

            Incentive Stock Options shall be granted only to an Eligible
            Participant who, at the time of the Option Grant Date, does not own
            Stock possessing more than 10% of the total combined voting power of
            all classes of stock of the Company; provided, however, the
            foregoing restriction shall not apply if at the time of the Option
            Grant Date the option price is at least one hundred ten percent
            (110%) of the Fair Market Value of the Stock subject to the
            Incentive Stock Option and such Incentive Stock Option by its terms
            is not exercisable after the expiration of five (5) years from the
            Option Grant Date.

            The Committee may adopt any other terms and conditions which it
            determines should be imposed for the Incentive Stock Option to
            qualify under Section 422 of the Code, as well as any other terms
            and conditions not inconsistent with this Article IV as determined
            by the Committee.

            The Committee may at any time offer to buy out for a payment in
            cash, Stock, Deferred Stock or Restricted Stock an Incentive Stock
            Option previously granted, based on such terms and conditions as the
            Committee shall establish and communicate to the Participant at the
            time that such offer is made.

            If the Incentive Stock Option Award Agreement so provides, the
            Committee may require that all or part of the shares of Stock to be
            issued upon the exercise of an Incentive Stock Option shall take the
            form of Deferred or Restricted Stock, which shall be valued on the
            date of exercise, as determined by the Committee, on the basis of
            the Fair Market Value of such Deferred Stock or Restricted Stock
            determined without regard to the deferral limitations and/or
            forfeiture restrictions involved.


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      (ii)  Time and Method of Exercise. The Committee shall determine the time
            or times at which an Option may be exercised in whole or in part,
            whether the exercise price shall be paid in cash or by the surrender
            at Fair Market Value of Stock, or by any combination of cash and
            shares of Stock, including, without limitation, cash, Stock, other
            Awards, or other property (including notes or other contractual
            obligations of Participants to make payment on a deferred basis,
            such as through "cashless exercise" arrangements, to the extent
            permitted by applicable laws), and the methods by which Stock will
            be delivered or deemed to be delivered to Participants.

      (iii) Incentive Stock Options. The terms of any Option granted under the
            Plan as an ISO shall comply in all respects with the provisions of
            Section 422 of the Code, including, but not limited to, the
            requirement that no ISO shall be granted more than ten years after
            the effective date of the Plan.

(c)   Performance Units. The Committee is authorized to grant Performance Units
      to Participants on the following terms and conditions:

      (i)   Performance Criteria and Period. At the time it makes an award of
            Performance Units, the Committee shall establish both the
            performance goal or goals and the performance period or periods
            applicable to the Performance Units so awarded. A performance goal
            shall be a goal, expressed in terms of growth in book value,
            earnings per share, return on equity or any other financial or other
            measurement deemed appropriate by the Committee, or may relate to
            the results of operations or other measurable progress of either the
            Company as a whole or the Participant's Subsidiary, division or
            department. The performance period will be the period of time over
            which one or more of the performance goals must be achieved, which
            may be of such length as the Committee, in its discretion, shall
            select. Neither the performance goals nor the performance periods
            need be identical for all Performance Units awarded at any time or
            from time to time. The Committee shall have the authority, in its
            discretion, to accelerate the time at which any performance period
            will expire or waive or modify the performance goals of any
            Participant or Participants. The Committee may also make such
            adjustments, to the extent it deems appropriate, to the performance
            goals for any Performance Units awarded to compensate for, or to
            reflect, any material changes which may have occurred in accounting
            practices, tax laws, other laws or regulations, the financial
            structure of the Company, acquisitions or dispositions of business
            or Subsidiaries or any unusual circumstances outside of management's
            control which, in the sole judgment of the Committee, alters or
            affects the computation of such performance goals or the performance
            of the Company or any relevant Subsidiary, division or department.

      (ii)  Value of Performance Units. The value of each Performance Unit at
            any time shall equal the book value per share of the Company's
            Stock, as such value appears on the consolidated balance sheet of
            the Company as of the end of the fiscal quarter immediately
            preceding the date of valuation.

(d)   Restricted Stock. The Committee is authorized to grant Restricted Stock to
      Participants on the following terms and conditions:

      (i)   Restricted Period. Restricted Stock awarded to a Participant shall
            be subject to such restrictions on transferability and other
            restrictions for such periods as shall be established by the
            Committee, in its discretion, at the time of such Award, which
            restrictions may lapse separately or in combination at such times,
            under such circumstances, or otherwise, as the Committee may
            determine.

      (ii)  Forfeiture. Restricted Stock shall be forfeitable to the Company
            upon termination of employment during the applicable restricted
            periods. The Committee, in its discretion, whether in an Award
            Agreement or anytime after an Award is made, may accelerate the time
            at which restrictions or forfeiture conditions will lapse or remove
            any such restrictions, including upon death, disability or
            retirement, whenever the Committee determines that such action is in
            the best interests of the Company.


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      (iii) Certificates for Stock. Restricted Stock granted under the Plan may
            be evidenced in such manner as the Committee shall determine. If
            certificates representing Restricted Stock are registered in the
            name of the Participant, such certificates may bear an appropriate
            legend referring to the terms, conditions and restrictions
            applicable to such Restricted Stock.

      (iv)  Rights as a Shareholder. Subject to the terms and conditions of the
            Award Agreement, the Participant shall have all the rights of a
            stockholder with respect to shares of Restricted Stock awarded to
            him or her, including, without limitation, the right to vote such
            shares and the right to receive all dividends or other distributions
            made with respect to such shares. If any such dividends or
            distributions are paid in Stock, the Stock shall be subject to
            restrictions and a risk of forfeiture to the same extent as the
            Restricted Stock with respect to which the Stock has been
            distributed.

(e)   Stock Appreciation Rights. The Committee is authorized to grant SARs to
      Participants on the following terms and conditions:

      (i)   Right to Payment. An SAR shall confer on the Participant to whom it
            is granted a right to receive, upon exercise thereof, the excess of
            (A) the Fair Market Value of one share of Stock on the date of
            exercise over (B) the grant price of the SAR as determined by the
            Committee as of the Date of Grant of the SAR, which grant price
            (except as provided in Section 7(a)) shall not be less than the Fair
            Market Value of one share of Stock on the Date of Grant.

      (ii)  Other Terms. The Committee shall determine the time or times at
            which an SAR may be exercised in whole or in part, the method of
            exercise, method of settlement, form of consideration payable in
            settlement, method by which Stock will be delivered or deemed to be
            delivered to Participants, whether or not an SAR shall be in tandem
            with any other Award, and any other terms and conditions of any SAR.
            Limited SARs may be granted on such terms, not inconsistent with
            this Section 6(e), as the Committee may determine. Limited SARs may
            be either freestanding or in tandem with other Awards.

(f)   Bonus Stock and Awards in Lieu of Cash Obligations. The Committee is
      authorized to grant Stock as a bonus, or to grant Stock or other Awards in
      lieu of Company or Subsidiary obligations to pay cash or deliver other
      property under other plans or compensatory arrangements; provided that, in
      the case of Participants subject to Section 16 of the Exchange Act, such
      cash amounts are determined under such other plans in a manner that
      complies with applicable requirements of Rule 16b-3 so that the
      acquisition of Stock or Awards hereunder shall be exempt from Section
      16(b) liability. Stock or Awards granted hereunder shall be subject to
      such other terms as shall be determined by the Committee.

(g)   Other Stock-Based Awards. The Committee is authorized, subject to
      limitations under applicable law, to grant to Participants such other
      Stock-Based Awards in addition to those provided in Sections 6(b) and (d)
      through (e) hereof, as deemed by the Committee to be consistent with the
      purposes of the Plan. The Committee shall determine the terms and
      conditions of such Awards. Stock delivered pursuant to an Award in the
      nature of a purchase right granted under this Section 6(g) shall be
      purchased for such consideration and paid for at such times, by such
      methods, and in such forms, including, without limitation, cash, Stock,
      other Awards, or other property, as the Committee shall determine.

(i)   Cash Payments. The Committee is authorized, subject to limitations under
      any applicable laws, to grant to Participants Tax Bonuses and other cash
      payments, whether awarded separately or as a supplement to any Stock-Based
      Award. The Committee shall determine the terms and conditions of such
      Awards.

Section 7 - Additional Provisions Applicable to Awards

(a)   Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted
      under the Plan may, in the discretion of the Committee, be granted either
      alone or in addition to, in tandem with, or in substitution for, any other
      Award granted under the Plan or any award granted under any other plan of


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      the Company or any Subsidiary, or any business entity acquired by the
      Company or any Subsidiary, or any other right of a Participant to receive
      payment from the Company or any Subsidiary. If an Award is granted in
      substitution for another Award or award, the Committee shall require the
      surrender of such other Award or award in consideration for the grant of
      the new Award. Awards granted in addition to, or in tandem with other
      Awards or awards may be granted either as of the same time as, or a
      different time from, the grant of such other Awards or awards. The per
      share exercise price of any Option, grant price of any SAR, or purchase
      price of any other Award conferring a right to purchase Stock:

      (i)   granted in substitution for an outstanding Award or award, shall be
            not less than the lesser of (A) the Fair Market Value of a share of
            Stock at the date such substitute Award is granted or (B) such Fair
            Market Value at that date, reduced to reflect the Fair Market Value
            at that date of the Award or award required to be surrendered by the
            Participant as a condition to receipt of the substitute Award; or

      (ii)  retroactively granted in tandem with an outstanding Award or award,
            shall not be less than the lesser of the Fair Market Value of a
            share of Stock at the Date of Grant of the later Award or at the
            Date of Grant of the earlier Award or award.

(b)   Exchange and Buy Out Provisions. The Committee may at any time offer to
      exchange or buy out any previously granted Award for a payment in cash,
      Stock, other Awards (subject to Section 7(a)), or other property based on
      such terms and conditions as the Committee shall determine and communicate
      to a Participant at the time that such offer is made.

(c)   Performance Conditions. The right of a Participant to exercise or receive
      a grant or settlement of any Award, and the timing thereof, may be subject
      to such performance conditions as may be specified by the Committee.

(d)   Term of Awards. If not previously exercised each Option shall expire upon
      the earlier of the tenth (10th) anniversary of the date of the grant
      thereof or (subject to section 9) upon the termination of the
      Participant's Employment (or, if applicable, on the day following the last
      day on which such Option is exercisable), provided that (i) the Committee
      may establish a shorter term for an Option at the time of the grant of
      such Option and (ii) in the case of an ISO issued to a Participant who
      owns stock in the Company possessing more than 10% of the total combined
      voting power of all classes of stock of the Company, such Incentive Stock
      Option shall expire on the fifth (5th) anniversary of the Date of Grant.
      For purposes of the preceding sentence, a person's stock ownership will be
      determined using the constructive ownership rules contained in Code
      Section 424(d), as amended from time to time.

(e)   Form of Payment. Subject to the terms of the Plan and any applicable Award
      Agreement, payments or transfers to be made by the Company or a Subsidiary
      upon the grant or exercise of an Award may be made in such forms as the
      Committee shall determine, including, without limitation, cash, Stock,
      other Awards, or other property (and may be made in a single payment or
      transfer, in installments, or on a deferred basis), in each case
      determined in accordance with rules adopted by, and at the discretion of,
      the Committee. (Such payments may include, without limitation, provisions
      for the payment or crediting of reasonable interest on installments or
      deferred payments.) The Committee, in its discretion, may accelerate any
      payment or transfer upon a change in control as defined by the Committee.
      The Committee may also authorize payment upon the exercise of an Option by
      net issuance or other cashless exercise methods.

(f)   Loan Provisions. With the consent of the Committee, and subject at all
      times to laws and regulations and other binding obligations or provisions
      applicable to the Company, the Company may make, guarantee, or arrange for
      a loan or loans to a Participant with respect to the exercise of any
      Option or other payment in connection with any Award, including the
      payment by a Participant of any or all federal, state, or local income or
      other taxes due in connection with any Award. Subject to such limitations,
      the Committee shall have full authority to decide whether to make a loan
      or loans hereunder and to determine the amount, terms, and provisions of


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<PAGE>

      any such loan or loans, including the interest rate to be charged in
      respect of any such loan or loans, whether the loan or loans are to be
      with or without recourse against the borrower, the terms on which the loan
      is to be repaid and the conditions, if any, under which the loan or loans
      may be forgiven.

(g)   Awards to Comply with Section 162(m) of the Code. The Committee may (but
      is not required to) grant an Award pursuant to the Plan to a Participant
      who, in the year of grant, may be a "covered employee," within the meaning
      of Section 162(m) of the Code, which is intended to qualify as
      "performance-based compensation" under Section 162(m) of the Code (a
      "Performance-Based Award"). The right to receive a Performance-Based
      Award, other than Options and SARs granted at not less than Fair Market
      Value, shall be conditional upon the achievement of performance goals
      established by the Committee in writing at the time such Performance-Based
      Award is granted. Such performance goals, which may vary from Participant
      to Participant and Performance-Based Award to Performance-Based Award,
      shall be based upon the attainment by the Company or any Subsidiary,
      division or department of specific amounts of, or increases in, one or
      more of the following, any of which may be measured either in absolute
      terms or as compared to another company or companies: revenues, earnings,
      cash flow, net worth, book value, stockholders' equity, financial return
      ratios, market performance or total stockholder return, and/or the
      completion of certain business or capital transactions. Before any
      compensation pursuant to a Performance-Based Award is paid, the Committee
      shall certify in writing that the performance goals applicable to the
      Performance-Based Award were in fact satisfied.

      The maximum amount which may be granted as Performance-Based Awards to any
      Participant in any calendar year shall not exceed (i) Stock-Based Awards
      for 100,000 shares of Stock (whether payable in cash or stock), subject to
      adjustment as provided in Section 8(a) hereof, (ii) 100,000 Performance
      Units, (iii) a Tax Bonus payable with respect to the Stock-Based Awards
      described in clause (i) and Performance Units described in clause (ii),
      and (iv) cash payments (other than Tax Bonuses) of $1,000,000.

(h)   Change of Control. In the event of a Change of Control of the Company, all
      Awards granted under the Plan (including Performance-Based Awards) that
      are still outstanding and not yet vested or exercisable or which are
      subject to restrictions shall become immediately 100% vested in each
      Participant or shall be free of any restrictions, as of the first date
      that the definition of Change of Control has been fulfilled, and shall be
      exercisable for the remaining duration of the Award. All Awards that are
      exercisable as of the effective date of the Change of Control will remain
      exercisable for the remaining duration of the Award.

Section 8. Adjustments upon Changes in Capitalization; Acceleration in Certain
Events

(a)   In the event that the Committee shall determine that any stock dividend,
      recapitalization, forward split or reverse split, reorganization, merger,
      consolidation, spin-off, combination, repurchase or share exchange, or
      other similar corporate transaction or event, affects the Stock or the
      book value of the Company such that an adjustment is appropriate in order
      to prevent dilution or enlargement of the rights of Participants under the
      Plan, then the Committee shall, in such manner as it may deem equitable,
      adjust any or all of (i) the number and kind of shares of Stock which may
      thereafter be issued in connection with Awards, (ii) the number and kind
      of shares of Stock issuable in respect of outstanding Awards, (iii) the
      aggregate number and kind of shares of Stock available under the Plan,
      (iv) the number of Performance Units which may thereafter be granted and
      the book value of the Company with respect to outstanding Performance
      Units, and (v) the exercise price, grant price, or purchase price relating
      to any Award or, if deemed appropriate, make provision for a cash payment
      with respect to any outstanding Award; provided, however, in each case,
      that no adjustment shall be made which would cause the Plan to violate
      Section 422(b)(1) of the Code with respect to ISOs or would adversely
      affect the status of a Performance-Based Award as "performance-based
      compensation" under Section 162(m) of the Code.

(b)   In addition, the Committee is authorized to make adjustments in the terms
      and conditions of, and the criteria included in, Awards in recognition of
      unusual or nonrecurring events (including, without limitation, events
      described in the preceding paragraph) affecting the Company or any
      Subsidiary, or in response to changes in applicable laws, regulations, or


                                       9
<PAGE>

      accounting principles. Notwithstanding the foregoing, no adjustment shall
      be made in any outstanding Performance-Based Awards to the extent that
      such adjustment would adversely affect the status of that
      Performance-Based Award as "performance-based compensation" under Section
      162(m) of the Code.

Section 9. Termination of Employment

      Unless the Committee shall otherwise determine at or after grant, in the
      event of termination of Participant's employment with the Company or any
      Subsidiary other than for Cause, disability or death, or if applicable,
      the termination of services given by the Participant to the Company or the
      subsidiary other than for Cause, Disability or Death, all Options granted
      to that Participant, which are vested and exercisable at the time of such
      termination, may, unless earlier terminated in accordance with the
      provisions of the Plan or the Option Agreement, be exercised within three
      (3) months after the date of such termination. If, on the date of
      termination, the Shares subject to the Option have not vested in their
      entirety, any Shares covered by the unvested portion of the Option shall
      expire and be of no further force and effect and revert to the Plan. If
      the vested portion of the Option is not so exercised within the time
      specified herein, such vested portion of the Option shall expire and be of
      no further force and effect, and the Shares covered by such Option shall
      revert to the Plan.

      In the event of termination of Participant's employment with the Company,
      or if applicable, the termination of services given by the Participant to
      the Company by reason of death or total and permanent Disability (within
      the meaning of Section 22(e)(3) of the Code), or Retirement, the
      outstanding Options, which were vested on the date of termination, may be
      exercised by the Participant, the Participant's legal guardian, the
      Participant's estate or a person who acquires the right to exercise the
      Option by bequest or inheritance, as the case may be, within twelve (12)
      months after termination (but in no event later than the expiration of the
      term of such Option as set forth in the Award Agreement). If, on the date
      of termination, there are Options which are not entirely vested, the
      Shares covered by the unvested portion of the Options shall revert to the
      Plan. If the Option is not so exercised within the time specified herein,
      the Option shall terminate, and the

      Shares covered by such Option shall revert to the Plan.

      If a Participant's employment is terminated for Cause, all Options held by
      the Participant shall immediately terminate, regardless of whether then
      exercisable, unless otherwise determined by the Committee.

In the event of a Participant's termination of Employment for any reason not
described in the preceding sentences, the Participant (or, in the event of the
Participant's death or disability during the period during which an Option is
exercisable under this sentence, the Participant's beneficiary or legal
representative) may exercise any Option which was exercisable at the time of
such termination for 90 days (or such greater or lesser period as the Committee
shall specify at or after the grant of such Option.

Section 10 - General Provisions

(a)   Changes to the Plan and Awards. The Board of Directors of the Company may
      amend, alter, suspend, discontinue, or terminate the Plan or the
      Committee's authority to grant Awards under the Plan without the consent
      of the Company's stockholders or Participants, except that any such
      amendment, alteration, suspension, discontinuation, or termination shall
      be subject to the approval of the Company's stockholders within one year
      after such Board action if such stockholder approval is required by any
      federal or state law or regulation or the rules of any stock exchange or
      automated quotation system on which the Stock may then be listed or
      quoted, and the Board may otherwise, in its discretion, determine to
      submit other such changes to the Plan to the stockholders for approval;
      provided, however, that without the consent of an affected Participant, no
      amendment, alteration, suspension, discontinuation, or termination of the
      Plan may materially and adversely affect the rights of such Participant
      under any Award theretofore granted and any Award Agreement relating
      thereto. The Committee may waive any conditions or rights under, or amend,
      alter, suspend, discontinue, or terminate, any Award theretofore granted
      and any Award Agreement relating thereto; provided, however, that without
      the consent of an affected Participant, no such amendment, alteration,
      suspension, discontinuation, or termination of any Award may materially
      and adversely affect the rights of such Participant under such Award.


                                       10
<PAGE>

      The foregoing notwithstanding, any performance condition specified in
      connection with an Award shall not be deemed a fixed contractual term, but
      shall remain subject to adjustment by the Committee, in its discretion at
      any time in view of the Committee's assessment of the Company's strategy,
      performance of comparable companies, and other circumstances, except to
      the extent that any such adjustment to a performance condition would
      adversely affect the status of a Performance-Based Award as
      "performance-based compensation" under Section 162(m) of the Code.

      No amendment will: (i) change the class of persons eligible to receive
      Awards; (ii) materially increase the benefits accruing to Participants
      under the Plan, or (iii) increase the number of shares of Stock or the
      number of Performance Units subject to the Plan.

(b)   No Right to Award or Employment. No employee or other person shall have
      any claim or right to receive an Award under the Plan. Neither the Plan
      nor any action taken hereunder shall be construed as giving any employee
      any right to be retained in the employ of the Company or any Subsidiary.

(c)   Tax Consequences. Any tax consequences arising from the grant or exercise
      of any Award or from the disposition of Shares or from any other event or
      act (whether of the Participant or of the Company) hereunder, shall be
      borne solely by the Participant. The Company shall withhold taxes
      according to the requirements under the Applicable Laws, rules, and
      regulations, including withholding taxes at source. Furthermore, such
      Participant shall agree to indemnify the Company that employs the
      Participant and/or the Company's Stockholders and/or directors and/or
      officers 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 Participant.
      Except as otherwise required by law, the Company shall not be obligated to
      honor the exercise of any Option by or on behalf of an Participant until
      all tax consequences (if any) arising from the exercise of such Options
      are resolved in a manner reasonably acceptable to the Company.

(d)   Limits on Transferability; Beneficiaries. No Award or other right or
      interest of a Participant under the Plan shall be pledged, encumbered, or
      hypothecated to, or in favor of, or subject to any lien, obligation, or
      liability of such Participants to, any party, other than the Company or
      any Subsidiary, or assigned or transferred by such Participant otherwise
      than by will or the laws of descent and distribution, and such Awards and
      rights shall be exercisable during the lifetime of the Participant only by
      the Participant or his or her guardian or legal representative.
      Notwithstanding the foregoing, the Committee may, in its discretion,
      provide that Awards or other rights or interests of a Participant granted
      pursuant to the Plan (other than an ISO) be transferable, without
      consideration, to immediate family members (i.e., children, grandchildren
      or spouse), to trusts for the benefit of such immediate family members and
      to partnerships in which such family members are the only partners. The
      Committee may attach to such transferability feature such terms and
      conditions as it deems advisable. In addition, a Participant may, in the
      manner established by the Committee, designate a beneficiary (which may be
      a person or a trust) to exercise the rights of the Participant, and to
      receive any distribution, with respect to any Award upon the death of the
      Participant. A beneficiary, guardian, legal representative or other person
      claiming any rights under the Plan from or through any Participant shall
      be subject to all terms and conditions of the Plan and any Award Agreement
      applicable to such Participant, except as otherwise determined by the
      Committee, and to any additional restrictions deemed necessary or
      appropriate by the Committee.

(e)   No Rights to Awards; No Stockholder Rights. No Participant shall have any
      claim to be granted any Award under the Plan, and there is no obligation
      for uniformity of treatment of Participants. No Award shall confer on any
      Participant any of the rights of a stockholder of the Company unless and
      until Stock is duly issued or transferred to the Participant in accordance
      with the terms of the Award.

(f)   Discretion. In exercising, or declining to exercise, any grant of
      authority or discretion hereunder, the Committee may consider or ignore
      such factors or circumstances and may accord such weight to such factors
      and circumstances as the Committee alone and in its sole judgment deems
      appropriate and without regard to the affect such exercise, or declining
      to exercise such grant of authority or discretion, would have upon the
      affected Participant, any other Participant, any employee, the Company,
      any Subsidiary, any stockholder or any other person.


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<PAGE>

(g)   Governing Law.

      (i)   The Plan and all instruments issued there under or in connection
            therewith , shall be governed by, construed, enforced and
            interpreted in accordance with, the laws of the State of Delaware.

(h)   Non-Exclusivity of the Plan

      The adoption of the Plan 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 then under the Plan, and
      such arrangements may be either applicable generally or only in specific
      cases. For the avoidance of doubt, prior grants of options to Participants
      of the Company under their employment agreements, and not in the framework
      of any previous option plan, shall not be deemed an approved incentive
      arrangement for the purpose of this Plan.

      (i).  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 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.

      (j).  Multiple Agreements

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

      (k)   Disputes

      Any dispute or disagreement which may arise under or as a result of or
      pursuant to this Plan or the Options Agreements shall be determined by the
      Board in its sole discretion and any interpretation made by the Board of
      the terms of the Plan or the Option Agreements shall be final, binding and
      conclusive.

(l)   Effective Date. The effective date of the Plan is April 21 , 2005.

(m)   Adoption of the Plan and Effective Date. The Plan shall be adopted by the
      requisite vote of the stockholders of the Company and shall be effective
      as of such date.

Adopted by the Board on April 21, 2005.

                                                Signed SPO MEDICAL INC


                                                --------------------------------
                                                Title

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