Ex 4.1

                           Exhibit 4.1 - Option Plan
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                                  SUPERCOM 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

1. PURPOSE OF THE ISOP.........................................................3

2. DEFINITIONS.................................................................3

3. ADMINISTRATION OF THE ISOP..................................................6

4. DESIGNATION OF PARTICIPANTS.................................................7

5. DESIGNATION OF OPTIONS PURSUANT TO SECTION 102 .............................7

6. TRUSTEE.....................................................................8

7. SHARES RESERVED FOR THE ISOP................................................9

8. PURCHASE PRICE..............................................................9

9. ADJUSTMENTS................................................................10

10. TERM AND EXERCISE OF OPTIONS..............................................11

11. VESTING OF OPTIONS........................................................12

12. DIVIDENDS.................................................................13

13. RESTRICTIONS ON ASSIGNABILITY AND SALE OF OPTIONS.........................13

14. EFFECTIVE DATE AND DURATION OF THE ISOP...................................13

15. AMENDMENTS OR TERMINATION.................................................14

16. GOVERNMENT REGULATIONS....................................................14

17. CONTINUANCE OF EMPLOYMENT.................................................14

18. GOVERNING LAW & JURISDICTION..............................................14

19. ARBITRATION...............................................................14

20. TAX CONSEQUENCES..........................................................14

21. NON-EXCLUSIVITY OF THE ISOP...............................................15

22. MULTIPLE AGREEMENTS.......................................................15


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      This plan,  as amended  from time to time,  shall be known as Supercom 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 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 entity which the Board 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   "BOARD" means the Board of Directors of the Company.

      2.4   "CAPITAL GAIN OPTION (CGO)" as defined in Section 5.4 below.

      2.5   "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  of  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.

      2.6   "CHAIRMAN" means the chairman of the Committee.

      2.7   "COMMITTEE" means a share option compensation committee appointed by
            the Board,  which shall  consist of no fewer than two members of the
            Board.

      2.8   "COMPANY" means Supercom Ltd, an Israeli company.

      2.9   "COMPANIES LAW" means the Israeli Companies Law 5759-1999.

      2.10  "CONTROLLING  SHAREHOLDER"  shall have the meaning ascribed to it in
            Section 32(9) of the Ordinance.


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      2.11  "DATE OF GRANT" means, the date of grant of an Option, as determined
            by the Board and set forth in the Optionee's Option Agreement.

      2.12  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.

      2.13  "EXPIRATION  DATE" means the date upon which an Option shall expire,
            as set forth in Section 10.2 of the ISOP.

      2.14  "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 Euronext,
            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.

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

      2.16  "ITA" means the Israeli Tax Authorities.

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

      2.18  "ORDINARY INCOME OPTION (OIO)" as defined in Section 5.5 below.

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


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      2.20  "102  OPTION"  means any Option  granted to  Employees  pursuant  to
            Section 102 of the Ordinance.

      2.21  "3(I)  OPTION" means an Option  granted  pursuant to Section 3(i) of
            the Ordinance to any person who is Non- Employee.

      2.22  "OPTIONEE"  means a person who receives or holds an Option under the
            ISOP.

      2.23  "OPTION  AGREEMENT"  means the share  option  agreement  between the
            Company and an Optionee that sets out the terms and conditions of an
            Option.

      2.24  "ORDINANCE"  means  the  1961  Israeli  Income  Tax  Ordinance  [New
            Version] 1961 as now in effect or as hereafter amended.

      2.25  "PURCHASE  PRICE"  means  the  price for each  Share  subject  to an
            Option.

      2.26  "SECTION 102" means section 102 of the Ordinance as now in effect or
            as hereafter amended.

      2.27  "SHARE" means the ordinary  shares,  NIS 0.01 par value each, of the
            Company.

      2.28  "SUCCESSOR  COMPANY" means any entity the Company is merged to or is
            acquired by, in which the Company is not the surviving entity.

      2.29  "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.

      2.30  "TRUSTEE" means any individual  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.

      2.31  "UNAPPROVED 102 OPTION" means an Option granted  pursuant to Section
            102(c) of the Ordinance and not held in trust by a Trustee.

      2.32  "VESTED  OPTION"  means any Option,  which has  already  been vested
            according to the Vesting Dates.

      2.33  "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  Company's  Articles  of
            Association.    Notwithstanding   the   above,   the   Board   shall
            automatically  have  residual  authority  if no  Committee  shall be
            constituted  or if such  Committee  shall  cease to operate  for any
            reason.

      3.2   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;  (iv) make an
            election as to the type of 102 Approved  Option;  and (v)  designate
            the type of Options.

            The Committee  shall have full power and authority to :(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)  accelerate  the  right  of an
            Optionee  to exercise in whole or in part,  any  previously  granted
            Option;  (iv)  determine  the  Purchase  Price  of the  Option;  (v)
            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.

      3.4   Notwithstanding  the above,  the Committee  shall not be entitled to
            grant Options to the  Optionees,  however,  it will be authorized to
            issue Shares underlying Options which have been granted by the Board
            and duly exercised  pursuant to the provisions  herein in accordance
            with section 112(a)(5) of the Companies Law.

      3.5   The Board shall have the authority to grant, at its  discretion,  to
            the holder of an outstanding  Option,  in exchange for the surrender
            and  cancellation  of such  Option,  a new Option  having a purchase
            price equal to, lower than or higher than the Purchase  Price of the
            original  Option so  surrendered  and canceled and  containing  such
            other  terms  and  conditions  as the  Committee  may  prescribe  in
            accordance with the provisions of the ISOP.


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      3.6   Subject to the Company's Articles of Association,  all decisions and
            selections  made  by the  Board  or the  Committee  pursuant  to the
            provisions  of the ISOP shall be made by a majority  of its  members
            except that no member of the Board or the  Committee  shall vote on,
            or be counted  for quorum  purposes,  with  respect to any  proposed
            action of the Board or the  Committee  relating  to any Option to be
            granted to that  member.  Any decision  reduced to writing  shall be
            executed in accordance with the provisions of the Company's Articles
            of Association, as the same may be in effect from time to time.

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

      3.8   Subject to the Company's  Articles of Association  and the Company's
            decision, and to all approvals legally required,  including, but not
            limited to the  provisions of the Companies  Law, each member of the
            Board or the Committee shall be indemnified and held harmless by the
            Company  against  any  cost  or  expense  (including  counsel  fees)
            reasonably incurred by him, or any liability (including any sum paid
            in settlement  of a claim with the approval of the Company)  arising
            out of any act or omission to act in connection with the ISOP unless
            arising out of such  member's own fraud or bad faith,  to the extent
            permitted  by  applicable  law.  Such  indemnification  shall  be in
            addition to any rights of  indemnification  the member may have as a
            director or otherwise  under the Company's  Articles of Association,
            any agreement,  any vote of shareholders or disinterested directors,
            insurance policy or otherwise.

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.

      4.3   Anything in the 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
            or any successor act or regulation, as in effect from time to time.

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 in Section 15 below,  and shall be
            conditioned upon the approval of this ISOP by the ITA.


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      5.3   Approved 102 Option may either be  classified as Capital Gain Option
            ("CGO") or Ordinary Income Option ("OIO").

      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 of the  Ordinance  and  the
            regulations promulgated thereunder.

      5.9   With  regards 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.

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
            or any  regulations,  rules  or  orders  or  procedures  promulgated
            thereunder (the "HOLDING PERIOD").  In the case the requirements for
            Approved  102 Options  are not met,  then the  Approved  102 Options
            shall be treated as Unapproved 102 Options,  all in accordance  with
            the   provisions   of  Section  102  and   regulations   promulgated
            thereunder.


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      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
            arising from  Approved 102 Options  which were granted to him and/or
            any Shares allocated or issued upon exercise of such Options.

      6.3   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 be 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.

      6.4   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.

7.    SHARES RESERVED FOR THE ISOP; RESTRICTION THEREON

      7.1   The Company has reserved  1,000,000  (one  million)  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.

8.    PURCHASE  PRICE

      8.1   The  Purchase  Price of each  Share  subject  to an Option  shall be
            determined by the  Committee in its sole and absolute  discretion in
            accordance with applicable law,  subject to any guidelines as may be
            determined  by the Board from time to time.  Each  Option  Agreement
            will contain the Purchase Price determined for each Optionee.


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      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,  Optionee's
      rights to purchase  Shares  under the ISOP shall be adjusted as  hereafter
      provided:

      9.1   In  the  event  of  Transaction,   the   unexercised   Options  then
            outstanding  under the ISOP shall be assumed or  substituted  for 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.  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  for the
            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); 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 Committee may, with the consent of the
            Successor Company, provide for the consideration to 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
            Transaction;  and provided further that the Committee 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


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            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  immediately  notify all  unexercised  Option  holders of such
            liquidation, and the Option holders 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 terminate immediately.

      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 Optionee's  employment or services,  with the Company
            or any of its Affiliates,  all Options granted to such Optionee will
            immediately expire. A notice of termination of employment or service
            shall be deemed to constitute  termination of employment or service.
            For  the  avoidance  of  doubt,  in  case


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<PAGE>

            of such  termination of employment or service,  the unvested portion
            of the  Optionee's  Option  shall  not vest  and  shall  not  become
            exercisable.

      10.5  Notwithstanding  anything  to the  contrary  hereinabove  and unless
            otherwise  determined in the Optionee's Option Agreement,  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 date of such  termination,  but
            only with  respect  to the  number of Vested  Options at the time of
            such termination according to the Vesting Dates, 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 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 three (3) months
                  after the date of such termination; or -

            (iii) prior to the date of such  termination,  the  Committee  shall
                  authorize  an  extension  of the  terms  of all or part of the
                  Vested  Options  beyond  the  date of such  termination  for a
                  period not to exceed the period  during  which the  Options by
                  their terms would otherwise have been exercisable.

            For avoidance of any doubt,  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  Committee  may,  from time to time,  deem
            advisable.

      10.8  With respect to Unapproved 102 Option,  if the Optionee ceases to be
            employed by the Company or any Affiliate,  the Optionee shall extend
            to the Company  and/or its Affiliate a security or guarantee 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.


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<PAGE>

      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  Committee may deem
            appropriate. The vesting provisions of individual Options may vary.

12.   DIVIDENDS

      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 Company's  Articles of Association  (and all  amendments  thereto) and
      subject to any applicable taxation on distribution of dividends,  and when
      applicable  subject  to the  provisions  of  Section  102 and  the  rules,
      regulations or orders promulgated thereunder.

13.   RESTRICTIONS ON ASSIGNABILITY AND SALE OF OPTIONS

      13.1  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.

      13.2  As 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.

14.   EFFECTIVE DATE AND DURATION OF THE ISOP

      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.

      The Company  shall obtain the approval of the Company's  shareholders  for
      the  adoption  of  this  ISOP  or for  any  amendment  to  this  ISOP,  if
      shareholders'  approval  is  necessary  or  desirable  to comply  with any
      applicable law including  without  limitation the US securities law or the
      securities  laws of other  jurisdiction  applicable to Options  granted to
      Optionees under this ISOP, or if shareholders' approval is required by any
      authority or by any governmental agencies or national securities exchanges
      including without limitation the US Securities and Exchange Commission.


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<PAGE>

15.   AMENDMENTS OR TERMINATION

      The Board may at any time, but when applicable,  after  consultation  with
      the Trustee,  amend,  alter,  suspend or terminate the ISOP. 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 the Optionee
      and the Company.  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.

16.   GOVERNMENT 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 State of Belgium 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  securities  act of
      Belgium and/or 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.

17.   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.

18.   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.

19.   ARBITRATION

      Any  dispute  in  relation  with  this  ISOP and the  exercise  of  rights
      thereunder,  shall be brought to  arbitration  of the legal counsel to the
      Company ("THE ARBITRATOR"), who shall decide on such dispute in accordance
      with the provisions of the Arbitration Law - 1968 and its supplement.  The
      decision of the  Arbitrator  shall be final and shall bind the Company and
      the Optionee.

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


                                       14
<PAGE>

            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.

      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.

      For the  avoidance  of doubt,  prior grant of options to  Optionees 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 Section.

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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