Document:

Exhibit 10.1

                            ESC MEDICAL SYSTEMS LTD.
                             1999 SHARE OPTION PLAN

                                    ARTICLE I

                                     Purpose

     This 1999 Share Option Plan (The "Plan") is intended to provide incentive
compensation to, and to encourage share ownership by, the directors, officers,
employees and certain consultants and dealers of ESC medical Systems Ltd. and
its subsidiaries (collectively, the "Company") in order to align their interests
with those of the Company's shareholders, and to encourage such parties to
remain in their respective capacities with the Company.

     The word "subsidiary", when used in the Plan, shall mean any corporation
(other than the Company) in an unbroken chain of corporation beginning with the
Company if, at the time of the granting of the option, each of the corporations
(other than the last corporation in the chain) owns stock possessing 50 percent
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

     It is intended that certain options granted under this Plan will qualify as
"incentive stock options" under Section 422 of the United States Internal
Revenue Code of 1986, as amended (the "Code"); provided, however, that incentive
stock options shall only be granted to employees of the Company.

                                   ARTICLE II

                                 Administration

     The Plan shall be administered by the Option Committee or, in the absence
thereof, the Compensation Committee of the Board of Directors (in each case the
"Committee"). Subject to the provisions of the Plan and any applicable law or
NASDAQ rule, the Committee shall have sole authority, in its absolute
discretion: (a) to determine which of the eligible employees, directors, dealers
and consultants of the Company and its subsidiaries shall be granted options;
(b) to authorize the granting of both incentive stock options and non-qualified
options; (c) to determine the times when options shall be granted and the number
of shares to be issued or transferred upon the exercise of each option; (d)
subject to the limitations of ARTICLE V, to determine the exercise price of each
option; (e) to determine the time or times at which each option becomes
exercisable, the duration of the exercise period and any other restrictions on
the exercise of options issued hereunder; (f) to prescribe the form or forms of
the option agreements under the Plan (which forms shall be consistent with the
terms of the Plan but need not be identical); (g) to adopt, amend and rescind
such rules and regulations as, in its option, may be advisable in connection
with the administration of the Plan. All decisions, determinations and
interpretations of the Committee shall be final and binding on all optionees.

<PAGE>

                                   ARTICLE III

                                     Shares

     The shares to be optioned under the Plan shall either be (i) authorized but
unissued Ordinary Shares, par value NIS 0.1 per share, of the Company, or (ii)
Ordinary Shares which the Company may acquire and deposit with General Investec
Trust Company. Ltd., or any substitute thereof as Trustee under the Plan (the
"Trustee") and under the terms of a Trust Agreement as shall be approved and
amended from time to time by the Board or the Executive Committee thereof
(together, the "Ordinary Shares"). Under the Plan, the total number of Ordinary
Shares which may be purchased pursuant to options granted hereunder shall not
exceed, in the aggregate, five million (5,000,000) Ordinary Shares, except as
such number of shares shall be adjusted or increased in accordance with the
provisions of ARTICLE X and Article XIX hereof.

     The number of Ordinary Shares available for grant of options under the Plan
shall be decreased by the sum of the number of shares with respect to which
options have been issued and that are then outstanding and the number of shares
issued upon exercise of options. In the event that any outstanding option under
the Plan for any reason expires, is terminated, or is canceled prior to the end
of the period during which options may be granted, the Ordinary Shares
underlying such option, may again be subject to an option under the Plan.

                                   ARTICLE IV

                           Eligibility of Participants

     Subject to ARTICLE VII, officers and other employees of the Company or of
its subsidiaries and directors of the Company or its subsidiaries shall be
eligible to participate in the Plan and receive incentive stock options or
non-qualifying options.

     Directors who are not employees, future employees, dealers, or consultants
of the Company shall also be eligible to participate in the Plan.

                                    ARTICLE V

                                  Option Price

     In the case of each option granted under the Plan, the option exercise
price shall be not less than eighty-five percent (85%) of the last reported
sales price (as expressed in either dollars or shekels adjusted to increase in
Israeli CPI) of the Ordinary Shares on the Nasdaq Stock Market ("NASDAQ") (the
"Fair Market Price"), on the date of grant.

                                      -2-
<PAGE>

                                   ARTICLE VI

                                Terms of Options

     The Committee shall determine the dates after which options may be
exercised, in whole or in part. An option is exercisable in installments, and my
be exercisable in whole or in part, with the unexercised portion of the option
remaining exercisable.

     Any other provision of the Plan notwithstanding and subject to ARTICLE VII,
no option shall be exercised after the tenth anniversary of the date that the
option was granted (the "Termination Date"), and no option granted to an
employee of the Company shall be exercisable before such employee accumulates at
least one year of service with the company.

     With respect to the directors, the Chief Executive Office ("CEO") and the
officers reporting directly to the CEO of the Company, the options granted
hereunder shall become exercisable with respect to the entire amount of the
Ordinary Shares underlying such options immediately upon a change in control of
the Company, unless the Board or the Committee determined otherwise with respect
to any specific director or officer upon approval of the options granted. A
"Change in Control" means the first to occur of any of the following dates:

     (i)  An acquisition (other than directly from the Company)of any voting
          securities of the Company by any "Person" (as the term person is used
          for purposes of Section 13(d) or 14 (d) of the Exchange Act)
          immediately after which such Person has "Beneficial Ownership" (within
          the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20%
          or more of the combined voting power of the Company's then outstanding
          voting securities, unless such Person has filed a Schedule 13D within
          the 12 month period prior to the Plan being first approved by the
          Board of Directors; provided, however, in determining whether a Change
          in Control has occurred, voting securities which are acquired in a
          "Non-Control Acquisition" (as hereinafter defined) shall not
          constitute an acquisition which would cause a Change in Control. A
          "Non-Control Acquisition" shall mean an acquisition by (A) an employee
          benefit plan (or a trust forming a part thereof or a trustee thereof
          acting solely in its capacity as trustee) maintained by (X) the
          Company or (Y) any corporation or other Person of which a majority of
          its voting power or its voting equity securities or equity interest is
          owned, directly or indirectly, by the Company (for purposes of this
          definition, a "Subsidiary"), (B) the Company or its Subsidiaries, or
          (C) any Person who files in connection with such acquisition a
          Schedule 13D which expressly disclaims any intention to seek control
          of the Company and does not expressly reserve the right to seek such
          control; provided, however, that any amendment to such statement of
          intent which either indicates an intention or reserved the right to
          seek control shall be deemed an "acquisition" of the securities of the
          Company reported in such filing as beneficially owned by such Person
          for purposes of this paragraph (i);

                                      -3-
<PAGE>

     (ii) The individuals who, as of the beginning of any two year period, are
          members of the Board (the "Incumbent Board"), ceasing for any reason,
          during such two year period, to constitute at least a majority of the
          members of the Board; provided, however, that if the election, or
          nomination for election by the Company's common stockholders, of any
          new director was approved by a vote of at least two-thirds of the
          Incumbent Board, such new director shall, for purposes of the
          Agreement, be considered a member of the Incumbent Board; provided
          further, however, that no individual shall be considered a member of
          the Incumbent Board if such individual initially assumed office as a
          result of either an actual or threatened "Election Contest" (as
          described in Rule 14a-11 promulgated under the Exchange Act) or other
          actual or threatened solicitation of proxies or consents by or on
          behalf of a Person other than the Board (a "Proxy Contest") including
          by reason of any agreement intended to avoid or settle any Election
          Contest or Proxy Contest; or

     (iii) Approval by stockholders of the Company of:

          (A)  A merger, consolidation or reorganization involving the Company,
               unless such merger, consolidation or reorganization is a
               "Non-Control Transaction" i.e., meets any of the requirements
               described in (a) or (b) below:

               (a)  the stockholders of the Company, immediately before such
                    merger, consolidation or reorganization, own, directly or
                    indirectly immediately following such merger, consolidation
                    or reorganization, at least eighty percent (80%) of the
                    combined voting power of the outstanding voting securities
                    of the corporation resulting from such merger or
                    consolidation or reorganization (the "Surviving
                    Corporation") in substantially the same proportion as their
                    ownership of the voting securities immediately before such
                    merger, consolidation or reorganization;

               (b)  the individuals who were members of the Incumbent Board
                    immediately prior to the execution of the agreement
                    providing for such merger, consolidation or reorganization
                    constitute at least two-thirds of the members of the board
                    of directors of the surviving corporation immediately
                    following the consummation of such merger, consolidation or
                    reorganization; and

          (B)  A complete liquidation or dissolution of the Company; or

          (C)  An agreement for the sale or other disposition of all or
               substantially all of the assets of the Company to any Person
               (other than a transfer to a Subsidiary).

                                      -4-
<PAGE>

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the "Subject Person") acquired Beneficial Ownership
of more than the permitted amount of the outstanding voting securities as a
result of the acquisition of voting securities by the Company which, by reducing
the number of voting securities outstanding, increases the proportional number
of shares Beneficially Owned by the Subject Persons, provided that if a Change
in Control would occur (but for the operation of this sentence) as a result of
the acquisition of voting securities by the Company, and after such, a
Beneficial Owner acquires additional voting securities which increase the
percentage of the then outstanding voting securities beneficially owned by the
Subject Person, then a Change in Control shall occur.

     Share options granted hereunder to employees may provide that if, prior to
the Termination Date, an optionee shall cease to be employed by the Company or a
subsidiary thereof (otherwise than by reason of death or disability), the option
will remain exercisable for a period not extending beyond three months after the
date of cessation of employment (unless specifically stated otherwise in the
specific option grant letter) to the extent it was exercisable at the time of
cessation of employment. If, prior to the Termination Date, an optionee shall
cease to be employed by the Company or any subsidiary thereof by reason of a
disability within the meaning of Section 22(e)(3) of the Code, options granted
hereunder may provide that they will remain exercisable for a period not
extending beyond one year after the date of cessation of employment to the
extent exercisable at the time of cessation of employment. In no even, however,
shall an option be exercisable after the Termination Date. The option shall
expire with respect to all Ordinary Share covered thereby into which at the time
of termination of the option, the option was not exercisable. In the event of
the death of an optionee prior to the Termination Date and while employed by the
Company or a subsidiary thereof or while entitled to exercise an option pursuant
to the preceding sentences of this paragraph, options granted hereunder may
provide that they will remain exercisable until the earlier of (i) the
Termination Date, and (ii) one year from date of death, by the person or persons
to whom the optionee's rights under the option pass by will or by applicable
laws of descent and distribution and to the extent that the optionee was
entitled to exercise it on the date of death.

     Notwithstanding the above, if prior to the Termination Date, an optionee
shall cease to be employed by the Company for reasons which, as determined by
the Company in its discretion, amount to bad faith, gross negligence or fraud,
or as a result of the termination of such optionee for cause, any option or
portion of an option not exercised as of the date of cessation of employment
will expire and terminate on such date, unless specifically stated otherwise in
the specific option grant letter.

                                   ARTICLE VII

          Special Provisions Applicable to Incentive Stock Options Only

     The aggregate fair market value (determined at the time the option is
granted) of the Ordinary Shares with respect to which any incentive stock option
is granted that is exercisable for the first time by the optionee during any
calendar year, (under this Plan or any other share option plan of the Company or
any parent or subsidiary thereof) shall not exceed $100,000.

                                      -5-
<PAGE>

     No incentive stock option may be granted to an individual who, at the time
the option is granted, owns directly, or indirectly within the meaning of
Section 422(b)(6) of the Code, Ordinary Shares possessing more than 10 percent
of the total combined voting power of all classes of stock of the Company or of
any parent or subsidiary thereof, unless (i) such option has an option price of
at least 110 percent of the fair market value of the Ordinary Shares on the date
of the grant of such option and (ii) such option cannot be exercised more than
five years after the date it is granted.

                                  ARTICLE VIII

                               Exercise of Options

     An optionee may exercise any exercisable option by signing and returning to
the Company at its principal office, a "Notice of Exercise" in the form
prescribed from time to time by the Company together with payment of the
exercise price. Such payment will be made in dollars or Shekels in accordance
with the terms of the related option grant letter. Each notice of Exercise shall
include an acknowledgment by the optionee, if applicable, that the Company has
not registered the shares issuable upon exercise of the option under the United
States Securities Act of 1933, as amended (the "Securities Act"), or any similar
law, and a representation by the optionee that he is acquiring such shares for
investment and not with a view to their distribution or resale as such terms are
defined in Rule 144 under the Securities Act ("Rule 144"). The optionee shall
sign and deliver to the Company, upon its request, a separate investment
representation, certificate or such other document as may be required by the
Company's counsel, to such effect; provided, however, that such representation,
certificate or other document may provide, if applicable, that the said
investment restriction shall not be operative as to the shares subject to the
option which may in the future be registered pursuant to the Securities Act.
Furthermore, the Company may place an appropriate legend on any share
certificate delivered to an optionee to the effect that, among other things
deemed to be necessary to be stated in such legend, such shares were acquired
pursuant to such an investment representation without registration of the
shares.

     Payment for Ordinary Shares purchased upon the exercise of an option
granted hereunder shall be made in full upon exercise of the option, by wire
transfer or certified or bank cashier's check payable to the order of the
Company, or by other means acceptable to the Company. The Ordinary Shares
purchased shall thereupon be promptly delivered; provided, however, that the
Company may, in its discretion, require that an optionee pay to the Company or
the Trustee, at the time of exercise, such amount as the Company deems necessary
to satisfy its obligation to withhold Israeli or United States Federal, state,
or local income or other taxes incurred by reason of the exercise or the
transfer of shares thereupon.

                                      -6-
<PAGE>

                                   ARTICLE IX

                      Non-Transferability of Option Rights

     No option shall be transferable, except by will or the laws of descent and
distribution. During the lifetime of the optionee, the option shall be
exercisable only by optionee, or by such optionee's legal representative.

                                    ARTICLE X

                  Adjustment for Recapitalization, Merger, Etc.

     The aggregate number of Ordinary Shares which may be purchased upon
exercise of the options granted hereunder, the number of Ordinary Shares covered
by each outstanding option and the price per share of each such option shall be
appropriately adjusted for any increase or decrease in the number of outstanding
shares of the Company resulting from a stock split or other subdivision or
consolidation of shares or payments of stock dividends or distributions or other
increases or decreases in the number of outstanding Ordinary Shares effected
without receipt of consideration by the Company or in the event of any other
extraordinary transaction.

     The foregoing adjustments and the manner of application of the foregoing
provisions shall be determined by the Committee in its sole discretion. Any such
adjustment may provide for the elimination of any fractional share which might
otherwise become issuable upon exercise of an option.

                                   ARTICLE XI

                        No Obligation to Exercise Option

     The grant of an option pursuant to the plan shall impose no obligation on
the optionee to exercise such option.

                                   ARTICLE XII

                                 Use of Proceeds

     The proceeds received from the issuance of Ordinary Shares upon exercise of
options, pursuant to the Plan shall be used for such purposes as the Company
shall determine to be appropriate.

                                      -7-
<PAGE>

                                  ARTICLE XIII

                             Rights as a Shareholder

     The company shall not be required to recognize an optionee as a shareholder
with respect to any share issuable or transferable, as the case may be, upon the
exercise of such option by the optionee until such optionee shall have become
the holder of record of such share, and such optionee shall not be entitled to
vote or to any dividends or distributions or other rights in respect of such
share for which the record date is prior to the date on which he shall have
become the holder of record thereof.

                                   ARTICLE XIV

                                Employment Rights

     Nothing in the Plan or in any option granted hereunder shall confer on any
optionee who is a director, officer or employee of the Company or any of its
subsidiaries any right to interfere in any way with the right of the Company or
any of its subsidiaries to terminate the optionee's employment at any time.

                                   ARTICLE XV

                             Compliance with The Law

     The Company shall not be liable for the non-issuance or non-transfer or any
delay in issuance or transfer of any Ordinary Shares issuable or transferred, as
the case may be, upon the exercise of any options granted under the Plan which
results from the inability of the Company to obtain, or from any delay in
obtaining, from any regulatory body having jurisdiction, all requisite authority
to issue or transfer Ordinary Shares of the Company upon exercise of the options
under the Plan or upon the transfer of Ordinary Shares issued upon such
exercise, if counsel for the Company deems such authority necessary for lawful
issuance or transfer of any such shares. Appropriate legends may be placed on
the stock certificates evidencing shares issued upon exercise of options to
reflect such transfer restrictions.

                                   ARTICLE XVI

                            Voting of Ordinary Shares

     Shares held by the Trustee under the Plan shall be voted in accordance with
the instructions of the Board.

                                  ARTICLE XVII

                             Cancellation of Options

     The Committee, in its discretion, may, with the consent of any optionee,
cancel any outstanding option hereunder.

     In the event that the average of the Fair Market Price (as calculated in
ARTICLE V) of the Company's Ordinary Shares for a continuous period of three
months is less than seventy-five

                                      -8-
<PAGE>

(75%) of the exercise price of any option, the Committee may, with the consent
of the optionee, cancel such option and grant a new option (which may require
extended vesting period) under the Plan to the optionee.

                                  ARTICLE XVIII

                               Transfer of Shares

     By exercise of an option granted hereunder, the optionee agrees that any
sale, transfer or other disposition of any of the Ordinary Shares issued upon
such exercise shall be made in accordance with the applicable requirements of
Rule 144, including, if applicable, the volume limitations applicable to
"affiliates" of the Company.

                                   ARTICLE XIX

                       Amendment or Discontinuance of Plan

     Subject to any applicable law and NASDAQ Rule, the Board or the Committee
may, without the consent of the Company's shareholders or any optionee under the
Plan, at any time terminate the Plan entirely and at any time or from time to
time amend or modify the Plan, provided that no such action shall adversely
affect options granted hereunder prior to such amendment or modification without
consent of any optionee aversely effected and, with respect to incentive stock
options, the Board shall not, without approval of the stockholders, (a) increase
the total number of Ordinary Shares which may be purchased pursuant to incentive
stock options granted under the Plan, except as contemplated in ARTICLE X, or
(b) expand the persons eligible to receive options under the Plan.

                                   ARTICLE XX

                                      Taxes

     Each optionee shall be solely liable for all taxes and other fees resulting
from the grant and/or exercise of options granted under the Plan and disposition
of shares acquired pursuant to the exercise of an option.

     Each optionee shall consult with his/her individual tax advisers to
determine the possible tax consequences of the grant and/or exercise of options
granted under the Plan and the disposition of shares acquired pursuant to the
exercise of the an option in his/her personal tax circumstances.

                                      -9-
<PAGE>

                                   ARTICLE XXI

                         Effectiveness and Term of Plan

     The Plan was adopted on November 11, 1999. The plan will expire and
terminate on November 11, 2009. No option may be granted pursuant to the Plan
after the termination of the Plan, however, options outstanding on that date may
still be exercised in accordance with the terms of their grant.

                                  ARTICLE XXII

                                  Governing Law

     The Plan and all instruments issued hereunder shall be governed by and
interpreted in accordance with the laws of the State of Israel, subject to the
provisions of the Code with respect to "incentive stock options" and subject to
the provisions of applicable United States securities laws with respect to
certain terms used herein.

                                      -10-Exhibit 10.2

                            ESC MEDICAL SYSTEMS LTD.
                             2000 SHARE OPTION PLAN

                                    ARTICLE I
                                     Purpose

This 2000 Share Option Plan (the "Plan") is intended to provide incentive
compensation to, and to encourage share ownership by, the directors, officers,
employees and certain consultants and dealers (the "Optionees") of ESC Medical
Systems Ltd. and its subsidiaries (collectively, the "Company") in order to
align their interests with those of the Company's shareholders, and to encourage
the sense of proprietorship of such parties, and to stimulate the active
interest of such parties in the development and financial success of the Company
by providing them with opportunities to purchase shares in the Company, pursuant
to the Plan approved by the board of directors of the Company (the "Board") and
its shareholders and to encourage such parties to remain in their respective
capacities with the Company.

The word "employee", when used in this Plan, shall have the meaning, with
respect to each Optionee, as provided in the relevant regulation under the
jurisdiction where implemented.

The word "subsidiary", when used in the Plan, shall mean any corporation (other
than the Company) in an unbroken chain of corporations beginning with the
Company if, at the time of the granting of the option, each of the corporations
(other than the last corporation in the chain) owns stock possessing 50 percent
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

It is intended that certain options granted under this Plan will qualify as
"incentive stock options" (the "ISOs") under Section 422 of the United States
Internal Revenue Code of 1986, as amended (the "Code"); provided, however, that
ISOs shall only be granted to U.S. resident employees of the Company. Options
granted to U.S. resident employees, that do not contain terms that will qualify
them as ISOs shall be referred to herein as Non-Qualified Stock Options (the
"NQSOs").

Each Option Agreement (as such term is defined hereunder) between the Company
and the U.S. resident Optionee shall state whether such Option will or will not
be treated as an ISO. No ISO shall be granted unless such Option, when granted,
qualifies as an "incentive stock option" under Section 422 of the Code. Any ISO
granted under the Plan shall contain such terms and conditions, consistent with
the Plan, as the Company may determine to be necessary to qualify such Option as
an "incentive stock option" under Section 422 of the Code.

Options granted to Israeli Optionees under the Option Plan may or may not
contain such terms as will qualify such options for the special tax treatment
under section 102 of the Israeli Tax Ordinance (New Version), 5721-1961, as
amended (the "Ordinance"), and the Income Tax Rules (Tax Benefits in Stock
Issuances to Employees) 5749-1989 (the "Rules") ("102 Options"). The 102 Options
which shall be granted to Optionees and/or any shares issued upon exercise of
such Options and/or any other shares received subsequently following any
realization of rights resulting from a 102 Option or from shares issued upon
exercise of a 102 Option, shall be issued to a trustee nominated by the
Committee, and approved in accordance with the provisions of Section 102 of the
Ordinance (the "Trustee") and held for the benefit of the Optionees for a period
of not less than two years (24 months) from the date of grant, and thereafter,
the Trustee will transfer the Options or the Option shares, as the case may be,
to the Optionees

                                      -11-
<PAGE>

and/or to any third party upon his/her demand, subject to any deduction or
withholding required under the Ordinance, the Rules or any other applicable law,
provided, however, that Options granted to Optionees who are employees of any of
the Company's subsidiaries shall also be subject to a pre-ruling of the tax
authorities. Options that do not contain terms that may qualify them for the
special tax treatment under Section 102 of the Ordinance, shall be referred to
herein as Section 3(I) Options ("3(I) Options").

     Options granted to Optionees who are both, residents and ordinarily
     residents in the United Kingdom under the Plan may or may not contain such
     terms as will qualify such options for the special tax treatment under the
     Income and Corporation Taxes Act, 1988, provided, however, that approved
     options can only be granted to UK resident employees.

     Options granted to Optionees who are residents of the Netherlands, under
     the Plan may or may not contain such terms as will qualify such options for
     the special tax treatment under the Dutch Personal Income Tax Act (PITA)
     and the Wage Tax Act (WTA), provided, however, that options under the Dutch
     special tax regime can only be granted to Dutch resident employees.

All options granted hereunder, whether together or separately, shall be
collectively referred to hereinafter as the "Options".

                                   ARTICLE II
                                 Administration

The Plan shall be administered by the Compensation Committee of the Board (the
"Committee"). Notwithstanding the above, the Board shall automatically have a
residual authority if no Committee shall be constituted or if such Committee
shall cease to operate for any reason whatsoever.

Subject to the provisions of the Plan and any applicable law, NASDAQ Stock
Market ("NASDAQ") rule, the Companies Act (1985) introduced in the UK, the
Committee shall have sole authority, in its absolute discretion: (a) to
determine which of the eligible employees, directors, dealers and consultants of
the Company and its subsidiaries shall be granted Options; (b) to designate an
Option as 102 Option and/or as an 3(I) Option (for Israeli Optionees), as ISOs
or as NQSOs (for U.S. Optionees), as approved options and/or unapproved options
(for UK Optionees) and options under the special tax regime for the residents of
the Netherlands,, and to authorize the granting of such Options; (c) to
determine the times when Options shall be granted and the number of shares to be
issued or transferred upon the exercise of each Option; (d) to determine the
exercise price of each Option; (e) to determine the time or times at which each
Option becomes exercisable, the duration of the exercise period and any other
restrictions on the exercise of Options issued hereunder; (f) to prescribe the
form or forms and terms of the Option Agreements under the Plan (which forms
shall be consistent with the terms of the Plan but need not be identical); (g)
to determine other jurisdictions in which the Plan shall be applicable; (h) to
adopt, amend and rescind such rules and regulations as, in its opinion, may be
advisable in connection with the administration of the Plan; (i) to accelerate
the right of an Optionee, in whole or in part, to any previously granted Option,
in the event of a public offering, merger, acquisition, transfer of assets
and/or liquidation. All decisions, determinations and interpretations of the
Committee shall be final and binding on all Optionees.

                                      -2-
<PAGE>

                                   ARTICLE III
                                     Shares

The shares to be optioned under the Plan shall be either (i) authorized but
unissued Ordinary Shares, par value NIS 0.1 per share, of the Company, or (ii)
Ordinary Shares which the Company may acquire and deposit with General Investec
Trust Company, Ltd. , or any substitute thereof as Trustee under the Plan and
under the terms of a Trust Agreement as shall be approved and amended from time
to time by the Board or the Executive Committee thereof (together, the "Ordinary
Shares").

Under the Plan, the total number of Ordinary Shares which may be purchased
pursuant to options granted hereunder shall not exceed, in the aggregate, ten
million (10,000,000) Ordinary Shares of which 6,000,000 shall be reserved for
ISOs. The Ordinary Shares shall be adjusted or increased in accordance with the
provisions of Article X and Article XIX hereof.

The number of Ordinary Shares available for grant of Options under the Plan
shall be decreased by the sum of the number of shares with respect to which
Options have been issued and that are then outstanding and the number of shares
issued upon exercise of Options. In the event that any outstanding Option under
the Plan for any reason expires, is terminated, or is canceled prior to the end
of the period during which options may be granted, the Ordinary Shares
underlying such option, may again be subject to an Option under the Plan.

Each Option granted pursuant to the Plan, shall be evidenced by a written
agreement between the Company and the Optionee (the "Option Agreement"). Each
Option Agreement shall state a number of the Shares to which the Option relates
and the type of Option granted thereunder (whether a 102 Option, a 3(I) Option,
an ISO, an NQSO, an approved or unapproved option for UK Optionees, Options
under special tax regime and Options that are not subject to special tax regime
for Optionees in the Netherlands or any other kinds of Option suitable under the
Plan). Options may be granted at any time after this Plan has been approved by
the Company, subject to any further approval or consent required under Section
102 of the Ordinance or the Rules, in case of 102 Options, or of the U.S.
Treasury, in case of ISOs and other applicable law, the Inland Revenue in the
case of UK and the tax inspector in the Netherlands, except that any and all
Options shall be effective upon their grant provided that all required approvals
shall have been received in respect of the grant of such Option, as required
under the relevant rules and regulations, and the Optionee has signed and
delivered to the Company a notice and undertaking as required under such rules.

                                   ARTICLE IV
                           Eligibility of Participants

Subject to ARTICLE VII, office holders and other employees of the Company or of
its subsidiaries and directors of the Company or its subsidiaries shall be
eligible to participate in the Plan. Directors who are not employees, future
employees, dealers, or consultants of the Company shall also be eligible to
participate in the Plan.

To the extent applicable and anything in the Plan to the contrary
notwithstanding, all grants of Options to directors and office holders ("Nosei
Misra" - as such term is defined in the Companies Law, 5759-1999 (the "Companies
Law") shall be authorized and implemented only in accordance with the provisions
of the Companies Law, as in effect from time to time, or Executive Officers, as
such term is defined under the SEC rules and regulations.

                                      -3-
<PAGE>

                                    ARTICLE V
                                  Option Price

Unless the Committee determines otherwise, the option exercise price shall be
the last reported sales price of the Ordinary Shares on the NASDAQ (the "Fair
Market Price"), on the date of grant.

                                   ARTICLE VI
                                Terms of Options

The Committee shall determine the dates after which Options may be exercised, in
whole or in part. An Option is exercisable in installments, and may be
exercisable in whole or in part, with the unexercised portion of the Option
remaining exercisable.

Any other provision of the Plan notwithstanding and subject to ARTICLE VII, no
Option shall be exercised after the tenth anniversary of the date that the
Option was granted (the "Termination Date").

With respect to the directors, Chief Executive Officer ("CEO") and the officers
reporting directly to the CEO of the Company, the Options granted hereunder
shall become exercisable with respect to the entire amount of the Ordinary
Shares underlying such Options immediately upon a Change in Control of the
Company, unless the Board or the Committee determined otherwise with respect to
any specific director or officer upon approval of the Options granted. A "Change
in Control" means the first to occur of any of the following dates:

(i)  An acquisition (other than directly from the Company) of any voting
     securities of the Company by any "Person" (as the term person is used for
     purposes of Section 13(d) or 14(d) of the Exchange Act) immediately after
     which such Person has "Beneficial Ownership" (within the meaning of Rule
     13d-3 promulgated under the Exchange Act) of 20% or more of the combined
     voting power of the Company's then outstanding Voting Securities, unless
     such Person has filed a Schedule 13D within the 12 month period prior to
     the Plan being first approved by the Board; provided, however, in
     determining whether a Change in Control has occurred, Voting Securities
     which are acquired in a "Non-Control Acquisition" (as hereinafter defined)
     shall not constitute an acquisition which would cause a Change in Control.
     A "Non-Control Acquisition" shall mean an acquisition by (A) an employee
     benefit plan (or a trust forming a part thereof or a trustee thereof acting
     solely in its capacity as trustee) maintained by (X) the Company or (Y) any
     corporation or other Person of which a majority of its voting power or its
     voting equity securities or equity interest is owned, directly or
     indirectly, by the Company (for purposes of this definition, a
     "Subsidiary"), (B) the Company or its Subsidiaries, or (C) any Person who
     files in connection with such acquisition a Schedule 13D which expressly
     disclaims any intention to seek control of the Company and does not
     expressly reserve the right to seek such control; provided, however, that
     any amendment to such statement of intent which either indicates an
     intention or reserves the right to seek control shall be deemed an
     "acquisition" of the securities of the Company reported in such filing as
     beneficially owned by such Person for purposes of this paragraph (i);

                                      -4-
<PAGE>

(ii) The individuals who, as of the beginning of any two year period, are
     members of the Board (the "Incumbent Board"), ceasing for any reason,
     during such two year period, to constitute at least a majority of the
     members of the Board; provided, however, that if the election, or
     nomination for election by the Company's common stockholders, of any new
     director was approved by a vote of at least two-thirds of the Incumbent
     Board, such new director shall, for purposes of the Agreement, be
     considered a member of the Incumbent Board; or

(iii) The consummation of any of the following transactions as entered into by
     the Company:

     (A)  A merger, consolidation or reorganization involving the Company,
          unless such merger, consolidation or reorganization is a "Non-Control
          Transaction" i.e., meets any of the requirements described in (i) or
          (ii) below:

          (i)  the stockholders of the Company, immediately before such merger,
               consolidation or reorganization, own, directly or indirectly
               immediately following such merger, consolidation or
               reorganization, at least eighty percent (80%) of the combined
               voting power of the outstanding voting securities of the
               corporation resulting from such merger or consolidation or
               reorganization (the "Surviving Corporation") in substantially the
               same proportion as their ownership of the Voting Securities
               immediately before such merger, consolidation or reorganization;
               or

          (ii) the individuals who were members of the Incumbent Board
               immediately prior to the execution of the agreement providing for
               such merger, consolidation or reorganization constitute at least
               two-thirds of the members of the board of directors of the
               surviving corporation immediately following the consummation of
               such merger, consolidation or reorganization;

     (B)  A complete liquidation or dissolution of the Company; or

     (C)  An agreement for the sale or other disposition of all or substantially
          all of the assets of the Company to any Person (other than a transfer
          to a Subsidiary).

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because any Person (the "Subject Person") acquired Beneficial Ownership
of more than the permitted amount of the outstanding Voting Securities as a
result of the acquisition of Voting Securities by the Company which, by reducing
the number of Voting Securities outstanding, increases the proportional number
of shares Beneficially Owned by the Subject Persons, provided that if a Change
in Control would occur (but for the operation of this sentence) as a result of
the acquisition of Voting Securities by the Company, and after such, a
Beneficial Owner acquires additional Voting Securities which increase the
percentage of the then outstanding Voting Securities beneficially owned by the
Subject Person, then a Change in Control shall occur.

     Share options granted hereunder to employees may provide that if, prior to
     the Termination Date, an Optionee shall cease to be employed or to grant
     any services, without cause by the Company or a subsidiary thereof
     (otherwise than by reason of death or disability), the option will remain
     exercisable after the date of cessation of employment (unless specifically
     stated otherwise in the specific option grant letter) to the extent it was

                                      -5-
<PAGE>

     exercisable at the time of cessation of employment, provided, however, that
     non-exercisable options will become void, at the date of cessation of
     employment. If, prior to the Termination Date, an Optionee shall cease to
     be employed by the Company or any subsidiary thereof by reason of a
     disability within the meaning of Section 22(e)(3) of the Code, Options
     granted hereunder may provide that they will remain exercisable until the
     Termination of the Plan to the extent exercisable at the time of cessation
     of employment. For the purposes hereof, "cessation of employment" shall
     mean the date upon notification of termination of employment has been
     delivered, by either the Company or the Optionee. In no event, however,
     shall an Option be exercisable after the Termination Date. The Option shall
     expire with respect to all Ordinary Share covered thereby into which at the
     time of termination of the Option, the Option was not exercisable. In the
     event of the death of an Optionee prior to the Termination Date and while
     employed by the Company or a subsidiary thereof or while entitled to
     exercise an Option pursuant to the preceding sentences of this paragraph,
     Options granted hereunder may provide that they will remain exercisable
     until (i) the Termination Date, and (ii) by the person or persons to whom
     the Optionee's rights under the Option pass by will or by applicable laws
     of descent and distribution and to the extent that the Optionee was
     entitled to exercise it on the date of death.

Notwithstanding the above, if prior to the Termination date, an Optionee shall
cease to be employed by the Company for reasons which, as determined by the
Company in its discretion, amount to bad faith, gross negligence or fraud, or as
a result of the termination of such Optionee for cause, any Option or portion of
an Option not exercised as of the date of cessation of employment will expire
and terminate on such date, unless specifically stated otherwise in the specific
Option Agreement.

                                   ARTICLE VII
                             Special Tax Provisions

The aggregate fair market value (determined at the time the Option is granted)
of the Ordinary Shares with respect to which any ISO is granted that is
exercisable for the first time by the Optionee during any calendar year, (under
this Plan or any other share option plan of the Company or any parent or
subsidiary thereof) shall not exceed $100,000.

No ISO may be granted to an individual who, at the time the option is granted,
owns directly, or indirectly within the meaning of Section 422(b)(6) of the
Code, Ordinary Shares possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company or of any parent or
subsidiary thereof, unless (i) such option has an option price of at least 110
percent of the fair market value of the Ordinary Shares on the date of the grant
of such option and (ii) such option cannot be exercised more than five years
after the date it is granted.

The aggregate fair market value (determined at the time the Option is granted)
of the Ordinary Shares with respect to which any approved option is granted that
is exercisable for the first time by the Optionee during any calendar year,
(under this Plan or any other share option plan of the Company or any parent or
subsidiary thereof) shall not exceed $50,000.

                                      -6-
<PAGE>

No approved option to UK resident employees, may be granted to an individual
who, at the time the option is granted, owns Ordinary Shares possessing more
than 10 percent of the total combined voting power of all classes of stock of
the Company or of any parent or subsidiary thereof.

                                  ARTICLE VIII

                               Exercise of Options

An Optionee may exercise any exercisable Option by signing and returning to the
Company at its principal office, a "Notice of Exercise" in the form prescribed
from time to time by the Company together with payment of the exercise price.
Such payment will be made in United States Dollars, Israeli Shekels, Japanese
Yen, British Pounds Sterling, Dutch Guilder or EURO, in accordance with the
terms of the related Option Agreement. The Notice of Exercise shall specify the
number of Shares with respect to which the Option is being exercised. The
Company is obligated to issue Shares upon such Notice of Exercise of an Option
granted under the Plan upon (a) the Company's completion of any registration or
other qualifications of the Ordinary Shares under any state and/or federal law,
rulings or regulations or (b) representations and undertakings by the Optionee
(or his legal representative, heir or legatee, in the event of the Optionee's
death) to assure that the sale of the Ordinary Shares complies with any
registration exemption requirements which the Company in its sole discretion
shall deem necessary or advisable. Such required representations and
undertakings may include representations and agreements that such Optionee (or
his legal representative, heir, or legatee): (a) is purchasing the Ordinary
Shares for investment and not with any present intention of selling or otherwise
disposing thereof; and (b) agrees to have placed upon the face and reverse of
any certificates evidencing such Shares a legend setting forth (i) any
representations and undertakings which such Optionee has given to the Company or
a reference thereto and (ii) that, prior to effecting any sale or other
disposition of any such Shares, the Optionee must furnish to the Company an
opinion of counsel, satisfactory to the Company, that such sale or disposition
will not violate the applicable requirements of State and federal laws and
regulatory agencies.

Payment for Ordinary Shares purchased upon the exercise of an Option granted
hereunder shall be made in full upon exercise of the Option, by wire transfer or
certified or bank cashier's check payable to the order of the Company. The
Ordinary Shares purchased shall thereupon be promptly delivered; provided,
however, that the Company may, in its discretion, require that an Optionee pay
to the Company or the Trustee, at the time of exercise or grant, as the case may
be, such amount as the Company deems necessary to satisfy its obligation to
withhold Israeli, United States Federal, state, or local income U.K. tax laws
and Dutch tax laws or other taxes incurred by reason of the exercise or the
transfer of shares thereupon.

                                   ARTICLE IX
                      Non-Transferability of Option Rights

No Option shall be transferable, except by will or the laws of descent and
distribution. During the lifetime of the Optionee, the Option shall be
exercisable only by Optionee, or by such Optionee's legal representative.

                                      -7-
<PAGE>

                                    ARTICLE X
                      Adjustment for Recapitalization, Etc.

The aggregate number of Ordinary Shares which may be purchased upon exercise of
the Options granted hereunder, the number of Ordinary Shares covered by each
outstanding Option and the price per share of each such option shall be
appropriately adjusted for any increase or decrease in the number of outstanding
shares of the Company resulting from a stock split or other subdivision or
consolidation of shares or payments of stock dividends or distributions or other
increases or decreases in the number of outstanding Ordinary Shares effected
without receipt of consideration by the Company or in the event of any other
extraordinary transaction.

The foregoing adjustments and the manner of application of the foregoing
provisions shall be determined by the Committee in its sole discretion. Any such
adjustment may provide for the elimination of any fractional share which might
otherwise become issuable upon exercise of an Option.

                                   ARTICLE XI
                        No Obligation to Exercise Option

The grant of an Option pursuant to the Plan shall impose no obligation on the
Optionee to exercise such Option.

                                   ARTICLE XII
                                 Use of Proceeds

The proceeds received from the issuance of Ordinary Shares upon exercise of
Options, pursuant to the Plan shall be used for such purposes as the Company
shall determine to be appropriate.

                                  ARTICLE XIII
                             Rights as a Shareholder

The Company shall not be required to recognize an Optionee as a shareholder with
respect to any share issuable or transferred, as the case may be, upon the
exercise of such Option by the Optionee until such Optionee shall have become
the holder of record of such share, and such Optionee shall not be entitled to
vote or to any dividends or distributions or other rights in respect of such
share for which the record date is prior to the date on which he shall have
become the holder of record thereof.

                                   ARTICLE XIV
                                Employment Rights

Neither the Option Plan nor the Option agreement with the Optionee shall impose
any obligation on the Company or a subsidiary thereof, to continue any Optionee
in its employ, or the hiring by the Company of the Optionee's services and
nothing in the Plan 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 a
subsidiary thereof or restrict the right of the Company or a subsidiary thereof
to terminate such employment or service hiring at any time.

                                   ARTICLE XV
                             Compliance with The Law

The Company shall not be liable for the non-issuance or non-transfer or any
delay in issuance or transfer of any Ordinary Shares issuable or transferred, as
the case may be, upon the exercise of any Options

                                      -8-
<PAGE>

granted under the Plan which results from the inability of the Company to
obtain, or from any delay in obtaining, from any regulatory body having
jurisdiction, all requisite authority to issue or transfer Ordinary Shares of
the Company upon exercise of the Options under the Plan or upon the transfer of
Ordinary Shares issued upon such exercise, if counsel for the Company deems such
authority necessary for lawful issuance or transfer of any such shares.
Appropriate legends may be placed on the stock certificates evidencing shares
issued upon exercise of Options to reflect such transfer restrictions.

                                   ARTICLE XVI
                            Voting of Ordinary Shares

Optionees shall only be entitled to all rights of a shareholder in the Company
upon the full payment of the exercise price of the Options granted under this
Plan. Shares held by the Trustee under the Plan, which have been fully paid
shall be voted in accordance with the instructions in writing of the Optionees.
The provisions of this Article XVI shall not in any way affect the provisions of
Article XIII of this Plan.

                                  ARTICLE XVII
                               Transfer of Shares

By exercise of an option granted hereunder, the optionee agrees that any sale,
transfer or other disposition of any of the Ordinary Shares issued upon such
exercise shall be made in accordance with the applicable requirements of Rule
144, including, if applicable, the volume limitations applicable to "affiliates"
of the Company.

                                  ARTICLE XVIII
                       Amendment or Discontinuance of Plan

Subject to any applicable law and NASDAQ Rule, the Board or the Committee may,
without the consent of the Company's shareholders or any Optionee under the
Plan, at any time terminate the Plan entirely and at any time or from time to
time amend or modify the Plan, including amendments deriving or needed as result
of any legal changes or tax reform that may be enacted in Israel in the future
or any other legal arrangements which may replace the current legal arrangement
under Section 102 of the Ordinance, provided that no such action shall adversely
affect Options granted hereunder prior to such amendment or modification without
consent of any Optionee adversely effected and, with respect to ISOs, the Board
shall not, without approval of the stockholders: (a) increase the total number
of Ordinary Shares which may be purchased pursuant to ISOs granted under the
Plan, except as contemplated in ARTICLE X, and (b) expand or change the persons
eligible to receive options under the Plan

                                   ARTICLE XIX

                                      Taxes

Each Optionee shall be solely liable for all taxes and other fees resulting from
the grant and/or exercise of Options granted under the Plan and disposition of
shares acquired pursuant to the exercise of an Option.

                                      -9-
<PAGE>

Each Optionee should consult with his/her individual tax advisers to determine
the possible tax consequences of the grant and/or exercise of Options granted
under the Plan and the disposition of shares acquired pursuant to the exercise
of the Option in his/her personal tax circumstances.

     The Company and/or the Trustee (where applicable) shall withhold taxes
     according to the requirements under the applicable laws, rules, and
     regulations, including the withholding of taxes at source. Furthermore, the
     Optionee shall agree to indemnify the Company and the Trustee (where
     applicable) any shareholder, director, manager or other Nosei Misra in the
     Company, 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.

The Board, the Committee and/or the Trustee shall not be required to release any
Share certificate, issued upon exercise of an Option, to an Optionee, until all
required payments have been fully made.

                                   ARTICLE XX
                         Effectiveness and Term of Plan

The Plan shall become effective upon shareholder approval and will expire on the
tenth anniversary of the date of such shareholder approval. No Option may be
granted pursuant to the Plan after the termination of the Plan, however, Options
outstanding on that date may still be exercised in accordance with the terms of
their grant.

                                  ARTICLE XXII
                  Governing Law and Other National Regulations

The Plan and all instruments issued hereunder shall be governed by and
interpreted in accordance with the laws of the State of Israel, subject to all
applicable laws, rules, and regulations, (especially rules of accounting)
whether of the State of Israel, the United States, the United Kingdom or the
Netherlands, or any other State having jurisdiction over the Company and the
Optionee, including the registration of the Shares under the United States
Securities Act of 1933, the Companies Act, 1985 in the UK or the Law for the
Supervision of Listed Shares in the Netherlands, and to such approvals by any
governmental agencies or national securities exchanges as may be required.

                                      -10-

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