Document:

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                                                                    EXHIBIT 10.1

                           PIKTEL TECHNOLOGIES LTD.
                                (the "Company")

                           EMPLOYEE SHARE OWNERSHIP

                                AND OPTION PLAN

             Pursuant to the Board Resolution dated March 29, 1995
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                           PIKTEL TECHNOLOGIES LTD.

                           EMPLOYEE SHARE OWNERSHIP

                                AND OPTION PLAN
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                               TABLE OF CONTENTS

1.     Preamble.

2.     Management of the Plan.

3.     The Shares subject to the Plan.

4.     The Plan exhausts the employee's entitlement to receive options in the
       Company.

5.     Allotment of the options and shares to the trustee.

6.     Agreement with the employee (option or agreement for the purchase of
       shares) and conditions of exercise.

7.     Exercise of the option.

8.     Transfer of the shares into the name of the employee.

9.     Additional documents.

10.    Taxation and other arrangements in connection with the transfer of the
       shares to the employee.

11.    Dividends.

12.    Rights and/or benefits arising out of the employee-employer relationship
       and the absence of an obligation to employ.

13.    Adjustments for changes in the capital structure.

14.    Amendment of the Plan, amendment of existing options or the replacement
       thereof.

15.    Commencement of the Plan; termination, freezing or lapse thereof.

16.    Release of the trustee and the legal advisor from liability and
       indemnification.

17.    Arbitration.

18.    The employee's declarations and covenants.

19.    Miscellaneous.

20.    Notices and/or instructions.

APPENDICES
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Appendix A:         Section 102 of the Income Tax Ordinance and the Income Tax
                    Rules (Tax Relief on the Allotment of Shares to Employees,
                    5749-198); the version as of the date of commencement of the
                    Plan (Clause 1.4).

Appendix B:         Trust deed pursuant to Regulation 3 of the Commissioner's
                    Rules (Clause 5.2).

Appendix C:         The Company's notice to the Assessing Officer as to the
                    Allotment Plan (Clause 5.2).

Appendix D:         Employee's notice to the trustee as to exercise of the
                    option (Clause 7.1).

Appendix E:         Notice to the Company of exercise of the option by the
                    trustee (Clause 7.3).

Appendix F:         Power of attorney given by the employee to the legal advisor
                    to sign the documents (Clause 9.2).

Appendix G:         Employee's confirmation to which he undertakes not to claim
                    exemption pursuant to Sections 95 or 97(a) of the Ordinance,
                    and the consent of the employee to the trust deed signed
                    pursuant to the Commissioner's Rules by the Company and the
                    trustee (Clause 10.7).

1.     PREAMBLE
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       1.1    The object of the Plan is to enable employees and advisors of the
              Company, employers and advisors of its subsidiaries, companies
              that have an interest in the Company, and companies related to the
              Company (collectively, the "Company") to acquire shares of the
              Company either at the market price or at a price higher or lower
              than the market, as shall be determined from time to time by the
              Company's Board ("Board").

       1.2    The Company, by means of the Plan, aims to continue to enjoy the
              services of the present officers of the Company, to ensure the
              acquisition of the services of other appropriate persons to fill
              the senior positions in the Company, and to create incentives for
              the holders of the senior positions in the Company to invest their
              maximum effort towards the Company's success while remaining
              faithful to the Company throughout. The Company is a
              high-technology Company and the value of its shares is dependent,
              inter alia, upon the effort which the Company's senior employees
              invest therein, upon their initiative and upon their creativity.
              The Company aims that its success shall also be theirs.

       1.3    The Company intends to bring the Plan under Section 102 of the
              Income Tax Ordinance ("Section 102" and the "Ordinance",
              respectively) and under the Income Tax Rules (Tax Relief on the
              Allotment of Shares to Employees), 5749-1989 ("Commissioner's
              Rules"). Nonetheless, the Company does not warrant that the Plan
              will be recognized by the income tax authorities or that even if
              it should comply with current provisions of the law, there will
              not be any future changes in the provisions of the law, the
              regulations or the Commissioner's Rules, in existence from time to
              time, or that the exemption under Section 102 will not be
              abolished by the Commissioner in accordance with his authority
              pursuant to the Commissioner's Rules and that the same will not
              affect the taxation of any of the employees, or that for other
              considerations the Company shall prefer not to apply Section 102
              to the options or shares which have vested to the employees from
              time to time pursuant to the Plan. Accordingly, the Company
              reserves the right at its absolute sole discretion to operate the
              Plan in whole or part, from time to time, outside of the framework
              of Section 102, whether with respect to all the employees or part
              of them.

       1.4    In the event that the provisions of Section 102 and the
              Commissioner's Rules apply to the employees or any one of them,
              then the provisions of Section 102 and the Commissioner's Rules as
              amended from time to time, or if the Commissioner shall determine
              special conditions for the Plan or a specific allotment within the
              framework of the Plan then these shall also be an integral part of
              this Plan in as much as they affect the employees to whom they
              apply. In the event of a contradiction between the clauses of the
              Plan, the appendices attached thereto and the agreements with
              employees prepared pursuant thereto or their application, and the
              provisions of the law and the Commissioner's Rules, the provision
              of the law and the Commissioner's Rules shall apply and the
              necessary adjustments to the Plan shall be determined by the Board
              at its sole discretion and its determination in this regard shall
              be final and binding. (For the employees convenience, a current
              version

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              of Section 102 and the Commissioner's Rules in effect at the time
              of adoption of the Plan are annexed hereto as Appendix A.) It is
              emphasized that only the version that is published in the Official
              Gazette is binding. Each employee is required to learn and
              consider the provisions of Section 102 and the Commissioner's
              Rules since they constitute an integral part of this Plan as
              aforesaid.

       1.5    In the event the Company's shares are registered for trade on the
              Tel-Aviv Stock Exchange Ltd., or on any other stock exchange,
              whether in Israel or abroad (hereinafter the "Stock Exchange") the
              grant of options and/or the issue of shares under the Plan may be
              conditional upon submission to the Stock Exchange or Securities
              Authorities (the "Authorities") of an outline, an immediate
              report, or a similar document or upon meeting any other
              requirement or instruction of the Stock Exchange and the
              requirement of any other authority acting under law as exists from
              time to time. In such event, in accordance with the Board's
              resolution, the Plan and the Agreements prepared pursuant thereto,
              may be amended as necessary to meet the requirements of the Stock
              Exchange or of the Authority, or any other authority as aforesaid.
              Such an amendment shall be part of the Plan and in any event of
              contradiction between the amendment and the Plan's provisions, the
              amendment's provisions shall prevail.

              Furthermore, in the event that the granting of the options and/or
              allotment of shares as a result of exercise of the options
              pursuant to the Plan, shall be subject to proceedings and/or to
              approvals required by law, then completion of the proceedings
              and/or the receiving of the approvals required by law shall
              constitute a preliminary condition to execution of the allotment.

2.     MANAGEMENT OF THE PLAN
       ----------------------

       2.1    The Plan will be managed by the Board, whose interpretations,
              applications and modes of management thereof shall be final and
              binding subject to the provisions of the Plan, conferring powers
              of interpretation or determination on the legal advisor. The Board
              or whomever it designates shall have the exclusive power to
              determine questions of policy and efficiency, which are likely to
              arise in the operation of the Plan.

              Every right, power or authority conferred on the Company by the
              Plan shall be exercised by the Board or whomever has been
              authorized by it to do so. Every directive or notice signed by two
              members of the Board shall constitute decisive proof and authority
              for every act or decision of the Company.

       2.2    Without derogating from the generality of the aforegoing, the
              Board shall have the following powers:

              2.2.1    To determine at their absolute and sole discretion who
                       shall serve as trustee pursuant to the Plan. To change
                       the trustee in the future at their absolute sole
                       discretion and/or to appoint someone else to serve as
                       trustee in place of the existing trustee if the

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                       existing trustee is unable or unwilling to fulfill his
                       duty as trustee, or in the event that Section 102 shall
                       apply to the Plan, if the approval of the trustee is
                       canceled by the Commissioner of Income Tax (in the event
                       that Section 102 shall apply to the Plan all the above
                       powers shall be exercised in coordination with the income
                       tax authorities).

              2.2.2    To interpret the Plan and the options and shares which
                       shall be granted pursuant to the Plan, and to make,
                       amend, and repeal regulations and instructions in the
                       Plan.

              2.2.3    To delegate its powers pursuant to the Plan to a
                       committee, whether the committee shall operate as an
                       independent committee or as a committee subject to the
                       Board.

              2.2.4    To determine at their absolute sole discretion, from time
                       to time, in general or for each employee individually:
                       (i) the date and manner of the granting of the options
                       and the allotment of shares or any part thereof; (ii) to
                       set conditions, which shall not necessarily be identical,
                       for every option or share which the Company shall grant,
                       including the price and the conditions for the exercise
                       of the option and the allotment of the share; (iii) the
                       date or dates upon which the option(s) or part thereof
                       shall be exercised; (iv) the manner of exercise of the
                       option; (v) the number of the shares which may be made
                       available to the employee for acquisition at times,
                       including the minimum number of shares which may be
                       realized at any time an option is exercised; (vi) the
                       employees' obligations to the Company, including the
                       obligation of the employee to sign every document which
                       the Board determines is of importance to the Company, and
                       upon which the exercise of the option and the receipt of
                       the share or the share certificate by the employee is
                       dependent; (vii) to sign with the employee or employees
                       an option agreement or agreements or share allotment
                       agreement or any other agreement in any form as shall be
                       determined by the employee and the Company. In general
                       this Plan provides a framework and the Board may, with
                       respect to any employee or employees, determine any
                       matter relating to the grant of options and the allotment
                       of shares in individual agreements. The Board shall be
                       empowered to allot from the shares subject to the Plan,
                       shares or options to purchase shares also to persons
                       providing services to the Company, but such grant or
                       allotment shall not be a qualifying allotment as defined
                       in Section 102 and the Commissioner's Rules, unless these
                       are so modified.

              2.2.5    In general, to exercise its authority, to take action and
                       to impose limitations and/or conditions with respect to
                       the Plan and/or the options granted pursuant to the Plan
                       and/or the shares subject to the options and/or the
                       shares which shall be allotted pursuant to the Plan, all
                       as the Board in its absolute discretion, shall consider
                       to be correct or necessary for the good of the Company
                       and the employees.

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              2.2.6    To appoint and replace, from time to time a legal advisor
                       for purposes of this Plan's provisions (the "Legal
                       Advisor").

              2.2.7    The powers vested in the Board pursuant to the Plan,
                       shall be exercised, as long as, in the Board's opinion,
                       no prejudice is caused to the rights of the employees, to
                       whom securities have been allotted pursuant to the Plan
                       and to the option agreement.

       2.3    No director or officer of the Company shall bear personal
              liability or any obligation to an employee as a result of any
              decision and/or action carried out in relation to the Plan or its
              execution.

3.     THE SHARES SUBJECT TO THE PLAN
       ------------------------------

       3.1    The shares subject to the Plan shall be the ordinary shares of the
              Company (the "Shares"). The maximum number of Shares subject to
              the Plan is 180,000 ordinary shares of NIS 0.10 nominal value
              each. The number of shares shall be amended pursuant to
              adjustments, if any, to the Company's share capital (such as
              splits, combinations, distribution of bonus shares, etc.), as set
              forth in Clause 13 below. In the event that an option granted
              under the Plan shall lapse for any reason, or shall end without
              having been fully exercised, or if Shares which have been allotted
              to persons entitled thereto are acquired back from them, or if the
              persons entitled to the Shares have lost their rights to the
              Shares, the Shares which have not been purchased pursuant to such
              option or the Shares of which the acquisition have not been
              completed shall again be placed at the disposal of the Plan. Any
              increase in the maximum number of Shares shall be made by the
              Board and shall require the approval of the general meeting of the
              shareholders of the Company.

       3.2    As long as the shares are held by the trustee or registered in his
              name in the register of members of the Company or as long as the
              share certificates are held by the trustee or the Legal Advisor,
              the trustee alone shall be entitled to receive every notice to
              which a shareholder is entitled, and he shall be entitled to
              exercise every right of the shareholders of the Company or require
              any information, financial report or other report which a
              shareholder has the right to require from the Company, and to
              participate in every shareholders' meeting. The employee shall not
              be entitled to exercise any such right as shareholder or make any
              demand or request of the trustee in this regard. The trustee shall
              vote at the general meeting of the Company in the same proportion
              as the other shareholders, and in such a manner, so that for
              practical purposes he shall be deemed to have abstained.

4.     THE PLAN EXHAUSTS THE EMPLOYEE'S ENTITLEMENT TO RECEIVE OPTIONS IN THE
       ----------------------------------------------------------------------
       COMPANY
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       By signing the Option Agreement mentioned in Clause 6 below, the employee
       declares and agrees that the Plan and the Agreement take precedence over
       any agreement, arrangement and/or understanding which may have been made
       in the past, if any, whether in writing or verbally between the employee
       and the Company, its directors and/or shareholders, and every
       arrangement, undertaking or promise to grant options and/or shares in the
       company, which

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       has been promised to the employee in the past by the shareholders or
       directors of the Company or related companies shall have no effect and
       are null and void. Accordingly, in all matters relating to options or
       shares of the Company, only the provisions of the Plan or the option
       agreement shall apply. Upon the earlier of receipt by the employee of the
       options, or upon their receipt by the trustee on his behalf, or the
       signing of the option agreement, the employee expressly waives every
       right which he had in the past, if any, vis a vis the Company, its
       shareholders or directors in connection with options or shares in the
       Company.

5.     ALLOTMENT OF THE OPTIONS AND THE SHARES TO THE TRUSTEE
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       5.1    The Board shall appoint a trustee for the purposes of this Plan.
              The trustee shall have all the powers provided by the law, the
              Commissioner's Rules, and the Plan and he shall act in accordance
              therewith, as shall be in effect from time to time, with respect
              to the shares or options which have been allocated to him for the
              employees, in accordance with the decision of the Board. The
              Company shall pay the trustee a salary as shall be agreed between
              the trustee and the Company.

       5.2    If the Plan or part thereof will be brought under Section 102, the
              Company and the trustee shall apply to the Commissioner of Income
              Tax for approval of the trustee pursuant to the provisions of
              Section 102 and the Commissioner's Rules. The Company and the
              trustee shall sign such trust deed as is provided by the
              Commissioner's Rules (the "Trust Deed") and shall notify the
              Assessing Officer, at the office at which the Company's file is
              maintained, of the allotment Plan at least 30 days prior its
              execution, pursuant to the provisions of the Commissioner's Rules.

              The Trust Deed agreed with the trustee who has been appointed by
              the Board for purposes of this Plan forms an integral part hereof
              and is attached hereto as Appendix B. The form of the notice to
              the Assessing Officer is attached hereto as an integral part
              hereof as Appendix C.

              The Company and the trustee shall be entitled to amend the Trust
              Deed, from time to time, as shall be deemed necessary by the Board
              for the purpose of executing the Plan in the most efficient manner
              possible for the good of the Company and the employees.

       5.3    The share certificates and the option agreements shall be issued
              in the name of the trustee and shall be deposited with and held by
              him, and registered in his name in the register(s) of members of
              the Company for a minimum period as shall be determined by the
              Board but which shall not be less than 24 months from the earlier
              of the date on which the options are granted or shares are
              allotted to the trustee (hereinafter referred to as the
              "Restriction Period"). The option agreements/share certificates
              shall be allotted to the trustee and shall be deposited with him
              on the date determined by the Board, after completion, to its
              satisfaction, of all the proceedings to proceed to the
              commencement of the Plan (hereinafter referred to as the "Fixed
              Day").

       5.4    In the event that additional Restriction Periods will apply to the
              options and/or shares pursuant to instructions of the Stock
              Exchange and/or

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              any law, the Board shall establish the extent and conditions of
              their application with an approach to endeavor to apply them
              parallel to the Restriction Period as far or is possible.

       5.5    For as long as the options have not been exercised and the shares
              have not been allotted, transferred and registered in the
              employee's name in the Company's registers, the employee shall not
              have any of the rights granted to a shareholder of the Company.

       5.6    Nothing in the aforegoing provisions shall derogate from the power
              of the Board to grant options and/or to allot shares to the
              trustee otherwise than under the provisions of Section 102 and the
              Commissioner's Rules, to appoint a trustee other than the trustee
              appointed by the Company for the purposes of Section 102, or to
              allot shares or grant options to employees directly and not
              through a trustee, upon such conditions as shall be determined by
              the Board.

6.     AGREEMENT WITH THE EMPLOYEE (OPTION OR AGREEMENT FOR THE PURCHASE OF
       --------------------------------------------------------------------
       SHARES) AND CONDITIONS OF EXERCISE
       ----------------------------------

       Every employee shall be required, unless the Board has reached a contrary
       agreement, to sign an option agreement or a share purchase agreement or
       another agreement, as determined from time to time by the Board, in the
       version presented from time to time by the Legal Advisor of the Company,
       and as shall be approved by the Board (hereinafter the "Option Agreement"
       or "Share Purchase Agreement" or the "Agreement").

       The Agreement, which shall be signed with the employee, will not
       necessarily be identical with respect to each employee. The following
       conditions, unless expressly otherwise determined in respect of a
       particular option, shall apply to every option and shall apply mutatis
       mutandis to the Share Purchase Agreement:

       6.1    The option shall be in force for a period of 10 (ten) years from
              the date of commencement of the Plan, as such date is defined in
              Clause 15 below. The option shall lapse upon expiration of this
              period unless this period is extended by the Board.

       6.2    Unless the provisions of Section 102 and the Commissioner's Rules
              do not apply to the option and unless the Board has reached a
              contrary agreement with the employee, the option shall be granted
              to the trustee on behalf of any employee, without consideration,
              or at such price as shall be determined by the Board at their
              absolute discretion ("Option Price"). The consideration for the
              shares, which shall be purchased upon exercise of the option,
              shall also be determined by the Board, and may be the market price
              or a price higher or lower than the market price of the shares,
              provided that it shall be not less than the nominal value of the
              shares relating to such option (hereinafter referred to as the
              "Option Exercise Price").

       6.3    In addition to the provisions of Clause 6.2 and without prejudice
              thereto, if the law and the Commissioner's Rules shall apply to
              the Agreement, the option shall be granted or the shares shall be
              allotted to the

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              employee in consideration for the employee waiving salary in
              accordance with a written understanding between himself and the
              Company or pursuant to the provisions of the Agreement.

       6.4    Unless determined otherwise in the Agreement, the Option Exercise
              Price shall be paid by the employee to the Company no later than
              the date of exercise of the option.

              In any event that an arrangement is made for deferred payment of
              the option exercise price, the Board may determine that the
              deferred payment shall be linked to the consumer price index or to
              a similar index or to a foreign currency, and may also include
              interest.

       6.5    The option and/or the right to the option and/or the Shares are
              personal, and except insofar as is specified in this Plan, and
              pursuant to Section 102 and the Commissioner's Rules (if they
              apply), may not be transferred, assigned, pledged, withheld,
              attached or otherwise charged either voluntarily or pursuant to
              any law, otherwise than by way of transfer pursuant to a will or
              the laws of inheritance (see Clause 6.8.4 below), and it is
              forbidden to grant any power of attorney or deed of transfer with
              respect thereto, whether the same has immediate effect or shall
              take effect on a future date. The option may be exercised only by
              the trustee on behalf of the employee named in the Option
              Agreement. A note as to the provisions of this Clause or a legend
              may appear on any document which grants the option including in
              the Option Agreement, and also on any share certificate or Share
              Purchase Agreement.

       6.6    The right to exercise the options is granted to the employee, but
              if the provisions of Section 102 and the Commissioner's Rules
              apply or if the Board has decided otherwise, the right to exercise
              the Options shall be granted to the trustee or the Shares shall be
              allotted to the trustee, in installments, gradually over a period
              of 4 (four) years from the date of granting the option, unless a
              different period or periods have been fixed for an employee or the
              provisions of Clause 6.7 below shall apply to him. At the end of
              every period which shall be determined in the Option Agreement for
              the exercise of the option (vesting periods), the option may, from
              time to time, be exercised in relation to all the shares allocated
              for that period in such manner that at the end of the 2 (two)
              years from the granting of the option the trustee shall, in the
              absence of contrary agreement with the employee, be entitled to
              exercise on behalf of the employee and at his request 1/2 (half)
              of the options and at the end of each of the remaining 2 (two)
              years another 1/4 (quarter).

              In addition, during every one of the vesting periods, the option
              may be exercised in relation to all or part of the shares
              allocated for every previous period in which the option was not
              fully exercised, subject to the provisions of Clause 6.8 below,
              provided that at the time of the exercise of the option the
              employee continues to be employed by the Company, or by a
              subsidiary company under its control on a continual basis from the
              date of the granting thereof until the date of the exercise
              thereof. After the end of the vesting periods and during the
              balance of the option period, the option may be exercised, from
              time to time, in

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              relation to all the shares which have not at that time been
              exercised and which shall remain subject to the conditions of the
              Option Agreement. The provisions of this Clause shall remain
              subject to the provisions of the Option Agreement which provide a
              minimum number of shares with respect to which the option may be
              exercised by any notice of exercise and also the provisions as to
              the number of times upon which the trustee can send the Company
              notice of exercise on behalf of the employee in respect of the
              option. The Board shall be entitled at any time to shorten the
              period of the vesting schedule.

       6.7    The Board may determine, at its discretion and subject to such
              conditions as it shall establish, that any employee shall be
              exempt from being subject to proportional allotment pursuant to
              the vesting period (as set forth in Clause 6.6) and shall be
              entitled to receive the options or the shares, through the trustee
              as specified in this Plan, or directly in his own name, upon
              signing of the Agreement or on such other date or dates as shall
              be agreed. In the event that the employees are exempt from
              proportional allotment subject to the vesting period (as set forth
              in Clause 6.6), the Board shall be entitled to determine by
              agreement with the employee that the trustee, or a subsidiary or
              affiliate of the Company shall have the right to repurchase the
              shares from the employee for a nominal consideration, if the
              employee shall not comply with the conditions which shall be
              determined by the Board or shall cease to be an employee of the
              Company. The Board shall determine additional conditions to this
              right of repurchase, including: (i) appropriate arrangements for
              the monies which shall be available to the trustee or the
              subsidiary or others for the purpose of the repurchase; (ii)
              conditions with respect to the voting rights of the employee;
              (iii) the right of first refusal or a pre-emptive right to
              purchase shares in the Company; (iv) the employees right to
              receive reports or information from the Company; and (v) the
              employees right to dividends with respect to shares which are
              likely to be reacquired as aforesaid. The employee shall not be
              entitled to sell or charge or transfer in any other manner the
              shares which are subject to the right of repurchase until the
              conditions determined by the Board as aforesaid have been complied
              with (including a minimum period of employment as a condition for
              the right of repurchase to lapse). As security for compliance with
              this undertaking the share certificate will be deposited with the
              trustee who will release the same to the employee only after the
              employee shall be finally entitled to the shares, and such shares
              shall not be subject to any other restrictive condition.

       6.8    Termination of the Employment of the Employee
              ---------------------------------------------

              6.8.1    Except for the reservations hereinafter contained, in the
                       event of the termination of the employment of an employee
                       by the Company for any reason whatsoever, whether for
                       reasons entitling him to receive compensation for
                       dismissal or for reasons which do not entitle him to
                       obtain compensation for dismissal, upon the employee's
                       instructions the trustee shall have the right to exercise
                       the option on behalf of such employee during a period of
                       3 (three) months from the date of the termination of
                       employment (as he could have done on the date of
                       termination of

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                       the employment as aforesaid). For this purpose, the
                       termination of the employment, shall be the date upon
                       which the Company or the employee, as the case may be,
                       shall notify the other party in writing of termination of
                       the relationship between them (even if the notice shall
                       contain a future date for the termination of their
                       relationship, the date of termination of employment for
                       this purpose shall be deemed to be the date of service of
                       the notice). At the end of the said period of 3 (three)
                       months, the option shall lapse. The employee shall notify
                       the trustee in accordance with the provisions of Clause
                       7.1 below if he shall desire that the trustee shall
                       exercise the option on his behalf.

              6.8.2    In the event that Section 102 and the Commissioner's
                       Rules apply to the Plan, then if the employee has ceased
                       to be an employee of the Company prior to the termination
                       a period of two years from the date of the qualifying
                       allotment, as defined in the Commissioner's Rules,
                       (except if the employment ceased by reason of death, or
                       if the Commissioner is satisfied that the employee has
                       ceased to be employed by the Company for special reasons
                       which are not under his control), then the exemption
                       provided by Section 102 shall not apply, pursuant to the
                       Commissioner's Rules, with respect to that employee. In
                       such a case, the employee shall be obliged to make
                       arrangements with the tax authorities at his expense for
                       all matters connected with the taxation of the options
                       and/or the shares and for payment of the tax which is due
                       immediately as a condition of the exercise of the option
                       pursuant to the provisions of law and the Commissioner's
                       Rules. Without derogating from the obligation of the
                       employee pursuant to this Clause, the Company and/or the
                       Legal Advisor shall be entitled to apply to the income
                       tax authorities in order to clarify the matter of the
                       liability of the employee with regards to the income tax.
                       The trustee shall not be obliged to transfer the options
                       or the shares to the employee or to sell the shares on
                       his behalf before the tax has been fully paid or before
                       the trustee has received an approval pursuant to the
                       Commissioner's Rules from the Assessing Officer as to the
                       settlement of the tax.

              6.8.3    Notwithstanding the aforegoing, the Board is empowered at
                       its absolute discretion, to extend the option exercise
                       period with respect to any employee or employees for such
                       period as it shall determine, and it is empowered to make
                       conditional its aforesaid agreement to extend the option
                       exercise period upon any condition it deems fit.

              6.8.4    In the event that an employee shall die after he has
                       become entitled to exercise the option, but prior to the
                       lapse thereof, the option shall be exercisable by the
                       trustee on behalf of the employee's heir or heirs during
                       the same period in which the option would have been
                       exercisable on the date of the employee's death and with
                       respect to the same number of Shares which were
                       exercisable.

                                       13
<PAGE>

              6.8.5    Notwithstanding the aforesaid and pursuant to the
                       provisions of Clause 6.1 above, in no case shall an
                       option be exercisable on the expiration of 10 (ten) years
                       from the date of commencement of the Plan, as such date
                       is defined in Clause 15 below, unless such date is
                       extended by the Board.

       6.9    The employee (whether as an option holder or even if shares have
              been allotted for him in the trustee's name) shall have none of
              the rights of a shareholder of the Company as long as the option
              has not been exercised and the shares allotted and registered in
              his name in the books of the Company.

7.     EXERCISE OF THE OPTION
       ----------------------

       7.1    An employee who desires that the trustee shall exercise an option
              on his behalf, shall instruct the trustee to do so in writing in
              the form annexed hereto as Appendix D or in such other form as
              shall be provided by the Legal Advisor. The employee shall annex
              to the notice the payment to be made with respect to the option
              exercise price, pursuant to the provisions of the Option Agreement
              and to the provisions of Clauses 6.2 and 6.4 above, together with
              all the other documents which the employee is obliged to sign as a
              condition for the exercise of the option, as specified in the
              Plan.

       7.2    If Section 102 does not apply to the option or the shares which
              relate thereto, or if in the opinion of the Legal Advisor it does
              not apply, and the options have been granted directly to the
              employee, the employee shall exercise the option by means of a
              notice of exercise in a form similar to Appendix D, but in place
              of the word "trustee" the word "employee" shall be inserted. In
              such cases, as a condition to the exercise of the option, the
              employee shall pay the tax applicable to him (including all tax
              payable by the Company arising out of its obligation to deduct tax
              at source) pursuant to the instructions of the Legal Advisor and
              the provisions of the Plan.

       7.3    Upon receipt of all the requisite documents, approvals and
              payments from the employee (which is a condition to the exercise
              of the option pursuant to the Plan, the Agreement, and in
              accordance with law), the trustee shall deliver a notice to the
              Company in the form annexed hereto as Appendix E or in such other
              form as shall be agreed with the employee. The Company shall allot
              the shares subject to the option in the name of the trustee,
              register the trustee in the register of members of the Company and
              shall provide the trustee with a share certificate in the name of
              the trustee with respect of those shares which shall be held by
              him, all pursuant to the provisions of this Plan, the law and the
              Commissioner's Rules.

              If the Agreement provides that the Company will grant the option
              directly to the employee, the tax has been paid and other
              conditions for the exercise of the option have been fulfilled, the
              shares will be allotted in the name of the employee.

8.     TRANSFER OF THE SHARES INTO THE NAME OF THE EMPLOYEE
       ----------------------------------------------------

                                       14
<PAGE>

       In the event the shares or the options have been allotted to the trustee,
       the following provisions shall apply:

       8.1    If the employee has not exercised the option, all the conditions
              of the Agreement have been fulfilled, the restriction period has
              ended and that the applicable tax has been paid in accordance with
              the provisions of the Plan, the law and the Commissioner's Rules,
              then the employee shall be entitled to demand that the options be
              transferred from the trustee's name into the employee's name.

       8.2    When the option has been exercised by the employee, the shares
              have been allotted to the trustee, the employee has paid the
              option exercise price in full and has signed and provided all the
              documents required at such time, the restriction period has
              concluded and payment has been made of all the tax due pursuant to
              the Plan, the law and the Commissioner's Rules, then the employee
              shall be entitled to request of the trustee to transfer the Shares
              into his name.

       8.3    The right of the employee to receive from the trustee the options,
              in the event they have not been exercised, or the shares after the
              options are exercised, in whole or in part, and the employee's
              right to require that the Shares and Options shall be registered
              in his name as aforesaid, and the right to request that the
              trustee will sell options or shares on his behalf and in his name
              for the purpose of financing the payments due thereon (subject to
              the Company's Articles of Association as the same shall be in
              force from time to time and subject to the provisions of law and
              to the Commissioner's Rules), are all personal and may not be
              transferred, assigned, pledged, withheld, attached or otherwise
              charged, either voluntarily or by virtue of any law, except for a
              transfer by virtue of a will or pursuant to the laws of
              inheritance, and no power of attorney or transfer deed shall be
              given with respect thereto, whether of immediate effect or with a
              future validity. Every such transfer, whether direct or indirect,
              whether made for immediate effect or in order to become effective
              in the future, shall be null and void, and the trustee shall not
              act in accordance therewith.

       8.4    If the employee was entitled to receive the option or the share
              pursuant to this Clause and to the Plan, the Company shall issue
              an option deed or a share certificate as necessary in the
              employee's name.

       8.5    In the event that bonus shares are allotted by virtue of the
              Shares allotted to an employee within the context of this Plan and
              which are registered in the name of the trustee, the same shall be
              allotted to the trustee and shall be registered in his name and
              for as long as the Shares are registered in the name of the
              trustee, they shall be considered for all purposes, and in
              particular, in all matters relating to the subjection thereof to
              the terms and conditions of the Plan and the provisions of Section
              102 and the Commissioner's Rules, as if they were the original
              shares by virtue of which they were allotted.

                                       15
<PAGE>

              By signing the Agreement, the employee confirms that he expressly
              agrees to the provisions of this Clause and undertakes as is
              required by Rule 4(b)(2) of the Commissioner's Rules.

       8.6    As long as the Company is not a public Company traded on the Stock
              Exchange, the transfer of the shares after they have been
              registered in the name of the employee shall be restricted
              pursuant to the provisions of this Plan (including provision 18.2
              below), to the provisions of the Company's Articles of
              Association, as the same shall be in force from time to time, and
              to every agreement between the Company and the employee.

9.     ADDITIONAL DOCUMENTS
       --------------------

       9.1    As long as the Shares have not been registered for trade on the
              Securities Stock Exchange, whether in Israel or abroad, the
              Company shall be entitled to demand from the employee at any time
              that the same shall provide any certificate, declaration or other
              document which the Company shall consider to be necessary pursuant
              to any law, whether local or foreign, or any certificate or
              agreement, (including an undertaking on the part of the employee
              not to sell his shares during any period which shall be required
              by an underwriter or investment bank or advisor of the Company for
              the purposes of any share issue, whether private or public,
              including any certificate or agreement which the Company shall
              need to obtain, if any, from the employees as members of a class
              of shareholders), or any certificate, declaration or other
              document which is deemed by the Board to be appropriate or
              necessary for the purpose of raising capital for the Company,
              whether by private issue or by public issue, whether in Israel or
              abroad for the purpose of merging the Company with another
              company, whether the Company shall be the surviving company or
              not, for the purpose of the reorganization of the Company, all as
              shall be deemed necessary by the Board in consultation with the
              Legal Advisor. The form of any document which the employee shall
              be required to sign shall be determined by the Legal Advisor, who
              shall formulate the document in his discretion, provided that in
              his opinion the raising of the additional capital as aforesaid,
              the merger or any other modifications as aforesaid shall not
              substantially prejudice the employee's investment in the Company.
              The dilution of the employee's holding in the Company which arises
              out of the raising of any additional capital or merger or out of
              the exercise of any options shall not be considered detrimental in
              any way to the employee's holdings.

              As long as the shares and/or the options are registered in the
              trustee's name, the same shall be authorized to sign in the
              employee's name and on his behalf on any of the aforesaid
              documentation. In the event that the options or Shares have been
              transferred into the name of the employee, and he has refused to
              confirm any document required by the Company as aforesaid by
              placing his signature thereon, the Legal Advisor shall be
              entitled, at the request of the Company, to sign any document in
              the name of the employee and on his behalf. In the event that with
              respect to a certain matter the Board and/or general meeting of
              the Company have taken resolutions, the trustee and/or the Legal

                                       16
<PAGE>

              Advisor shall exercise their authority as aforesaid, in their sole
              discretion, in order to advance and/or realize the resolution
              and/or its purpose.

       9.2    In order to guarantee the aforesaid, upon the earlier of the
              employee`s signing of the Agreement as is mentioned in Clause 6
              hereof, or signing of the Power of Attorney attached hereto as
              Appendix F, the employee irrevocably empowers the Legal Advisor
              and/or the trustee, since the rights of the Company and of the
              other shareholders are dependent thereon, to sign in his name as
              aforesaid on any document as aforesaid, and the employee shall
              have no complaint or claim against the Legal Advisor or the
              trustee with respect to such signature. The employee will
              authenticate his signature in the presence of a notary, if he
              shall be asked to do so by the Company, in order to give full
              validity to the Power of Attorney.

              In the event that the Company shall offer securities to the
              public, so that its shares will be traded on the Stock Exchange in
              Israel or abroad, this Clause 9.2 shall cease to have effect on
              the date of the offer to the public, as this date shall be
              determined, by the Legal Advisor. In the event this Clause ceases
              to have effect, it shall not influence the validity of any
              document which has been signed pursuant to this Clause, prior to
              this Clause having ceased to have effect.

10.    TAXATION AND OTHER ARRANGEMENTS IN CONNECTION WITH THE TRANSFER OF THE
       ----------------------------------------------------------------------
       SHARES TO THE EMPLOYEE
       ----------------------

       10.1   General
              -------

              The options which shall be granted and the shares which shall be
              allotted pursuant to this Plan shall be granted and/or allotted in
              connection with the employee/employer relationship. The employee
              shall be liable for all taxes, duties, fines due to the employee's
              error or failure (but not due to the Company's error or failure)
              and for other payments which shall be imposed by the tax
              authorities (whether in Israel or abroad) and for every obligatory
              payment of whatever source with respect of the options, the shares
              or a dividend or any other benefit in respect thereof and/or for
              all charges which shall accrue to the employee and/or to the
              trustee in connection with the Plan, and in particular without
              prejudice to the generality of the aforesaid, for income tax,
              stamp duty, capital gains tax, value added tax and National
              Insurance contributions (some of which do not apply at the present
              date but in theory may apply in the future and are therefore
              included by way of example).

       10.2   Taxation of the Employee if Section 102 of the Ordinance Applies
              ----------------------------------------------------------------
              to the Plan
              -----------

                                       17
<PAGE>

[FREE, NON-BINDING TRANSLATION FROM THE HEBREW ORIGINAL]

              A general explanation follows as to the applicable tax in Israel
              only, provided that Section 102 applies to the Plan, but without
              prejudice to the full tax duty of the employee as aforesaid and in
              Clause 1.4 above, and the same shall not be considered a
              professional opinion given to the employee as to tax law. It is,
              therefore, clarified to the employee that he is to independently
              examine and seek professional advice for his own data regarding
              all tax consequences and aspects to which he shall be subject as a
              result of his participation in this Plan.

              10.2.1   Date of Tax Liability
                       ---------------------

                       In general and pursuant to the provisions of Section 102
                       and the Commissioner's Rules, the employee's income from
                       the granting of the option or the share allotment in the
                       trustee's name on his behalf shall be tax exempted.
                       Furthermore, Rule 3(t) to the Ordinance shall not apply
                       to the exercise of the option by the trustee. The date of
                       the tax liability is the date of the transfer of the
                       shares into the name of the employee or the date of the
                       sale of the shares by the trustee or the employee. On
                       such date, pursuant to the provisions of Section 102(C)
                       of the Ordinance, the employee shall be deemed to have
                       sold the shares for the consideration as this term is
                       defined in Section 88 of the Ordinance. For this purpose,
                       the "cost price" shall be deemed to be only the sum which
                       has been paid by the employee in cash at the time of the
                       allotment. The trustee must deduct 30% at source from the
                       said consideration or such other rate as the Assessing
                       Officer shall determine from time to time. Determination
                       of the consideration and the mode of calculation of the
                       amount of tax as hereinafter provided in this Clause,
                       shall be in any manner which the trustee shall deem fit,
                       and he is entitled to consult with the Company's
                       Accountant in this regard. The employee shall not be
                       entitled to an exemption from the tax due pursuant to
                       Section 97(c) of the Ordinance, and therefore, inter
                       alia, the provisions relating to the exemption from tax
                       provided by the Income Tax Order (Tax Exemption on
                       Capital Gains from the Sale of Shares), 5742-1981, shall
                       not apply to him. The Commissioner has the power to
                       determine additional rules, conditions and regulations as
                       provided in Section 102. In the event the employee has
                       sold the shares after they have been transferred into his
                       name by the trustee, the date on which the same have been
                       transferred into the employee's name shall be deemed to
                       be the purchase date and the sum determined for
                       consideration as to Section 102(c) shall be deemed to be
                       the original price.

              10.2.2   Tax Alternative for the Employee
                       --------------------------------

                       Pursuant to Rule 6(b) of the Commissioner's Rules, as it
                       exists at the time the Plan is adopted by the Board, the
                       employee is also entitled to the following tax
                       alternative:
                       If the shares allotted are registered for trade on the
                       Stock Exchange, the employee shall be entitled to ask the
                       Assessing Officer by way of a notice to be sent by
                       registered mail, within

                                       18
<PAGE>

                       30 days from the aforesaid registration date, that his
                       shares shall be deemed to be sold pursuant to their
                       average price on the Stock Exchange in the first three
                       trade days; in the event the employee has asked for the
                       aforesaid - he shall not be entitled to retract his
                       request; the employee shall be entitled to postpone the
                       payment of the tax due until the date on which the shares
                       are deemed to have been sold pursuant to Rule 102(3) of
                       the Ordinance. The aforesaid tax shall be paid by the
                       trustee in addition to linkage and interest from the date
                       of registration of the shares for trade on the Stock
                       Exchange until the payment date; the employee shall
                       deliver to the trustee a copy of the request filed
                       pursuant to this Clause on the date on which the notice
                       has been sent to the Assessing Officer.

              10.2.3   A Two Year Working Period
                       -------------------------

                       Pursuant to the Commissioner's Rules the exemption in
                       Section 102 shall not apply to options granted to the
                       employee if within 2 years from the allotment to the
                       trustee the employee has ceased to be an employee of the
                       Company, unless to the satisfaction of the Commissioner
                       the same has ceased as aforesaid due to death or to
                       particular circumstances beyond the employee's control.

       10.3   Deduction at Source
              -------------------

              Without prejudice to the employee's obligation to pay all the
              taxes in connection with the option and/or the shares connected to
              the option in accordance with the provisions of Clause 10.1 above,
              the Company and/or any affiliated company and/or the trustee shall
              be entitled, in their absolute discretion, or shall be obliged,
              pursuant to the law and to the Commissioner's Rules, to make
              deductions at source from all payments due to the employee and to
              transfer the tax to the Assessing Officer at such time as they are
              by law or instruction of the Assessing Officer obliged to deduct
              the tax. Tax will be deducted from all payments due to the
              employee whether from salary due to the employee or from any
              payment due from any other source including funds from dividends
              or the consideration from sale of the Shares by the trustee as set
              forth in this Plan. The deduction at source shall be made as the
              Company or the trustee shall decide in accordance with the
              provisions of any law, as the same shall be construed by them and
              they are entitled to consult with the Company's Accountant. The
              employee shall not be entitled to contest the decision of the
              Company and/or the trustee or to make any claim against them even
              if they were mistaken in their considerations or were negligent in
              good faith with respect to the execution of the deduction at
              source.

       10.4   Taxation at the Time of Transfer of the Options or the Shares into
              ------------------------------------------------------------------
              the name of the Employee
              ------------------------

                                       19
<PAGE>

              10.4.1   In order to ensure that the tax shall be paid and as far
                       as is possible that the income tax authorities shall not
                       have any claim against the employee, the Company or the
                       trustee - with respect to the payment of the tax,
                       resulting from the grant of the options and allotment of
                       the shares - before the options/shares are transferred
                       into the name of the employee, the trustee shall obtain a
                       certificate of the Assessing Officer to the effect that
                       the tax due pursuant to Section 102(c) of the Ordinance
                       and pursuant to the Commissioner's Rules (hereinafter,
                       referred as the "Due Tax") has been paid and that the
                       shares may be transferred into the name of the employee,
                       or, any other permit as shall be deemed necessary by, and
                       which meets the satisfaction of, the trustee or the
                       Company. Alternatively, as shall be determined by the
                       trustee at his discretion, the trustee shall transfer to
                       the Assessing Officer 30%, or any other percentage due by
                       law or by the Commissioner's Rules, of the consideration,
                       as defined in Section 88 of the Ordinance, on account of
                       the Due Tax as calculated by the trustee, and the trustee
                       is entitled to consult in this matter with the Company's
                       Accountant. The employee shall not be entitled to raise
                       any complaint against the trustee, the Company or the
                       Accountant with respect to the calculation of the
                       consideration and the Due Tax. The employee shall contact
                       the Assessing Officer with any complaint with respect to
                       over payment of tax.

              10.4.2   The employee shall be obliged, in coordination with the
                       trustee and the company, to provide the trustee, (if
                       required to do so by the trustee or by the Company or by
                       the Company's Accountant) with an approval of the
                       Assessing Officer as to the Due Tax from the employee
                       with respect to the options and/or the shares which is to
                       be paid to the Assessing Officer as a condition for the
                       transfer of the shares into the name of the employee in
                       such form as shall be acceptable to the trustee, who
                       shall be entitled to consult in this matter with the
                       Company's Accountant. The employee shall be obliged to
                       deliver to the trustee or to the Company, upon request,
                       any documentation, approval or other data they in their
                       discretion require, for purposes of organizing payment of
                       the Due Tax pursuant to the Plan. Upon receipt by the
                       trustee from the employee of the approval of the
                       Assessing Officer as to the amount of Due Tax, the
                       employee shall pay the trustee the amount of the Due Tax
                       and the trustee shall pay the same to the Assessing
                       Officer. Alternatively, in accordance with trustee's
                       demand, the employee shall pay the Due Tax directly to
                       the Assessing Officer and shall provide the trustee with
                       the Assessing Officer's approval of the payment, in
                       customary form releasing the trustee and the Company from
                       all liability for payment of the tax.

              10.4.3   It is hereby declared that if only part of the full
                       amount of the tax is paid by the trustee, whether by way
                       of deduction of tax at source or otherwise, then, the
                       said payments shall be deemed only an advance payment on
                       account of the employee's Due Tax liability, and the
                       employee shall bear the responsibility for

                                       20
<PAGE>

                       clarification of the full liability, including reporting
                       to the tax authorities and payment of the Due Tax.

              10.4.4   The employee shall bear all payments, levies, fees and
                       taxes, (such as the stamp duty), connected with the
                       transfer of the shares into his name.

       10.5   Certificate of Assessing Officer - General
              ------------------------------------------

              The Company or the trustee shall be entitled, at any time, to
              apply to the Assessing Officer and with respect to an employee
              abroad, whether an employee of the Company or of an affiliate, the
              Company shall be entitled to apply to any foreign tax authority,
              for receipt of their approval as to the amount of tax which the
              Company or the employee or the trustee is to pay to the tax
              authorities for the granting options or the allotment of shares,
              or regarding any other question with respect to the application of
              this Plan. The approval shall be in a form acceptable to the
              trustee or the Company to the effect that upon the payment of such
              sum there shall be no further demands whatsoever by the tax
              authorities against the Company or its affiliate or the trustee
              with respect to such shares or options.

              For the avoidance of doubt, upon signing the Option Agreement, the
              employee and the Company, empower each of the Company and the
              trustee - individually, to approach at any time as they deem fit,
              the Assessing Officer, the Commissioner of Income Tax or any
              Foreign Tax Authority, in their names in order to obtain an
              approval from them regarding any matter arising out of this Plan.

              The Board or the trustee shall be entitled to delay any
              application of the employee as aforesaid to sell shares or to
              transfer them into his name (or, in the event that Section 102
              doesn't apply, to exercise the option) until receipt of the
              approval of the Assessing Officer (or of the Foreign Tax
              Authority). This reply might be delayed, for an extended period or
              until other arrangements are provided for, which in the Board's
              opinion, will ensure that the Company and the trustee shall not be
              charged with any tax payment in the future. The employee shall not
              be entitled to make any complaints on the grounds of the delay in
              the selling of the options or the shares or as a result of any
              damage caused to him as a result of the aforesaid delay.

       10.6   Indemnification of the Company and the Trustee with Respect to Tax
              ------------------------------------------------------------------
              Payments
              --------

              Since it is possible that the tax authorities may demand a larger
              payment than the amount estimated, and which was demanded of the
              employee; and since pursuant to the provisions of the Plan, the
              employee alone is liable for the full payment of the tax arising
              out of his participation in the Plan, the employee declares and
              covenants, upon signing the Option Agreement, that the Company,
              the related Company and the trustee shall not bear any liability
              and shall be indemnified by him against all expenses or losses
              which are caused to them with respect to any payments of tax which
              shall be made by them, including payments for

                                       21
<PAGE>

              non-deduction of tax at source in connection with the granting of
              the option, the exercise thereof, the allotment of the shares, the
              sale of the shares or the transfer of the shares into the name of
              the employee, and the payment of dividends.

       10.7   Tax Exemption Pursuant to Sections 95 and 97(a) of the Ordinance
              ----------------------------------------------------------------
              and Pursuant to Chapter Seven of the Encouragement of Industry
              --------------------------------------------------------------
              (Taxes) Law, 5729-1969
              ----------------------

              In the event that Section 102 shall apply to the Plan, then upon
              signing the Agreement the employee acknowledges in writing in
              accordance with the Commissioner's Rules that he undertakes not to
              apply for a tax exemption pursuant to Sections 95 and 97(a) of the
              Ordinance or pursuant to Chapter Seven of the Encouragement of
              Industry (Taxes) Law, 5729-1969, with respect to the transfer of
              the shares prior to the end of the Restriction Period and before
              the Due Tax has been paid. In accordance with the provisions of
              the Commissioner's Rules, the exemption provided by Section 102(b)
              of the Ordinance shall not apply to shares which are sold under
              tax exemption pursuant to Sections 95 or 97(a) of the Ordinance or
              in the context of an exemption for the sale of shares upon a
              merger of corporations. The employee shall also confirm his
              agreement in writing to the provisions of the Trust Deed signed by
              the Company and the trustee. The form of the employee's
              confirmation is annexed hereto as Appendix G.

11.    DIVIDENDS
       ---------

       11.1   The Shares shall participate equally in every cash dividend which
              shall be declared and distributed to the holders of the ordinary
              shares of the Company, subject to the provisions hereof.

       11.2   A cash dividend shall be distributed only with respect to those
              shares that have been allotted as a result of exercise of options
              by the Fixed Date for the distribution of the dividend, and to a
              person registered in the register of members as the shareholder.

              The employee shall not have any claim against the Company, its
              directors or shareholders, if for any reason whatsoever, whether
              dependent upon the Company or upon the employee, the shares have
              not been allotted to the employee by Fixed Date.

       11.3   Notice of a resolution of the Board to distribute a dividend shall
              be sent by registered mail, by facsimile or by any means which in
              the Board's opinion ensures that the notice will reach every
              employee to whom options have been granted and who are entitled to
              exercise the same by the Fixed Date, at least seven days prior to
              the Fixed Date for the distribution of the dividend, or shall be
              delivered to them by hand at least 48 hours prior to the Fixed
              Date. An employee who is entitled pursuant to the Plan to require
              the trustee to exercise an option for the purchase of any shares
              on his behalf by the Fixed Date, may do so, and if he does so by
              the Fixed Date, the shares which are allocated with respect to the
              options that have been exercised by the Fixed Date shall be
              entitled to participate in the distribution of the dividend.

                                       22
<PAGE>

       11.4   A dividend with respect to Shares registered in the name of the
              trustee, shall be paid to the trustee, subject to any lawful
              deduction of tax, whether at the usual rate applicable to a
              dividend or at a higher rate. The trustee shall transfer the
              dividend to the employees in accordance with instructions that he
              shall receive from the Company. Alternatively, the Company shall
              be entitled to pay the dividend directly to the employee subject
              to the deduction of the applicable tax.

       11.5   Without derogating from the provisions of Clause 10.3 above, the
              Company or the trustee shall be entitled to set off and deduct at
              source from any dividend (that shall be declared and distributed
              as aforesaid) any sum that the employee owes to the Company or to
              the trustee, whether under this Plan or otherwise, and/or any sum
              that the employee owes to the income tax authorities with respect
              to the dividend, including the tax applicable, if applicable, to
              the transfer of the dividend from the trustee to the employee, the
              options, the exercise thereof, the allotment of the shares, the
              transfer of the shares into the name of the employee, or any other
              matter relating to the shares and/or the options.

12.    RIGHTS AND/OR BENEFITS ARISING OUT OF THE EMPLOYEE/ EMPLOYER RELATIONSHIP
       -------------------------------------------------------------------------
       AND THE ABSENCE OF AN OBLIGATION TO EMPLOY
       ------------------------------------------

       12.1   No income or profit which shall be credited or which purports to
              be credited to the employee with respect to the Plan shall in any
              manner be taken into account in the calculation of the basis of
              the employee's entitlement from the Company or from its affiliates
              of any social welfare right or of other rights or benefits arising
              out of the employee/employer relationship. Without derogating from
              the generality of the aforegoing, such income shall not be taken
              into account for the purposes of calculation of social security,
              managers' insurance, pension fund, advanced studies fund,
              severance payments, holiday pay and the like. If pursuant to any
              law the Company shall be obliged for the purposes of the
              calculation of the said items to take into account income or
              profit actually or theoretically credited to the employee, then
              and in such case, the employee shall indemnify the Company against
              any expense caused to it in this matter.

       12.2   Nothing in this Plan shall be interpreted as obliging the Company
              or its related Company to employ the employee. Furthermore, the
              relationship between the Company and the employee shall be
              conducted without reference to this Plan. The employee shall not
              have any claim at any time against the Company or related Company
              as a result of termination of his employment in the event that the
              termination of his employment at any time causes the options to
              expire and prevents him from realizing his expectation to exercise
              the options and to receive Share of the Company pursuant to any
              agreement between him and the Company; and causes him damage as a
              result of the early imposition of a tax liability pursuant to the
              Commissioner's Rules.

13.    ADJUSTMENTS FOR CHANGES IN THE CAPITAL STRUCTURE
       ------------------------------------------------

                                       23
<PAGE>

       In the event that changes are made in connection with the capital
       structure of the Company, including, but without derogating from the
       generality of the aforegoing, changes in the Shares which are subject to
       the Plan (by way of merger, combination, reorganization, changes in
       capital structure, distribution of bonus shares, distribution of a
       non-cash dividends, splitting of shares, liquidation dividends,
       consolidation of shares, exchange of shares, change in the structure of
       the Company or otherwise), the Board shall make the appropriate changes
       to the options and/or the Shares in order to reflect such event. In the
       event that such adjustment shall create fractions of shares, such
       fractions of shares shall be ignored for the purposes of calculating the
       number of shares subject to a particular option in accordance with the
       instructions of the Board.

       All shares originating from a change or adjustment as aforesaid, shall be
       deemed for all purposes (including in all matters related to the
       subjection thereof to the terms of the Plan and the provisions of Section
       102 and the Commissioner's Rules, if applicable) to be the original
       shares in respect whereof the change or adjustment was made.

14.    AMENDMENT OF THE PLAN, AMENDMENT OF EXISTING OPTIONS OR THE REPLACEMENT
       -----------------------------------------------------------------------
       THEREOF
       -------

       If in the Board's opinion the Plan as formulated does not fulfill its
       objectives or its objectives may be fulfilled in a better and more
       efficient manner, it is entitled to cancel the Plan in whole or in part
       or to change the same and/or to establish another incentive Plan in its
       place, whether it be for options, shares or other rights or benefits
       which in the opinion of the Board will correctly reflect the balance
       between the achievement of the objectives of the Plan and the other
       interests of the Company and of the employees, including tax
       considerations.

15.    COMMENCEMENT OF THE PLAN; TERMINATION, FREEZING OR LAPSE THEREOF
       ----------------------------------------------------------------

       15.1   The Plan shall enter into force on the date which shall be fixed
              by the Board. In the event that the Board shall decide to bring
              the Plan under Section 102, shares will not be allotted to the
              trustee earlier than thirty days from the date of the notice to
              the Assessing Officer of the adoption thereof (pursuant to Section
              102 and the Commissioner's Rules) (herein referred to as the "Date
              of Commencement of the Plan").

              The Plan shall also apply to all the options shares in respect of
              which the Company has undertake to employees prior to the Date of
              Commencement of the Plan.

       15.2   The Board is entitled, at any time, to freeze or terminate the
              Plan and also to determine that this Plan shall apply to those
              employees to whom the Company has given a prior undertaking to
              grant options and/or shares, but that another plan shall apply to
              new employees. In the event that the Plan is not brought to an
              earlier end, it shall lapse on the expiration of 10 (ten) years
              from the Date of Commencement of the Plan as aforesaid. In the
              event that the Plan shall lapse, options shall not be allotted
              under the Plan, but options which have been granted

                                       24
<PAGE>

              thereunder may be exercised after the Plan shall have lapsed or
              frozen, subject thereto. The termination or freezing of the Plan
              shall not affect employees to whom shares have been allotted or
              options granted on a date prior to the termination or freezing of
              the Plan.

16.    RELEASE OF THE TRUSTEE AND THE LEGAL ADVISOR FROM LIABILITY AND
       ---------------------------------------------------------------
       INDEMNIFICATION
       ---------------

       In no event shall the trustee or the Legal Advisor be liable to the
       Company and/or the employee under the Plan and/or to any third party
       (including, without derogating from the generality of the aforegoing, the
       income tax authorities and any other governmental or administrative
       authority), or to a purchaser of shares from the employee, with respect
       to any act which has been carried out and/or which shall be carried out,
       or with respect to any opinion which has been given or which shall be
       given with respect to this Plan, the execution thereof and any matter in
       connection therewith or arising therefrom. The Company and the employee
       covenant upon signing the Option Agreement that they will not make any
       claim against the trustee and the Legal Advisor in any manner whatsoever
       and on any ground whatsoever and they expressly agree that if the trustee
       or the Legal Advisor shall be sued by them, then the trustee or the Legal
       Advisor shall be entitled by virtue of this Clause alone to apply to the
       court for dismissal of the action against the trustee or the Legal
       Advisor with costs. The Company covenants and agrees that if an action is
       commenced by any third party against the trustee or the Legal Advisor,
       they shall be entitled, without any objection on the Company's part, to
       join in the Company as third party to any action and a judgment against
       them will be paid by the Company.

       The Company and the employee covenant to indemnify the trustee and/or the
       Legal Advisor against any liability of this nature and/or in relation to
       any claim and/or demand against the trustee and/or the Legal Advisor by
       any person whatsoever, including the tax authorities, with respect to
       their acts or omissions in connection with this Plan.

17.    ARBITRATION
       -----------

       Every dispute or disagreement between the Company and the employee in
       relation to and/or in connection with the Plan shall be referred to the
       exclusive decision of the Legal Advisor acting as a sole arbitrator. The
       arbitrator shall not be bound by laws of evidence or by substantive law
       and shall not be obliged to give grounds for his decision and shall be
       empowered to dispose of a matter by way of compromise in his absolute
       discretion. The parties are aware that the Legal Advisor is the Legal
       Advisor of the Company and that for this reason or for any other reason
       arising out of his relationship with the Company the Legal Advisor may
       find himself in a position of conflicting interests. The Legal Advisor
       alone shall decide if a conflict of interest exists which precludes him
       from serving as arbitrator or from fulfilling any other duty in
       connection with the Plan. The Company and the employee hereby waive any
       claim with respect to this matter. In the event that the Legal Advisor
       shall decide that it is not proper that he should serve as arbitrator in
       a particular dispute, he shall transfer his powers to a sole arbitrator
       who shall be appointed by the Legal Advisor pursuant to an arbitration
       deed drafted by the Legal Advisor.

                                       25
<PAGE>

18.    THE EMPLOYEE'S DECLARATIONS AND COVENANTS
       -----------------------------------------

       Upon signing the Agreement, the employee declares and acknowledges that
       he is aware and agrees:

       18.1   That the shares of the Company are not traded on any stock
              exchange; that the Company has no obligations either towards him
              or in general to register its shares or its options or the shares
              or options of the employee for trading on a stock exchange, or to
              offer the same to the public in any manner whatsoever.

       18.2   That in addition to the restrictions under the Plan with respect
              to the transfer of the Shares which the employee shall receive as
              a result of the exercise of the option, as these shall exist from
              time to time, as long as the Company shall be a private company or
              a public company whose shares are not traded on any stock
              exchange, every other restriction or amendment to any restriction
              pursuant to the provisions of the founding documents of the
              Company as the same shall be in force from time to time shall also
              apply. As a result of these restrictions, the employee may never
              be able to sell or otherwise transfer the shares which shall be
              allotted to him as a consequence of the exercise of the option or
              the shares which shall be allotted to him pursuant to the Plan.
              The employee is aware that the Company, as long as it shall be a
              private company (or a public company whose shares are not traded
              on any stock exchange) is interested in ensuring that its shares
              shall not be transferred to a person having no connection with it,
              in particular because of the restricted number of shares. The
              absence of consent of the Board to the sale of shares by the
              employee to any third party may place the employee in a position
              in which the shares will not be transferred from the name of the
              trustee into his name (in the event that Section 102 shall apply)
              since the employee will not have the means to pay the Due Tax.

       18.3   That there may be potential difficulties and/or impossibility in
              exercising the option in whole or in part as a result of
              restrictions and conditions to which the option is subject,
              including, inter alia, the possibility of the lapse of the option
              as a result of the employee leaving the Company, subject to the
              provisions of the Plan. The same shall apply with respect to the
              shares which have been allotted pursuant to the Plan.

       18.4   That in view of the complicated and uncertain nature of the
              taxation provisions, and the fact that they are subject to change
              from time to time, it is recommended that the employee study the
              regulations and tax laws relating to the matter and/or shall seek
              the advice of a professional advisor who has expertise in tax
              matters connected with the Plan (such as the restrictions and the
              risks inherent in the granting of the option and/or the exercise
              of options and the allotment of shares to employees pursuant to
              the Income Tax Laws and/or pursuant to any other statute and law).
              Every explanation which the employee shall receive from the
              Company or on its behalf with respect to the tax consequences is
              not a binding obligation of the Company towards the employee.

                                       26
<PAGE>

       18.5   That a situation may occur in which the tax consequences that
              arise out of the granting of the options and/or out of the
              exercise thereof and/or the allotment of the shares shall convert
              the granting of the options and/or the exercise thereof and/or the
              receipt of the shares into a clearly undesirable proposition for
              the employee. The Company, expressly, does not take upon itself
              any obligation in this matter and does not make any declaration
              with respect to the tax consequences connected with the granting
              of the options, and/or the exercise thereof, and/or the allotment
              of the shares, and/or the transfer thereof into the name of the
              employee, and upon signing the Option Agreement, and/or upon the
              exercise the options, the employee takes upon himself all risks
              and consequences inherent therein.

       18.6   That the Company is engaged in an area of intense competition,
              speedy technological changes, and a limited number of customers,
              and therefore, and because of the large number of limitations in
              the Plan, if the employee shall be required to pay the Option
              Exercise Price for the options or for their exercise, then his
              investment in the shares of the Company or in the options is a
              high risk speculative investment.

       18.7   That by signing the Agreement, the employee confirms and covenants
              that he acquires the share for the purposes of investment and not
              for the purpose of distribution, as is defined in the Securities
              Act 1933 of the United States. If the Company's shares shall be
              traded in the United States, the employee shall not sell the
              Shares, unless he has received legal advice from the Legal Advisor
              or a United States attorney acceptable to the Legal Advisor, that
              the sale of the shares does not constitute a breach of the said
              Act or the rules which were made pursuant thereto (including
              Section 144) or that the sale of the shares is exempt from the
              provisions of the said Act.

       18.8   That by signing the Agreement the employee waives any right of
              first refusal to purchase shares of the Company which other
              shareholders offer to sell, and waives any pre-emptive rights to
              purchase shares which the Company is allotting or shall allot in
              the future, in the event that such rights exist or shall exist
              pursuant to the Company's Article of Association as shall be in
              force from time to time.

19.    MISCELLANEOUS
       -------------

       19.1   Every option and/or share given to the employees is subject to the
              condition that if, in the opinion of the Legal Advisor, it is
              necessary as a condition for and/or in connection with the issue
              of the shares subject to the option and/or in connection with the
              registration of the shares for trade on any stock exchange, to
              fulfill any precondition in order to facilitate such registration
              as aforesaid, or for purposes of writing a prospectus or for the
              receipt of the consent and/or approval of any administrative or
              governmental authority, either in Israel or abroad, or for the
              receipt of the consent of an underwriter or underwriters for the
              offer of shares to the public, then and in such case the option
              shall not be exercised in whole or in part and the shares shall
              not be registered

                                       27
<PAGE>

              unless the said requirements are fulfilled upon conditions
              acceptable to the Board.

              The Company shall be free of all liability whatsoever with respect
              to its inability, due to the absence of the consent or approval as
              aforesaid or due to the Company's unwillingness to comply with the
              said requirements or to bear the costs incurred therein. Nothing
              in this Plan shall impose on the Company the obligation to issue
              to the public or to register for trading (pursuant to any
              securities' law) the options granted pursuant to the Plan or the
              shares issued pursuant to the options or the shares allotted to
              the employee and a legend testifying these limitations may be
              stamped on every share certificate or Option (including the
              Agreement).

       19.2   The consideration that shall be received from the exercise of the
              options and/or the purchase of the shares pursuant to the Plan
              shall serve the Company as working capital.

       19.3   The Plan and all of its documents including the Agreement shall be
              governed by Israeli law. The Israeli courts or authorized
              tribunals of the State of Israel shall have the exclusive
              jurisdiction over this Plan.

20.    NOTICES AND/OR INSTRUCTIONS
       ---------------------------

       Every notice or instruction which is required or permitted pursuant to
       the Option Agreement or the Plan, shall be given in writing, and shall be
       deemed to have been delivered on the date it is delivered to the
       addressee by hand or by fax or within 3 (three) working days after it has
       been sent by registered mail to the parties' address as it appears in the
       preamble to the Agreement.

                                       28
<PAGE>

APPENDIX A
                  THE INCOME TAX (TAX CONCESSIONS ON A SHARE
                   ALLOTMENT TO EMPLOYEES) RULES, 5749-1989

By virtue of my power pursuant to section 102 of the Income Tax Ordinance
(hereinafter referred to as "the Ordinance") I make these rules:

Definitions
-----------

1.   In these rules -

     (1)  "the holding period" means the period commencing on the date when the
          qualifying allotment was made and ending on the date when the employee
          was charged tax on the shares pursuant to section 102(c) of the
          Ordinance;

     (2)  "relative" means as defined in section 76 of the Ordinance;

     (3)  "qualifying allotment" means an allotment of which notice is given as
          provided in section 4, which meets the conditions prescribed in these
          Rules;

     (4)  "the Adjustments Law" means the Income Tax (Adjustments for Inflation)
          Law, 5745-1985.

Trustee's Approval
------------------

2.   (a)  An application for the approval of a trustee shall be made to the
          Commissioner in writing on the form in schedule "A".

     (b)  The Commissioner may approve a person as trustee, either generally or
          for a particular share allotment, if he is satisfied that all the
          following have been fulfilled:

          (1)  the person is an advocate or certified public accountant or an
               unlimited liability company, all of whose shareholders are
               advocates or certified public accountants or that he may serve as
               a trustee pursuant to section 5 of the Joint Investments Trust
               Law, 5721-1961;

                                                                               1
<PAGE>

          (2)  the person is not a shareholder of the allotting company, is not
               an employee of the said company and does not serve as a director
               of it; for the purpose hereof, "person" includes his relative,
               partner, employer or employee and in the case of a trustee which
               is a company or cooperative society, it includes a shareholder or
               the holder of rights in it.

     (c)  Should a person's appointment as trustee be approved without the
          approval being limited to a particular share allotment, the
          Commissioner may cancel the approval with respect to allotments the
          making of which is after the date of cancellation.

Trust Instrument
----------------

3.   A company and trustee applying for the application of the  provisions of
     section 102 of the Ordinance to apply with respect to a particular share
     allotment shall execute a trust instrument containing all the obligations
     prescribed in the form in schedule "B" and furnish a copy thereof to the
     Assessing Officer together with the notice of the allotment plan as
     provided in section 4.

Notice Of Allotment
-------------------

4.   (a)  A company and trustee applying for the application of the provisions
          of section 102 of the Ordinance to apply with respect to a particular
          share allotment shall send to the Assessing Officer, at the office
          where the company's file is kept, notice of the allotment plan on the
          form in schedule "C"; the notice shall be submitted to the Assessing
          Officer at least 30 days before the allotment is made; should the
          company have a withholding tax file at another office, the company and
          trustee shall send a copy of the notice to the said office.

     (b)  The notice mentioned in sub-section (a) shall inter alia include the
          following undertakings:

          (1)  the company's undertaking that if bonus shares are allotted by
               virtue of the shares allotted for an employee in the scope of the
               qualifying allotment, they will be transferred to the trustee;
               the trustee's undertaking to apply to the said shares the
               provisions of section 102 of the Ordinance and these Rules, as
               though they were shares which had been allotted in the scope of
               the qualifying allotment and notice that the company and trustee
               are in possession of a written certificate from the employee that
               he

                                                                               2
<PAGE>

               agrees that the provisions of this paragraph shall apply to the
               bonus shares;

          (2)  notice that the company and trustee hold a written certificate
               from the employee that he undertakes not to claim a tax exemption
               pursuant to section 95 or 97(a) of the Ordinance on account of a
               transfer of the shares prior to the end of the holding period.

Controlling Shareholders
------------------------

5.   The exemption prescribed in section 102(b) of the Ordinance shall not apply
     with respect to shares allotted for an employee, if on the date of
     allotment or as a result of the allotment he is a controlling shareholder
     of the company; for the purpose hereof, "controlling shareholder" has the
     definition contained in section 32(9) of the Ordinance.

Miscellaneous Exceptions
------------------------

6.   (a)  The exemption prescribed in section 102(b) of the Ordinance shall
          not apply with respect to an employee, if within two years of the date
          of allotment he stops being an employee of the company, unless he
          stops being such by reason of death or special circumstances beyond
          the employee's control, to the satisfaction of the Commissioner.

     (b)  Should the shares allotted in the scope of a qualifying allotment be
          listed for trade on a stock exchange, the employee may apply to the
          Assessing Officer, in notice to be sent by registered mail within 30
          days of the date of such listing, for his shares to be deemed sold at
          their average stock exchange price in the first three trading days;
          should the employee so apply, he may not withdraw his application; the
          employee may defer payment of the tax for which he is liable until
          such time as the shares are deemed sold pursuant to section 102(c) of
          the Ordinance; the said tax shall be paid by the trustee with the
          addition of linkage differentials and interest from the date the
          shares are listed for trade on the stock exchange until the date of
          payment; the employee shall deliver to the trustee a copy of the
          application filed pursuant to this section at the time he sends the
          notice to the Assessing Officer.

     (Three)   For the purpose of sections 7 and 8 the real capital gain shall
           be adjusted as prescribed for the purpose of the employee's liability
           pursuant to sub-section (b) from the date of listing until the date
           when the shares are deemed sold pursuant to section 102(c) of the
           Ordinance.

                                                                               3
<PAGE>

Capital Adjustments
-------------------

7.   (a)  A company shall not be entitled to a capital supplement pursuant to
          the Adjustments Law on account of a qualifying allotment; this
          provision shall not apply with respect to an amount paid by an
          employee in cash; for the purpose hereof "payment in cash" excludes a
          waiver of remuneration.

     (b)  Notwithstanding the aforesaid in sub-section (a), the company shall be
          entitled to a capital supplement at the time when the tax is paid by
          the employee or the trustee with respect to the shares allotted to him
          in the scope of a qualifying allotment; the amount permitted as a
          capital supplement shall be equal to the real capital gain as
          determined for the purpose of the employee's tax liability.

Expense
-------

8.   (a)  A company shall not be entitled to claim the deduction of any amount
          on account of a qualifying allotment or on account of remuneration
          waived by the employee in consideration for shares allotted to him in
          the scope of a qualifying allotment.

     (b)  Notwithstanding as provided in sub-section (a), a company will be
          allowed an expense at the time when the tax is paid by the employee or
          the trustee with respect to the shares allotted to the employee in the
          scope of a qualifying allotment; the amount allowed the company as an
          expense shall be equal to the real capital gain as determined for the
          purpose of the employee's tax liability.

Redeemable Shares
-----------------

9.   The exemption prescribed in section 102(b) of the Ordinance shall not apply
     with respect to an allotment of redeemable shares.

Exempt Transfer
---------------

10.  The exemption prescribed in section 102(b) of the Ordinance shall not apply
     with respect to shares sold with a tax exemption pursuant to sections 95 or

                                                                               4
<PAGE>

     97(a) of the Ordinance or in the scope of an exemption for the sale of
     shares in corporate mergers.

Share Transfer
--------------

11.  The exemption prescribed in section 102(b) of the Ordinance shall not
     apply, if within two years of the date of issue the trustee transfers the
     shares to the employee or to another person or signs a share certificate
     transfer form or the employee sells his right to receive the shares or his
     right as beneficiary of the shares held by the trustee.

Retroactive Cancellation
------------------------

12.  (a)  If after the date of allotment a condition for the grant of exemption
          prescribed in these Rules or in special conditions prescribed by the
          Commissioner is not fulfilled or the exemption is cancelled pursuant
          to section 13, the employee shall, within 30 days of the date on which
          the condition was not fulfilled or from the date of cancellation, as
          the case may be (hereinafter referred to as "the date of breach"), pay
          the higher of the following:

          (1)  the tax exempted at the time of the allotment, plus linkage
               differentials and interest from the date of allotment to the date
               of payment;
          (2)  the tax which would apply pursuant to section 102(c) of the
               Ordinance were the shares sold on the date of the breach.

     (b)  If the tax for which the employee would be liable pursuant to section
          102(c) of the Ordinance had the trustee sold the shares on the
          expiration of two years from the date of allotment exceeds the tax for
          which he is liable pursuant to sub-section (a), as adjusted, the
          employee shall pay the difference to the Assessing Officer within
          seven days of the end of the said two years.

     (c)  Should the employee be taxed pursuant to this section, the trustee
          shall continue to hold his shares until the end of two years from the
          date of allotment or until receiving a certificate from the Assessing
          Officer that the tax has been paid in accordance with the provisions
          of this section, whichever is the later.

                                                                               5
<PAGE>

     (d)  Should the Assessing Officer determine the value of the shares
          received by an employee for the purpose of computing the tax from
          which the employee was exempted as provided in sub-section (a) or (b),
          the said determination shall be governed by the provisions prescribed
          in the Ordinance with regard to objection and appeal.

Non-Fulfilment Of Particulars And Conditions
--------------------------------------------

13.  The Commissioner may cancel the exemption prescribed in section 102(b) of
     the Ordinance with respect to a particular allotment, if special conditions
     prescribed by him in advance with respect to the allotment are not
     fulfilled or if particulars contained in the notice of the allotment plan
     are not fulfilled.

Withholding Tax
---------------

14.  A trustee shall not transfer the share certificates to any person
     whatsoever until after he has transferred to the Assessing Officer 30% of
     the consideration or such other percentage as fixed by the Assessing
     Officer or until after he has been furnished with a certificate from the
     Assessing Officer that tax has been paid at such rate and if there is an
     applicable tax pursuant to section 6(b), 12 or 13 - the tax pursuant to the
     said section has been paid; the said tax and certificates shall be
     furnished to the Assessing Officer by the trustee within seven days of the
     date of the share sale or of the release of the share certificates from the
     trustee's possession, whichever is the earlier, together with notice in the
     form set out in schedule "D".

Registration
------------

15.  Subject to Rule 17 hereinafter, the employer shall keep a separate record
     with respect to each allotment plan and give a copy of it to the trustee;
     the said records shall include every particular relating to the allotment,
     including -

     (1)  the names of the employees to whom shares have been allotted in the
          scope of the qualifying allotment, their ID numbers and addresses;

     (2)  the quantity, class and description of the shares allotted to each
          employee, including the share numbers;

     (3)  a breakdown of the amounts paid by each employee for the shares and
          the dates of payment;

     (4)  the date of allotment;

                                                                               6
<PAGE>

     (5)  acts done with respect to the shares, including the transfer of the
          shares to the employee or his heirs, and the sale of the shares.

Reporting
---------

16.  Subject to Rule 17 hereinafter, a trustee shall report within 30 days of
     the start of each tax year on -

     (1)  the balance of each employee's shares at the start of the preceding
          tax year;

     (2)  acts done with respect to the shares during the previous year;

     (3)  bonus shares allotted by virtue of the shares;

     (4)  the balance of each employee's shares on the last day of the preceding
          tax year;

     (5)  dividend distributed by virtue of the shares;

     (6)  shares with respect to which a tax charge applies pursuant to section
          102(c) of the Ordinance, the amount of consideration on their account
          of them and the amount of tax transferred by the trustee or for the
          payment of which a certificate was furnished to the trustee.

Report To The Securities Authority
----------------------------------

17.  Should all the particulars mentioned in sections 15 and 16 be included in a
     report which has been filed with the Securities Authority, a copy of the
     report filed with the Authority shall be filed instead of the report to be
     filed pursuant to sections 15 and 16.

                                                                               7
<PAGE>

APPENDIX B

                                TRUST INSTRUMENT

          Made in ______________________ this 29th day of March 1995

BETWEEN:       ELIYAHU LERNER, CPA

               of 7 Haomanim St, Tel Aviv

               (hereinafter referred to as "the Trustee")

                                                               of the first part
                                                               -----------------

AND            PICTEL TECHNOLOGIES LTD

               of 22 Hayetzira St, PO Box 3654, Petah Tikvah 49130

               (hereinafter referred to as "the Company")

                                                              of the second part
                                                              ------------------

WHEREAS        on 9th January 1995 the Trustee was approved by the Commissioner
               of Income Tax by virtue of his authority pursuant to section 102
               of the Income Tax Ordinance (hereinafter referred to as "the
               Ordinance") as trustee for the purpose of the Company's employee
               option and/or share allotment plan;

AND WHEREAS    on 29th March 1995 the Company adopted a share and/or option
               allotment plan within the meaning of section 102 of the Ordinance
               (hereinafter referred to as "the plan") for its employees;

AND WHEREAS    pursuant to the plan the Company will from time to time allot
               shares or rights to shares (hereinafter referred to as "shares")
               to employees in a qualifying allotment within the meaning of this
               term in the Income Tax (Tax Concessions on a Share Allotment to
               Employees) Rules, 5749-1989 (hereinafter referred to as
               "qualifying allotment") (hereinafter referred to as "the Rules");
<PAGE>

AND WHEREAS    pursuant to the plan all the shares in the qualifying allotment
               will be allotted to the Trustee for him to hold on trust as
               provided in the Rules, the plan and this trust instrument.

NOW THEREFORE IT IS AGREED BETWEEN THE PARTIES AS FOLLOWS:

1.   The recitals hereto, the Rules and such special conditions as the
     Commissioner prescribes for the purpose of the allotment constitute an
     integral part of this trust instrument.

2.   Pursuant to the plan the share certificates will not be allotted to the
     Company's employees but will be allotted in the Trustee's name and be held
     by him for a period of not less than 24 months (hereinafter referred to as
     "the lock-up period").

3.   Before the end of the lock-up period or before payment of the applicable
     tax  or of 30% of the consideration has been paid as provided in clause 4,
     whichever is the later, the shares may not be transferred, assigned,
     pledged, attached or any other voluntarily lien and no power of attorney or
     instrument of transfer shall be given with respect to them, whether their
     effect be  immediate or on a future date, other than a transfer by virtue
     of a will or pursuant to law; should the shares be transferred by virtue of
     a will or pursuant to law as aforesaid, the provisions of section 102 and
     the Rules shall apply to the employee's heirs or transferees.

4.   From the end of the lock-up period each employee shall be entitled at any
     time to require the Trustee to transfer the shares to which he is entitled
     into his name, provided that the Trustee shall not transfer the shares as
     aforesaid until after the applicable tax charged pursuant to section 102(c)
     of the Ordinance and the Rules (hereinafter referred to as "the applicable
     tax ") has been paid and the Trustee holds a certificate to that effect
     from the Assessing Officer or until after the Trustee has transferred to
     the Assessing Officer 30% of the consideration on account of the applicable
     tax.

5.   If pursuant to the conditions of the plan an employee is granted rights for
     the purchase of shares, those rights shall be allotted in the Trustees
     name. The employee shall be entitled to instruct the Trustee to exercise
     the rights as prescribed in the plan. The shares which are the subject of
     the rights shall be allotted to the Trustee in accordance with the
     provisions of section 2 above and they shall be governed by the provisions
     of this instrument. The lock-up period shall include the period during
     which the rights granted for the purchase of the shares were held by the
     Trustee.

                                                                               2
<PAGE>

6.   If bonus shares are allotted on account of the shares which were allotted
     for an employee in the scope of a qualifying allotment, the bonus shares
     shall be transferred by the Company to the Trustee and the Trustee's
     obligations pursuant to this instrument shall respectively also apply to
     the bonus shares.

7.   The Company undertakes to the Trustee that it will not, in any way
     whatsoever  undertake to allot shares to employees in the scope of a
     qualifying allotment unless prior to the allotment it obtains a certificate
     from the employee that he undertakes to the Assessing Officer not to make a
     transfer of the shares with respect to which a tax exemption applies and
     not to claim a tax exemption pursuant to section 95 or 97(a) of the
     Ordinance or pursuant to  Chapter Seven of the Encouragement of Industry
     (Taxes) Law, 5729-1969, on account of the share transfer before the
     applicable tax has been paid.

8.   A condition for this arrangement with respect to a particular employee
     shall be his agreement in writing to the provisions of this agreement.

                      AS WITNESS THE HANDS OF THE PARTIES

(Signed)                                       (Signed & Stamped)

______________________________                 ______________________________
The Trustee                                    The Company

                                                                               3
<PAGE>

                                  APPENDIX C

29th March 1995

The Assessing Officer
Tel Aviv

Dear Sir,

          Notice Of A Qualifying Allotment Pursuant To The Income Tax
              (Tax Concessions On A Share Allotment To Employees)
           Rules, 5749-1989 (hereinafter referred to as "the Rules")
           ---------------------------------------------------------

1.   In accordance with section 3 of the Rules we notify you that Pixel
     Technologies Ltd (hereinafter referred to as "the company") has resolved to
     adopt a share/option plan, that has been adopted by it, within the meaning
     of section 102 of the Income Tax Ordinance and pursuant to the Rules, in
     the scope whereof options and shares will be allotted to the company's
     employees on a qualifying allotment within the meaning of the Rules.

2.   The date of the option allotment in the scope of the plan will not be
     before 30 days from the date of this notice or after _________.

3.   Eliyahu Lerner, CPA will be the trustee for the plan's implementation
     (hereinafter referred to as "the trustee"). The trustee's appointment was
     approved on 9th January 1995 by the Commissioner of Income Tax in
     accordance with his authority pursuant to section 102 of the Ordinance.

4.   (a)  In accordance with section 4(b) of the Rules, the company hereby
          undertakes to the Assessing Officer that if an employee is allotted
          bonus shares by virtue of the shares allotted for him in the scope of
          the qualifying allotment, they will be transferred to the trustee so
          long as the trustee holds the shares allotted to him for the employee
          in the scope of the qualifying allotment. The trustee hereby
          undertakes to the Assessing Officer to apply the provisions of section
          102 of the Ordinance to the said bonus shares as though the bonus
          shares were shares allotted to the employee in the scope of the
          qualifying allotment.
<PAGE>

     (b)  In accordance with section 4(b) of the Rules, we confirm to you that
          before the allotment is made we shall arrange to obtain a written
          certificate from the employee that he agrees that the arrangement will
          apply to him and that he undertakes not to claim a tax exemption
          pursuant to section 95 or 97(a) of the Income Tax Ordinance or
          pursuant to Chapter Seven of the Encouragement of Industry (Taxes)
          Law, 5729-1969 by reason of a transfer of the shares prior to the end
          of the holding period.

5.   A trust instrument as provided in section 3 of the Rules is enclosed
     herewith.

6.   The trustee undertakes to the Assessing Officer that he will not transfer
     the shares or the share certificates until after the tax charged pursuant
     to section 102 of the Ordinance and in accordance with the Rules has been
     paid or after the trustee has transferred to the Assessing Officer 30% of
     the consideration on account of the tax charged.

7.   The company or the employee has furnished to the trustee a certificate from
     the Assessing Officer as to the level of tax payable as a condition for the
     shares' transfer into the employee's name. The trustee will only transfer
     the shares to the employee only after the amount of tax prescribed in the
     Assessing Officer's certificate has been paid.

Yours faithfully,

(Signed)                                       (Signed & Stamped)

______________________________                 ______________________________
The Trustee                                    The Company

                                      -2-
<PAGE>

                         ACCORD TELECOMMUNICATION LTD

                                  APPENDIX D
             TO THE COMPANY'S EMPLOYEE OPTIONS AND/OR SHARES PLAN

                           (Section 7.1 of the Plan)

                                EXERCISE NOTICE
                                ---------------

                                                             Date: _____________

Eliyahu Lerner, CPA
The Trustee Under The Company Employee Share And/Or Option Plan
Of Accord Telecommunication Ltd
24 Raoul Wallenberg St
Tel Aviv 67897
--------------

Dear Sir,

I hereby give you notice that I wish you to exercise on my behalf the option
granted to you on _____________ to purchase _____ ordinary shares of Accord
Telecommunication Ltd (hereinafter referred to as "the company") on my behalf
and that you should purchase _____ ordinary shares in accordance with the said
option at a price of NIS ___________ per share.

Attached to this notice herewith is a cheque in the sum of NIS ___________ in
payment of NIS ___________  for the said shares.

I acknowledge that all the shares will be allotted to you and registered in your
name and that every share certificate with respect to them will be held by you.

I also acknowledge that I may only apply for the shares to be transferred to my
name after the lock-up period as defined in the plan and after any tax and/or
other payment on account thereof has been paid and that all the provisions of
the plan and the law will apply.

Yours faithfully,

_______________
<PAGE>

                         ACCORD TELECOMMUNICATION LTD

                                  APPENDIX E
             TO THE COMPANY'S EMPLOYEE OPTIONS AND/OR SHARES PLAN

                           (Section 7.3 of the Plan)

                                EXERCISE NOTICE
                                ---------------

                                                              Date: ____________
Accord Telecommunication Ltd.
10 Martin Gahal St
P.O. Box 3654
Petach Tikva 49130
------------------

Dear Sirs,

By this notice I hereby exercise the option granted to me for an employee of the
company on ____________ to purchase _____ ordinary shares of Accord
Telecommunication Ltd. on behalf of ____________ with respect to _____ ordinary
shares in accordance with the said option at a price of NIS ____________ per
share.

Enclosed herewith is a check in the sum of NIS ____________ in payment for the
said shares.

Yours faithfully,

_____________
Eliyahu Lerner

<PAGE>

                         ACCORD TELECOMMUNICATION LTD

                                  APPENDIX F
                 TO THE COMPANY'S EMPLOYEE AND/OR SHARES PLAN

                            (Section 9 of the Plan)

                         IRREVOCABLE POWER OF ATTORNEY
                         -----------------------------

I the undersigned hereby authorise and empower Adv. David Cohen (hereinafter
referred to as "the legal advisor") and/or Eliyahu Lerner, CPA or such person as
succeeds him as trustee for the purpose of the employee options/shares plan of
Accord Telecommunication Ltd (hereinafter respectively referred to as "the
trustee" and "the company") as follows:

1.   I authorise and empower the trustee, so long as any shares and/or options
     that have been allotted or granted for me are registered in his name, to
     exercise every right, power and authority attached to the shares and/or
     options and to sign any document (including any agreement, including merger
     agreement of the company or agreement for the purchase or sale of its
     assets and all documents ancillary thereto, decision, application, deed,
     receipt and the like), affidavit or certificate for and on my behalf with
     regard to the shares and/or options or the rights that they represent in
     the company, insofar as he deems necessary or desirable.

2.   Without derogating from section 1 above, I authorise and empower the
     trustee, so long as the shares and/or options are registered in his name,
     and empower the legal advisor after the shares and/or options have been
     transferred into my name, to sign on my behalf and in my stead on any
     document (as set out in section 1 above), affidavit or certificate
     (including any waiver of a right of first refusal to purchase shares
     offered for sale by other shareholders of the company and/or of a pre-
     emptive right to purchase shares that the company is allotting or will
     allot in future, insofar as such rights exist or shall exist in future, in
     accordance with the company's articles as they may be
<PAGE>

     in effect from time to time), for and on my behalf or to undertake for and
     on my behalf if the legal advisor or the trustee deems fit at their
     absolute discretion, that the document, affidavit or certificate is
     necessary or desirable for the purpose of any issue of the company, whether
     such is a private issue or a public offering, in Israel or abroad, for the
     purpose of the company's merger with another company, whether or not the
     company is the surviving company, for the purpose of the company's
     reorganisation and all in accordance with what they deem necessary or
     desirable.

This power of attorney shall be construed as broadly as possible, based on the
provisions of the company's employee options/ shares plan and its objects and
intents and in accordance with the instructions of the legal advisor at his
discretion, and it is irrevocable since the rights of the company and its other
shareholders are dependent hereon.

This power of attorney shall expire at such time as the company goes public in a
way that its shares are traded on a stock exchange in Israel or abroad, as such
time is fixed, for this purpose, by the legal advisor. The expiration of this
power of attorney shall not, in any way whatsoever, effect the validity of any
document (as set out in section 1 above), affidavit or certificate signed as
aforesaid by virtue of this power of attorney prior to its expiration.

                 As witness my hand this _____ day of _________

_______________

                           __________________________
                       I certify the aforegoing signature

                                                                               2
<PAGE>

                          ACCORD TELECOMMUNICATION LTD

                                   APPENDIX G
              TO THE COMPANY'S EMPLOYEE OPTIONS AND/OR SHARES PLAN

                           (Section 10.7 of the Plan)

The Income Tax Commission
The Assessing Officer
Accord Telecommunication Ltd ("Accord")
Eliyahu Lerner, CPA or such person as succeeds him as trustee for the purpose
of the company's employee share and/or option plan ("the trustee")

Dear Sirs,

                    Agreement, Certification And Undertaking
                    ----------------------------------------

I hereby confirm to you that -

1.   I agree that the arrangement mentioned in section 102 of the Income Tax
     Ordinance shall govern the options and shares due to me from Accord and
     apply to me in full.

2.   I hereby agree to the provisions of the trust instruments executed between
     Accord and the trustee (hereinafter referred to as "the trust instrument").

3.   I agree that if bonus shares are allotted by virtue of the shares that have
     been allotted for me in a qualifying allotment or which are subject to
     options that have been granted to me, they shall be allotted to the trustee
     and be registered in his name, and the provisions of section 102 of the
     Income Tax Ordinance ("the Ordinance") and the Income Tax (Tax Concessions
     On The Allotment Of Shares To Employees) Rules, 5749-1989 ("the
     Commissioner's Rules") shall govern the said shares as though they were the
     original shares in respect to which they were allotted and the trustee's
     obligations pursuant to the trust instrument shall respectively also govern
     the bonus shares.
<PAGE>

4.   I hereby undertake to the Income Tax Commission and the Assessing Officer
     not to apply for or claim a tax exemption under section 97(a) or 104 of the
     Ordinance or for an exemption for the sale of shares in the scope of
     corporate mergers on account of a transfer of shares that have been
     allotted to me or that are subject to the options that have been granted to
     me pursuant to the plan, before I have paid the applicable tax  with
     respect to those shares in accordance with the Ordinance and the
     Commissioner's Rules, and I further undertake not to transfer the shares
     where a tax exemption applies to such transfer, before the tax charged has
     been paid.

5.   I agree that the trustee and the company shall notify the Assessing
     Officer, pursuant to section 4(b) of the Commissioner's Rules, that they
     are holding this confirmation.

________________

                                                                               2<PAGE>

                                                                    EXHIBIT 10.2

                             ACCORD NETWORKS LTD.

                                SHARE OWNERSHIP

                            AND OPTION PLAN (2000)

             Adopted by the Board of Directors on January 26, 2000
<PAGE>

                               TABLE OF CONTENTS

1.     Preamble.

2.     Administration of the Plan.

3.     Shares Subject to the Plan.

4.     Option Prices.

5.     Exclusivity of the Plan.

6.     Allotment of the Options and Shares to the Trustee.

7.     Option or Share Purchase Agreement; Termination of Employment or
       provision of services.

8.     Term of Options; Exercise.

9.     Additional Documents.

10.    Taxation.

11.    Dividends.

12.    Rights and/or Benefits arising out of the Employee/Employer Relationship
       and the Absence of an Obligation to Employ.

13.    Adjustments Upon Changes in Capitalization or Merger

14.    Termination and Amendment.

15.    Effectiveness of the Plan.

16.    Release of the Trustee, the Attorney and Legal Counsel from Liability and
       Indemnification.

17.    Governing Laws.

APPENDICES
----------

Appendix A:         Grantee's Notice to the Trustee as to Exercise of the Option
                    (Section 8.2).

Appendix B:         Notice to the Company of Exercise of the Option by the
                    Trustee (Section 8.4).

Appendix C:         Proxy and Power of Attorney (Section 9.2).

                                       2
<PAGE>

1.     PREAMBLE
       --------

       1.1    This plan, as amended from time to time, shall be known as the
              "Accord Networks Ltd.'s Share Ownership and Option Plan (2000)"
              (the "Plan"). The purpose and intent of the Plan is to provide
              incentives to employees, directors and/or consultants or other
              service providers (the "Grantees") of the Company, and/or of its
              subsidiaries or parent company, (each a "Related Company" and
              collectively, "Related Companies") by providing them with the
              opportunity to purchase shares of the Company.

              The Plan is designed to comply with Section 102 of the Income Tax
              Ordinance ("Section 102") and the rules promulgated thereunder
              (the "Commissioner's Rules") and to enable the Company and the
              employees of the Company or any Related Company (the "Employees")
              to benefit from Section 102 and the Commissioner's Rules and also
              to enable the Company to grant options and issue shares outside
              the context of Section 102. The Company, however, does not warrant
              that the Plan will be recognized by the income tax authorities or
              that future changes will not be made to the provisions of the law,
              regulations or the Commissioner's Rules, which are promulgated
              from time to time, or that any exemption or benefit currently
              available pursuant to Section 102 will not be abolished.

       1.2    Should any provision of Section 102 or the Commissioner's Rules
              which applies to Employees be amended, such amendment shall be
              deemed included in the Plan with respect to options granted or
              shares issued in the context of Section 102. Where a conflict
              arises between any section of the Plan, the agreement as defined
              in Section 7 below (the "Agreement") or their application, and the
              provisions of the law and the Commissioner's Rules, the Board of
              Directors of the Company (the "Board") in its sole discretion
              shall determine the necessary changes to be made to the Plan and
              their determination regarding this matter shall be final and
              binding.

       1.3    In the event the Company's shares should be registered for trading
              on the Tel-Aviv Stock Exchange Ltd., or on any other stock
              exchange, whether in Israel or abroad, the options and/or shares
              allotted in accordance with the Plan may be made conditional to
              any requirement or instruction of the stock exchange authorities
              or of any other relevant authority acting pursuant to applicable
              law as shall exist from time to time. In such case, by means of a
              Board resolution, the Plan and the Agreements prepared pursuant
              hereto, may be amended as necessary to meet such requirements. In
              the event of a contradiction between any such amendment and the
              Plan's provisions, the amendment shall prevail.

2.     ADMINISTRATION OF THE PLAN
       --------------------------

       2.1    The Plan shall be administered by the Board and/or by any
              committee of the Board so designated by the Board. Any subsequent
              references herein to the Board shall also mean any such committee
              and, unless the powers of

                                       3
<PAGE>

              the committee have been specifically limited, such committee shall
              have all of the powers of the Board granted herein. Subject to
              Sections 4 and 14, the Board shall have plenary authority to
              determine the terms and conditions of all options (which need not
              be identical), including, without limitation, the purchase price
              of the shares covered by each option, the individuals to whom, and
              the time or times at which, options shall be granted, the number
              of shares to be subject to each option, whether an option shall be
              granted pursuant to Section 102 or otherwise and when an option
              can be exercised and whether in whole or in installments. Subject
              to Section 15, the Board shall have plenary authority to construe
              and interpret the Plan, to prescribe, amend and rescind the rules
              and regulations relating to it and to make all other
              determinations deemed necessary or advisable for the
              administration of the Plan. All determinations and decisions of
              the Board pursuant to the provisions of the Plan and all related
              orders and resolutions of the Board shall be final, conclusive and
              binding on all persons, including the Company, its shareholders,
              the Grantees and their estates and beneficiaries.

       2.2    Any directive or notice signed by two members of the Board shall
              constitute conclusive proof and authority for every act or
              decision of the Company.

       2.3    No director or officer of the Company shall be personally liable
              or obligated to any Grantee as a result of any decision made
              and/or action taken with respect to the Plan or its execution.

3.     SHARES SUBJECT TO THE PLAN
       --------------------------

       The shares subject to the Plan shall be Ordinary Shares of the Company.
       The maximum number of shares that may be issued under the Plan is 750,000
       Ordinary Shares of NIS 0.01 nominal value each, as such number of shares
       may be adjusted in accordance with Section 13. Such shares may be in
       whole or in part, as the Board shall from time to time determine and
       subject to applicable law authorized and unissued Ordinary Shares or
       issued and fully paid Ordinary Shares which shall have been purchased by
       the Trustee (as such term is defined in Section 6.1) with funds provided
       by the Company. If any option granted under the Plan shall expire,
       terminate or be canceled for any reason without having been exercised in
       full, such shares subject thereto shall again be available for the
       purposes of the Plan. Any increase in the maximum number of shares shall
       be recommended by the Board and shall require the approval of the general
       meeting of the shareholders of the Company.

4.     OPTION PRICES
       -------------

       The consideration to be paid by the Grantee for each share purchased by
       exercising the option (the "Option Exercise Price") shall be as
       determined by the Board on the date of grant, provided that the Option
       Exercise Price shall not be less than the nominal value of the shares
       subject to the option.

                                       4
<PAGE>

5.     EXCLUSIVITY OF PLAN
       -------------------

       Unless otherwise determined by the Board in any particular instance as
       part of the Agreement, each Grantee hereunder will be required to declare
       and agree that all prior agreements, arrangements and/or understandings
       with respect to shares of the Company or options to purchase shares of
       the Company which have not actually been issued or granted prior to
       execution of the Agreement shall be null and void and that only the
       provisions of the Plan and/or the Agreement shall apply.

       Notwithstanding the above, the adoption of this Plan, by itself, shall
       not be construed as amending, modifying or rescinding any incentive
       arrangement previously approved by the Board 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 this Plan, and such arrangements
       may be either applicable generally or only in specific cases.

6.     ALLOTMENT OF THE OPTIONS AND THE SHARES TO THE TRUSTEE
       ------------------------------------------------------

       6.1    The Board shall appoint a Trustee for the purposes of this Plan
              (the "Trustee"). The Trustee shall have all the powers provided by
              law, the Commissioner's Rules, and the Plan and shall act pursuant
              to the provisions thereof, as they shall apply from time to time.
              The Company shall pay the Trustee a fee as shall be agreed between
              the Trustee and the Company.

       6.2    The certificates representing any shares and the option deeds
              shall be issued by the Company in the name of the Trustee and
              shall be deposited with the Trustee, held by it and registered in
              its name in the register of members of the Company for a minimum
              period as determined by the Board. Options granted or shares
              issued in the context of Section 102 shall be deposited with the
              Trustee, held by him and registered in his name for a minimum
              period of not less than 24 months from the date on which the
              option or shares issued to the Trustee (hereinafter the
              "Restriction Period").

       6.3    Without derogating from the provisions of Sections 6.2 above or
              6.7 below, the shares issued with respect to any options granted
              hereunder will be held by the Trustee and registered in its name
              until the consummation of the initial public offering of the
              Company's shares, pursuant to an effective registration statement,
              prospectus or similar document in Israel or such other
              jurisdiction as is determined by the Board (the "IPO").

       6.4    The option shall not confer upon the holder thereof any of the
              rights of a shareholder of the Company, for as long as it has not
              been exercised.

                                       5
<PAGE>

       6.5    For as long as any shares are held by the Trustee or registered in
              its name or for as long as the certificates representing any
              shares are held by the Trustee, the Trustee alone shall be
              entitled to receive every notice to which a shareholder is
              entitled, or to demand any information, and any financial and/or
              other report to which a shareholder is entitled from the Company,
              and only the Trustee or whomever it shall designate pursuant to
              the Proxy and Power of Attorney referred to in Section 9.2 below
              and attached as Appendix C hereto (the "Attorney"), shall be
              entitled to exercise every other right of the shareholders
              vis-a-vis the Company including the right to participate in all
              shareholders' meetings. No Grantee shall be entitled to exercise
              any of these rights as shareholder nor make any demand or request
              of the Trustee and/or of the Attorney in this regard.

       6.6    Shares registered in the Trustee's name shall be represented at
              all meetings of shareholders of the Company and shall be voted by
              the Trustee at its discretion in the best interest of the Company.

       6.7    Nothing in the aforegoing provisions shall derogate from the power
              of the Board to grant options or to allot shares to the Trustee
              otherwise than under the provisions of Section 102 and the
              Commissioner's Rules or to allot shares or grant options to
              Grantees directly otherwise than through the Trustee or on terms
              which differ from those specified above or to approve the transfer
              of shares from the Trustee to the name of any Grantee(s) upon such
              conditions as shall be determined by the Board.

7.     OPTION OR SHARE PURCHASE AGREEMENT; TERMINATION OF EMPLOYMENT OR
       ----------------------------------------------------------------
       PROVISION OF SERVICES
       ---------------------

       Unless otherwise determined by the Board, every Grantee shall be required
       to sign an option or share purchase agreement or other document as shall
       be determined by the Board, in the form approved by the Board (the
       "Agreement").

       The Agreement need not be identical with respect to each Grantee. The
       following terms, however, shall apply to all options, and, mutatis
       mutandis, shares, unless expressly otherwise decided in respect of a
       particular option:

       7.1    In addition to the provisions of Section 4 and without prejudice
              thereto, where Section 102 and the Commissioner's Rules apply to
              the Agreement and so require, the option shall be granted to the
              Employee in consideration for a waiver of salary by the Grantee
              pursuant to the provisions of the Agreement.

       7.2    The Option Exercise Price shall be paid by the Grantee to the
              Company no later than the date of exercise of the option unless
              otherwise determined in the Agreement.

       7.3    The Grantee shall have no right of first refusal to purchase
              shares of the Company which may be offered for sale by
              shareholders of the Company,

                                       6
<PAGE>

              and shall have no pre-emptive rights to purchase shares which are
              being allotted or shall in the future be allotted by the Company,
              to the extent any such rights otherwise exist.

       7.4    The option and/or the right to the option and/or the shares are
              personal and except insofar as is specified in this Plan, and,
              where applicable, subject to Section 102 and the Commissioner's
              Rules, may not be transferred, assigned, pledged, withheld,
              attached or otherwise charged either voluntarily or pursuant to
              any law, except by way of transfer pursuant to the laws of
              inheritance, and no power of attorney or deed of transfer, whether
              the same has immediate effect or shall take effect on a future
              date, shall be given with respect thereto. The option may only be
              exercised by the Trustee on behalf of the Grantee named in the
              Agreement. A note as to the provisions of this sub-section or a
              legend may appear on any document which grants the option and in
              particular in the Agreement, and also on any share certificate.

       7.5    The right to exercise the option is granted to the Trustee on
              behalf of the Grantee. Vesting shall be in installments, gradually
              over a period of 4 (four) years from the date of grant of the
              option or such other period or periods as determined by the Board.
              Unless otherwise determined, at the conclusion of each period for
              the exercise of the option as determined in the Agreement
              ("Vesting Periods"), the option may, from time to time, be
              exercised in relation to all the shares allocated for that period
              in such manner that at the end of the first year from the granting
              of the option the Trustee shall, in the absence of a contrary
              determination in the Agreement, be entitled to exercise on behalf
              of the Grantee and at his or her request twenty-five percent (25%)
              of the options and 6.25% of the options will vest at the end of
              each three-month period thereafter.

              In addition, during each of the periods, the option may be
              exercised in relation to all or part of the shares allocated for
              any previous period in which the option was not fully exercised,
              provided, subject to the provisions of Section 7.7 hereof, that at
              the time of the exercise of the option the Grantee continues to
              be: (i) a service provider of the company or a Related Company, if
              such Grantee is a service provider, from the date of grant thereof
              until the date of their exercise; (ii) employed by the Company or
              a Realted Company on a continual basis, if such Grantee is an
              Employee, from the date of the grant thereof until the date of
              their exercise; and (iii) serve as a director of the Company, if
              such Grantee is a director of the Company, from the date of grant
              thereof until the date of their exercise. After the end of the
              Vesting Periods and during the balance of the option period, the
              option may be exercised, from time to time, in relation to all or
              part of the shares which have not at that time been exercised and
              which remain subject to the option, subject to the provisions of
              Section 7.7 hereof and to any condition in the Agreement, if such
              exists, which provides a minimum number of shares with respect to
              which the option may be exercised and any provision which
              determines the number of times that the Trustee may send the
              Company notice of exercise on behalf

                                       7
<PAGE>

              of the Grantee in respect of the option. The Board shall be
              entitled at any time to shorten or accelerate the vesting schedule
              or any Vesting Period.

       7.6    The Board may determine at its sole discretion, that any Grantee
              shall be entitled to receive the options or the shares, through
              the Trustee, pursuant to the provisions of this Plan or directly
              in the name of the Grantee, immediately upon execution of the
              Agreement or on such other date or dates as the Company has
              undertaken towards such Grantee. In the event that a Grantee is
              exempt from the Vesting Periods (pursuant to the provisions of
              Section 7.5), the Board shall be entitled to determine that where
              the Grantee does not comply with the conditions determined by the
              Board or ceases to be an employee, director or advisor of the
              Company or any Related Company, the Trustee, the Company or a
              Related Company shall have the right to repurchase the shares from
              the Grantee for nominal or any other consideration determined by
              the Board. The Board may set additional conditions to this right
              of repurchase, including the provision of appropriate arrangements
              for the monies which shall be available to the Trustee, the
              Company or a Related Company or others for the purpose of the
              repurchase and conditions with respect to the voting rights of the
              Grantee, rights of first refusal or pre-emptive rights to purchase
              shares in the Company, to the extent such rights exist, the
              Grantees right to receive reports or information from the Company,
              and the Grantees right to a dividend in respect of shares which
              are subject to a right of repurchase as aforesaid. For as long as
              the aforegoing conditions of the Board (including a minimum period
              of employment as a condition for the lapse of the right to
              repurchase) have not been complied with, the Grantee shall not be
              entitled to sell or charge or transfer in any other manner the
              shares which are subject to the right of repurchase. As security
              for the compliance with this undertaking the share certificate
              will be deposited with the Trustee who will release the same to
              the Grantee only after the Grantee becomes entitled to the shares
              and the same are not subject to any other restrictive condition.

       7.7    Termination of Employment or Provision of Service
              -------------------------------------------------

              7.7.1 If the Grantee ceases to be: (i) an Employee; (ii) a service
                    provider, or (iii) a director of the Company, as the case
                    may be, prior to the complete exercise of an option, (a) by
                    reason of death, disability (as determined by the Board in
                    its absolute discretion) ("Disability") or retirement after
                    age 60 with the approval of the Board, the option shall
                    remain exercisable for a period of one year following such
                    termination (but only to the extent exercisable at
                    termination of employment and not beyond the scheduled
                    expiration date); (b) for any other reason other than for
                    Cause, the option shall remain exercisable for a period of
                    30 days following the date of termination; or (c) for Cause,
                    as such term is defined below, all options held by or on
                    behalf of such Grantee shall immediately expire upon the
                    earlier of such termination or notice of termination (unless
                    the Agreement provides otherwise).

                                       8
<PAGE>

                       For purposes hereof, the term "Cause" shall mean (i) a
                       material breach by the Grantee of its obligations under
                       any agreement with the Company or any Related Company,
                       including the Agreement; (ii) the commission by the
                       Grantee of an act of fraud or embezzlement against the
                       Company or any Related Company or the willful taking of
                       action injurious to the business or prospects of the
                       Company or any Related Company; or (iii) the Grantee
                       conviction of a felony involving moral turpitude; and,
                       (iv) the Grantee's involvement with an act which
                       constitutes breach of trust between him and the Company
                       or any Related Company or which constitutes breach of
                       discipline.

                       In the case of Employees, the Board may determine whether
                       any given leave of absence constitutes a termination of
                       employment. Options granted under this Plan shall not be
                       affected by any change of employment so long as the
                       Grantee continues to be an Employee of the Company or
                       Related Company.

              7.7.2    In such case as Section 102 and the Commissioner's Rules
                       shall apply to any option, where the Grantee ceases to be
                       an Employee prior to the termination of a period of two
                       years from the date of the qualifying allotment as
                       defined in the Commissioner's Rules, (except where the
                       Commissioner is satisfied that the Grantee ceased to be
                       employed by the Company or Related Company by reason of
                       death or for special reasons beyond the Grantee's
                       control), the exemption provided by Section 102 shall not
                       apply with respect to that Grantee pursuant to the
                       Commissioner's Rules. In such case, the Grantee shall be
                       obliged to make arrangements with the tax authorities at
                       his expense for all matters to do with the taxation of
                       the options and/or the shares.

              7.7.3    Notwithstanding the foregoing, the Board may in its
                       absolute discretion, extend the period of exercise of the
                       option by a Grantee or Grantees for such time as it shall
                       determine either with or without conditions.

8.     TERM OF OPTIONS; EXERCISE
       -------------------------

       8.1    The term of each option shall be for such period as the Board
              shall determine, but not more than 10 (ten) years from the date of
              grant thereof or such shorter period as is prescribed in Section
              7.7 hereof.

       8.2    A Grantee who desires that the Trustee exercise an option on his
              or her behalf shall instruct the Trustee to do so in writing in
              the form annexed hereto as Appendix A or in such other form as
              shall be approved by the Board. The notice shall be accompanied by
              payment of the full Option Exercise Price of such shares as
              provided in the Agreement.

                                       9
<PAGE>

       8.3    If Section 102 does not apply to the option or the shares which
              relate thereto, as a condition for the exercise of the option, the
              Grantee shall pay the tax applicable to him or her (including all
              tax payable by the Company arising out of its obligation to deduct
              tax at source) pursuant to applicable law and the provisions of
              the Plan.

       8.4    Upon receipt of all the requisite documents, approvals and
              payments from the Grantee, including sufficient proof of payment
              of any applicable taxes in form satisfactory to the Company and
              the Trustee, the Trustee shall deliver a notice to the Company in
              the form annexed hereto as Appendix B or in such other form as
              shall be approved by the Board. The Company shall allot the shares
              in the name of the Trustee.

       8.5    Without limiting the foregoing, the Board may, with the consent of
              the Grantee, from time to time cancel all or any portion of any
              option then subject to exercise, and the Company's obligation in
              respect of such option may be discharged by: (i) payment to the
              Grantee or to the Trustee on behalf of the Grantee of an amount in
              cash equal to the excess, if any, of the Fair Market Value of the
              relevant shares at the date of such cancellation subject to the
              portion of the option so canceled over the aggregate Option
              Exercise Price of such shares; (ii) the issuance or transfer to
              the Grantee or to the Trustee on behalf of the Grantee of shares
              of the Company with a Fair Market Value at the date of such
              transfer equal to any such excess; or (iii) a combination of cash
              and shares with a combined value equal to any such excess, all as
              determined by the Board in its sole discretion.

              For purposes hereof, the "Fair Market Value" of the Ordinary
              Shares shall mean, as of any date, the value of the Ordinary
              Shares determined as follows:

              (a)    If the Shares are listed on the Nasdaq National Market or
                     The Nasdaq SmallCap Market of The Nasdaq Stock Market,
                     their 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 system for the last market
                     trading day prior to the time of determination, as reported
                     in The Wall Street Journal or such other source as the
                     Administrator deems reliable;

              (b)    If the Shares are listed on the Tel Aviv Stock Exchange,
                     but are not traded on the Nasdaq National Market or The
                     Nasdaq Small Cap Market, their 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 for
                     the last market trading day prior to the time of
                     determination, as reported in Globes, HaAretz or such other
                     source as the Administrator deems reliable;

              (c)    If the Shares are regularly quoted by a recognized
                     securities dealer but selling prices are not reported,
                     their Fair Market Value shall be

                                       10
<PAGE>

                     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;

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

        9.  ADDITIONAL DOCUMENTS
            --------------------

            9.1  Until the consummation of the IPO, the Company shall have the
                 right to demand from the Grantee at any time that the same
                 shall provide, and the Grantee shall provide, any certificate,
                 declaration or other document which the Company shall consider
                 to be necessary or desirable pursuant to any law, whether local
                 or foreign, including any certificate or agreement which the
                 Company shall require, if any, from the Grantees as members of
                 a class of shareholders, or any certificate, declaration or
                 other document the obtaining of which shall be deemed by the
                 Board to be appropriate or necessary for the purpose of raising
                 capital for the Company (including pursuant to a public
                 offering of securities), of merging the Company with another
                 company (whether the Company is the surviving entity or not),
                 or of reorganization of the Company, including, in the event of
                 a consolidation or merger of the Company or any sale, lease,
                 exchange or other transfer of all or substantially all of the
                 assets or shares of the Company the sale or exchange, as the
                 case may be, of any shares the Grantee (or the Trustee on his
                 or her behalf) may have purchased hereunder all as shall be
                 deemed necessary or desirable by the Board.

            9.2  In order to guarantee the aforesaid, and because the rights of
                 the Company and the other shareholders are dependent thereon,
                 the grantee shall, upon signing the Agreement and as a
                 condition to the grant of any options hereunder, execute the
                 Proxy and Power of Attorney attached hereto as Appendix C, or
                 in such other form as shall be approved by the Board,
                 irrevocably empowering the Trustee and/or the Attorney, until
                 consummation of the IPO, to sign any document and take any
                 action in his or her name as aforesaid, and the Grantee shall
                 have no complaint or claim against the Trustee and/or the
                 Attorney in respect of such signature. The Grantee will
                 authenticate his or her signature in the presence of a notary
                 if he shall be asked to do so by the Company, in order to give
                 full validity to the power of attorney.

        10. TAXATION
            --------

            10.1 General

                 The Grantee shall be liable for all taxes, duties, fines and
                 other payments which may be imposed by the tax authorities
                 (whether in Israel or abroad) and for every obligatory payment
                 of whatever source in respect of the options, the shares
                 (including, without limitation, upon the exercise of the
                 options, the sale of the shares or the registration of the
                 shares in the Grantee's name) or dividends or any other benefit
                 in respect thereof and/or

                                       11
<PAGE>

                 for all charges which shall accrue to the Grantee, the Company,
                 or any Realted Company and/or to the Trustee in connection with
                 the Plan.

            10.2 Deduction at Source
                 -------------------

                 The Company and/or any Related Company and/or the Trustee
                 shall, in their absolute and sole discretion, be entitled or
                 shall be obliged, pursuant to the law and to the Commissioner's
                 Rules, to make deductions at source from all payments due to
                 the Grantee from any source.

            10.3 Certificate of Authorization of Assessing Officer
                 -------------------------------------------------

                 The Company (including any Related Company) or the Trustee
                 shall at any time be entitled to apply to the Assessing
                 Officer, and in the case of a Grantee abroad, to any foreign
                 tax authority, for receipt of their certificate of
                 authorization as to the amount of tax which the Company or any
                 Related Company or the Grantee or the Trustee is to pay to the
                 tax authorities resulting from granting the options or
                 allotting the shares, or regarding any other question with
                 respect to the application of the Plan.

            11.  DIVIDENDS
                 ---------

                 The Ordinary Shares received as a result of the exercise of the
                 options shall participate equally with the Company's other
                 Ordinary Shares in every cash dividend which shall be declared
                 and distributed subject to the following provisions:

                 11.1  A cash dividend shall be distributed only to persons
                       registered in the register of members as shareholders on
                       the record date fixed for the distribution of the
                       dividend.

                 11.2  A dividend with regard to shares which are registered in
                       the name of the Trustee shall be paid to the Trustee,
                       subject to any lawful deduction of tax, whether such rate
                       is at the usual rate applicable to a dividend or at a
                       higher rate. The Trustee shall transfer the dividend to
                       the Grantees in accordance with instructions that it
                       shall receive from the Company. Alternatively, the
                       Company shall be entitled to pay the dividend directly to
                       the Grantee subject to the deduction of the applicable
                       tax.

                 11.3  Without derogating from the provisions of Section 11.2
                       hereof, the Company or the Trustee shall be entitled to
                       set off and deduct at source from any dividend any sum
                       that the Grantee owes to the Company or the Trustee,
                       whether under the Plan or otherwise, and/or any sum that
                       the Grantee owes to the tax authorities.

                                       12
<PAGE>

            12.  RIGHTS AND/OR BENEFITS ARISING OUT OF THE EMPLOYEE/ EMPLOYER
                 ------------------------------------------------------------
                 RELATIONSHIP AND THE ABSENCE OF AN OBLIGATION TO EMPLOY
                 -------------------------------------------------------

                 12.1  No income or gain which shall be credited to or which
                       purports to be credited to the Employee as a result of
                       the Plan, shall in any manner be taken into account in
                       the calculation of the basis of the Employee's
                       entitlements from the Company or any Related Company or
                       in the calculation of any social welfare right or other
                       rights or benefits arising out of the employee/employer
                       relationship. If, pursuant to any law, the Company or any
                       Realted Company , shall be obliged for the purposes of
                       calculation of the said items to take into account income
                       or gain actually or theoretically credited to the
                       Employee, the Employee shall indemnify the Company or any
                       Realted Company, against any expense caused to it in this
                       regard.

                 13.2  Nothing in the Plan shall be interpreted as obliging the
                       Company or any Related Company to employ the Employee and
                       nothing in the Plan or any option granted pursuant
                       thereto shall confer upon any Employee any right to
                       continue in the employment of the Company or any Related
                       Company restrict the right of the Company or any Related
                       Company to terminate such employment at any time. The
                       Employee shall have no claim whatsoever against the
                       Company or any Realted Company as a result of the
                       termination of his employment, even if such termination
                       causes any options to expire and/or prevents him or her
                       from exercising the options and/or from receiving or
                       retaining the shares pursuant to any agreement between
                       him or her and the Company, or results in any loss due to
                       an early imposition of tax liability pursuant to
                       applicable law.

        13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER
            ----------------------------------------------------

                 13.1  Changes in Capitalization.
                       -------------------------

                       In the event shares issued as a result of the exercise of
                       options granted pursuant to the Plan, shall be subdivided
                       or combined into a greater or smaller number of shares or
                       if, upon a reorganization, recapitalization or the like,
                       the shares shall be exchanged for other securities of the
                       Company, each Grantee shall be entitled, subject to the
                       conditions herein stated, to purchase such number of
                       shares or amount of other securities of the Company as
                       were exchangeable for the number of Shares of the Company
                       which such Optionee would have been entitled to purchase
                       except for such action, and appropriate adjustments shall
                       be made in the purchase price per share to reflect such
                       subdivision, combination or exchange.

                       In the event that the Company shall issue any of its
                       shares or other securities as bonus shares or a stock
                       dividend upon or with respect to

                                       13
<PAGE>

                       any shares which shall at the time be subject to an
                       option hereunder, each Grantee upon exercising such
                       option shall be entitled to receive (for the purchase
                       price payable upon such exercise), the shares as to which
                       he or she is exercising such option and, in addition
                       thereto (at no additional cost), such number of shares of
                       the class or classes in which such bonus shares or stock
                       dividend were declared, and such amount of shares (and
                       the amount in lieu of fractional shares) as is equal to
                       the shares which he or she would have received had he or
                       she been the holder of the shares as to which he or she
                       is exercising his or her Option at all times between the
                       date of grant of such option and the date of its
                       exercise.

                 13.2  Dissolution or Liquidation.
                       --------------------------

                       In the event of the proposed dissolution or liquidation
                       of the Company, the Board shall notify each Grantee as
                       soon as practicable prior to the effective date of such
                       proposed transaction. The Board in its discretion may
                       provide for a Grantee to have the right to exercise his
                       or her option until fifteen (15) days prior to such
                       transaction as to all of the optioned shares, including
                       shares as to which the Option would not otherwise be
                       exercisable. To the extent it has not been previously
                       exercised, an option will terminate immediately prior to
                       the consummation of such proposed action.

                 13.3  Merger or Asset Sale.
                       --------------------

                       In the event of a merger of the Company with or into
                       another corporation, or the sale of substantially all of
                       the assets of the Company, each outstanding option shall
                       be assumed or an equivalent option substituted by the
                       successor corporation or a parent or Subsidiary of the
                       successor corporation. In the event that the successor
                       corporation refuses to assume or substitute for the
                       option, the Grantee shall fully vest in and have the
                       right to exercise the option as to all of the optioned
                       stock, including shares as to which it would not
                       otherwise be vested or exercisable. If an option becomes
                       fully vested and exercisable in lieu of assumption or
                       substitution in the event of a merger or sale of

                                       14
<PAGE>

                       assets, the Board shall notify the Grantee in writing or
                       electronically that the option shall be fully exercisable
                       for a period of fifteen (15) days from the date of such
                       notice, and the option shall terminate upon the
                       expiration of such period. For the purposes of this
                       paragraph, the option shall be considered assumed if,
                       following the merger or sale of assets, the option
                       confers the right to purchase or receive, for each share
                       of optioned shares immediately prior to the merger or
                       sale of assets, the consideration (whether shares, cash,
                       or other securities or property) received in the merger
                       or sale of assets by holders of shares for each share
                       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 merger or sale of
                       assets is not solely Ordinary Shares (or their
                       equivalent) of the successor corporation or its parent,
                       the Board may, with the consent of the successor
                       corporation, provide for the consideration to be received
                       upon the exercise of the option, for each share of
                       optioned shares, to be solely ordinary shares (or their
                       equivalent) of the successor corporation or its parent
                       equal in fair market value to the per Share consideration
                       received by holders of in the merger or sale of assets.

        14. TERMINATION AND AMENDMENT
            -------------------------

            Unless the Plan shall theretofore have been terminated as
            hereinafter provided, the Plan shall terminate on, and no option
            shall be granted after, the tenth anniversary of the date the Plan
            is adopted by the Board. The Plan may be terminated, modified or
            amended by the shareholders of the Company. The Board may at any
            time terminate, modify or amend the Plan in such respects as it
            shall deem advisable; provided, however, that the Board may not,
            without shareholders approval, increase the maximum number of
            Ordinary Shares as to which options may be granted under the Plan
            (except by adjustment pursuant to Section 14) or extend the
            termination date of the Plan. Options granted prior to termination
            of the Plan may, subject to the terms of the Plan and any Agreement,
            be exercised thereafter. No amendment or modification of the Plan
            may, without the consent of the Grantee to whom any option shall
            theretofore have been granted, adversely affect the rights of such
            Grantee under such option.

        15. EFFECTIVENESS OF THE PLAN
            -------------------------

            The Plan shall become effective as of the date determined by the
            Board.

        16. RELEASE OF THE TRUSTEE AND THE ATTORNEY FROM LIABILITY AND
            ----------------------------------------------------------
            INDEMNIFICATION
            ---------------

            In no event shall the Trustee or the Attorney be liable to the
            Company and/or any Grantee under the Plan and/or any third party
            (including without prejudice to the generality of the aforegoing, to
            the income tax authorities and any other governmental or
            administrative authority), or to a purchaser of shares from any
            Grantee with respect to any act which has been or will be carried
            out in relation to the Plan, its execution and any matter connected
            thereto or arising therefrom. The Company will not, and the Grantee
            will be required to covenant upon signing the Agreement that he or
            she will not, make any claim against the Trustee or the Attorney in
            any manner whatsoever and on any ground whatsoever and they
            expressly agree that if the Trustee or the Attorney are sued by
            them, then the Trustee or the Attorney shall be entitled by virtue
            of this Section alone to apply to the court for dismissal of the
            action against them with costs. The Company covenants and agrees
            that if an action is commenced by any third party against the
            Trustee or the Attorney they shall be entitled, without any
            objection on the Company's part to join the Company as a third party
            to any action and a judgment against them will be paid by the
            Company.

                                       15
<PAGE>

            The Company covenants and the Grantee will be required to covenant
            to indemnify the Trustee and/or the Attorney against any liability
            in relation to any claim and/or demand made against the Trustee
            and/or the Attorney by any person whatsoever, including the tax
            authorities, in relation to their acts or omissions in connection
            with the Plan.

        17. GOVERNING LAWS
            --------------

            The Plan and all instruments issued thereunder shall be governed by
            and construed in accordance with the laws of the State of Israel.

                                       16
<PAGE>

                             ACCORD NETWORKS LTD.

                                  Appendix A

                   to Accord Networks Ltd.'s Share Ownership
                            and Option Plan (2000)

                                 (Section 8.2)

                              NOTICE OF EXERCISE

                                                            Date: ______________

The Trustee under the Accord Networks Ltd.'s
Share Ownership and Option Plan (2000)
(the "Plan")

Dear Sirs,

                             Re: Notice of Exercise
                                 ------------------

I hereby wish to inform you that it is my desire that of the Option which was
granted to you on ________ to acquire ______ (________) Ordinary Shares of
Accord Networks Ltd. (the "Company") on my behalf, you exercise and acquire on
my behalf ______ (________) of the Ordinary Shares subject to the said Option at
a price of NIS ____ per share, all in accordance with the Plan.

Attached to this Notice is a check in the amount of NIS ________ (NIS ________)
as payment for the abovementioned shares.

I am aware that all the shares shall be allotted to you, registered in your name
and that you shall hold all the share certificates representing such shares.

Likewise, I am aware of and agree to all the other provisions of the Plan and
applicable law.

                                                           Yours sincerely,

                                                           ---------------
                                                           Grantee's name

                                       17
<PAGE>

                             ACCORD NETWORKS LTD.

                                  Appendix B

                   to Accord Networks Ltd.'s Share Ownership
                            and Option Plan (2000)

                                 (Section 8.4)

                              NOTICE OF EXERCISE

                                                           Date: ______________

Accord Networks Ltd.
10 Martin Gehl Street
Petah Tikva, Israel

Dear Sirs,

                             Re: Notice of Exercise
                                 ------------------

Please be advised that I hereby exercise ________ (________) of the Ordinary
Shares subject to the Option which was granted to me on behalf of __________ on
________ to acquire ________ (________) Ordinary Shares of Accord Networks Ltd.,
at a price of NIS ____ per share, all in accordance with the Plan.

Attached to this Notice is a check in the amount of NIS ________ (NIS ________)
as payment for the abovementioned shares.

                                                           Yours sincerely,

                                                           ---------------
                                                           The Trustee

                                       18
<PAGE>

                             ACCORD NETWORKS LTD.

                                  Appendix C

                   to Accord Networks Ltd.'s Share Ownership
                            and Option Plan (2000)

                                 (Section 9.2)

                    IRREVOCABLE PROXY AND POWER OF ATTORNEY

I, the undersigned, _____________, hereby appoint Mr. Eliahu Lerner, C.P.A.
and/or Mr. Yehuda Zviel, C.P.A. or whomever shall replace him as trustee
pursuant to the Company's Employee Share Ownership and Option Plan (1999) or
whomever they shall designate (the "Trustee" and the "Plan", respectively) as my
proxy to participate and vote (or abstain) for me and on my behalf as he at his
sole discretion shall deem appropriate, on all matters at all meetings of
shareholders (whether ordinary, extraordinary or otherwise), of Accord Networks
Ltd. (the "Company"), on behalf of all the shares and/or options of the Company
held by the Trustee on my behalf and I hereby grant an irrevocable power of
attorney to the Trustee as follows:

I hereby authorize and grant power of attorney to the Trustee for as long as any
shares and/or options which were allotted or granted on my behalf are held by
the Trustee or registered in his name, or for as long as the certificates
representing any shares are held by the Trustee, to exercise every right, power
and authority with respect to the shares and/or options and to sign in my name
and on my behalf any document (including any agreement, including a merger
agreement of the Company or an agreement for the purchase or sale of assets or
shares including the shares of the Company held on my behalf and any and all
documentation accompanying any such agreements, such as, but not limited to,
decisions, requests, instruments, receipts and the like), and any affidavit or
approval with respect to the shares and/or options or to the rights which they
represent in the Company in as much as the Trustee shall deem it necessary or
desirable to do so. In addition and without derogating from the generality of
the foregoing, I hereby authorize and grant power of attorney to the Trustee to
sign any document as aforesaid and any affidavit or approval (such as any waiver
of rights of first refusal to acquire shares which are offered for sale by other
shareholders of the Company and/or any pre emptive rights to acquire any shares
being allotted by the Company, in as much as such rights shall exist pursuant to
the Company's Articles of Association as shall be in existence from time to
time) and/or to make and execute any undertaking in my name and on my behalf if
the Trustee shall, at his sole discretion, deem that the document, affidavit or
approval is necessary or desirable for purposes of any placement of securities
of the Company, whether private or public (including lock-up arrangements and
undertakings), whether in Israel or abroad, for purposes of a merger of the
Company with another entity, whether the Company is the surviving entity or not,
for purposes of any reorganization or recapitalization of the Company or for
purposes of any purchase or sale of assets or shares of the Company.

                                       19
<PAGE>

This Proxy and Power of Attorney shall be interpreted in the widest possible
sense, in reliance upon the Plan and upon the goals and intentions thereof.

This Proxy and Power of Attorney is irrevocable and shall expire and cease to be
of force and effect immediately after the consummation of the initial public
offering of the Company's shares, pursuant to an effective registration
statement, prospectus or similar document in Israel or such other jurisdiction
as is determined by the Board of Directors of the Company and shall be
irrevocable until such time as the rights of the Company and the Company's
shareholders are dependent hereon. The expiration of this Power of Attorney
shall in no manner effect the validity of any document (as aforesaid), affidavit
or approval which has been signed or given as aforesaid prior to the expiration
hereof and in accordance herewith.

IN WITNESS WHEREOF, I have executed this Proxy and Power of Attorney on the __
day of ________, _____.

-----------

CONFIRMATION

I, the undersigned, ________, hereby confirm the signature of ________ which
appears above.

---------------

                                       20

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