Document:

EXHIBIT 10.1

PASSAVE INC.

THE 2003 ISRAELI SHARE OPTION PLAN

(*IN COMPLIANCE WITH AMENDMENT NO. 132 OF THE ISRAELI TAX ORDINANCE, 2002)

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TABLE OF CONTENTS

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

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

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

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

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

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

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

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

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

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

11. VESTING OF OPTIONS........................................................13

12. SHARES SUBJECT TO RIGHT OF FIRST REFUSAL..................................13

13. DIVIDENDS.................................................................14

14. RESTRICTIONS ON ASSIGNABILITY AND SALE OF OPTIONS.........................14

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

16. AMENDMENTS OR TERMINATION.................................................15

17. GOVERNMENT REGULATIONS....................................................15

18. CONTINUANCE OF EMPLOYMENT.................................................15

19. GOVERNING LAW & JURISDICTION..............................................15

20. TAX CONSEQUENCES..........................................................15

21. NON-EXCLUSIVITY OF THE ISOP...............................................16

22. MULTIPLE AGREEMENTS.......................................................16

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This plan, as amended from time to time, shall be known as Passave Inc. 2003
Israeli Share Option Plan (the "ISOP").

1.     PURPOSE OF THE ISOP

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

2.     DEFINITIONS

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

       2.1  "AFFILIATE"  means any  "employing  company"  within the  meaning of
            Section 102(a) of the Ordinance.  For the purpose hereof  "employer"
            means Passave Ltd.

       2.2  "APPROVED  102 OPTION" means an Option  granted  pursuant to Section
            102(b)  of the  Ordinance  and held in trust  by a  Trustee  for the
            benefit of the Optionee,  in accordance  with the  provisions of the
            Ordinance.

       2.3  "BOARD" means the Board of Directors of the Company.

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

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

       2.6  "CHAIRMAN" means the chairman of the Committee.

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

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            absence thereof,  the Board. The Committee shall have such authority
            as the Board has assigned to it.

       2.8  "COMPANY" means Passave Inc., an US corporation  incorporated  under
            the laws of Delaware.

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

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

       2.11 EMPLOYEE"  means a person  who is  employed  by the  Company  or its
            Affiliates,  including an individual who is serving as a director or
            an office  holder,  but  excluding  Controlling  Shareholder  in the
            Company.  An Employee  shall not cease to be an Employee  (i) in the
            case  of  any  leave  of  absence  approved  by the  Company  or its
            Affiliates,  as  applicable,  or  (ii)  upon  the  transfer  of such
            Employee's employment among the Company and its Affiliates.

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

       2.13 "FAIR  MARKET  VALUE"  means as of any  date,  the  value of a Share
            determined as follows:

            (i) If the Shares are listed on any established  stock exchange or a
            national  market  system,  including  without  limitation the NASDAQ
            National Market system,  or the NASDAQ SmallCap Market of the NASDAQ
            Stock Market, the Fair Market Value shall be the closing sales price
            for such Shares (or the closing bid, if no sales were reported),  as
            quoted on such  exchange or system for the last  market  trading day
            prior to time of  determination,  as  reported  in the  Wall  Street
            Journal,  or such other source as the Board deems reliable.  Without
            derogating from the above, solely for the purpose of determining the
            tax liability pursuant to Section 102(b)(3) of the Ordinance,  if at
            the Date of Grant the Company's shares are listed on any established
            stock  exchange  or a  national  market  system or if the  Company's
            shares  will be  registered  for  trading  within  ninety  (90) days
            following the Date of Grant, the Fair Market Value of a Share at the
            Date of Grant shall be  determined  in  accordance  with the average
            value of the  Company's  shares  on the  thirty  (30)  trading  days
            preceding  the Date of  Grant or on the  thirty  (30)  trading  days
            following the date of registration for trading, as the case may be;

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

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

     2.14    "IPO" means the initial public offering of the Company's shares.

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

     2.16    "ITA" means the Israeli Tax Authorities.

     2.17    "NON-EMPLOYEE"  means a consultant,  adviser or service provider of
             the Company or its Affiliates,  provided that such person is not an
             Employee or a Controlling Shareholder in the Company.

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

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

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

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

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

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

     2.24    "ORDINANCE"  means  the 1961  Israeli  Income  Tax  Ordinance  [New
             Version]  1961,  as now in effect or as  hereafter  amended and the
             regulations,  rules and orders of procedure promulgated  thereunder
             from time to time.

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

     2.26    "SECTION 102" means section 102 of the Ordinance.

     2.27    "SHARE"  means  the  Common  Stock,  $ ___ par value  each,  of the
             Company.

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

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

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

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

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

      2.33   "VESTING  DATES"  means,  as  determined  by  the  Board  or by the
             Committee,  the date as of which the Optionee  shall be entitled to
             exercise  the  Options  or part of the  Options,  as set  forth  in
             Section 11 of the ISOP.

3.   ADMINISTRATION OF THE ISOP

      3.1    The Board or the  Committees shall have the power to administer the
             ISOP,  all as  provided  by  applicable  law  and in the  Company's
             incorporation   documents,   as   amended   from   time  to   time.
             Notwithstanding  the  above,  the Board  shall  automatically  have
             residual  authority if no Committee shall be constituted or if such
             Committee shall cease to operate for any reason,  in which case any
             reference  to the  Committee  in the ISOP shall be  construed  as a
             reference to the Board.

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

      3.3    The Committee  shall have the full power and authority,  subject to
             the approval of the Board to the extent  required under  applicable
             law or under the Company's incorporation documents, as amended from
             time to time, to: (i) designate Optionees; (ii) determine the terms
             and provisions of the respective Option Agreements,  including, but
             not  limited  to,  the  number of  Options  to be  granted  to each
             Optionee,  the  number  of  Shares to be  covered  by each  Option,
             provisions  concerning the time and the extent to which the Options
             may be exercised and the nature and duration of  restrictions as to
             the transferability or restrictions  constituting  substantial risk
             of forfeiture and to cancel or suspend awards, as necessary;  (iii)
             determine  the Fair  Market  Value of the  Shares  covered  by each
             Option;  (iv)  make an  election  as to the  type  of 102  Approved
             Option;  (v)  designate  the  type  of  Options;   (vi)  alter  any
             restrictions and conditions of any Options or Shares subject to any
             Options   (vii)   interpret  the   provisions   and  supervise  the
             administration  of the  ISOP;  (viii)  accelerate  the  right of an
             Optionee to exercise in whole or in part,  any  previously  granted
             Option;  (ix)  determine  the  Purchase  Price of the  Option;  (x)
             prescribe,  amend and rescind rules and regulations relating to the
             ISOP; and (xi) make all other  determinations  deemed  necessary or
             advisable for the administration of the ISOP.

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

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

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

      3.7    Subject to the Company's  incorporation  documents, as amended from
             time to time, the Company's decision,  and to all approvals legally
             required,  each  member  of the  Board  or the  Committee  shall be
             indemnified  and held  harmless by the Company  against any cost or
             expense (including counsel fees) reasonably incurred by him, or any
             liability (including any sum paid in settlement of a claim with the
             approval of the Company)  arising out of any act or omission to act
             in connection with the ISOP unless arising out of such member's own
             fraud or bad faith, to the extent permitted by applicable law. Such
             indemnification   shall   be  in   addition   to  any   rights   of
             indemnification  the  member may have as a  director  or  otherwise
             under the Company's  incorporation  documents, as amended from time
             to time, any agreement,  any vote of shareholders or  disinterested
             directors, insurance policy or otherwise.

4.   DESIGNATION OF PARTICIPANTS

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

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

      4.3    Anything in the ISOP to the contrary notwithstanding, all grants of
             Options to directors and office  holders  shall be  authorized  and
             implemented in accordance

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             with  the  provisions  of  the   incorporation   documents  or  any
             applicable law, as in effect from time to time.

5.   DESIGNATION OF OPTIONS PURSUANT TO SECTION 102

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

      5.2    The grant of Approved 102 Options  shall be made under this ISOP as
             adopted by the Board in accordance with Section 15 below, and shall
             be conditioned upon the approval of this ISOP by the ITA.

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

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

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

      5.6    No approved 102 Options may be granted to any  Employee  unless and
             until (i) this ISOP is approved by the ITA, and (ii) the  Company's
             election of the type of Approved  102 Options as CGI or OIO granted
             to Employees (the "ELECTION"),  has been  appropriately  filed with
             the ITA before the Date of Grant of the first  Approved 102 Option.
             Such  Election  shall  remain  in  effect  until  the  end  of  the
             subsequent  year  following the year during which the Company first
             granted  Approved 102  Options.  The  Election  shall  obligate the
             Company  to grant,  during  the period  indicated  in the  sentence
             above,  ONLY the type of Approved  102 Option it has  elected,  and
             shall apply to all Optionees who were granted  Approved 102 Options
             during the period  indicated  herein,  all in  accordance  with the
             provisions of Section 102(g) of the Ordinance. For the avoidance of
             doubt,  such  Election  shall not prevent the Company from granting
             Unapproved   102   Options   to   Employees   OR  3(i)   Option  to
             Non-Employees, simultaneously.

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

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

      5.9    With regards to Approved 102 Options,  the  provisions  of the ISOP
             and/or the Option  Agreement  shall be subject to the provisions of
             Section 102 and the Tax Assessing  Officer's permit, if applicable,
             and the said provisions and permit shall be deemed an

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            integral part of the ISOP and of the Option Agreement. Any provision
            of Section 102 and/or the said permit which is necessary in order to
            receive  and/or to keep any tax  benefit  pursuant  to Section  102,
            which  is  not  expressly  specified  in  the  ISOP  or  the  Option
            Agreement,  shall be  considered  binding  upon the  Company and the
            Optionees.

6.   TRUSTEE

      6.1   Approved  102 Options  which shall be granted  under the ISOP and/or
            any Shares issued upon exercise of such Approved 102 Options  and/or
            other shares  received  subsequently  following any  realization  of
            rights, including without limitation bonus shares in connection with
            such Options or Shares and all of the rights  attached to the shares
            or options  described  above,  shall be  allocated  or issued to the
            Trustee and held for the benefit of the Optionees for such period of
            time as required by Section 102 (the "SECTION 102  PERIOD").  All of
            the rights  attached to Shares  issued upon exercise of Approved 102
            Options,  including without limitation dividend in shares,  shall be
            subject to the same tax  treatment  as the  treatment  to which such
            Options are subject to. In the case the  requirements  for  Approved
            102  Options are not met,  then the  Approved  102 Options  shall be
            treated  as  Unapproved  102  Options,  all in  accordance  with the
            provisions of Section 102.

      6.2   Notwithstanding anything to the contrary, the Trustee shall not make
            any  transaction  or take any action with  respect to  Approved  102
            Options or Shares issued upon exercise  thereof,  will not transfer,
            assign,  release,  pledge,  mortgage voluntary,  whether immediately
            effective or  effective  at a future date,  other than by will or by
            operation of law, until after the full payment of the Optionee's tax
            liabilities arising from the Approved 102 Options which were granted
            to him,  their  exercise,  any Shares  issued upon  exercise of such
            Approved 102 Options or any release of transfer by the  Trustee,  or
            after  guarantying  the  payment of said taxes.  If such  Options or
            Shares have been  transferred  by will or by  operation  of law, the
            provisions of Section 102 will apply with respect to the or heirs or
            the transferees of the Optionee or Shareholder, as the case may be.

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

      6.4   With respect to any Approved 102 Option,  subject to the  provisions
            of Section 102 and any rules or  regulation  or orders or procedures
            promulgated thereunder, an Optionee shall not be entitled to sell or
            release  from  trust  any Share  received  upon the  exercise  of an
            Approved 102 Option and/or any share received subsequently following
            any  realization  of rights,  including  without  limitation,  bonus
            shares,  until the lapse of the  Section 102 Period  required  under
            Section 102 of the Ordinance

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7.    SHARES RESERVED FOR THE ISOP; RESTRICTION THEREON

      7.1   The Company has reserved 2,577,829 (TWO MILLION FIVE HUNDRED SEVENTY
            SEVEN THOUSAND EIGHT HUNDRED AND TWENTY TWO) authorized but unissued
            Shares,  for the  purposes  of the ISOP and for the  purposes of any
            other share  option plans which may be adopted by the Company in the
            future,  subject to adjustment as set forth in Section 9 below.  Any
            Shares  which  remain  unissued  and  which are not  subject  to the
            outstanding Options at the termination of the ISOP shall cease to be
            reserved for the purpose of the ISOP,  but until  termination of the
            ISOP the Company  shall at all times  reserve  sufficient  number of
            Shares to meet the  requirements of the ISOP.  Should any Option for
            any  reason  expire  or  be  canceled   prior  to  its  exercise  or
            relinquishment  in full, the Shares subject to such Option may again
            be  subjected  to an Option  under  the ISOP or under the  Company's
            other share option plans.

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

      7.3   Subject to the provisions of Section 102, until the  consummation of
            an IPO, the Shares issued upon exercise of Options shall be voted by
            an irrevocable proxy (the "PROXY") pursuant to the directions of the
            Board, such Proxy to be assigned to the person or persons designated
            by the Board.  Such person or persons  designated by the Board shall
            be indemnified  and held harmless by the Company against any cost or
            expense (including counsel fees) reasonably  incurred by him/her, or
            any liability  (including any sum paid in settlement of a claim with
            the approval of the  Company)  arising out of any act or omission to
            act in connection  with the voting of such Proxy unless  arising out
            of such member's own fraud or bad faith, to the extent  permitted by
            applicable  law.  Such  indemnification  shall be in addition to any
            rights of  indemnification  the  person(s) may have as a director or
            otherwise under the Company's  incorporation  documents,  as amended
            from  time to  time,  any  agreement,  any vote of  shareholders  or
            disinterested  directors,  insurance policy or otherwise.  The Proxy
            shall be  delivered  to the Company at such time as set forth in the
            Option Agreement. Without derogating from the above, with respect to
            Approved 102 Options,  such shares shall be voted in accordance with
            the  provisions of Section 102 and any rules,  regulations or orders
            promulgated thereunder.

8.    PURCHASE  PRICE

      8.1   The  Purchase  Price of each  Share  subject  to an Option  shall be
            determined  by the Board or the  Committee  in its sole and absolute
            discretion  in  accordance  with

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            applicable  law,  subject to any  guidelines as may be determined by
            the Board or the Committee,  as applicable,  from time to time. Each
            Option Agreement will contain the Purchase Price determined for each
            Optionee.

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

      8.3   THE  PURCHASE  PRICE  SHALL BE  DENOMINATED  IN THE  CURRENCY OF THE
            PRIMARY ECONOMIC ENVIRONMENT OF, EITHER THE COMPANY OR THE OPTIONEE,
            AS DETERMINED BY THE COMPANY.

9.    ADJUSTMENTS

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

      9.1   In  the  event  of  Transaction,   the   unexercised   Options  then
            outstanding  under the ISOP shall be assumed or  substituted  for an
            appropriate  number of option  for  shares of common  stock or other
            securities  of the  Successor  Company (or a parent or subsidiary of
            the  Successor  Company).  In the  case  of such  assumption  and/or
            substitution of options,  appropriate  adjustments  shall be made to
            the Purchase  Price so as to reflect such action and all other terms
            and  conditions  of the Option  Agreements  shall remain  unchanged,
            including  but not limited to the vesting  schedule,  all subject to
            the determination of the Committee or the Board, which determination
            shall be in their sole  discretion  and  final.  The  Company  shall
            notify the Optionee of the Transaction in such form and method as it
            deems  applicable at least ten (10) days prior to the effective date
            of such Transaction.

      9.2   Notwithstanding  the above and subject to any applicable  law, if in
            any  such  Transaction  as  described  in  section  9.1  above,  the
            Successor Company (or parent or subsidiary of the Successor Company)
            does not agree to  assume or  substitute  for the  Options,  all the
            unvested options will be expired, unless otherwise determined by the
            Board.

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

                                      -11-
<PAGE>

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

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

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

      9.6   Anything  herein to the  contrary  notwithstanding,  if prior to the
            completion of the IPO all or substantially  all of the shares of the
            Company  are  to be  sold,  or in  case  of a  Transaction,  all  or
            substantially  all of the shares of the Company are to be  exchanged
            for  securities  of another  Company,  then each  Optionee  shall be
            obliged to sell or  exchange,  as the case may be,  any Shares  such
            Optionee   purchased   under  the  ISOP,  in  accordance   with  the
            instructions issued by the Board in connection with the Transaction,
            whose determination shall be final.

      9.7   The  Optionee  acknowledges  that in the  event  that the  Company's
            shares  shall  be  registered  for  trading  in any  public  market,
            Optionee's  rights to sell the  Shares  may be  subject  to  certain
            limitations  (including a lock-up  period),  as will be requested by
            the Company or its  underwriters,  and the Optionee  unconditionally
            agrees and accepts any such limitations.

                                      -12-
<PAGE>

10.   TERM AND EXERCISE OF OPTIONS

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

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

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

      10.4  Subject to the  provisions  of section  10.5 below,  in the event of
            termination of Optionee's  employment or services,  with the Company
            or any of its Affiliates,  all Options granted to such Optionee will
            immediately expire. A notice of termination of employment or service
            shall be deemed to constitute  termination of employment or service.
            For  the  avoidance  of  doubt,  in  case  of  such  termination  of
            employment or service, the unvested portion of the Optionee's Option
            shall not vest and shall not become exercisable.

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

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

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

                                      -13-
<PAGE>

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

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

      10.6  To avoid doubt, the holders of Options shall not be deemed owners of
            the Shares  issuable upon the exercise of Options and shall not have
            any of the rights or  privileges of  shareholders  of the Company in
            respect of any Shares  purchasable  upon the exercise of any part of
            an Option,  until  registration  of the  Optionee  as holder of such
            Shares in the Company's  register of  shareholders  upon exercise of
            the Option in accordance with the provisions of the ISOP.

      10.7  Any form of Option Agreement authorized by the ISOP may contain such
            other  provisions  as the  Committee  may,  from time to time,  deem
            advisable.

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

11.   VESTING OF OPTIONS

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

      11.2  An Option may be subject to such other terms and  conditions  on the
            time or times when it may be  exercised,  as the  Committee may deem
            appropriate. The vesting provisions of individual Options may vary.

12.   SHARES SUBJECT TO RIGHT OF FIRST REFUSAL

      12.1  Notwithstanding  anything  to  the  contrary  in  the  incorporation
            documents of the Company,  as amended from time to time, none of the
            Optionees  shall have a right of first  refusal in relation with any
            sale of shares in the Company.

      12.2  Unless otherwise determined by the Committee, until such time as the
            Company shall  complete an IPO, an Optionee shall not have the right
            to sell Shares  issued upon the exercise of an Option within six (6)
            months  and  one day of the  date of  exercise  of  such  Option  or
            issuance  of  such  Shares.   Unless  otherwise  determined  by  the
            Committee, until such time as the Company shall complete an IPO, the

                                      -14-
<PAGE>

            sale of Shares  issuable  upon the  exercise  of an Option  shall be
            subject   to  a  right  of  first   refusal   on  the  part  of  the
            Repurchaser(s).

            REPURCHASER(S)  MEANS (I) THE COMPANY,  IF  PERMITTED BY  APPLICABLE
            LAW, ( II) IF THE COMPANY IS NOT PERMITTED BY APPLICABLE  LAW , THEN
            ANY AFFILIATE OF THE COMPANY  DESIGNATED BY THE COMMITTEE;  OR (III)
            IF NO  DECISION  IS REACHED  BY THE  COMMITTEE,  THEN THE  COMPANY'S
            EXISTING  SHAREHOLDERS  (SAVE,  FOR  AVOIDANCE  OF DOUBT,  FOR OTHER
            OPTIONEES  WHO  ALREADY  EXERCISED  THEIR  OPTIONS),   PRO  RATA  IN
            ACCORDANCE WITH THEIR SHAREHOLDING. THE OPTIONEE SHALL GIVE A NOTICE
            OF SALE  (HEREINAFTER THE "NOTICE") TO THE COMPANY IN ORDER TO OFFER
            THE SHARES TO THE REPURCHASER(S).

      12.3  The Notice  shall  specify the name of each  proposed  purchaser  or
            other transferee (hereinafter the "PROPOSED TRANSFEREE"), the number
            of  Shares  offered  for sale,  the price per Share and the  payment
            terms. The Repurchaser(s) will be entitled for thirty (30) days from
            the day of receipt of the Notice  (hereinafter the "NOTICE PERIOD"),
            to purchase  all or part of the  offered  Shares on a pro rata basis
            based upon their respective holdings in the Company.

      12.4  If by the end of the  Notice  Period not all of the  offered  Shares
            have been  purchased by the  Repurchaser(s),  the Optionee  shall be
            entitled to sell such Shares at any time during the ninety (90) days
            following the end of the Notice  Period on terms not more  favorable
            than  those  set  out in the  Notice,  provided  that  the  Proposed
            Transferee  agrees in writing  that the  provisions  of this section
            shall  continue to apply to the Shares in the hands of such Proposed
            Transferee. Any sale of Shares issued under the ISOP by the Optionee
            that is not made in accordance with the ISOP or the Option Agreement
            shall be null and void.

13.   DIVIDENDS

      With respect to all Shares (but excluding, for avoidance of any doubt, any
      unexercised  Options)  allocated  or issued  upon the  exercise of Options
      purchased by the  Optionee and held by the Optionee or by the Trustee,  as
      the case may be, the  Optionee  shall be entitled to receive  dividends in
      accordance with the quantity of such Shares,  subject to the provisions of
      the Company's  Articles of Association  (and all  amendments  thereto) and
      subject to any applicable taxation on distribution of dividends,  and when
      applicable  subject  to the  provisions  of  Section  102 and  the  rules,
      regulations or orders promulgated thereunder.

                                      -15-
<PAGE>

14.   RESTRICTIONS ON ASSIGNABILITY AND SALE OF OPTIONS

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

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

      14.2  As long as Options  and/or  Shares are held by the Trustee on behalf
            of the Optionee,  all rights of the Optionee over the Options or the
            Shares are personal,  can not be transferred,  assigned,  pledged or
            mortgaged by the Optionee voluntary, other than by will or operation
            of law.

15.   EFFECTIVE DATE AND DURATION OF THE ISOP

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

16.   AMENDMENTS OR TERMINATION

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

17.   GOVERNMENT REGULATIONS

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

                                      -16-
<PAGE>

18.   CONTINUANCE OF EMPLOYMENT OR HIRED SERVICES

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

19.   GOVERNING LAW & JURISDICTION

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

20.   TAX CONSEQUENCES

      20.1  Any tax  consequences  arising  from the  grant or  exercise  of any
            Option, from the payment for Shares covered thereby,  the release or
            transfer  of Shares by the  Trustee,  or from any other event or act
            (of the Company and/or its Affiliates, the Trustee or the Optionee),
            hereunder, shall be borne solely by the Optionee. The Company and/or
            its Affiliates  and/or the Trustee,  as  applicable,  shall withhold
            taxes  according  to the  requirements  under the  applicable  laws,
            rules,  and  regulations,  including  withholding  taxes at  source.
            Furthermore,  the  Optionee  shall  agree to  indemnify  the Company
            and/or its  Affiliates  and/or the  Trustee  and hold them  harmless
            against and from any and all  liability for any such tax or interest
            or  penalty  thereon,  including  without  limitation,   liabilities
            relating to the necessity to withhold, or to have withheld, any such
            tax from any payment made to the Optionee.

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

      20.3  To the  extent  provided  by the terms of an Option  Agreement,  the
            Optionee may satisfy any tax withholding  obligation relating to the
            exercise  or  acquisition  of  Shares  under an Option by any of the
            following means (in addition to the Company's right to withhold from
            any  compensation  paid  to the  Optionee  by the  Company)  or by a
            combination  of such  means:  (i)  tendering  a cash  payment;  (ii)
            subject to the Committee's approval on the payment date, authorizing
            the Company to withhold Shares from the Shares otherwise issuable to
            the  Optionee as a result of the exercise or  acquisition  of Shares
            under the Option in an amount not to exceed  the  minimum  amount of
            tax  required to be withheld by law; or (iii)  subject to  Committee
            approval on the payment  date,  delivering  to the Company owned and
            unencumbered  Shares;  provided that Shares  acquired on exercise of
            Options  have  been  held  for at  least 6  months  from the date of
            exercise.

                                      -17-
<PAGE>

21.   NON-EXCLUSIVITY OF THE ISOP

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

22.   MULTIPLE AGREEMENTS

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

                                      -18-
<PAGE>

         AMENDMENT NO. 1 TO PASSAVE, INC. 2003 ISRAELI SHARE OPTION PLAN

Section 7.1 of Passave,  Inc.  2003 Israeli  Share Option Plan shall be replaced
with the following:

      7.1   The Company has reserved  5,800,000  authorized but unissued  Shares
            (of which 2,577,829 have been  previously  granted) for the purposes
            of the  ISOP,  plus an  annual  increase  to be added  on the  first
            business day of each  calendar  year  beginning in 2006 equal to the
            lesser  of  (x)  750,000  Shares,  (y) 4% of the  number  of  Shares
            outstanding  as of such  date,  or (z) a  lesser  number  of  Shares
            determined  by the  board  or any of  the  committees  appointed  to
            administer the ISOP, subject to adjustment as set forth in Section 9
            below.  Any  Shares  issued  subject  to  awards  granted  under the
            Company's  2005 U.S.  Stock  Incentive  Plan (the "2005 U.S.  Plan")
            shall also count against (and reduce) the maximum  aggregate  number
            of Shares  reserved  for issuance  under the ISOP.  Any Shares which
            remain unissued and which are not subject to the outstanding Options
            at the  termination  of the ISOP shall cease to be reserved  for the
            purpose of the ISOP,  but until  termination of the ISOP the Company
            shall at all times reserve  sufficient  number of Shares to meet the
            requirements of the ISOP. Should any Option for any reason expire or
            be canceled  prior to its exercise or  relinquishment  in full,  the
            Shares  subject to such Option may again be  subjected  to an Option
            under the ISOP.Exhibit 10.2

                                  PASSAVE, INC.

                         2005 U.S. STOCK INCENTIVE PLAN

       1.     PURPOSES OF THE PLAN. The purposes of this Plan are to attract and
retain the best available personnel, to provide additional incentives to
Employees, Directors and Consultants and to promote the success of the Company's
business.

       2.     DEFINITIONS. The following definitions shall apply as used herein
and in the individual Award Agreements except as defined otherwise in an
individual Award Agreement. In the event a term is separately defined in an
individual Award Agreement, such definition shall supercede the definition
contained in this Section 2.

              (a)    "2003 ISRAELI PLAN" means the Company's 2003 Israeli Share
Option Plan, as amended and restated.

              (b)    "ADMINISTRATOR" means the Board or any of the Committees
appointed to administer the Plan.

              (c)    "AFFILIATE" and "ASSOCIATE" shall have the respective
meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange
Act.

              (d)    "APPLICABLE LAWS" means the legal requirements relating to
the Plan and the Awards under applicable provisions of federal securities laws,
state corporate and securities laws, the Code, the rules of any applicable stock
exchange or national market system, and the rules of any non-U.S. jurisdiction
applicable to Awards granted to residents therein.

              (e)    "ASSUMED" means that pursuant to a Corporate Transaction
either (i) the Award is expressly affirmed by the Company or (ii) the
contractual obligations represented by the Award are expressly assumed (and not
simply by operation of law) by the successor entity or its Parent in connection
with the Corporate Transaction with appropriate adjustments to the number and
type of securities of the successor entity or its Parent subject to the Award
and the exercise or purchase price thereof which at least preserves the
compensation element of the Award existing at the time of the Corporate
Transaction as determined in accordance with the instruments evidencing the
agreement to assume the Award.

              (f)    "AWARD" means the grant of an Option, SAR, Dividend
Equivalent Right, Restricted Stock, Restricted Stock Unit or other right or
benefit under the Plan.

              (g)    "AWARD AGREEMENT" means the written agreement evidencing
the grant of an Award executed by the Company and the Grantee, including any
amendments thereto.

              (h)    "BOARD" means the Board of Directors of the Company.

              (i)    "CAUSE" means, with respect to the termination by the
Company or a Related Entity of the Grantee's Continuous Service, that such
termination is for "Cause" as such term (or word of like import) is expressly
defined in a then-effective written agreement between the Grantee and the
Company or such Related Entity, or in the absence of such then-effective

                                       1
<PAGE>

written agreement and definition, is based on, in the determination of the
Administrator, the Grantee's: (i) performance of any act or failure to perform
any act in bad faith and to the detriment of the Company or a Related Entity;
(ii) dishonesty, intentional misconduct or material breach of any agreement with
the Company or a Related Entity; or (iii) commission of a crime involving
dishonesty, breach of trust, or physical or emotional harm to any person;
provided, however, that with regard to any agreement that defines "Cause" on the
occurrence of or in connection with a Corporate Transaction or a Change in
Control, such definition of "Cause" shall not apply until a Corporate
Transaction or a Change in Control actually occurs.

              (j)    "CHANGE IN CONTROL" means a change in ownership or control
of the Company after the Registration Date effected through either of the
following transactions:

                     (i)    the direct or indirect acquisition by any person or
related group of persons (other than an acquisition from or by the Company or by
a Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities pursuant to
a tender or exchange offer made directly to the Company's stockholders which a
majority of the Continuing Directors who are not Affiliates or Associates of the
offeror do not recommend such stockholders accept, or

                     (ii)   a change in the composition of the Board over a
period of twelve (12) months or less such that a majority of the Board members
(rounded up to the next whole number) ceases, by reason of one or more contested
elections for Board membership, to be comprised of individuals who are
Continuing Directors.

              (k)    "CODE" means the Internal Revenue Code of 1986, as amended.

              (l)    "COMMITTEE" means any committee composed of members of the
Board appointed by the Board to administer the Plan.

              (m)    "COMMON STOCK" means the common stock of the Company.

              (n)    "COMPANY" means Passave, Inc., a Delaware corporation, or
any successor entity that adopts the Plan in connection with a Corporate
Transaction.

              (o)    "CONSULTANT" means any person (other than an Employee or a
Director, solely with respect to rendering services in such person's capacity as
a Director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity.

              (p)    "CONTINUING DIRECTORS" means members of the Board who
either (i) have been Board members continuously for a period of at least twelve
(12) months or (ii) have been Board members for less than twelve (12) months and
were elected or nominated for election as Board members by at least a majority
of the Board members described in clause (i) who were still in office at the
time such election or nomination was approved by the Board.

                                       2
<PAGE>

              (q)    "CONTINUOUS SERVICE" means that the provision of services
to the Company or a Related Entity in any capacity of Employee, Director or
Consultant is not interrupted or terminated. In jurisdictions requiring notice
in advance of an effective termination as an Employee, Director or Consultant,
Continuous Service shall be deemed terminated upon the actual cessation of
providing services to the Company or a Related Entity notwithstanding any
required notice period that must be fulfilled before a termination as an
Employee, Director or Consultant can be effective under Applicable Laws. A
Grantee's Continuous Service shall be deemed to have terminated either upon an
actual termination of Continuous Service or upon the entity for which the
Grantee provides services ceasing to be a Related Entity. Continuous Service
shall not be considered interrupted in the case of (i) any approved leave of
absence, (ii) transfers among the Company, any Related Entity, or any successor,
in any capacity of Employee, Director or Consultant, or (iii) any change in
status as long as the individual remains in the service of the Company or a
Related Entity in any capacity of Employee, Director or Consultant (except as
otherwise provided in the Award Agreement). An approved leave of absence shall
include sick leave, military leave, or any other authorized personal leave. For
purposes of each Incentive Stock Option granted under the Plan, if such leave
exceeds three (3) months, and reemployment upon expiration of such leave is not
guaranteed by statute or contract, then the Incentive Stock Option shall be
treated as a Non-Qualified Stock Option on the day three (3) months and one (1)
day following the expiration of such three (3) month period.

              (r)    "CORPORATE TRANSACTION" means any of the following
transactions, provided, however, that the Administrator shall determine under
parts (iv) and (v) whether multiple transactions are related, and its
determination shall be final, binding and conclusive:

                     (i)    a merger or consolidation in which the Company is
not the surviving entity, except for a transaction the principal purpose of
which is to change the state in which the Company is incorporated;

                     (ii)   the sale, transfer or other disposition of all or
substantially all of the assets of the Company;

                     (iii)  the complete liquidation or dissolution of the
Company;

                     (iv)   any reverse merger or series of related transactions
culminating in a reverse merger (including, but not limited to, a tender offer
followed by a reverse merger) in which the Company is the surviving entity but
(A) the shares of Common Stock outstanding immediately prior to such merger are
converted or exchanged by virtue of the merger into other property, whether in
the form of securities, cash or otherwise, or (B) in which securities possessing
more than forty percent (40%) of the total combined voting power of the
Company's outstanding securities are transferred to a person or persons
different from those who held such securities immediately prior to such merger
or the initial transaction culminating in such merger, but excluding any such
transaction or series of related transactions that the Administrator determines
shall not be a Corporate Transaction; or

                     (v)    acquisition in a single or series of related
transactions by any person or related group of persons (other than the Company
or by a Company-sponsored employee benefit plan) of beneficial ownership (within
the meaning of Rule 13d-3 of the

                                       3
<PAGE>

Exchange Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities but
excluding any such transaction or series of related transactions that the
Administrator determines shall not be a Corporate Transaction.

              (s)    "COVERED EMPLOYEE" means an Employee who is a "covered
employee" under Section 162(m)(3) of the Code.

              (t)    "DIRECTOR" means a member of the Board or the board of
directors of any Related Entity.

              (u)    "DISABILITY" means as defined under the long-term
disability policy of the Company or the Related Entity to which the Grantee
provides services regardless of whether the Grantee is covered by such policy.
If the Company or the Related Entity to which the Grantee provides service does
not have a long-term disability plan in place, "Disability" means that a Grantee
is unable to carry out the responsibilities and functions of the position held
by the Grantee by reason of any medically determinable physical or mental
impairment for a period of not less than ninety (90) consecutive days. A Grantee
will not be considered to have incurred a Disability unless he or she furnishes
proof of such impairment sufficient to satisfy the Administrator in its
discretion.

              (v)    "DIVIDEND EQUIVALENT RIGHT" means a right entitling the
Grantee to compensation measured by dividends paid with respect to Common Stock.

              (w)    "EMPLOYEE" means any person, including an Officer or
Director, who is in the employ of the Company or any Related Entity, subject to
the control and direction of the Company or any Related Entity as to both the
work to be performed and the manner and method of performance. The payment of a
director's fee by the Company or a Related Entity shall not be sufficient to
constitute "employment" by the Company.

              (x)    "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.

              (y)    "FAIR MARKET VALUE" means, as of any date, the value of
Common Stock determined as follows:

                     (i)    If the Common Stock is listed on one or more
established stock exchanges or national market systems, including without
limitation The Nasdaq National Market or The Nasdaq SmallCap Market of The
Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on the
principal exchange or system on which the Common Stock is listed (as determined
by the Administrator) on the date of determination (or, if no closing sales
price or closing bid was reported on that date, as applicable, on the last
trading date such closing sales price or closing bid was reported), as reported
in The Wall Street Journal or such other source as the Administrator deems
reliable;

                     (ii)   If the Common Stock is regularly quoted on an
automated quotation system (including the OTC Bulletin Board) or by a recognized
securities dealer, its Fair Market Value shall be the closing sales price for
such stock as quoted on such system or by

                                       4
<PAGE>

such securities dealer on the date of determination, but if selling prices are
not reported, the Fair Market Value of a share of Common Stock shall be the mean
between the high bid and low asked prices for the Common Stock on the date of
determination (or, if no such prices were reported on that date, on the last
date such prices were reported), as reported in The Wall Street Journal or such
other source as the Administrator deems reliable; or

                     (iii)  In the absence of an established market for the
Common Stock of the type described in (i) and (ii), above, the Fair Market Value
thereof shall be determined by the Administrator in good faith.

              (z)    "GRANTEE" means an Employee, Director or Consultant who
receives an Award under the Plan.

              (aa)   "IMMEDIATE FAMILY" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
Grantee's household (other than a tenant or employee), a trust in which these
persons (or the Grantee) have more than fifty percent (50%) of the beneficial
interest, a foundation in which these persons (or the Grantee) control the
management of assets, and any other entity in which these persons (or the
Grantee) own more than fifty percent (50%) of the voting interests.

              (bb)   "INCENTIVE STOCK OPTION" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code

              (cc)    "NON-QUALIFIED STOCK OPTION" means an Option not intended
to qualify as an Incentive Stock Option.

              (dd)   "OFFICER" means a person who is an officer of the Company
or a Related Entity within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder.

              (ee)   "OPTION" means an option to purchase Shares pursuant to an
Award Agreement granted under the Plan.

              (ff)   "PARENT" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.

              (gg)   "PERFORMANCE-BASED COMPENSATION" means compensation
qualifying as "performance-based compensation" under Section 162(m) of the Code.

              (hh)   "PLAN" means this 2005 U.S. Stock Incentive Plan.

              (ii)   "REGISTRATION DATE" means the first to occur of (i) the
closing of the first sale to the general public pursuant to a registration
statement filed with and declared effective by the Securities and Exchange
Commission under the Securities Act of 1933, as amended, of (A) the Common Stock
or (B) the same class of securities of a successor corporation (or its Parent)
issued pursuant to a Corporate Transaction in exchange for or in substitution of
the

                                       5
<PAGE>

Common Stock; and (ii) in the event of a Corporate Transaction, the date of the
consummation of the Corporate Transaction if the same class of securities of the
successor corporation (or its Parent) issuable in such Corporate Transaction
shall have been sold to the general public pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended, on or prior to the date of
consummation of such Corporate Transaction.

              (jj)   "RELATED ENTITY" means any Parent or Subsidiary of the
Company and any business, corporation, partnership, limited liability company or
other entity in which the Company or a Parent or a Subsidiary of the Company
holds a substantial ownership interest, directly or indirectly.

              (kk)   "REPLACED" means that pursuant to a Corporate Transaction
the Award is replaced with a comparable stock award or a cash incentive program
of the Company, the successor entity (if applicable) or Parent of either of them
which preserves the compensation element of such Award existing at the time of
the Corporate Transaction and provides for subsequent payout in accordance with
the same (or a more favorable) vesting schedule applicable to such Award. The
determination of Award comparability shall be made by the Administrator and its
determination shall be final, binding and conclusive.

              (ll)   "RESTRICTED STOCK" means Shares issued under the Plan to
the Grantee for such consideration, if any, and subject to such restrictions on
transfer, rights of first refusal, repurchase provisions, forfeiture provisions,
and other terms and conditions as established by the Administrator.

              (mm)   "RESTRICTED STOCK UNITS" means an Award which may be earned
in whole or in part upon the passage of time or the attainment of performance
criteria established by the Administrator and which may be settled for cash,
Shares or other securities or a combination of cash, Shares or other securities
as established by the Administrator.

              (nn)   "RULE 16B-3" means Rule 16b-3 promulgated under the
Exchange Act or any successor thereto.

              (oo)   "SAR" means a stock appreciation right entitling the
Grantee to Shares or cash compensation, as established by the Administrator,
measured by appreciation in the value of Common Stock.

              (pp)   "SHARE" means a share of the Common Stock.

              (qq) "Sub-Plan" means the rules or procedures adopted by the
Administrator in order for the grant of Awards to comply with the Applicable
Laws of any non-U.S. jurisdiction.

              (rr) "SUBSIDIARY" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.

       3.     STOCK SUBJECT TO THE PLAN.

              (a)    Subject to the provisions of Section 10, below, the maximum
aggregate number of Shares which may be issued pursuant to all Awards (including
Incentive Stock Options) is 5,800,000 Shares, plus an annual increase to be
added on the first business day of each calendar year beginning in 2006 equal to
the lesser of (x) 750,000 Shares, (y) four percent

                                       6
<PAGE>

(4%) of the number of Shares outstanding as of such date, or (z) a lesser number
of Shares determined by the Administrator. In addition, Dividend Equivalent
Rights shall be payable solely in cash and therefore the issuance of Dividend
Equivalent Rights shall not be deemed to reduce the maximum aggregate number of
Shares which may be issued under the Plan. The Shares to be issued pursuant to
Awards may be authorized, but unissued, or reacquired Common Stock.

              (b)    Any Shares issued subject to Options granted under the 2003
Israeli Plan shall also count against (and reduce) the maximum aggregate number
of Shares reserved for issuance under the Plan.

              (c)    Any Shares covered by an Award (or portion of an Award)
which is forfeited, canceled or expires (whether voluntarily or involuntarily)
shall be deemed not to have been issued for purposes of determining the maximum
aggregate number of Shares which may be issued under the Plan. Shares that
actually have been issued under the Plan pursuant to an Award shall not be
returned to the Plan and shall not become available for future issuance under
the Plan, except that if unvested Shares are forfeited, or repurchased by the
Company at the lower of their original purchase price or their Fair Market Value
at the time of repurchase, such Shares shall become available for future grant
under the Plan. To the extent not prohibited by the listing requirements of The
Nasdaq National Market (or other established stock exchange or national market
system on which the Common Stock is traded) and Applicable Law, any Shares
covered by an Award which are surrendered (i) in payment of the Award exercise
or purchase price or (ii) in satisfaction of tax withholding obligations
incident to the exercise of an Award shall be deemed not to have been issued for
purposes of determining the maximum number of Shares which may be issued
pursuant to all Awards under the Plan, unless otherwise determined by the
Administrator.

       4.     ADMINISTRATION OF THE PLAN.

              (a)    PLAN ADMINISTRATOR.

                     (i)    ADMINISTRATION WITH RESPECT TO DIRECTORS AND
OFFICERS. With respect to grants of Awards to Directors or Employees who are
also Officers or Directors of the Company, the Plan shall be administered by (A)
the Board or (B) a Committee designated by the Board, which Committee shall be
constituted in such a manner as to satisfy the Applicable Laws and to permit
such grants and related transactions under the Plan to be exempt from Section
16(b) of the Exchange Act in accordance with Rule 16b-3. Once appointed, such
Committee shall continue to serve in its designated capacity until otherwise
directed by the Board.

                     (ii)   ADMINISTRATION WITH RESPECT TO CONSULTANTS AND OTHER
EMPLOYEES. With respect to grants of Awards to Employees or Consultants who are
neither Directors nor Officers of the Company, the Plan shall be administered by
(A) the Board or (B) a Committee designated by the Board, which Committee shall
be constituted in such a manner as to satisfy the Applicable Laws. Once
appointed, such Committee shall continue to serve in its designated capacity
until otherwise directed by the Board. The Board may authorize one or more
Officers to grant such Awards and may limit such authority as the Board
determines from time to time.

                                       7
<PAGE>

                     (iii)  ADMINISTRATION WITH RESPECT TO COVERED EMPLOYEES.
Notwithstanding the foregoing, as of and after the date that the exemption for
the Plan under Section 162(m) of the Code expires, as set forth in Section 18
below, grants of Awards to any Covered Employee intended to qualify as
Performance-Based Compensation shall be made only by a Committee (or
subcommittee of a Committee) which is comprised solely of two or more Directors
eligible to serve on a committee making Awards qualifying as Performance-Based
Compensation. In the case of such Awards granted to Covered Employees,
references to the "Administrator" or to a "Committee" shall be deemed to be
references to such Committee or subcommittee.

                     (iv)   ADMINISTRATION ERRORS. In the event an Award is
granted in a manner inconsistent with the provisions of this subsection (a),
such Award shall be presumptively valid as of its grant date to the extent
permitted by the Applicable Laws.

              (b)    POWERS OF THE ADMINISTRATOR. Subject to Applicable Laws and
the provisions of the Plan (including any other powers given to the
Administrator hereunder), and except as otherwise provided by the Board, the
Administrator shall have the authority, in its discretion:

                     (i)    to select the Employees, Directors and Consultants
to whom Awards may be granted from time to time hereunder;

                     (ii)   to determine whether and to what extent Awards are
granted hereunder;

                     (iii)  to determine the number of Shares or the amount of
other consideration to be covered by each Award granted hereunder;

                     (iv)   to approve forms of Award Agreements for use under
the Plan;

                     (v)    to determine the terms and conditions of any Award
granted hereunder;

                     (vi)   to amend the terms of any outstanding Award granted
under the Plan, provided that (A) any amendment that would adversely affect the
Grantee's rights under an outstanding Award shall not be made without the
Grantee's written consent, provided, however, that an amendment or modification
that may cause an Incentive Stock Option to become a Non-Qualified Stock Option
shall not be treated as adversely affecting the rights of the Grantee, (B) the
reduction of the exercise price of any Option awarded under the Plan shall be
subject to stockholder approval and (C) canceling an Option at a time when its
exercise price exceeds the Fair Market Value of the underlying Shares, in
exchange for another Option, Restricted Stock, or other Award shall be subject
to stockholder approval, unless the cancellation and exchange occurs in
connection with a Corporate Transaction;

                     (vii)  to construe and interpret the terms of the Plan and
Awards, including without limitation, any notice of award or Award Agreement,
granted pursuant to the Plan;

                                       8
<PAGE>

                     (viii) to grant Awards to Employees, Directors and
Consultants employed outside the United States on such terms and conditions
different from those specified in the Plan as may, in the judgment of the
Administrator, be necessary or desirable to further the purpose of the Plan;

                     (ix)   to take such other action, not inconsistent with the
terms of the Plan, as the Administrator deems appropriate; and

                     (x)    to adopt rules or procedures relating to the
operation and administration of the Plan to accommodate the specific
requirements of the Applicable Law and procedures of any non-U.S. jurisdiction.
Without limiting the generality of the foregoing, the Administrator is
specifically authorized to adopt rules and procedures regarding the handling of
direct payments or other approved contributions, payment of interest, conversion
of local currency, payroll tax, income tax withholding and reporting procedures,
and the handling of documents evidencing ownership of securities that vary with
the laws of any non-U.S. jurisdiction. The Administrator may also adopt rules,
procedures, or a Sub-Plan applicable to particular Grantees and particular
Affiliates.

The express grant in the Plan of any specific power to the Administrator shall
not be construed as limiting any power or authority of the Administrator;
provided that the Administrator may not exercise any right or power reserved to
the Board. Any decision made, or action taken, by the Administrator or in
connection with the administration of this Plan shall be final, conclusive and
binding on all persons having an interest in the Plan.

              (c)    INDEMNIFICATION. In addition to such other rights of
indemnification as they may have as members of the Board or as Officers or
Employees of the Company or a Related Entity, members of the Board and any
Officers or Employees of the Company or a Related Entity to whom authority to
act for the Board, the Administrator or the Company is delegated shall be
defended and indemnified by the Company to the extent permitted by law on an
after-tax basis against all reasonable expenses, including attorneys' fees,
actually and necessarily incurred in connection with the defense of any claim,
investigation, action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan, or any Award
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by the Company) or paid by them in
satisfaction of a judgment in any such claim, investigation, action, suit or
proceeding, except in relation to matters as to which it shall be adjudged in
such claim, investigation, action, suit or proceeding that such person is liable
for gross negligence, bad faith or intentional misconduct; provided, however,
that within thirty (30) days after the institution of such claim, investigation,
action, suit or proceeding, such person shall offer to the Company, in writing,
the opportunity at the Company's expense to defend the same.

       5.     ELIGIBILITY. Awards other than Incentive Stock Options may be
granted to Employees, Directors and Consultants. Incentive Stock Options may be
granted only to Employees of the Company or a Parent or a Subsidiary of the
Company. An Employee, Director or Consultant who has been granted an Award may,
if otherwise eligible, be granted additional Awards. Awards may be granted to
such Employees, Directors or Consultants who are residing in non-U.S.
jurisdictions as the Administrator may determine from time to time.

       6.     TERMS AND CONDITIONS OF AWARDS.

              (a)    TYPES OF AWARDS. The Administrator is authorized under the
Plan to award any type of arrangement to an Employee, Director or Consultant
that is not inconsistent with the provisions of the Plan and that by its terms
involves or might involve the issuance of (i) Shares, (ii) cash or (iii) an
Option, a SAR, or similar right with a fixed or variable price related to the
Fair Market Value of the Shares and with an exercise or conversion privilege
related to the passage of time, the occurrence of one or more events, or the
satisfaction of performance criteria

                                       9
<PAGE>

or other conditions. Such awards include, without limitation, Options, SARs,
sales or bonuses of Restricted Stock, Restricted Stock Units or Dividend
Equivalent Rights, and an Award may consist of one such security or benefit, or
two (2) or more of them in any combination or alternative.

              (b)    DESIGNATION OF AWARD. Each Award shall be designated in the
Award Agreement. In the case of an Option, the Option shall be designated as
either an Incentive Stock Option or a Non-Qualified Stock Option. However,
notwithstanding such designation, an Option will qualify as an Incentive Stock
Option under the Code only to the extent the $100,000 dollar limitation of
Section 422(d) of the Code is not exceeded. The $100,000 limitation of Section
422(d) of the Code is calculated based on the aggregate Fair Market Value of the
Shares subject to Options designated as Incentive Stock Options which become
exercisable for the first time by a Grantee during any calendar year (under all
plans of the Company or any Parent or Subsidiary of the Company). For purposes
of this calculation, Incentive Stock Options shall be taken into account in the
order in which they were granted, and the Fair Market Value of the Shares shall
be determined as of the grant date of the relevant Option.

              (c)    CONDITIONS OF AWARD. Subject to the terms of the Plan, the
Administrator shall determine the provisions, terms, and conditions of each
Award including, but not limited to, the Award vesting schedule, repurchase
provisions, rights of first refusal, forfeiture provisions, form of payment
(cash, Shares, or other consideration) upon settlement of the Award, payment
contingencies, and satisfaction of any performance criteria. The performance
criteria established by the Administrator may be based on any one of, or
combination of, the following: (i) increase in share price, (ii) earnings per
share, (iii) total stockholder return, (iv) operating margin, (v) gross margin,
(vi) return on equity, (vii) return on assets, (viii) return on investment, (ix)
operating income, (x) net operating income, (xi) pre-tax profit, (xii) cash
flow, (xiii) revenue, (xiv) expenses, (xv) earnings before interest, taxes and
depreciation, (xvi) economic value added and (xvii) market share. The
performance criteria may be applicable to the Company, Related Entities and/or
any individual business units of the Company or any Related Entity. Partial
achievement of the specified criteria may result in a payment or vesting
corresponding to the degree of achievement as specified in the Award Agreement.

              (d)    ACQUISITIONS AND OTHER TRANSACTIONS. The Administrator may
issue Awards under the Plan in settlement, assumption or substitution for,
outstanding awards or obligations to grant future awards in connection with the
Company or a Related Entity acquiring another entity, an interest in another
entity or an additional interest in a Related Entity whether by merger, stock
purchase, asset purchase or other form of transaction.

              (e)    DEFERRAL OF AWARD PAYMENT. The Administrator may establish
one or more programs under the Plan to permit selected Grantees the opportunity
to elect to defer receipt of consideration upon exercise of an Award,
satisfaction of performance criteria, or other event that absent the election
would entitle the Grantee to payment or receipt of Shares or other consideration
under an Award. The Administrator may establish the election procedures, the
timing of such elections, the mechanisms for payments of, and accrual of
interest or other earnings, if any, on amounts, Shares or other consideration so
deferred, and such other terms, conditions, rules and procedures that the
Administrator deems advisable for the administration of any such deferral
program.

                                       10
<PAGE>

              (f)    SEPARATE PROGRAMS. The Administrator may establish one or
more separate programs under the Plan for the purpose of issuing particular
forms of Awards to one or more classes of Grantees on such terms and conditions
as determined by the Administrator from time to time.

              (g)    INDIVIDUAL LIMITATIONS ON AWARDS.

                     (i)    INDIVIDUAL LIMIT FOR OPTIONS AND SARS. Following the
date that the exemption from application of Section 162(m) of the Code described
in Section 18 (or any exemption having similar effect) ceases to apply to
Awards, the maximum number of Shares with respect to which Options and SARs may
be granted to any Grantee in any calendar year shall be [_________] Shares. In
connection with a Grantee's commencement of Continuous Service, a Grantee may be
granted Options and SARs for up to an additional [_________] Shares which shall
not count against the limit set forth in the previous sentence. The foregoing
limitations shall be adjusted proportionately in connection with any change in
the Company's capitalization pursuant to Section 10, below. To the extent
required by Section 162(m) of the Code or the regulations thereunder, in
applying the foregoing limitations with respect to a Grantee, if any Option or
SAR is canceled, the canceled Option or SAR shall continue to count against the
maximum number of Shares with respect to which Options and SARs may be granted
to the Grantee. For this purpose, the repricing of an Option (or in the case of
a SAR, the base amount on which the stock appreciation is calculated is reduced
to reflect a reduction in the Fair Market Value of the Common Stock) shall be
treated as the cancellation of the existing Option or SAR and the grant of a new
Option or SAR.

                     (ii)   INDIVIDUAL LIMIT FOR RESTRICTED STOCK AND RESTRICTED
STOCK UNITS. Following the date that the exemption from application of Section
162(m) of the Code described in Section 18 (or any exemption having similar
effect) ceases to apply to Awards, for awards of Restricted Stock and Restricted
Stock Units that are intended to be Performance-Based Compensation, the maximum
number of Shares with respect to which such Awards may be granted to any Grantee
in any calendar year shall be [_________] Shares. The foregoing limitation shall
be adjusted proportionately in connection with any change in the Company's
capitalization pursuant to Section 10, below.

                     (iii)  DEFERRAL. If the vesting or receipt of Shares under
an Award is deferred to a later date, any amount (whether denominated in Shares
or cash) paid in addition to the original number of Shares subject to such Award
will not be treated as an increase in the number of Shares subject to the Award
if the additional amount is based either on a reasonable rate of interest or on
one or more predetermined actual investments such that the amount payable by the
Company at the later date will be based on the actual rate of return of a
specific investment (including any decrease as well as any increase in the value
of an investment).

              (h)    EARLY EXERCISE. The Award Agreement may, but need not,
include a provision whereby the Grantee may elect at any time while an Employee,
Director or Consultant to exercise any part or all of the Award prior to full
vesting of the Award. Any unvested Shares received pursuant to such exercise may
be subject to a repurchase right in favor of the Company or a Related Entity or
to any other restriction the Administrator determines to be appropriate.

                                       11
<PAGE>

              (i)    TERM OF AWARD. The term of each Award shall be the term
stated in the Award Agreement, provided, however, that the term of an Award
shall be no more than ten (10) years from the date of grant thereof. However, in
the case of an Incentive Stock Option granted to a Grantee who, at the time the
Option is granted, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary
of the Company, the term of the Incentive Stock Option shall be five (5) years
from the date of grant thereof or such shorter term as may be provided in the
Award Agreement. Notwithstanding the foregoing, the specified term of any Award
shall not include any period for which the Grantee has elected to defer the
receipt of the Shares or cash issuable pursuant to the Award.

              (j)    TRANSFERABILITY OF AWARDS. Incentive Stock Options may not
be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Grantee, only by the Grantee. Other Awards
shall be transferable (i) by will and by the laws of descent and distribution
and (ii) during the lifetime of the Grantee, to the extent and in the manner
authorized by the Administrator by gift or pursuant to a domestic relations
order to members of the Grantee's Immediate Family. Notwithstanding the
foregoing, the Grantee may designate one or more beneficiaries of the Grantee's
Award in the event of the Grantee's death on a beneficiary designation form
provided by the Administrator.

              (k)    TIME OF GRANTING AWARDS. The date of grant of an Award
shall for all purposes be the date on which the Administrator makes the
determination to grant such Award, or such other later date as is determined by
the Administrator.

       7.     AWARD EXERCISE OR PURCHASE PRICE, CONSIDERATION AND TAXES.

              (a)    EXERCISE OR PURCHASE PRICE. The exercise or purchase
price, if any, for an Award shall be as follows:

                     (i)    In the case of an Incentive Stock Option:

                            (A)    granted to an Employee who, at the time of
the grant of such Incentive Stock Option owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary of the Company, the per Share exercise price shall be not
less than one hundred ten percent (110%) of the Fair Market Value per Share on
the date of grant; or

                            (B)    granted to any Employee other than an
Employee described in the preceding paragraph, the per Share exercise price
shall be not less than one hundred percent (100%) of the Fair Market Value per
Share on the date of grant.

                     (ii)   In the case of a Non-Qualified Stock Option, the per
Share exercise price shall be determined by the Administrator.

                     (iii)  In the case of Awards intended to qualify as
Performance-Based Compensation, the exercise or purchase price, if any, shall be
not less than one hundred percent (100%) of the Fair Market Value per Share on
the date of grant.

                                       12
<PAGE>

                     (iv)   In the case of other Awards, such price as is
determined by the Administrator.

                     (v)    Notwithstanding the foregoing provisions of this
Section 7(a), in the case of an Award issued pursuant to Section 6(d), above,
the exercise or purchase price for the Award shall be determined in accordance
with the provisions of the relevant instrument evidencing the agreement to issue
such Award.

              (b)    CONSIDERATION. Subject to Applicable Laws, the
consideration to be paid for the Shares to be issued upon exercise or purchase
of an Award including the method of payment, shall be determined by the
Administrator. In addition to any other types of consideration the Administrator
may determine, the Administrator is authorized to accept as consideration for
Shares issued under the Plan the following, provided that the portion of the
consideration equal to the par value of the Shares must be paid in cash or other
legal consideration permitted by the Delaware General Corporation Law:

                     (i)    cash;

                     (ii)   check;

                     (iii)  if the exercise or purchase occurs on or after the
Registration Date, surrender of Shares or delivery of a properly executed form
of attestation of ownership of Shares as the Administrator may require which
have a Fair Market Value on the date of surrender or attestation equal to the
aggregate exercise price of the Shares as to which said Award shall be
exercised, provided, however, that Shares acquired under the Plan or any other
equity compensation plan or agreement of the Company must have been held by the
Grantee for a period of more than six (6) months (and not used for another Award
exercise by attestation during such period);

                     (iv)   with respect to Options, if the exercise occurs on
or after the Registration Date, payment through a broker-dealer sale and
remittance procedure pursuant to which the Grantee (A) shall provide written
instructions to a Company designated brokerage firm to effect the immediate sale
of some or all of the purchased Shares and remit to the Company sufficient funds
to cover the aggregate exercise price payable for the purchased Shares and
any applicable taxes, fees, and costs associated with the exercise of the
Options; and (B) shall provide written directives to the Company to deliver the
certificates for the purchased Shares directly to such brokerage firm in order
to complete the sale transaction; or

                     (v)    any combination of the foregoing methods of payment.

The Administrator may at any time or from time to time, by adoption of or by
amendment to the standard forms of Award Agreement described in Section
4(b)(iv), or by other means, grant Awards which do not permit all of the
foregoing forms of consideration to be used in payment for the Shares or which
otherwise restrict one or more forms of consideration, or grant Awards which
require that one or more of the foregoing forms of consideration be used in
payment for the Shares.

              (c)    TAXES. No Shares shall be delivered under the Plan to any
Grantee or other person until such Grantee or other person has made arrangements
acceptable to the Administrator for the satisfaction of any non-U.S., federal,
state, or local income and employment tax withholding obligations, including,
without limitation, obligations incident to

                                       13
<PAGE>

the receipt of Shares. Upon exercise or vesting of an Award the Company shall
withhold or collect from Grantee an amount sufficient to satisfy such tax
obligations, including, but not limited too, by surrender of the whole number of
Shares covered by the Award sufficient to satisfy the minimum applicable tax
withholding obligations incident to the exercise or vesting of an Award.

       8.     EXERCISE OF AWARD.

              (a)    PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER.

                     (i) Any Award granted hereunder shall be exercisable at
such times and under such conditions as determined by the Administrator under
the terms of the Plan and specified in the Award Agreement.

                     (ii)   An Award shall be deemed to be exercised when
written notice of such exercise has been given to the Company in accordance with
the terms of the Award by the person entitled to exercise the Award and full
payment for the Shares with respect to which the Award is exercised has been
made, including, to the extent selected, use of the broker-dealer sale and
remittance procedure to pay the purchase price as provided in Section 7(b)(iv).

              (b)    EXERCISE OF AWARD FOLLOWING TERMINATION OF CONTINUOUS
SERVICE.

                     (i)    An Award may not be exercised after the termination
date of such Award set forth in the Award Agreement and may be exercised
following the termination of a Grantee's Continuous Service only to the extent
provided in the Award Agreement.

                     (ii)   Where the Award Agreement permits a Grantee to
exercise an Award following the termination of the Grantee's Continuous Service
for a specified period, the Award shall terminate to the extent not exercised on
the last day of the specified period or the last day of the original term of the
Award, whichever occurs first.

                     (iii)  Any Award designated as an Incentive Stock Option to
the extent not exercised within the time permitted by law for the exercise of
Incentive Stock Options following the termination of a Grantee's Continuous
Service shall convert automatically to a Non-Qualified Stock Option and
thereafter shall be exercisable as such to the extent exercisable by its terms
for the period specified in the Award Agreement.

       9.     CONDITIONS UPON ISSUANCE OF SHARES.

              (a)    Shares shall not be issued pursuant to the exercise of an
Award unless the exercise of such Award and the issuance and delivery of such
Shares pursuant thereto shall comply with all Applicable Laws, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.

              (b)    As a condition to the exercise of an Award, the Company may
require the person exercising such Award to represent and warrant at the time of
any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or

                                       14
<PAGE>

distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required by any Applicable Laws.

       10.    ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any
required action by the stockholders of the Company, the number of Shares covered
by each outstanding Award, and the number of Shares which have been authorized
for issuance under the Plan but as to which no Awards have yet been granted or
which have been returned to the Plan, the exercise or purchase price of each
such outstanding Award, the maximum number of Shares with respect to which
Awards may be granted to any Grantee in any calendar year, as well as any other
terms that the Administrator determines require adjustment shall be
proportionately adjusted for (i) any increase or decrease in the number of
issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Shares, or similar transaction affecting
the Shares, (ii) any other increase or decrease in the number of issued Shares
effected without receipt of consideration by the Company, or (iii) as the
Administrator may determine in its discretion, any other transaction with
respect to Common Stock including a corporate merger, consolidation, acquisition
of property or stock, separation (including a spin-off or other distribution of
stock or property), reorganization, liquidation (whether partial or complete) or
any similar transaction; provided, however that conversion of any convertible
securities of the Company shall not be deemed to have been "effected without
receipt of consideration." In the event of any distribution of cash or other
assets to stockholders other than a normal cash dividend, the Administrator may
also, in its discretion, make adjustments described in (i)-(iii) of this Section
10 or substitute, exchange or grant Awards with respect to the shares of a
Related Entity (collectively "adjustments"). In determining adjustments to be
made under this Section 10, the Administrator may take into account such factors
as it deems appropriate, including (x) the restrictions of Applicable Law, (y)
the potential tax, accounting or other consequences of an adjustment and (z) the
possibility that some Grantees might receive an adjustment and a distribution or
other unintended benefit, and in light of such factors or circumstances may make
adjustments that are not uniform or proportionate among outstanding Awards,
modify vesting dates, defer the delivery of stock certificates or make other
equitable adjustments. Any such adjustments to outstanding Awards will be
effected in a manner that precludes the material enlargement of rights and
benefits under such Awards. Adjustments, if any, and any determinations or
interpretations, including any determination of whether a distribution is other
than a normal cash dividend, shall be made by the Administrator and its
determination shall be final, binding and conclusive. In connection with the
foregoing adjustments, the Administrator may, in its discretion, prohibit the
exercise of Awards during certain periods of time. Except as the Administrator
determines, no issuance by the Company of shares of any class, or securities
convertible into shares of any class, shall affect, and no adjustment by reason
hereof shall be made with respect to, the number or price of Shares subject to
an Award.

       11.    CORPORATE TRANSACTIONS AND CHANGES IN CONTROL.

              (a)    TERMINATION OF AWARD TO EXTENT NOT ASSUMED IN CORPORATE
TRANSACTION. Effective upon the consummation of a Corporate Transaction, all
outstanding Awards under the Plan shall terminate. However, all such Awards
shall not terminate to the extent they are Assumed in connection with the
Corporate Transaction.

                                       15
<PAGE>

              (b)    ACCELERATION OF AWARD UPON CORPORATE TRANSACTION OR CHANGE
IN CONTROL. Except as provided otherwise in an individual Award Agreement, in
the event of any Corporate Transaction or Change in Control, there will not be
any acceleration of vesting or exercisability of any Award.

       12.    EFFECTIVE DATE AND TERM OF PLAN. The Plan shall become effective
upon the earlier to occur of its adoption by the Board or its approval by the
stockholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated. Subject to Section 17, below, and Applicable
Laws, Awards may be granted under the Plan upon its becoming effective.

       13.    AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN.

              (a)    The Board may at any time amend, suspend or terminate the
Plan; provided, however, that no such amendment shall be made without the
approval of the Company's stockholders to the extent such approval is required
by Applicable Laws, or if such amendment would lessen the stockholder approval
requirements of Section 4(b)(vi) or this Section 13(a).

              (b)    No Award may be granted during any suspension of the Plan
or after termination of the Plan.

              (c)    No suspension or termination of the Plan (including
termination of the Plan under Section 12, above) shall adversely affect any
rights under Awards already granted to a Grantee.

       14.    RESERVATION OF SHARES.

              (a)    The Company, during the term of the Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.

              (b)    The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.

       15.    NO EFFECT ON TERMS OF EMPLOYMENT/CONSULTING RELATIONSHIP. The Plan
shall not confer upon any Grantee any right with respect to the Grantee's
Continuous Service, nor shall it interfere in any way with his or her right or
the right of the Company or any Related Entity to terminate the Grantee's
Continuous Service at any time, with or without Cause, and with or without
notice. The ability of the Company or any Related Entity to terminate the
employment of a Grantee who is employed at will is in no way affected by its
determination that the Grantee's Continuous Service has been terminated for
Cause for the purposes of this Plan.

       16.    NO EFFECT ON RETIREMENT AND OTHER BENEFIT PLANS. Except as
specifically provided in a retirement or other benefit plan of the Company or a
Related Entity, Awards shall not be

                                       16
<PAGE>

deemed compensation for purposes of computing benefits or contributions under
any retirement plan of the Company or a Related Entity, and shall not affect any
benefits under any other benefit plan of any kind or any benefit plan
subsequently instituted under which the availability or amount of benefits is
related to level of compensation. The Plan is not a "Retirement Plan" or
"Welfare Plan" under the Employee Retirement Income Security Act of 1974, as
amended.

       17.    STOCKHOLDER APPROVAL. The grant of Incentive Stock Options under
the Plan shall be subject to approval by the stockholders of the Company within
twelve (12) months before or after the date the Plan is adopted excluding
Incentive Stock Options issued in substitution for outstanding Incentive Stock
Options pursuant to Section 424(a) of the Code. Such stockholder approval shall
be obtained in the degree and manner required under Applicable Laws. The
Administrator may grant Incentive Stock Options under the Plan prior to approval
by the stockholders, but until such approval is obtained, no such Incentive
Stock Option shall be exercisable. In the event that stockholder approval is not
obtained within the twelve (12) month period provided above, all Incentive Stock
Options previously granted under the Plan shall be exercisable as Non-Qualified
Stock Options.

       18.    EFFECT OF SECTION 162(M) OF THE CODE. The Plan, and all Awards
issued thereunder, are intended to be exempt from the application of Section
162(m) of the Code, which restricts under certain circumstances the Federal
income tax deduction for compensation paid by a public company to named
executives in excess of $1 million per year. The exemption is based on Treasury
Regulation Section 1.162-27(f), in the form existing on the effective date of
the Plan, with the understanding that such regulation generally exempts from the
application of Section 162(m) of the Code compensation paid pursuant to a plan
that existed before a company becomes publicly held. Under such Treasury
Regulation, this exemption is available to the Plan for the duration of the
period that lasts until the earlier of (i) the expiration of the Plan, (ii) the
material modification of the Plan, (iii) the exhaustion of the maximum number of
shares of Common Stock available for Awards under the Plan, as set forth in
Section 3(a), (iv) the first meeting of stockholders at which directors are to
be elected that occurs after the close of the third calendar year following the
calendar year in which the Company first becomes subject to the reporting
obligations of Section 12 of the Exchange Act, or (v) such other date required
by Section 162(m) of the Code and the rules and regulations promulgated
thereunder. To the extent that the Administrator determines as of the date of
grant of an Award that (i) the Award is intended to qualify as Performance-Based
Compensation and (ii) the exemption described above is no longer available with
respect to such Award, such Award shall not be effective until any stockholder
approval required under Section 162(m) of the Code has been obtained.

       19.    UNFUNDED OBLIGATION. Grantees shall have the status of general
unsecured creditors of the Company. Any amounts payable to Grantees pursuant to
the Plan shall be unfunded and unsecured obligations for all purposes,
including, without limitation, Title I of the Employee Retirement Income
Security Act of 1974, as amended. Neither the Company nor any Related Entity
shall be required to segregate any monies from its general funds, or to create
any trusts, or establish any special accounts with respect to such obligations.
The Company shall retain at all times beneficial ownership of any investments,
including trust investments, which the Company may make to fulfill its payment
obligations hereunder. Any investments or the creation or maintenance of any
trust or any Grantee account shall not create or constitute a trust or fiduciary
relationship between the Administrator, the Company or any Related Entity and a

                                       17
<PAGE>

Grantee, or otherwise create any vested or beneficial interest in any Grantee or
the Grantee's creditors in any assets of the Company or a Related Entity. The
Grantees shall have no claim against the Company or any Related Entity for any
changes in the value of any assets that may be invested or reinvested by the
Company with respect to the Plan.

       20.    CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular. Use
of the term "or" is not intended to be exclusive, unless the context clearly
requires otherwise.

                                       18

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