Document:

S-8

Exhibit 4.1 

ECTEL LTD. 

2003 SHARE OPTION PLAN 

     A. NAME AND PURPOSE 

         1.       
          Name: This plan, as amended from time to time, shall be known as
          “ECtel Ltd. 2003 Share Option Plan” (the “Plan”). 

         2.       
          Purpose: The purpose and intent of the Plan is to provide incentives to
          employees, former employees, directors, consultants and contractors (both
          Israeli and non-Israeli) of ECtel Ltd., a company organized under the laws of
          the State of Israel, or any subsidiary thereof (the “Company”), by
          providing them with opportunities to purchase Ordinary Shares, nominal value of
          0.04 New Israeli Shekel each of the Company (the “Shares”), pursuant
          to a plan approved by the Board of Directors of the Company (the
          “Board”) which is designed to allow them to benefit from the
          provisions of either Section 102 or Section 3(9) of the Israeli Income Tax
          Ordinance [New Version] 1961 (the “Ordinance”), as applicable, and the
          rules and regulations promulgated thereunder or any other tax ruling provided by
          the tax authorities to the Company, or with respect to non-Israeli Grantees (as
          such term is defined below), the applicable laws relevant in the country of
          residency of such Grantees . 

     B. GENERAL TERMS AND CONDITIONS OF THE PLAN 

    3.        Administration:  

		    3.1        The
Board may appoint a Share Incentive Committee, which will consist of such number of
Directors of the Company, as may be fixed from time to time by the Board. The Board shall
appoint the members of the committee, may from time to time remove members from, or add
members to, the Committee and shall fill vacancies in the Committee however caused. The
Plan will be administered by the Share Incentive Committee, or by the Board (including,
but not limited to, actions which the Share Incentive Committee is not permitted to take
according to Section112 of the Companies Law, 1999 (the “Companies Law”))
(collectively – the “Committee”).  

		    3.2        The
Committee shall select one of its members as its Chairman and shall hold its meetings at
such times and places, as it shall determine. Actions taken by a majority of the members
of the Committee, at a meeting at which a majority of its members is present, or acts
reduced to, or approved in, writing by all members of the Committee, shall be the valid
acts of the Committee. The Committee may appoint a Secretary, who 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        Subject
to the general terms and conditions of this Plan and applicable law, the Committee shall
have the full authority in its discretion, from time to time and at any time to determine
(i) the persons (“Grantees”) to whom options to purchase Shares (the “Options”)
shall be granted, (ii) the number of Shares subject to each Option, (iii) the
time or times at which the same shall be granted, (iv) the schedule and conditions
on which such Options may be exercised and on which such Shares shall be paid for, (v) rules
and provisions as may be necessary or appropriate to permit eligible Grantees who are not
Israeli residents to participate in the Plan and/or to receive preferential tax treatment
in their country of residence, with respect to the Options granted hereunder, and/or (vi)
any other matter which is necessary or desirable for, or incidental to, the
administration of the Plan.  

		    3.4        Subject
to the general terms and conditions of the Plan and the Ordinance, the Committee shall
have the full authority in its discretion, from time to time and at any time, to
determine:  

		    (a)        with
respect to the grant of 102 Options (as defined in Section 5.1(a)(i) below)
          – whether the Company shall elect the “Ordinary Income Route”          under
Section 102(b)(1) of the Ordinance (the “Ordinary Income Route”)           or
the “Capital Gains Route” under Section 102(b)(2) of the Ordinance
          (the “Capital Gains Route”) (each of the Ordinary Income Route or the
          Capital Gains Route – a “Taxation Route”) for the grant of 102
          Options, and the identity of the trustee who shall be granted such 102 Options
          in accordance with the provisions of this Plan and the then prevailing Taxation
          Route.  

	 	        In
the event the Committee determines that the Company shall elect one of the Taxation
Routes for the grant of 102 Options, the Company shall be entitled to change such
election only following the lapse of one year from the end of the tax year in which 102
Options are first granted under the then prevailing Taxation Route; and  

		    (b)        with
respect to the grant of 3(9) Options (as defined in Section 5.1(a)(ii)           below)
– whether or not 3(9) Options shall be granted to a trustee in           accordance
with the terms and conditions of this Plan, and the identity of the           trustee who
shall be granted such 3(9) Options in accordance with the provisions           of this
Plan.  

		    3.5        Notwithstanding
 the  aforesaid,  the Committee may, from time to time and at any time, grant 102 Options
that will not be subject to a Taxation Route, as detailed in Section 102(c) of the
Ordinance (“102(c) Options”).  

		    3.6        The
Committee may, from time to time, adopt such rules and regulations for carrying out the
Plan as it may deem necessary. No member of the Board or of the Committee shall be liable
for any act or determination made in good faith with respect to the Plan or any Option
granted thereunder.  

		    3.7        The
interpretation and construction by the Committee of any provision of the Plan or of any
Option thereunder shall be final and conclusive and binding on all parties who have an
interest in the Plan or any Option or Share issuance thereunder unless otherwise
determined by the Board.  

    4.        Eligible
Grantees: 

		    4.1        The
Committee, at its discretion, may grant Options to any employee, former employee,
director, consultant or contractor of the Company. Anything in this Plan to the contrary
notwithstanding, all grants of Options to office holders (i.e., “Nosei Misra”,
as such term is defined in the Companies Law) shall be authorized and implemented only in
accordance with the provisions of the Companies Law.  

		    4.2        The
grant of an Option to a Grantee hereunder, shall neither entitle such Grantee to
participate, nor disqualify him from participating, in any other grant of options
pursuant to this Plan or any other share option plan of the Company.  

         5.       
          Grant of Options, Issuance of Shares, Dividends and Shareholder Rights: 

		                      5.1        Grant
of Options and Issuance of Shares .

		    (a)        Subject
to the provisions of the Ordinance and applicable law,  

		    (i)        all
grants of Options to employees, directors and office holders of the
          Company, other than to a Controlling Shareholder of the Company (i.e.,
          “Baal Shlita”, as such term is defined in the Ordinance), shall be
          made only pursuant to the provisions of Section 102 of the Ordinance, the
          Income Tax Rules (Tax Relief in Issuance of Shares to Employees), 2003
          (“102 Rules”) and any other regulations, rulings, procedures or
          clarifications promulgated thereunder (“102 Options”), or any other
          section of the Income Tax Ordinance that will be relevant for such issuance in
          the future; and  

		    (ii)        all
grants of Options to consultants, contractors, former employees or           Controlling
Shareholders of the Company shall be made only pursuant to the           provisions of
Section 3(9) of the Ordinance and the rules and regulations           promulgated
thereunder (“3(9) Options”), or any other section of the           Ordinance
that will be relevant for such issuance in the future.  

		    (iii)        Notwithstanding
the aforesaid in Sections 5.1(a)(i) and 5.1 (a)(ii), the           Committee, at it
discretion, may grant Options to any employee, former employee,           director,
consultant or contractor of the Company pursuant to the provisions of           any tax
ruling provided to the Company with respect to such Options by the           Israeli
Commissioner of Income Tax.  

		    (b)               Subject
to Sections 7.1 and 7.2 hereof, the effective date of the grant of an           Option
(the “Date of Grant”) shall be the date the Committee resolves           to
grant such Option, unless specified otherwise by the Committee in its
          determination relating to the award of such Option. The Committee shall
promptly           give the Grantee written notice (the “Notice of Grant”) of
the grant           of an Option.  

		    (c)        Trust.
In the event Options are granted under the Plan to a trustee           designated by the
Committee in accordance with the provisions of Section 3.4           hereof and, with
respect to 102 Options, approved by the Israeli Commissioner of           Income Tax (the
“Trustee”), the Trustee shall hold each such Option           and the Shares
issued upon exercise thereof in trust (the “Trust”) for           the benefit
of the Grantee in respect of whom such Option was granted (the           “Beneficial
Grantee”).  

	 	        In
accordance with Section 102, the tax benefits afforded to 102 Options (and any Shares
received upon exercise thereof) in accordance with the Ordinary Income Route or Capital
Gains Route, as applicable, shall be contingent upon the Trustee holding such 102 Options
for a period of at least (i) one year from the end of the tax year in which the 102
Options are granted, if the Company elects the Ordinary Income Route, or (ii) two years
from the end of the tax year in which the 102 Options are granted, if the Company elects
the Capital Gains Route, or (iii) such other period as shall be approved by the Israeli
Commissioner of Income Tax (collectively the “Trust Period”).  

With respect to 102 Options granted
to the Trustee, the following shall apply: 

		    (i)        A
Grantee granted 102 Options shall not be entitled to sell the Shares received
          upon exercise thereof (the “Exercised Shares”) or to transfer such
          Exercised Shares (or such 102 Options) from the Trust prior to the lapse of the
          Trust Period;  

		    (ii)        Any
and all rights issued in respect of the Exercised Shares, including bonus
          shares but excluding cash dividends (“Rights”(, shall be issued to
the           Trustee and held thereby until the lapse of the Trust Period, and such
Rights           shall be subject to the Taxation Route which is applicable to such
Exercised           Shares.  

		    (iii)        Notwithstanding
the aforesaid, Exercised Shares or Rights may be sold or           transferred, and the
Trustee may release such Exercised Shares (or 102 Options)           or Rights from
Trust, prior to the lapse of the Trust Period, provided however,           that tax is
paid or withheld in accordance with Section 102(b)(4) of the           Ordinance and
Section 7 of the 102 Rules.  

		    (iv)        All
certificates representing Shares issued to the Trustee under the Plan shall           be
deposited with the Trustee, and shall be held by the Trustee until such time
          that such Shares are released from the Trust as herein provided.  

		    (d)        Subject
to the terms hereof, at any time after the Options have vested, with           respect to
any Options or Shares the following shall apply: Upon the written           request of
any Beneficial Grantee, the Trustee shall release from the Trust the           Options
granted, and/or the Shares issued, on behalf of such Beneficial Grantee,           by
executing and delivering to the Company such instrument(s) as the Company may
          require, giving due notice of such release to such Beneficial Grantee, provided,
however, that the Trustee shall not so release any such           Options and/or
Shares to such Beneficial Grantee unless the latter, prior to, or           concurrently
with, such release, provides the Trustee with evidence,           satisfactory in form
and substance to the Trustee, that all taxes, if any,           required to be paid upon
such release have, in fact, been paid.  

		    5.2        Guarantee.
In the event a 102(c) Option is granted to a Grantee who is an employee at the time of
such grant, if the Grantee’s employment is terminated, for any reason, such Grantee
shall provide the Company with a guarantee or collateral securing the payment of all
taxes required to be paid upon the sale of the Exercised Shares received upon exercise of
such 102(c) Option.  

		    5.3        Dividend.
All Shares issued upon the exercise of Options granted under the Plan shall entitle the
Grantee thereof to receive dividends with respect thereto. For so long as Shares issued
to the Trustee on behalf of a Beneficial Grantee are held in the Trust, the dividends
paid or distributed with respect thereto shall be remitted to the Trustee for the benefit
of such Beneficial Grantee or distributed directly to such Beneficial Grantee, as shall
be solely determined by the Committee.  

		    5.4        Shareholder
Rights. The holder of an Option shall have no shareholder rights with respect to the
Shares subject to such Option until such person shall have exercised the Option, paid the
exercise price and become the record holder of the purchased Shares. Subject to the
provisions of the Plan and the provisions of the Articles of Association of the Company,
the Exercised Shares shall entitle the Grantee or Beneficial Grantee thereof to full
shareholder rights (via the Trustee, if in Trust), including voting and dividend rights,
with respect to such Exercised Shares.  

    6.        Reserved
Shares: The total number of Shares that may be subject to           Options granted
under the Plan shall not exceed 1,700,000 in the aggregate,           subject to
adjustments as provided in Section 11 hereof. Without derogating           from the
foregoing, the Committee shall have full authority in its discretion to
          determine that the Company may issue, for the purposes of the Plan, previously
          issued Shares that are held by the Company, from time to time, as Dormant
Shares           (as such term is defined in the Companies Law). All Shares under the
Plan, in           respect of which the right hereunder of a Grantee to purchase the same
shall,           for any reason, terminate, expire or otherwise cease to exist, shall
again be           available for grant through Options under the Plan.  

     7.        Grant
of Options:  

		    7.1        The
implementation of the Plan and the granting of any Option under the Plan shall be subject
to the Company’s procurement of all approvals and permits required by applicable law
or regulatory authorities having jurisdiction over the Plan, the Options granted under it
and the Shares issued pursuant to it.  

		    7.2        The
Notice of Grant shall state, inter alia, the number of Shares subject to each
Option, the vesting schedule, the dates when the Options may be exercised, the exercise
price, whether the Options granted thereby are 102 Options or 3(9) Options or other
Options, and such other terms and conditions as the Committee at its discretion may
prescribe, provided that they are consistent with this Plan. Each Notice of Grant
evidencing a 102 Option shall, in addition, be subject to the provisions of the
provisions of the Ordinance applicable to such Options.  

		    7.3        Vesting.
Without derogating from the rights and powers of the Committee under Section 7.3
hereof, unless otherwise specified by the Committee, the Options shall be for a term of
ten (10) years. The Vesting Period pursuant to which the Options shall vest shall be
determined by the Committee from time to time.  

	 	        "Vesting
 Period"  of an  Option  means,  for the  purpose  of the  Plan  and  its  related
instruments, the period between the Adoption Date (the “AdoptionDate” for
the purpose of this Plan means the Date of Grant or any other date determined by the
Committee for a given grant of Options) and the date on which the holder of an Option may
exercise the rights awarded pursuant to the terms of the Option.  

		    7.4        Acceleration
of Vesting. The Committee shall have full authority to determine any provisions
regarding the acceleration of the Vesting Period of any Option or the cancellation of all
or any portion of any outstanding restrictions with respect to any Option or Share upon
certain events or occurrences, and to include such provisions in the Notice of Grant on
such terms and conditions as the Committee shall deem appropriate.  

		    7.5        Repricing.
Subject to applicable law, the Committee shall have full authority to, at any time and
from time to time, without the approval of the Shareholders of the Company, (i) grant in
its discretion to the holder of an outstanding Option, in exchange for the surrender and
cancellation of such Option, a new Option having an exercise price lower than provided in
the Option so surrendered and canceled and containing such other terms and conditions as
the Committee may prescribe in accordance with the provisions of the Plan, or (ii)
effectuate a decrease in the Exercise Price (see Section 8 below) of outstanding Options.
At the full discretion of the Committee such actions may be brought before the
shareholders of the Company for their approval.  

    8.        Exercise
Price: The exercise price per Share subject to each Option shall           be
determined by the Committee in its sole and absolute discretion, subject to
          applicable law.  

      9.        Exercise
of Options:  

		    9.1        Options
shall be exercisable pursuant to the terms under which they were awarded and subject to
the terms and conditions of the Plan.  

		    9.2        The
exercise of an Option shall be made by a written notice of exercise (the “Notice of
Exercise”) delivered by the Grantee (or, with respect to Options held in the Trust,
by the Trustee upon receipt of written instructions from the Beneficial Grantee) to the
Company at its principal executive office, specifying the number of Shares to be
purchased and accompanied by the payment therefor, and containing such other terms and
conditions as the Committee shall prescribe from time to time.  

		    9.3        Anything
herein to the contrary notwithstanding, but without derogating from the provisions of
Section 10 hereof, if any Option has not been exercised and the Shares subject
thereto not paid for within ten (10) years after the Date of Grant (or any shorter period
set forth in the Notice of Grant), such Option and the right to acquire such Shares shall
terminate, all interests and rights of the Grantee in and to the same shall ipso facto
expire, and, in the event that in connection therewith any Options are still held in the
Trust as aforesaid, the Trust with respect thereto shall ipso facto expire, and the
Shares subject to such Options shall again be available for grant through Options under
the Plan, as provided for in Section 6 herein.  

		    9.4        Each
payment for Shares shall be in respect of a whole number of Shares, and shall be effected
in cash or by a bank’s check payable to the order of the Company, or such other
method of payment acceptable to the Company.  

     10.        Termination
of Employment:  

		    10.1        Employees.
In the event that a Grantee who was an employee of the Company on the Date of Grant of
any Options to him or her ceases, for any reason, to be employed by the Company (the
“Cessation of Employment”), unless otherwise determined by the Committee, all
Options theretofore granted to such Grantee when such Grantee was an employee of the
Company shall terminate as follows:  

		    (a)        The
date of the Grantee’s Cessation of Employment shall be the date on           which
the employee-employer relationship between the Grantee and the Company           ceases
to exist (the “Date of the Cessation”).  

		    (b)        All
such Options which are not vested at the Date of Cessation shall terminate immediately. 

		    (c)        If
the Grantee’s Cessation of Employment is by reason of such           Grantee’s
death or “Disability” (as hereinafter defined), such           Options (to the
extent vested at the Date of Cessation) shall be exercisable by           the Grantee or
the Grantee’s guardian, legal representative, estate or           other person to
whom the Grantee’s rights are transferred by will or by           laws of descent or
distribution, at any time until 180 days from the Date of           Cessation, and shall
thereafter terminate.  

	 	        For
purposes hereof, “Disability” shall mean the inability to engage in any
substantial gainful occupation for which the Grantee is suited by education, training or
experience, by reason of any medically determinable physical or mental impairment which
is expected to result in such person’s death or to continue for a period of six (6)
consecutive months or more.  

		    (d)        If
the Grantee’s Cessation of Employment is due to any reason other than
          those stated in Sections 10.1(c), 10.1(e) and 10.1(f) herein, such Options (to
          the extent vested at the Date of Cessation) shall be exercisable at any time
          until 30 days after the Date of Cessation, and shall thereafter terminate;
          provided, however, that if the Grantee dies within such period, such
          Options (to the extent vested at the Date of Cessation) shall be exercisable by
          the Grantee’s legal representative, estate or other person to whom the
          Grantee’s rights are transferred by will or by laws of descent or
          distribution at any time until 180 days from the Date of Cessation, and shall
          thereafter terminate.  

		    (e)        Notwithstanding
the aforesaid, if the Grantee’s Cessation of Employment is           due to (i) breach
of the Grantee’s duty of loyalty towards the           Company, or (ii) breach
of the Grantee’s duty of care towards the           Company, or (iii) the
commission any flagrant criminal offense by the           Grantee, or (iv) the
commission of any act of fraud, embezzlement or           dishonesty towards the Company
by the Grantee, or (v) any unauthorized use           or disclosure by the Grantee
of confidential information or trade secrets of the           Company, or (vi) any other
intentional misconduct by the Grantee (by act or           omission) adversely affecting
the business or affairs of the Company in a           material manner, or (vii) any act
or omission by the Grantee which would allow           for the termination of the Grantee’s
employment without severance pay,           according to the Severance Pay Law, 1963, all
the Options whether vested or not           shall ipso facto expire immediately and be of
no legal effect.  

		    (f)        If
a Grantee retires, he shall, subject to the approval of the Committee,           continue
to enjoy such rights, if any, under the Plan and on such terms and           conditions,
with such limitations and subject to such requirements as the           Committee in its
discretion may determine.  

		    (g)        Whether
the Cessation of Employment of a particular Grantee is by reason of           “Disability” for
the purposes of paragraph 10.1(c) hereof or by           virtue of “retirement” for
purposes of paragraph 10.1(f) hereof,           or is a termination of employment
other than by reason of such Disability or           retirement, or is for reasons as set
forth in paragraph 10.1(e) hereof,           shall be finally and conclusively
determined by the Committee in its absolute           discretion.  

		    (h)        Notwithstanding
the aforesaid, under no circumstances shall any Option be           exercisable after the
specified expiration of the term of such Option.  

		    10.2        Directors,
Consultants and Contractors. In the event that a Grantee, who is a director,
consultant or contractor of the Company, ceases, for any reason, to serve as such, the
provisions of Sections 10.1(b), 10.1(c), 10.1(d), 10.1(e), 10.1(g) and 10.2(h) above
shall apply, mutatis mutandis. For the purposes of this Section 10.2, “Date
of Cessation” shall mean:  

		    (a)        with
respect to directors – the date on which a director submits notice of
          resignation from the Board or the date on which the shareholders of the Company
          remove such director from the Board; and  

		    (b)        with
respect to consultants and contractors – the date on which the           consulting
or contractor agreement between such consultant or contractor, as           applicable,
and the Company expires or the date on which either of the parties           to such
agreement sends the other notice of its intention to terminate said           agreement.  

		    10.3        Notwithstanding
the foregoing provisions of this Section 10, the Committee shall have the
discretion, exercisable either at the time an Option is granted or thereafter, to:  

		    (a)        extend
the period of time for which the Option is to remain exercisable           following the
Date of Cessation to such greater period of time as the Committee           shall deem
appropriate, but in no event beyond the specified expiration of the           term of the
Option;  

		    (b)        permit
the Option to be exercised, during the applicable exercise period           following the
Date of Cessation, not only with respect to the number of Shares           for which such
Option is exercisable at the Date of Cessation but also with           respect to one or
more additional installments in which the Grantee would have           vested under the
Option had the Grantee continued in the employ or service of           the Company.  

     11.        Adjustments,
Liquidation and Corporate Transaction:  

		    11.1        Definitions:
 

	 	        "Corporate
 Transaction"  means the occurrence,  in a single transaction or in a series of related
transactions, of any one or more of the following events:  

		    (i)        a
sale  or  other  disposition  of all or  substantially all, as determined by the Board in
its discretion,  of the  consolidated  assets of the Company and its subsidiaries;  

		    (ii)        a
sale or other disposition of at least eighty percent (80%) of the outstanding
          securities of the Company;  

		    (iii)        a
merger, consolidation or similar transaction following which the Company is           not
the surviving corporation; or  

		    (iv)        a
merger, consolidation or similar transaction following which the Company is           the
surviving corporation but the Ordinary Shares of the Company outstanding
          immediately preceding the merger, consolidation or similar transaction are
          converted or exchanged by virtue of the merger, consolidation or similar
          transaction into other property, whether in the form of securities, cash or
          otherwise.  

		    11.2        Adjustments.
Subject to any required action by the shareholders of the Company, the number of Shares
subject to each outstanding Option, and the number of Shares which have been authorized
for issuance under the Plan but as to which no Options have yet been granted or which
have been returned to the Plan upon cancellation or expiration of an Option, as well as
the price per share of Shares subject to each such outstanding Option, shall be
proportionately adjusted for 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 the payment of a stock dividend (bonus shares) with
respect to the Shares or any other increase or decrease in the number of issued Shares
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed to have
been “effected without receipt of consideration.” Such adjustment shall be made
by the Committee, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, 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 thereof shall be made with respect to, the number or price of Shares
subject to an Option.  

		    11.3        Liquidation.
Unless otherwise provided by the Board, in the event of the proposed dissolution or
liquidation of the Company, all outstanding Options will terminate immediately prior to
the consummation of such proposed action. In such case, the Committee may declare that
any Option shall terminate as of a date fixed by the Committee and give each Grantee the
right to exercise his Option, including any Option which would not otherwise be
exercisable.  

		    11.4        Corporate
Transaction.  

		    (a)        In
the event of a Corporate Transaction, immediately prior to the effective date
          of such Corporate Transaction, each Option may, at the sole and absolute
          discretion of the Committee, either:  

		    (i)        be
substituted for an option to purchase securities of any successor entity (the
          “Successor Entity Option”) such that the Grantee may exercise the
          Successor Entity Option for such number and class of securities of the
successor           entity which would have been issuable to the Grantee in consummation
of such           Corporate Transaction, had the Option been exercised immediately prior
to the           effective date of such Corporate Transaction; and/or  

		    (ii)        be
assumed by any successor entity such that the Grantee may exercise the Option
          for such number and class of securities of the successor entity which would
have           been issuable to the Grantee in consummation of such Corporate
Transaction, had           the Option been exercised immediately prior to the effective
date of such           Corporate Transaction.  

In the event of a clause (i) or
clause (ii) action, appropriate adjustments shall be made to the exercise price per Share
to reflect such action. 

		    (b)        Immediately
following the consummation of the Corporate Transaction, all           outstanding
Options shall terminate and cease to be outstanding, except to the           extent
assumed by a successor entity.  

		    (c)        Notwithstanding
the aforementioned in Section 7.4 above, ten (10) days prior to           the effective
date of the Corporate Transaction, all Options granted under the           plan to
Directors and executive officers, notwithstanding the Vesting Period of           such
Options, subject to closing of said transaction, shall vest in full and           become
fully exercisable.  

		    (d)        Notwithstanding
the foregoing, and without derogating from the power of the           Committee pursuant
to the provisions of this Plan, the Committee shall have full           authority and
sole discretion to determine that any of the provisions of           Sections 11.4(a)(i)
and/or 11.4(a)(ii) above shall apply in the event of a           Corporate Transaction in
which the consideration received by the shareholders of           the Company is not
solely comprised of securities of a successor entity, or in           which such
consideration is solely cash or assets other than securities of a           successor
entity.  

		    11.5        Sale.
Subject to any provision in the Article of Association of the Company, in the event that
all or substantially all of the issued and outstanding share capital of the Company is to
be sold (the “Sale”), each Grantee shall be obligated to participate in the
Sale and sell his or her Shares and/or Options in the Company, provided, however,
that each such Share or Option shall be sold at a price equal to that of any other Share
sold under the Sale (minus the applicable exercise price), while accounting for changes
in such price due to the respective terms of any such Option, and subject to the absolute
discretion of the Board.  

	 	        With
respect to Shares held in Trust the following  procedure will be applied:  The Trustee
will transfer the Shares held in Trust and sign any document in order to effectuate the
transfer of Shares, including share transfer deeds, provided however, that the Trustee
receives a notice from the Board, specifying that: (i) all or substantially all of the
issued outstanding share capital of the Company is to be sold, and therefore the Trustee
is obligated to transfer the Shares held in Trust; (ii) the Company is obligated to
withhold at the source all taxes required to be paid upon release of the Shares from the
Trust and to provide the Trustee with evidence, satisfactory to the Trustee, that such
taxes indeed have been paid; (iii) the Company is obligated to transfer the consideration
for the Shares directly to the Grantees.  

		    11.6        The
grant of Options under the Plan shall in no way affect the right of the Company to
adjust, reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.  

    12.        Limitations
on Transfer: No Option shall be assignable or transferable by           the Grantee
to whom granted otherwise than by will or the laws of descent and           distribution,
and an Option may be exercised during the lifetime of the Grantee           only by such
Grantee or by such Grantee’s guardian or legal representative.           The terms
of such Option shall be binding upon the beneficiaries, executors,
          administrators, heirs and successors of such Grantee.  

     13.        Term
and Amendment of the Plan:  

		    13.1        The
Plan was adopted by the Board on August 3, 2003. The Plan shall terminate upon the
earliest of (i) the expiration of the ten (10)-year period measured from the date
the Plan was adopted by the Board, or (ii) the termination of all outstanding
Options in connection with a Corporate Transaction. All Options outstanding at the time
of a clause (i) termination event shall continue to have full force and effect in
accordance with the provisions of the Plan and the documents evidencing such Options.  

		    13.2        Subject
to applicable laws, the Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or
modification shall adversely affect any rights and obligations with respect to Options at
the time outstanding under the Plan, unless the Grantee consents to such amendment or
modification.  

		    13.3        Without
derogating from the foregoing, the Board in its discretion may, at any time and from time
to time, without the approval of the Shareholders of the Company, (i) expand of the
class of participants eligible to participate in the Plan; and/or (ii) expand the types
of options or awards provided under the Plan and/or (iii) extend the duration of the
Plan. Notwithstanding the aforesaid, at the full discretion of the Board any of the above
actions may be brought before the shareholders of the Company for their approval.  

    14.        Withholding
and Tax Consequences: The Company’s obligation to           deliver Shares upon
the exercise of any Options granted under the Plan shall be           subject to the
satisfaction of all applicable income tax and other compulsory           payments
withholding requirements. All tax consequences and obligations           regarding any
other compulsory payments arising from the grant or exercise of           any Option,
from the payment for, or the subsequent disposition of, Shares           subject thereto
or from any other event or act (of the Company, of the Trustee           or of the
Grantee) hereunder, shall be borne solely by the Grantee, and the           Grantee shall
indemnify the Company and/or the Trustee, as applicable, and hold           them harmless
against and from any and all liability for any such tax or other           compulsory
payment, or interest or penalty thereon, including without           limitation,
liabilities relating to the necessity to withhold, or to have           withheld, any
such tax or other compulsory payment from any payment made to the           Grantee.  

     15.        Miscellaneous: 

		    15.1        Continuance
of Employment. Neither the Plan nor the grant of an Option thereunder shall impose
any obligation on the Company to continue the employment or service of any Grantee.
Nothing in the Plan or in any Option granted thereunder shall confer upon any Grantee any
right to continue in the employ or service of the Company for any period of specific
duration, or interfere with or otherwise restrict in any way the right of the Company to
terminate such employment or service at any time, for any reason, with or without cause.  

		    15.2        Requirement
of Law.Notwithstanding anything to the contrary in this Plan,the grant
of Options and the issuance of Shares under the Plan to Grantees who are non-Israeli
residents, shall not be governed by Section 102 or Section 3(9) and shall be subject to
all applicable laws, rules and regulations, and to such approvals as may be required by
any governmental agency of the country of residence of such Grantees.  

		    15.3        Governing
Law. The Plan and all instruments issued thereunder or in connection therewith, shall
be governed by, and interpreted in accordance with, the laws of the State of Israel.  

		    15.4        Use
of Funds. Any proceeds received by the Company from the sale of Shares pursuant to
the exercise of Options granted under the Plan shall be used for general corporate
purposes of the Company.  

		    15.5        Multiple
Agreements. The terms of each Option may differ from other Options granted under the
Plan at the same time, or at any other time. The Committee may also grant more than one
Option to a given Grantee during the term of the Plan, either in addition to, or in
substitution for, one or more Options previously granted to that Grantee. The grant of
multiple Options may be evidenced by a single Notice of Grant or multiple Notices of
Grant, as determined by the Committee.  

		    15.6        Non-Exclusivity
of the Plan. The adoption of the Plan by the Board shall not be construed as
amending, modifying or rescinding any previously approved incentive arrangement 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
stock options otherwise than under the Plan, and such arrangements may be either
applicable generally or only in specific cases.S-8

Exhibit 4.2  

ECtel LTD. 

2003 U.S. EMPLOYEE
STOCK OPTION PLAN 

     A.
          NAME AND PURPOSE 

         1.       
          Name and Purpose: ECtel Ltd. sponsors this plan, as amended from time to
          time, which shall be known as the “ECtel Ltd. 2003 U.S. Employee Stock
          Option Plan” (the “Plan”). The purpose and intent of the Plan is
          to provide incentives to officers, employees and consultants of ECtel Inc. and
          other non-Israeli subsidiaries of ECtel Ltd. (hereinafter, together with their
          subsidiaries, the “Companies”) by providing them with opportunities to
          purchase Ordinary Shares, nominal value 0.04 New Israeli Shekels each
          (“Shares”), of the parent company of the Companies, ECtel Ltd. (the
          “Parent”). 

    2.        Definitions:  

		    2.1        "Code"
means the Internal Revenue Code of 1986, as amended. 

		    2.2        "Incentive
 Stock Option" means an "incentive  stock option"  within the meaning of Section 422 of
the Code.  

		    2.3        "Nonqualified
Stock Option" means an Option that is not an Incentive Stock Option. 

		    2.4        “Ten-Percent
Stockholder” means an Eligible Grantee, who, at the time an Incentive Stock Option
is to be granted to such Eligible Grantee, owns (within the meaning of Section 422(b)(6)
of the Code) stock possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company, a parent or a subsidiary within the meaning
of Sections 424(e) and 424(f), respectively, of the Code.  

     B.
          GENERAL TERMS AND CONDITIONS OF THE PLAN 

    3.        Administration:  

		    3.1        The
Board of Directors of the Parent may appoint a Share Incentive Committee, which will
consist of such number of Directors of the Parent, as may be fixed from time to time by
the Board. The Board shall appoint the members of the committee, may from time to time
remove members from, or add members to, the Committee and shall fill vacancies in the
Committee however caused. The Plan will be administered by the Share Incentive Committee,
or by the Board (including, but not limited to, actions which the Share Incentive
Committee is not permitted to take according to Section 112 of the Companies Law, 1999
(the “Companies Law”)) (collectively – the “Committee”).  

		    3.2        The
Committee shall select one of its members as its Chairman and shall hold its meetings at
such times and places as it shall determine. Actions taken by a majority of the members
of the Committee, at a meeting at which a majority of its members is present, or acts
reduced to or approved in writing by all members of the Committee, shall be the valid
acts of the Committee. The Committee may appoint a Secretary, who 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        Subject
to the general terms and conditions of this Plan, the Committee shall have the full
authority in its sole and absolute discretion, from time to time and at any time, to
determine (i) the persons (“Grantees”) to whom options to purchase Shares (“Option(s)”)
shall be granted, (ii) the number of Shares to be covered by each Option, (iii) the time
or times at which the same shall be granted, (iv) the price, vesting schedule and
conditions on which such Options may be exercised and on which such Shares shall be paid
for, and/or (v) interpret or construe the Plan or make determinations with respect to any
other matter which is necessary or desirable for, or incidental to, the administration of
the Plan. In determining the number of Shares covered by the Option to be granted to each
Grantee, the Committee may consider, among other things, the Grantee’s salary and
the duration of the Grantee’s employment by the Parent.  

		    3.4        The
Committee may, from time to time, adopt such rules and regulations for carrying out the
Plan as it may deem necessary. No member of the Board or of the Committee shall be liable
for any act or determination made in good faith with respect to the Plan or any Option
granted thereunder.  

		    3.5        The
interpretation and construction by the Committee of any provision of the Plan or of any
Option thereunder shall be final and conclusive unless otherwise determined by the Board,
in which event the Board’s determination shall be final and conclusive.  

         4.       
          Eligible Grantees: The Committee, at its discretion, may grant Options to
          any officer, director or consultant of the Parent or its subsidiaries, provided
          that such person is not an employee of the Parent resident in Israel; and
          provided, however, that Incentive Stock Options shall be granted only to
          employees of the Parent or its subsidiaries. Anything in this Plan to the
          contrary notwithstanding, all grants of Options to Directors and Office Holders
          – “Nosei Misra” – as such term is defined in the Israeli
          Companies Law – 1999, as amended from time to time (the “Companies
          Law”) – shall be authorized and implemented only in accordance with
          the provisions of the Companies Law. The grant of an Option to a Grantee
          hereunder, shall neither entitle such Grantee to participate, nor disqualify him
          from participating, in any other grant of options pursuant to this Plan or any
          other stock option plan of the Parent. 

         5.       
          Grant of Options and Issuance of Shares: Subject to any applicable law,
          the effective date of the grant of an Option (the “Date of Grant”)
          shall be the date specified by the Committee in its determination relating to
          the award of such Option. The Committee shall promptly give the Grantee written
          notice of the grant of an Option, and the Grantee shall execute an agreement
          evidencing such grant and the rights and obligations of the Grantee and the
          Company with respect to such Option Agreement (the “Option
          Agreement”). 

         6.       
          Reserved Shares: The total number of Shares that may be subject to
          Options granted under the Plan shall not exceed 50,000 in the aggregate, subject
          to adjustments as provided in Section 11 hereof. Without derogating from
          the foregoing, the Committee shall have full authority in its discretion to
          determine that the Parent may issue, for the purposes of this Plan, previously
          issued Shares that are held by the Parent, from time to time, as Dormant Shares
          (as such term is defined in the Companies Law).. All Shares under the Plan, in
          respect of which the right hereunder of a Grantee to purchase the same shall,
          for any reason, terminate, expire or otherwise cease to exist, shall again be
          available for grant through Options under the Plan. 

         7.       
          Grant of Options: 

		    7.1        The
Committee in its discretion may award to Grantees Options to purchase Shares in the
Parent available under the Plan.  

		    7.2        The
Option Agreement shall state, inter alia, the number of Shares covered thereby, the dates
when the Option may be exercised, the exercise price, and such other terms and conditions
as the Committee at its discretion may prescribe, provided that they are consistent with
this Plan.  

		    7.3        Options
granted thereunder shall be for such term as the Committee shall determine, provided that
(i) no Incentive Stock Option shall be exercisable after the expiration of ten (10) years
from the date it is granted (five (5) years in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder) and (ii) no Nonqualified Stock Option shall be
exercisable after the expiration of ten (10) years and one (1) day from the date it is
granted. The Committee may, subsequent to the granting of any Option, extend the term
thereof but in no event shall the term as so extended exceed the maximum term provided
for in the preceding sentence.  

		    7.4        The
schedule pursuant to which such Options shall vest, and the Grantee shall be entitled to
pay for, and acquire, the Shares, shall be determined by the Committee at its sole
discretion. Unless determined otherwise by the Committee, the schedule pursuant to which
such Options shall vest, and the Grantee thereof shall be entitled to pay for and acquire
the Shares, shall be such that the Options shall be fully vested on the first business
day following the passing of three (3) years from the Date of Grant (the “Vesting
Period”) as follows: fifty percent (50%) of such Options shall vest on each of the
first and second anniversaries of the Date of Grant. Vesting period of an Option means,
for the purpose of the Plan and its related instruments, the period between the Date of
Grant and the date on which the holder of an Option may exercise the rights awarded
pursuant to terms of the Option. Vesting of Options granted hereunder will continue only
during periods while the employer-employee or other service provider relationship exists
between the relevant Company and the Grantee, as the case may be. For the purposes of
this paragraph 7.4, the employer-employee or other service-provider relationship will not
be deemed to exist with regard to periods during which the Grantee is on an unpaid leave
of absence from the Company.  

         8.       
          Exercise Price: The exercise price per Share covered by each Option shall
          be determined by the Committee in its sole and absolute discretion; provided,
          however: 

		    8.1        In
the case of an Incentive Stock Option granted to any Eligible Grantee other than a
Ten-Percent Stockholder, the per Share exercise price shall be no less than 100% of the
Fair Market Value per Share on the date of the grant.  

		    8.2        In
the case of an Incentive Stock Option granted to any Ten-Percent Stockholder, the per
Share exercise price shall be no less than 110% of the Fair Market Value per Share on the
date of the grant.  

		    8.3        In
no event shall the exercise price of an Option be less than the nominal value of the
Shares into which such Option is exercisable.  

		    8.4        Repricing:
Subject to applicable law, the Committee shall have full authority to, at any time and
from time to time, without the approval of the shareholders of the Parent, (i) grant, in
its discretion, to the holder of an outstanding Incentive Stock Option and/or
Nonqualified Stock Option, in exchange for the surrender and cancellation of such Option,
a new Option having an exercise price lower than provided in the Option so surrendered
and canceled and containing such other terms and conditions as the Committee may
prescribe in accordance with the provisions of the Plan, or (ii) effectuate a decrease in
the Exercise Price of outstanding Nonqualified Stock Option as provided in Section 8.5
below. At the full discretion of the Committee, such actions may be brought before the
shareholders of the Parent for their approval.  

		    8.5        Subject
to the foregoing, the Committee may reduce the exercise price of any outstanding
Nonqualified Stock Option. In the event of such amendment, the Date of Grant of such
Option shall thereafter be considered to be the date of such amendment; provided,
however, that for purposes of vesting, the Option shall continue to be exercisable based
on the terms set forth in the original Option Agreement.  

		    8.6        For
the purposes hereof, “Fair Market Value” on any date shall be the last sale
price reported for the Shares on NASDAQ National Market System (“NMS”) on such
date or on the last day preceding such date on which a sale was reported.  

		    8.7        Notwithstanding
any other provision of the Plan to the contrary, the aggregate Fair Market Value
(determined as of the date of grant) of the Shares with respect to which Incentive Stock
Options granted to a Grantee by the Parent or any parent or subsidiary of the Parent are
exercisable for the first time shall not exceed $100,000 in any calendar year; provided,
however, that any Option designated as an Incentive Stock Option under the Plan or any
portion thereof that exceeds the foregoing limit or that is otherwise disqualified as an
incentive stock option by operation of Section 422(d) or any other provision of the Code,
shall be treated as a Nonqualified Stock Option for purposes of the Plan.  

    9.        Exercise
of Options:  

		    9.1        Options
shall be exercisable pursuant to the terms under which they were awarded and subject to
the terms and conditions of this Plan and the Option Agreement.  

		    9.2        The
exercise of an Option shall be made by a written notice of exercise (the “Notice of
Exercise”) delivered by the Grantee to the Parent at its principal executive office,
specifying the number of Shares to be purchased and accompanied by the payment therefor,
and containing such other terms and conditions as the Committee shall prescribe from time
to time. An Option may be exercised in whole or in part to the extent exercisable under
the Plan and Option Agreement.  

		    9.3        Anything
herein to the contrary notwithstanding, but without derogating from the provisions of
Section 10 hereof, if any Option has not been exercised and the Shares covered
thereby not paid for within ten (10) years after the Date of Grant (or any shorter period
set forth in the Option Agreement), such Option and the right to acquire such Shares
shall terminate, and all interests and rights of the Grantee in and to the same shall
ipso facto expire.  

		    9.4        Each
payment for Shares shall be in respect of a whole number of Shares, and shall be effected
in cash or by a cashier’s check payable to the order of the Parent, or such other
method of payment acceptable to the Parent.  

    10.        Termination
of Employment:  

		    10.1        In
the event that a Grantee ceases, for any reason, to be employed by the Companies, all
Options theretofore granted to such Grantee shall terminate as follows, subject to the
provisions of 7.4 above and 11.3 below:  

		    (a)        All
Options which are not vested and not exercisable at the time of the           cessation
of employment shall terminate immediately.  

		    (b)        If
the Grantee ceases to be employed by reason of such Grantee’s death or
          “Disability” (as hereinafter defined), such Options (to the extent
          exercisable at the time of the Grantee’s cessation of employment) shall be
          exercisable by the Grantee, Grantee’s legal representative, estate or
other           person to whom the Grantee’s rights are transferred by will or by
laws of           descent or distribution (the “Estate”) at any time until
thirty (30)           days after such Grantee’s Disability has been established, or
after the           Estate has been legally established (but in no event after the
expiration date           of such Option), and shall thereafter terminate. In the event
of Disability, the           Committee will be authorized, at its sole discretion, to
decide that the said           exercise period is extended, with or without being subject
to additional terms           or restrictions (except that to the extent that the Grantee
holds Incentive           Stock Options, the Committee will not extend such term for more
than one year           after such Grantee’s Disability has been established). For
purposes hereof,           Disability shall mean a physical or mental impairment
constituting a permanent           and total disability within the meaning of Section
22(e)(3) of the Code.  

		    (c)        If
the Grantee ceases to be employed for any other reason, such Options (to the
          extent exercisable at the time of the Grantee’s termination of employment)
          shall be exercisable at any time until the two (2) weeks from the termination
of           the Employee’s employment (but in no event after the expiration date of
          such Option), and shall thereafter terminate. For the purposes of this Section
          10.1(c), the date of termination of employment shall be the date on which the
          termination notice is sent to the Grantee, or the date on which the resignation
          notice is sent to the employer, as the case may be, regardless of the actual
          date of cessation of work.  

		    (d)        Notwithstanding
the aforesaid in Section 10.1(c) above, if the Grantee’s           termination of
employment is due to (i) breach of the Grantee’s fiduciary           duties towards
any of the Companies, or (ii) breach of the Grantee’s duty           of care towards
any of the Companies, or (iii) the Grantee has committed any           fellony, or (iv)
the Grantee has committed a fraudulent act towards any of the           Companies, or (v)
the Grantee caused intentionally, by act or omission, any           material financial
damage to any of the Companies, all the Options whether           vested or not shall ipso
facto expire immediately and be of no legal           effect. For the purposes of
this Section 10.1(d), the date of termination of           employment shall be the date
on which the termination notice is sent to the           Grantee, or the date on which
the resignation notice is sent to the employer, as           the case may be, regardless
of the actual date of cessation of work.  

		    (e)        Notwithstanding
the aforesaid, if the Grantee ceases to be a full-time employee           of any of the
Companies and becomes a part-time employee, such Options (to the           extent
exercisable at the time the Grantee ceases to be a full-time employee of           any of
the Companies) shall be exercisable for a period of six (6) months           following
such cessation of the full-time employment, and shall thereafter           terminate. All
Options that are not vested at the time of cessation of the           full-time
employment shall ipso facto expire and be of no legal effect.  

		    (f)        If
a Grantee should retire (as such term is defined by the Committee at its sole
          and absolute discretion), he shall, subject to the approval of the Committee,
          continue to enjoy such rights, if any, under the Plan and on such terms and
          conditions, with such limitations and subject to such requirements as the
          Committee in its discretion may determine.  

		    10.2        Whether
the cessation of employment of a particular Grantee is for reason of “Disability” for
the purposes of paragraph 10.1(b) hereof or by virtue of “retirement” for
purposes of paragraph 10.1(f) hereof, or is a termination of employment other than
by reason of such Disability or retirement, or is for reasons as set forth in paragraph
10.1(d) hereof, shall be finally and conclusively determined by the Committee in its
absolute discretion.  

		    10.3        Notwithstanding
the foregoing provisions of Section 10.1, the Committee may provide, either at the
time an Option is granted or thereafter, that such Option may be exercised after the
periods provided for in Section 10.1, but in no event beyond the term of the Option.  

    11.        Adjustment
Upon Changes in Capitalization  

		    11.1        to
any required action by the shareholders of the Parent, the number of Shares covered by
each outstanding Option, and the number of Shares which have been authorized for issuance
under the Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as the price
per share of Shares covered by each such outstanding Option, shall be proportionately
adjusted for 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 the payment of a stock dividend (bonus shares) with respect to the Shares or
any other increase or decrease in the number of issued Shares effected without receipt of
consideration by the Parent; provided, however, that conversion of any convertible
securities of the Parent shall not be deemed to have been “effected without receipt
of consideration.” Such adjustment shall be made in the sole and absolute discretion
of the Committee, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Parent of shares of
stock of any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the number or
price of Shares subject to an Option.  

		    11.2        Any
such adjustment in the Shares or other securities subject to outstanding Incentive Stock
Options (including any adjustments in the purchase price) shall be made in such manner as
not to constitute a modification as defined by Section 424 (h) (3) of the Code
and only to the extent otherwise permitted by Sections 422 and 424 of the Code.  

		    11.3        In
the event of the proposed dissolution or liquidation of the Parent, the Committee shall
notify each Grantee at lease fifteen (15) days prior to such proposed action. To the
extent it has not been previously exercised, each Option will terminate immediately prior
to the consummation of such proposed action.  

		    11.4        (a)
In the event of a Corporate Transaction (as defined below), immediately prior to the
effective date of such Corporate Transaction, each Option may, at the sole and absolute
discretion of the Committee, either:  

		    (i)        be
substituted for options to purchase securities of any successor entity (the
          “Successor Entity Option”) such that the Grantee may exercise the
          Successor Entity Option for such number and class of securities of the
successor           entity which would have been issuable to the Grantee in consummation
of such           Corporate Transaction, had the Option been exercised immediately prior
to the           effective date of such Corporate Transaction; and/or  

		    (ii)        be
assumed by the successor entity such that the Grantee may exercise the           Options
for such number and class of securities of the successor entity which           would
have been issuable to the Grantee in consummation of such Corporate
          Transaction, had the Option been exercised immediately prior to the effective
          date of such Corporate Transaction.  

In the event of a clause (i) or
clause (ii) action, appropriate adjustments shall be made to the exercise price per Share
to reflect such action. 

         (b)       
          Immediately following the consummation of the Corporate Transaction, all
          outstanding Options shall terminate and cease to be outstanding, except to the
          extent assumed by a successor entity. 

         (c)       
          Notwithstanding the aforementioned in Section 7.4 above, ten (10) days prior to
          the effective date of the Corporate Transaction, all Options granted under the
          plan to directors and executive officers of Parent, notwithstanding the Vesting
          Period of such Options, subject to closing of said transaction, shall vest in
          full and become fully exercisable. 

         (d)       
          Notwithstanding the foregoing, and without derogating from the power of the
          Committee pursuant to the provisions of this Plan, the Committee shall have full
          authority and sole discretion to determine that any of the provisions of
          Sections 11.4(a)(i) and/or 11.4(a)(ii) above shall apply in the event of a
          Corporate Transaction in which the consideration received by the shareholders of
          the Parent is not solely comprised of securities of a successor entity, or in
          which such consideration is solely cash or assets other than securities of a
          successor entity. 

         (e)       
          “Corporate Transaction” means the occurrence, in
          a single transaction or in a series of related transactions, of any one or more
          of the following events: 

		    (i)        a
sale  or  other  disposition  of all or  substantially all, as determined by the Board in
its discretion,  of the  consolidated  assets of the Parent and its subsidiaries; 

		    (ii)        a
sale or other disposition of at least eighty percent (80%) of the outstanding
          securities of the Parent;  

		    (iii)        a
merger, consolidation or similar transaction following which the Parent is not
          the surviving corporation; or  

		    (iv)        a
merger, consolidation or similar transaction following which the Parent is the
          surviving corporation but the Ordinary Shares of the Parent outstanding
          immediately preceding the merger, consolidation or similar transaction are
          converted or exchanged by virtue of the merger, consolidation or similar
          transaction into other property, whether in the form of securities, cash or
          otherwise.  

		    11.5        Subject
to any provision in the Article of Association of the Parent, in the event that all or
substantially all of the issued and outstanding share capital of the Parent is to be sold
(the “Sale”), each Grantee shall be obligated to participate in the Sale and
sell his or her Shares and/or Options in the Company, provided, however, that each such
Share or Option shall be sold at a price equal to that of any other Share sold under the
Sale (minus the applicable exercise price), while accounting for changes in such price
due to the respective terms of any such Option, and subject to the absolute discretion of
the Board.  

    12.        Non-Transferability  

        No
Option shall be assignable or transferable by the Grantee to whom granted otherwise than
by will or the laws of descent and distribution, and an Option may be exercised during the
lifetime of the Grantee only by such Grantee or by such Grantee’s guardian or legal
representative. The terms of such Option shall be binding upon the beneficiaries,
executors, administrators, heirs and successors of such Grantee. 

    13.        Term
and Amendment of the Plan:  

		    13.1        The
Plan shall expire on August 3, 2013 (except as to Options outstanding on that date).  

		    13.2        Subject
to applicable laws, the Board in its discretion may, at any time and from time to time,
without the approval of the Shareholders of the Parent terminate or amend the Plan in any
respect and without derogating from the aforesaid, the Board may (i)  expand of the
class of participants eligible to participate in the Plan; and/or (ii) expand the types
of options or awards provided under the Plan and/or (iii) extend the duration of the
Plan. Notwithstanding the aforesaid, at the full discretion of the Board any of the above
actions may be brought before the shareholders of the Parent for their approval.  

	 	        In
no event may any action to amend or terminate the Plan of the Parent alter or impair the
rights of a Grantee, without his consent, under any Option previously granted to him.  

         14.       
          Tax Consequences: All tax consequences arising from the grant or exercise
          of any Option, from the payment for, or the subsequent disposition of, Shares
          covered thereby or from any other event or act (of the Parent or the Grantee)
          hereunder, shall be borne solely by the Grantee, and the Grantee shall indemnify
          the Parent and hold it 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 Grantee. 

    15.        Restricted
Stock:  

		    15.1        The
Shares issuable upon exercise of the Options granted herein will be “restricted
securities” under the Securities Act of 1933 and the regulations promulgated
hereunder (the “Act”) and may not be resold absent registration under the Act
or an available exemption thereunder. In the event that an owner of Shares issued
pursuant to this Plan effects a sale or transfer of such Shares under an available
exemption under the Act, such owner shall, before effecting such sale or transfer, (i)
notify the Parent in writing of the proposed disposition and the name of the proposed
transferees, (ii) furnish the Parent with an opinion of counsel satisfactory in form and
content to the Parent, and (iii) furnish the Parent with an agreement in writing from the
transferee pursuant to which such transferee agrees to be bound by the provisions
contained herein and in the Option Agreement, or (iv) the Parent shall have waived,
expressly and in writing, its rights under clauses (i), (ii) and (iii) of this
subsection.  

		    15.2        The
Shares issuable upon exercise of the Options granted herein, once any such Option is
exercised and the Shares issued, will be subject to a lock-up for 180 days (or for such
longer period as may be requested by the Parent’s underwriter or underwriters)
following the date immediately subsequent to the first date of the effectiveness of the
first underwritten public offering of any of the Parent’s securities. In connection
with any subsequent underwritten public offering of the Parent’s securities, the
Shares issuable upon exercise of the Options granted herein, once any such Option is
exercised and the Shares issued, will be subject to a lock-up for 120 days (or such
longer period as may be requested by the Parent’s underwriter or underwriters)
following the date immediately subsequent to the first date of the effectiveness of such
public offering. During such periods, if the owner of the option Shares is not
participating in such public offering, the owner of the option Shares will not be allowed
to sell or transfer, or offer to sell or transfer, any Shares without the prior written
consent of the Parent’s underwriter or underwriters.  

    16.        Miscellaneous:  

		    16.1        Continuance
of Employment: Neither the Plan nor the grant of an Option thereunder shall impose
any obligation on the Parent to continue the employment of any Grantee, and nothing in
the Plan or in any Option granted pursuant thereto shall confer upon any Grantee any
right to continue in the employ of the Parent, or restrict the right of the Parent to
terminate such employment at any time.  

		    16.2        Governing
Law; Regulations and Approvals:  

		                               16.2.1        The
Plan and all instruments issued thereunder or in connection  therewith,  shall be
governed by, and interpreted in accordance with, the laws of the State of Israel.  

		                               16.2.2        The
 obligation  of the Parent to sell or deliver  Shares with  respect to Options granted
under the Plan shall be subject to all applicable laws, rules and regulations and the
obtaining of all such approvals by governmental agencies as may be deemed necessary or
appropriate by the Committee.  

		                               16.2.3        Subject
 to  Section 9, the Board may make such  changes  as may be  necessary  or appropriate to
comply with the rules and regulations of any government authority or to obtain for
Optionees granted Incentive Stock Options the tax benefits under the applicable
provisions of the Code and regulations promulgated thereunder.  

		                               16.2.4        Each
 Option is  subject to the  requirement  that,  if at any time the  Committee determines,
in its absolute discretion, that the listing, registration or qualification of Shares
issuable pursuant to the Plan is required by any securities exchange or under any state
or federal law, or the consent or approval of any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a condition of,
or in connection with, the grant of an Option or the issuance of Shares, no Options shall
be granted or payment made or Shares issued, in whole or in part, unless listing,
registration, qualification, consent or approval has been effected or obtained free of
any conditions that are not acceptable to the Committee.  

		    16.3        Application
of Funds: The proceeds received by the Parent from the sale of Shares pursuant to
Options granted under the Plan will be used for general corporate purposes of the Parent.  

		    16.4        Multiple
Agreements: The terms of each Option may differ from other Options granted under the
Plan at the same time, or at any other time. The Committee may also grant more than one
Option to a given Grantee during the term of the Plan, either in addition to, or in
substitution for, one or more Options previously granted to that Grantee. The grant of
multiple Options may be evidenced by a single Option Agreement or multiple Option
Agreements, as determined by the Committee.  

		    16.5        Non-Exclusivity
of the Plan: The adoption of the Plan by the Board shall not be construed as
amending, modifying or rescinding any previously approved incentive arrangement 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
stock options otherwise than under the Plan, and such arrangements may be either
applicable generally or only in specific cases.  

		    16.6        Withholding
of Taxes: The Parent shall have the right to deduct from any payment of cash to any
Optionee an amount equal to the income taxes and other amounts required by law to be
withheld with respect to any Option. Notwithstanding anything to the contrary contained
herein, if an Optionee is entitled to receive Shares upon exercise of an Option, the
Parent shall have the right to require such Optionee, prior to the delivery of such
Shares, to pay to the Parent the amount of any income taxes and other amounts that the
Parent is required by law to withhold. With respect to any Incentive Stock Options
granted under this Plan, if the Optionee makes a disposition, within the meaning of
Section 424(c) of the Code and regulations promulgated thereunder, of any Share or Shares
issued to such Optionee pursuant to such Optionee’s exercise of the Incentive Stock
Option, and such disposition occurs within the two-year period commencing on the day
after the date of grant of such Option or within the one-year period commencing on the
day after the date of issuance of the Share or Shares to the Optionee pursuant to the
exercise of such Option, such Optionee shall, within ten (10) days of such disposition,
notify the Parent thereof and thereafter immediately deliver to the Parent any amount of
income taxes and other amounts that the Parent informs the Optionee the Parent is
required to withhold.

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