Document:

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                                                                    Exhibit 10.1

ISRAEL

                                   CAMTEK LTD.

                           EMPLOYEE SHARE OPTION PLAN

1.     DEFINITIONS

       As used herein the following terms shall have the meanings hereinafter
       set forth, unless the context clearly indicates to the contrary.

       (A)    the "COMPANY" - Camtek Ltd.

       (B)    "BOARD" - the Board of Directors of the Company.

       (C)    "SHARE(S)" - Ordinary Shares of the Company, each with a par value
              of NIS 0.01.

       (D)    "OPTION(S)" - an Option or Options granted within the framework of
              this Plan each of which imparts the right to purchase one Share
              per Option.

       (E)    "GRANTEE" - an employee of the Company to whom Options are granted
              or to whom the Company decides to grant Options.

       (F)    "PLAN" - the Company's Employee Share Option Plan as provided
              hereunder, and as may be amended from time to time by the Board,
              as set forth hereinbelow.

       (G)    "OPTION AGREEMENT" - the Agreement to be executed between the
              Company and the Grantee under which Option(s) are to be granted.

       (H)    "VESTED OPTION(S)" - that portion of the Options which the Grantee
              is entitled to exercise in accordance with the provisions of
              Section 7.2 of the Plan or the provisions of the Option Agreement
              executed with such Grantee.

       (I)    the "EXERCISE PERIOD" - the period during which the Vested Options
              may be exercised, as provided in Section 7.3 of the Plan.

       (J)    "EXERCISE PRICE" - the price which the Grantee must pay to
              exercise each Option.

       (K)    "EXERCISED SHARES" - the Shares issued upon the exercise of the
              Options.

       (L)    the "TRUSTEE" - the custodian appointed by the Company for the
              purposes of this Plan and approved of by the Israeli Income Tax
              Commissioner, or any other custodian that the Company may appoint,
              in its sole discretion, in place of the approved custodian,
              provided that such custodian shall be approved by the Israeli
              Income Tax Commissioner.

2.     THE PLAN

       2.1    PURPOSE - The purpose and intent of the Plan is to grant to
              selected employees of the Company an opportunity to purchase
              Shares of the Company by way of granted Options and to provide an
              additional incentive to such employees to remain in the

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              employ of the Company, to encourage the sense of proprietorship of
              such employees, and to stimulate the active interest of such
              employees in the success of the Company.

       2.2    FRAMEWORK - The Plan shall be implemented in accordance with
              Section 102 of the Israeli Income Tax Ordinance (New Version),
              1961, and the rules and regulations promulgated thereunder, as are
              in effect from time to time (hereinafter: the "Ordinance").

       2.3    EFFECTIVE DATE - The Board has resolved to adopt and authorize the
              Plan and has resolved that it shall enter into effect commencing
              1.9.97.

3.     ADMINISTRATION

       3.1    The Plan shall be administered by the Board or by a committee
              appointed by the Board.

       3.2    The Board shall have sole and full discretion and sole authority
              to administer the Plan and all actions related thereto, including
              to perform any and all of the following from time to time and at
              any time:

              3.2.1  to determine the Company's employees in favor of whom the
                     Options shall be granted, the number of Options to be
                     granted in favor of each employee, the Exercise Price
                     thereof, and the conditions under which such Options may be
                     exercised;

              3.2.2  to interpret the Plan;

              3.2.3  to determine the terms of the Option Agreements;

              3.2.4  to perform any action required or advisable for the
                     administration of the Plan;

              3.2.5  to prescribe, amend, modify (including by adding new terms
                     and rules), and to rescind and terminate the Plan or any of
                     its terms.

       3.3    Any amendment or modification of the Plan, if any, shall be
              applicable to the relationship between the Grantee and the
              Company, including under the Option Agreements and the amendment
              or modification shall be deemed to have been included in the Plan
              and the Option Agreements, ab initio, unless the amendment or
              modification adversely affects the rights of a Grantee under the
              Vested Options.

4.     ELIGIBILITY

              In determining the employees in favor of whom Options are to be
              granted, the number of Options to be granted and the terms of the
              Options, the Board may take into account the nature of the
              services rendered by the respective employee, his present and
              future potential and contribution to the Company's success, and
              any other data the Board may deem relevant.

5.     RESERVED SHARES

       The total number of Options to be granted to the Grantees pursuant to the
       Plan shall be determined from time to time by the Board.

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       The Company shall at all times reserve such number of authorized but
       unissued Shares which equals the number of Shares to which all of the
       then outstanding Options may be converted upon exercise.

6.     GRANT OF OPTIONS AND ISSUANCE OF SHARES IN TRUST

       6.1    The Options shall be granted in favor of the Grantee for no
              consideration.

       6.2    The Options and the Grantee's rights thereunder shall be subject
              to the execution of an Option Agreement between the Company and
              the Grantee, which Option Agreement shall set forth the terms and
              conditions of the Options, as determined by the Company, including
              without limitation, the number of Options granted thereunder, the
              terms of exercise thereof (including the Exercise Price) and any
              other term the Board may deem necessary.

       6.3    In addition, the Options shall be subject to the execution of all
              the documents necessary in order to comply with the Ordinance, and
              all other documents required by the Company, (the Option Agreement
              and said documents shall be hereinafter referred to as: the
              "DOCUMENTS").

       6.4    The Company shall provide the Grantee with the Documents for
              signature after the Board adopts a resolution to grant Options in
              favor of such Grantee, and the Company shall sign such Documents
              after they have been duly signed and returned by such Grantee.

              It is hereby clarified that the execution of the said Documents by
              the Grantee does not exempt the Grantee from signing any other
              document as may be required by the Company at a later stage.

       6.5    In order to fulfil the provisions of Section 102 of the Ordinance,
              the Options granted hereunder shall be held by the Trustee and the
              Exercised Shares shall be issued to the Trustee, and both shall be
              registered in the name of the Trustee, who shall hold the Options
              and/or the Exercised Shares in trust for an aggregate period of AT
              LEAST TWO (2) YEARS commencing from the date an Option letter is
              deposited with the Trustee which deposit shall not precede the
              lapse of 30 days after the date on which the notice regarding the
              grant was delivered to the tax authorities (hereinafter: the
              "RESTRICTED PERIOD"), and then continuing until such time as they
              are released, as hereinafter provided.

7.     TERMS OF OPTIONS

       7.1    The amount of Options and the Exercise Price for each Grantee
              shall be determined by the Board and shall be specified in the
              Option Agreement; provided however, that in no event shall the
              Exercise Price be less than the fair market value of the Shares on
              the date of the grant of the Options. For as long as the Company's
              shares are traded on Nasdaq, said fair market value shall be as
              determined by the closing value of the Shares listed on Nasdaq at
              the closing of the last previous day of trading.

       7.2    Unless otherwise determined by the Board with respect to any
              specific Grantee, the right of a Grantee to exercise the Options
              granted in such Grantee's favor during the Exercise Period shall
              be vested with such Grantee as follows:

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                                       4

              (a)    If the Grantee remains in the employ of the Company or its
                     subsidiaries for a period of not less than 2 years from the
                     date of the resolution of the Board regarding the issuance
                     of the Options to the Grantee (hereinafter: the "Date of
                     the Grant") - the Grantee shall be entitled to exercise 50%
                     of all the Options granted in such Grantee's favor.

              (b)    If the Grantee remains in the employ of the Company or its
                     subsidiaries for a period of not less than 3 years from the
                     Date of Grant - the Grantee shall be entitled to exercise
                     75% of all the Options granted in such Grantee's favor.

              (c)    If the Grantee remains in the employ of the Company or its
                     subsidiaries for a period of not less than 4 years from the
                     Date of Grant - the Grantee shall be entitled to exercise
                     100% of all the Options granted in such Grantee's favor.

              In the event that the employment of the Grantee is terminated for
              any reason (including due to death or disability), all of the
              Options granted in his favor which are not yet Vested Options
              shall immediately expire and terminate, shall become null and void
              and shall not entitle the Grantee to any right in or to the
              Company.

       7.3    EXERCISE PERIOD

              7.3.1  Each Vested Option shall remain exercisable until the lapse
                     of two years following the later of : (I) the vesting date
                     of such Options, or (II) the date of the initial public
                     offering of the Company's shares on Nasdaq.

              7.3.2  Notwithstanding the abovesaid, a Grantee shall also be
                     entitled to exercise the Vested Options immediately prior
                     to the closing of a transaction, the nature of which is the
                     sale of all of the shares of the Company by the
                     shareholders, upon receipt of the Company's notice
                     specifying such date. It is hereby clarified that in any
                     event, upon the closing of such a transaction, the
                     non-Vested Options shall expire and terminate and become
                     null and void and shall not entitle the Grantee to any
                     right in or to the Company. In the event the Grantee does
                     not exercise all of the Vested Options on the date
                     specified by the Company, the remaining Vested Options
                     shall expire and terminate and become null and void on the
                     closing date of the abovementioned transaction and shall
                     not entitle the Grantee to any right in or toward the
                     Company.

       7.4    Vested Options may be exercised at one time or from time to time
              during the Exercise Period, but only by the Trustee, after the
              Trustee shall have received written instructions from the Grantee,
              accompanied by the full payment of the Exercise Price for the
              Vested Options then being exercised, by personal check or
              cashier's check payable to the order of the Company (the written
              instructions accompanied by the full payment shall be referred to
              hereinafter as: the "Exercise Notice"). The Trustee shall exercise
              such Vested Options with respect to which the Exercise Notice was
              given, by giving the Company, at its principal office, written
              notice of intent to exercise such Vested Options, accompanied by
              the Exercise Notice; provided however, that in case payment is
              made by personal check (and not by cashier's check), the Options
              shall not be considered as exercised, and the Company shall not
              issue the Exercised Shares in respect thereof, until the personal
              check shall have been fully honored by the bank on which it was
              drawn.

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       7.5    The Exercised Shares shall be issued in the name of the Trustee
              who shall hold same until their release as hereinafter provided.

       7.6    A Grantee whose employment with the Company was terminated for any
              reason (including death or disability) shall be entitled only to
              the Shares which were previously exercised and the Vested Options,
              and the remaining Options (i.e. non-Vested) shall expire and
              terminate and become null and void and shall not entitle the
              Grantee to any right in or to the Company.

8.     TRANSFERABILITY

       8.1    The Options and all rights related thereto shall not be
              assignable, transferable, subjected to an attachment, lien or
              encumbrance of any kind.

       8.2    Notwithstanding the abovesaid, the Vested Options shall be
              transferable by will or intestacy, provided that the Company
              receives written notice thereof, accompanied by a certified copy
              of the Will or Intestacy Order and/or other evidence deemed
              acceptable by the Board, and accompanied by the transferee(s)
              written consent to the provisions and rules of the Ordinance, the
              Plan, and the Option Agreement.

       8.3    Following the exercise of the Vested Options, the Exercised Shares
              shall be transferable after the Restricted Period, subject to all
              applicable securities regulations and lock-up provisions. Further,
              to the extent that applicable law provides for concurrent payment
              of taxes by the transferor upon transfer, the Exercised Shares
              shall only be transferable once payment of all taxes required to
              be paid in connection with a sale or transfer of Exercised Shares
              shall have been made to the tax assessor, confirmation of same
              shall have been received by the Trustee or the Company, and the
              conditions set forth in Section 9 hereunder shall have been
              fulfilled.

       8.4    Without derogating from the abovesaid, in the event the
              shareholders of the Company (not including shareholders who
              purchased shares under an employee share option plan)
              (hereinafter: the "SELLING SHAREHOLDERS") intend to sell all of
              their shares in the Company, and to the effect that the Grantee
              was asked to do so by the majority of the Selling Shareholders
              (which majority shall be determined according to the pro rata
              share of each Selling Shareholder of the issued share capital of
              the Company), the Grantee shall be obligated to join the sale and
              sell his Shares, under the same conditions as the Selling
              Shareholders are selling their shares, and if requested by the
              purchasers of such sale, at the purchaser's sole discretion, the
              Grantee shall sell to the purchasers the Vested Options, under the
              same terms, as if the Grantee had exercised same immediately prior
              to the sale.

9.     RELEASE

       Upon the lapse of the Restricted Period, the Trustee may, pursuant to the
       written request of the Grantee, release and transfer the Exercised Shares
       to the Grantee, or to any third party to whom the Grantee wishes to sell
       the Exercised Shares, as indicated in the Grantee's written notice,
       provided however that all the following conditions will have been
       fulfilled prior to such transfer: (I) payment to the tax assessor of all
       taxes required to be paid upon the release and transfer of the Exercised
       Shares and confirmation of same received by the Trustee; and (II) receipt
       by the Trustee of written confirmation issued by the Company to the
       Trustee stating that all requirements for said release and transfer have
       been fulfilled according to the terms of the Articles, the Ordinance, the
       Plan and the Option Agreement.

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                                       6

       The date on which the Exercised Shares shall be released and transferred
       to the Grantee shall hereinafter be referred to as the "DATE OF RELEASE".

10.    TERMINATION

       10.1   Notwithstanding anything to the contrary herein, any Option
              granted in favor of a Grantee not exercised by such Grantee within
              the Exercise Period and in strict accordance with the terms of the
              Plan and the Option Agreement, shall, upon the lapse of the
              Exercise Period, immediately expire and terminate, become null and
              void, and shall not entitle the Grantee to any right in, or toward
              the Company in connection with same, and all interests and rights
              of the Grantee, in and to same, shall expire.

       10.2   Notwithstanding anything to the contrary herein, upon the issuance
              of a court order declaring the bankruptcy of a Grantee, or the
              appointment of a receiver or a provisional receiver for a Grantee,
              or over his assets, or any part thereof, or upon making a general
              assignment for the benefit of his creditors, any Option issued and
              registered in favor of such Grantee which was not yet exercised by
              the Grantee shall immediately expire and terminate, become null
              and void and shall not entitle the Grantee, his receiver,
              successors, creditors or assignees, to any right in, or toward the
              Company in connection with same, and all interests and rights of
              the Grantee, his receiver, successors, creditors or assignees, in
              and to same, if any, shall expire.

11.    RIGHTS AS SHAREHOLDER

       11.1   It is hereby clarified that a Grantee shall not, by virtue of the
              Plan, the Option Agreement or any Option granted in favor of him
              thereunder, have any of the rights of a shareholder with respect
              to any Shares represented by the Options, until the Options have
              been exercised.

              Furthermore, except for the right to receive dividends as provided
              in Section 12.1 hereinafter, the Grantee shall not have any rights
              by virtue of the Exercised Shares until same shall have been
              transferred to the Grantee by registering same in the Grantee's
              name, and only then shall the Grantee have the rights of a
              shareholder with respect to the shares so registered.

       11.2   For so long as the Exercised Shares are held by the Trustee, the
              Company shall consider only the Trustee as the owner of such
              shares for all purposes whatsoever (including without limitation,
              for the purpose of delivering notices); the Trustee, however,
              shall not exercise the voting rights conferred by such Exercised
              Shares in any way whatsoever, and shall not issue a proxy to any
              person or entity to vote such shares.

       11.3   The Grantee shall not have, and hereby waives the right to have,
              by virtue of the Exercised Shares, any pre-emptive rights to
              purchase, along with the other shareholders in the Company, a pro
              rata portion of any securities proposed to be offered by the
              Company prior to the offering thereof to any third party and any
              rights of first refusal to purchase any securities of the Company
              offered by the other shareholders of the Company.

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                                       7

12.    DIVIDENDS AND BONUS SHARES

       12.1   Cash dividends paid or distributed, if any, with respect to the
              Exercised Shares held by the Trustee, shall be remitted directly
              to the Grantee who is entitled to the Exercised Shares for which
              the dividends are being paid or distributed.

       12.2   All bonus shares to be issued by the Company, if any, with regard
              to the Exercised Shares, shall, if the Exercised Shares are
              registered to the Trustee, be registered in the name of the
              Trustee and, if the Exercised Shares are registered to the
              Grantee, be registered in the name of the Grantee. All provisions
              applying to the Exercised Shares, shall apply to the bonus shares,
              mutatis mutandis.

       12.3   The Trustee shall transfer the said bonus shares upon the transfer
              of the Exercised Shares with respect to which the bonus shares
              were issued.

13.    ADJUSTMENTS

       The number of Shares to which each outstanding Option is exercisable,
       shall be proportionately adjusted in the event of a reorganization of the
       share capital of the Company by a stock split, reverse stock split,
       combination or reclassification of the shares, as well as for a
       distribution of bonus shares. Such adjustment shall be made by the Board,
       whose determination in this matter shall be final and binding.

14.    RIGHTS TO CHANGES

       The Plan or the Option Agreement shall not affect, in any way, the
       rights, powers or freedoms of the Company or its shareholders to make or
       authorize: any sale, transfer or any change whatsoever in all or any part
       of the Company's assets, obligations or business, or any other business,
       commercial or corporate act or proceeding, whether of a similar character
       or otherwise; any or all adjustments, recapitalizations, reorganizations
       or other changes in the Company's capital structure or business; any
       merger or consolidation of the Company; any issue of bonds, debentures,
       shares (including preferred or prior preference shares ahead of or
       affecting the existing shares of the Company including the shares into
       which the Options granted hereunder are exercisable or the Exercised
       Shares or the rights thereof, etc.); or the dissolution or liquidation of
       the Company; and none of the above acts or authorizations shall entitle
       the Grantee to any right or remedy, including, without limitation, a
       right of compensation for any dilution resulting from any issuance of any
       shares or of any other securities in the Company to any person or entity
       whatsoever.

15.    NO EMPLOYMENT OBLIGATIONS

       Nothing in the Plan, the Option Agreements or in any Option granted
       hereunder shall guarantee the Grantee's employment in the Company and no
       obligation of the Company as to the length of employment of the Grantee
       or as to any other term of employment shall be implied by same; the
       Company reserves the right to terminate the employment of any employee
       pursuant to such employee's terms of employment and any law.

16.    NO REPRESENTATION

       The Company does not and shall not, through this Plan or through any
       Option Agreement, make or be deemed to make any representation toward any
       Grantee with regard to the

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       Company, its business, its value or with regard to the Company's shares
       in general, and the Exercised Shares in particular, their value or
       rights.

       The Grantee, upon entering the Option Agreement, represents and warrants
       toward the Company, that his consent to the grant of the Options issued
       in favor of him and their exercise (if so exercised), is, in no respect,
       made on the basis of any representation or warranty made by the Company
       or by any of its directors, officers, shareholders or employees, and is
       made based only upon his examination and expectations of the Company, on
       an "as is" basis. The Grantee waives any claim whatsoever of "non
       conformity" of any kind or any other cause of action or claim of any kind
       with respect to the Options and/or the Shares exercised thereupon.

17.    TAX CONSEQUENCES

       All tax consequences arising from the grant or exercise of any Option,
       the payment for or the transfer of the Exercised Shares to the Grantee,
       or from any other event or act (of the Company or the Grantee) hereunder,
       shall be borne solely by the Grantee, and the Grantee shall indemnify the
       Company and hold it harmless from and against any and all liability for
       any such tax or interest or penalty.

       The Company and the Trustee may withhold from any payment to which the
       Grantee may be entitled to from the Company, the amount of the tax and/or
       other mandatory payment the withholding of which is required with respect
       to the Options and/or the Exercised Shares under any law.

18.    SUBORDINATION

       It is clarified that the Grant of the Options hereunder is subject to the
       approval by the Tax Authorities of the Plan and the Trustee, in
       accordance with the Ordinance. It is also clarified that the Plan and the
       Option Agreement are subject to the provisions of the Ordinance which
       accordingly shall be deemed an integral part of each, and which shall
       prevail over any term that is not consistent with the Ordinance.<PAGE>

                                                                    Exhibit 10.2

                                   CAMTEK LTD.
                           INCENTIVE STOCK OPTION PLAN

1.     DEFINITIONS

       As used herein the following terms shall have the meanings hereinafter
       set forth, unless the context clearly indicates to the contrary.

       (A)    the "COMPANY" - Camtek Ltd.

       (B)    "BOARD" - the Board of Directors of the Company.

       (C)    "SHARE(S)" - Ordinary Shares of the Company, each with a par value
              of NIS 0.01.

       (D)    "OPTION(S)" - an Option or Options granted within the framework of
              this Plan each of which imparts the right to purchase one Share
              per Option.

       (E)    "GRANTEE" - an employee of the Company to whom Options are granted
              or to whom the Company decides to grant Options.

       (F)    "PLAN" - the Company's Employee Share Option Plan as provided
              hereunder, and as may be amended from time to time by the Board,
              as set forth hereinbelow.

       (G)    "OPTION AGREEMENT" - the Agreement to be executed between the
              Company and the Grantee under which Option(s) are to be granted.

       (H)    "VESTED OPTION(S)" - that portion of the Options which the Grantee
              is entitled to exercise in accordance with the provisions of
              Section 8.2 of the Plan or the provisions of the Option Agreement
              executed with such Grantee.

       (I)    the "EXERCISE PERIOD" - the period during which the Vested Options
              may be exercised, as provided in Section 8.3 of the Plan.

       (J)    "EXERCISE PRICE" - the price which the Grantee must pay to
              exercise each Option.

       (K)    "EXERCISED SHARES" - the Shares issued upon the exercise of the
              Options.

       (L)    the "TRUSTEE" - the custodian appointed by the Company for the
              purposes of this Plan.

       (M)    "INCENTIVE STOCK OPTION(S)" - as defined in Section 7 hereto.

       (N)    "INCENTIVE STOCK OPTION GRANTEE" - as defined in Section 7 hereto.

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                                       2

       2.     THE PLAN

       2.1    PURPOSE - The purpose and intent of the Plan is to grant to
              selected employees of the Company and of the Company's
              subsidiaries, an opportunity to purchase Shares of the Company by
              way of granted Options and to provide an additional incentive to
              such employees to remain in the employ of the Company and the
              Company's subsidiaries, to encourage the sense of proprietorship
              of such employees, and to stimulate the active interest of such
              employees in the success of the Company and the Company's
              subsidiaries.

       2.2    EFFECTIVE DATE - The Board has resolved to adopt and authorize the
              Plan and has resolved that it shall enter into effect commencing
              1.9.97.

       2.3    SUNSET DATE - The Plan shall be valid and in effect for a period
              of ten (10) years and shall expire on 31.8.2007.

3.     ADMINISTRATION

       3.1    The Plan shall be administered by the Board or by a committee
              appointed by the Board.

       3.2    The Board shall have sole and full discretion and sole authority
              to administer the Plan and all actions related thereto, including
              to perform any and all of the following from time to time and at
              any time:

              3.2.1  to determine the Company's and the Company's subsidiaries'
                     employees in favor of whom the Options shall be granted,
                     the number of Options to be granted in favor of each
                     employee, the Exercise Price thereof, and the conditions
                     under which such Options may be exercised;

              3.2.2  to interpret the Plan;

              3.2.3  to determine the terms of the Option Agreements;

              3.2.4  to perform any action required or advisable for the
                     administration of the Plan;

              3.2.5  to prescribe, amend, modify (including by adding new terms
                     and rules), and to rescind and terminate the Plan or any of
                     its terms.

       3.3    Any amendment or modification of the Plan, if any, shall be
              applicable to the relationship between the Grantee and the
              Company, including under the Option Agreements and the amendment
              or modification shall be deemed to have been included in the Plan
              and the Option Agreements, ab initio, unless the amendment or
              modification adversely affects the rights of a Grantee under the
              Vested Options.

4.     ELIGIBILITY

              In determining the employees in favor of whom Options are to be
              granted, the number of Options to be granted and the terms of the
              Options, the Board may take into account the nature of the
              services rendered by the respective employee, his present and
              future
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                                       3

              potential and contribution to the Company's success, and any other
              data the Board may deem relevant.

5.     RESERVED SHARES

       The total number of Options to be granted to the Grantees pursuant to the
       Plan shall be determined from time to time by the Board.

       The Company shall at all times reserve such number of authorized but
       unissued Shares which equals the number of Shares to which all of the
       then outstanding Options may be converted upon exercise.

6.     GRANT OF OPTIONS AND ISSUANCE OF SHARES IN TRUST

       6.1    The Options shall be granted in favor of the Grantee for no
              consideration.

       6.2    The Options and the Grantee's rights thereunder shall be subject
              to the execution of an Option Agreement between the Company and
              the Grantee, which Option Agreement shall set forth the terms and
              conditions of the Options, as determined by the Company, including
              without limitation, the number of Options granted thereunder, the
              terms of exercise thereof (including the Exercise Price) and any
              other term the Board may deem necessary.

       6.3    In addition, the Options shall be subject to the execution of all
              the documents necessary in order to comply with all applicable tax
              laws (hereinafter: the "TAX LAWS"), and all other documents
              required by the Company, (the Option Agreement and said documents
              shall be hereinafter referred to as: the "DOCUMENTS").

       6.4    The Company shall provide the Grantee with the Documents for
              signature after the Board adopts a resolution to grant Options in
              favor of such Grantee, and the Company shall sign such Documents
              after they have been duly signed and returned by such Grantee.

              It is hereby clarified that the execution of the said Documents by
              the Grantee does not exempt the Grantee from signing any other
              document as may be required by the Company at a later stage.

       6.5    During the Restricted Period (as defined below) and until the
              underlying Shares are released (as provided below), the Options
              granted hereunder shall be held by the Trustee and the Exercised
              Shares shall be issued to the Trustee, and both shall be
              registered in the name of the Trustee, who shall hold the Options
              and/or the Exercised Shares in trust for an aggregate period of at
              least two (2) years commencing from the date the Option
              documentation is deposited with the Trustee (hereinafter: the
              "RESTRICTED PERIOD"), and then continuing until such time as they
              are released, as hereinafter provided.

7.     AWARD OF INCENTIVE STOCK OPTIONS

       The Board may, from time to time and subject to the provisions of the
       Plan and such other terms and conditions as the Board may prescribe,
       grant to any participant in the Plan one or

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                                       4

       more "incentive stock options" (intended to qualify as such under the
       provisions of section 422 of the Internal Revenue Code of 1986, as
       amended) ("Incentive Stock Options") to purchase for cash the number of
       Shares allotted by the Board. The maximum number of Shares that may be
       issued under this Section 7 is 50,000. The date an Incentive Stock Option
       is granted shall mean the date selected by the Board as of which the
       Board allots a specific number of shares to a participant pursuant to the
       Plan. Notwithstanding the foregoing, Incentive Stock Options shall not be
       granted to any owner of 10% or more of the total combined voting power of
       the Company and its subsidiaries.

       Without derogating from anything to the contrary contained herein, it is
       hereby clarified that a resolution of the Board with the following effect
       shall require shareholder approval: (I) increasing the maximum number of
       Shares that may be issued under this Section 7; (II) extending the period
       during which an Incentive Stock Option may be granted or exercised; (III)
       extending the term of this Incentive Stock Option Plan; or (IV) changing
       the class of employees who are eligible to participate in this Incentive
       Stock Option Plan.

       7.1    INCENTIVE STOCK OPTION AGREEMENTS.

              The grant of an Incentive Stock Option shall be evidenced by a
              written Incentive Stock Option Agreement, executed by the Company
              and the holder of an Incentive Stock Option (the "INCENTIVE STOCK
              OPTION GRANTEE"), stating the number of Incentive Stock Options to
              be granted and the other terms referred to in Section 6.2 of the
              Plan, and in such form as the Board may from time to time
              determine.

       7.2    INCENTIVE STOCK OPTION PRICE.

              The exercise price of the Incentive Stock Options shall be 100% of
              the fair market value of a share of Shares on the date the
              Incentive Stock Option is granted. For as long as the Company's
              shares are traded on Nasdaq, said fair market value shall be as
              determined by the closing value of the Shares listed on Nasdaq at
              the closing of the last previous day of trading.

       7.3    MAXIMUM AMOUNT OF INCENTIVE STOCK OPTION GRANT.

              The aggregate value of Shares vesting in any calendar year to the
              benefit of any one Grantee pursuant to an Incentive Stock Option,
              shall not exceed US $100,000, such value measured by the fair
              market value of such shares on the date of grant of the Option
              pursuant to Section 7.2 above.

       7.4    APPLICABILITY OF STOCK OPTIONS SECTIONS.

              All Sections of this Plan shall apply equally to Incentive Stock
              Options, mutatis mutandis, to the extent not inconsistent with the
              express provisions of this Section 7. Said sections are
              incorporated by reference in this Section 7 as though fully set
              forth herein.

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                                       5

8.     TERMS OF OPTIONS

       8.1    Except as otherwise provided, the amount of Options and the
              Exercise Price for each Grantee shall be determined by the Board
              and shall be specified in the Option Agreement; provided however,
              that in no event shall the Exercise Price of (a) any Option be
              less than the par value price of the Shares; and of (b) any
              Incentive Stock Option be less than the fair market value of the
              Shares on the date of the grant of the Options, as set forth in
              Section 7.2 above.

       8.2    Unless otherwise determined by the Board with respect to any
              specific Grantee, the right of a Grantee to exercise the Options
              granted in such Grantee's favor during the Exercise Period shall
              be vested with such Grantee as follows:

              (a)    If the Grantee remains in the employ of the Company or its
                     subsidiaries for a period of not less than 2 years from the
                     date of the resolution of the Board regarding the issuance
                     of the Options to the Grantee (hereinafter: the "Date of
                     the Grant") - the Grantee shall be entitled to exercise 50%
                     of all the Options granted in such Grantee's favor.

              (b)    If the Grantee remains in the employ of the Company or its
                     subsidiaries for a period of not less than 3 years from the
                     Date of Grant - the Grantee shall be entitled to exercise
                     75% of all the Options granted in such Grantee's favor.

              (c)    If the Grantee remains in the employ of the Company or its
                     subsidiaries for a period of not less than 4 years from the
                     Date of Grant - the Grantee shall be entitled to exercise
                     100% of all the Options granted in such Grantee's favor.

              In the event that the employment of the Grantee is terminated for
              any reason (including due to death or disability), all of the
              Options granted in his favor which are not yet Vested Options
              shall immediately expire and terminate, shall become null and void
              and shall not entitle the Grantee to any right in or to the
              Company.

       8.3    EXERCISE PERIOD

              8.3.1  Each Vested Option shall remain exercisable until the lapse
                     of two years following the later of : (I) the vesting date
                     of such Options, or (II) the date of the initial public
                     offering of the Company's shares on Nasdaq. '

              8.3.2  Notwithstanding the abovesaid, a Grantee shall also be
                     entitled to exercise the Vested Options immediately prior
                     to the closing of a transaction, the nature of which is the
                     sale of all of the shares of the Company by the
                     shareholders, upon receipt of the Company's notice
                     specifying such date. It is hereby clarified that in any
                     event, upon the closing of such a transaction, the
                     non-Vested Options shall expire and terminate and become
                     null and void and shall not entitle the Grantee to any
                     right in or to the Company. In the event the Grantee does
                     not exercise all of the Vested Options on the date
                     specified by the Company, the remaining Vested Options
                     shall expire and terminate and become null and void on the
                     closing date of the abovementioned transaction and shall
                     not entitle the Grantee to any right in or toward the
                     Company.

<PAGE>
                                       6

       8.4    Vested Options may be exercised at one time or from time to
              time during the Exercise Period, but only by the Trustee, after
              the Trustee shall have received written instructions from the
              Grantee, accompanied by the full payment of the Exercise Price for
              the Vested Options then being exercised, by personal check or
              cashier's check payable to the order of the Company (the written
              instructions accompanied by the full payment shall be referred to
              hereinafter as: the "EXERCISE NOTICE"). The Trustee shall exercise
              such Vested Options with respect to which the Exercise Notice was
              given, by giving the Company, at its principal office, written
              notice of intent to exercise such Vested Options, accompanied by
              the Exercise Notice; provided however, that in case payment is
              made by personal check (and not by cashier's check), the Options
              shall not be considered as exercised, and the Company shall not
              issue the Exercised Shares in respect thereof, until the personal
              check shall have been fully honored by the bank on which it was
              drawn.

       8.5    The Exercised Shares shall be issued in the name of the Trustee
              who shall hold same until their release as hereinafter provided.

       8.6    A Grantee whose employment with the Company was terminated for any
              reason (including death or disability) shall be entitled only to
              the Shares which were previously exercised and the Vested Options,
              and the remaining Options (i.e. non-Vested) shall expire and
              terminate and become null and void and shall not entitle the
              Grantee to any right in or to the Company.

9.     TRANSFERABILITY

       9.1    The Options and all rights related thereto shall not be
              assignable, transferable, subjected to an attachment, lien or
              encumbrance of any kind.

       9.2    Notwithstanding the abovesaid, the Vested Options shall be
              transferable by will or intestacy, provided that the Company
              receives written notice thereof, accompanied by a certified copy
              of the Will or Intestacy Order and/or other evidence deemed
              acceptable by the Board, and accompanied by the transferee(s)
              written consent to the provisions and rules of the Tax Laws, the
              Plan, and the Option Agreement.

       9.3    Following the exercise of the Vested Options, the Exercised Shares
              shall be transferable after the Restricted Period, subject to all
              applicable securities regulations and lock-up provisions. Further,
              to the extent that applicable law provides for concurrent payment
              of taxes by the transferor upon transfer, the Exercised Shares
              shall only be transferable once payment of all taxes required to
              be paid in connection with a sale or transfer of Exercised Shares
              shall have been made to the tax assessor, confirmation of same
              shall have been received by the Trustee or the Company, and the
              conditions set forth in Section 9 hereunder shall have been
              fulfilled.

       9.4    "'Without derogating from the abovesaid, in the event the
              shareholders of the Company (not including shareholders who
              purchased shares under an employee share option plan)
              (hereinafter: the "SELLING SHAREHOLDERS") intend to sell all of
              their shares in the Company, and to the effect that the Grantee
              was asked to do so by the majority of the Selling Shareholders
              (which majority shall be determined according to the pro rata
              share of each Selling Shareholder of the issued share capital of
              the Company), the Grantee

<PAGE>
                                       7

              shall be obligated to join the sale and sell his Shares, under the
              same conditions as the Selling Shareholders are selling their
              shares, and if requested by the purchasers of such sale, at the
              purchaser's sole discretion, the Grantee shall sell to the
              purchasers the Vested Options, under the same terms, as if the
              Grantee had exercised same immediately prior to the sale.

10.    RELEASE

       upon the lapse of the Restricted Period, the Trustee may, pursuant to the
       written request of the Grantee, release and transfer the Exercised Shares
       to the Grantee, or to any third party to whom the Grantee wishes to sell
       the Exercised Shares, as indicated in the Grantee's written notice,
       provided however that all the following conditions will have been
       fulfilled prior to such transfer: (I) payment to the tax assessor of all
       taxes required to be paid upon the release and transfer of the Exercised
       Shares and confirmation of same received by the Trustee; and (II) receipt
       by the Trustee of written confirmation issued by the Company to the
       Trustee stating that all requirements for said release and transfer have
       been fulfilled according to the terms of the Articles, the Tax Laws, the
       Plan and the Option Agreement. The date on which the Exercised Shares
       shall be released and transferred to the Grantee shall hereinafter be
       referred to as the "DATE OF RELEASE".

11.    TERMINATION

       11.1   Notwithstanding anything to the contrary herein, any Option
              granted in favor of a Grantee not exercised by such Grantee within
              the Exercise Period and in strict accordance with the terms of the
              Plan and the Option Agreement, shall, upon the lapse of the
              Exercise Period, immediately expire and terminate, become null and
              void, and shall not entitle the Grantee to any right in, or toward
              the Company in connection with same, and all interests and rights
              of the Grantee, in and to same, shall expire.

       11.2   Notwithstanding anything to the contrary herein, upon the issuance
              of a court order declaring the bankruptcy of a Grantee, or the
              appointment of a receiver or a provisional receiver for a Grantee,
              or over his assets, or any part thereof, or upon making a general
              assignment for the benefit of his creditors, any Option issued and
              registered in favor of such Grantee which was not yet exercised by
              the Grantee shall immediately expire and terminate, become null
              and void and shall not entitle the Grantee, his receiver,
              successors, creditors or assignees, to any right in, or toward the
              Company in connection with same, and all interests and rights of
              the Grantee, his receiver, successors, creditors or assignees, in
              and to same, if any, shall expire.

12.    RIGHTS AS SHAREHOLDER

       12.1   It is hereby clarified that a Grantee shall not, by virtue of the
              Plan, the Option Agreement or any Option granted in favor of him
              thereunder, have any of the rights of a shareholder with respect
              to any Shares represented by the Options, until the Options have
              been exercised.

              Furthermore, except for the right to receive dividends as provided
              in Section 13.1 hereinafter, the Grantee shall not have any rights
              by virtue of the Exercised Shares until

<PAGE>
                                       8

              same shall have been transferred to the Grantee by registering
              same in the Grantee's name, and only then shall the Grantee have
              the rights of a shareholder with respect to the shares so
              registered.

       12.2   For so long as the Exercised Shares are held by the Trustee, the
              Company shall consider only the Trustee as the owner of such
              shares for all purposes whatsoever (including without limitation,
              for the purpose of delivering notices); the Trustee, however,
              shall not exercise the voting rights conferred by such Exercised
              Shares in any way whatsoever, and shall not issue a proxy to any
              person or entity to vote such shares.

       12.3   The Grantee shall not have, and hereby waives the right to have,
              by virtue of the Exercised Shares, any pre-emptive rights to
              purchase, along with the other shareholders in the Company, a pro
              rata portion of any securities proposed to be offered by the
              Company prior to the offering thereof to any third party and any
              rights of first refusal to purchase any securities of the Company
              offered by the other shareholders of the Company.

13.    DIVIDENDS AND BONUS SHARES

       13.1   Cash dividends paid or distributed, if any, with respect to the
              Exercised Shares held by the Trustee, shall be remitted directly
              to the Grantee who is entitled to the Exercised Shares for which
              the dividends are being paid or distributed.

       13.2   All bonus shares to be issued by the Company, if any, with regard
              to the Exercised Shares, shall, if the Exercised Shares are
              registered to the Trustee, be registered in the name of the
              Trustee and, if the Exercised Shares are registered to the
              Grantee, be registered in the name of the Grantee. All provisions
              applying to the Exercised Shares, shall apply to the bonus shares,
              mutatis mutandis.

       13.3   The Trustee shall transfer the said bonus shares upon the transfer
              of the Exercised Shares with respect to which the bonus shares
              were issued.

14.    ADJUSTMENTS

       The number of Shares to which each outstanding Option is exercisable,
       shall be proportionately adjusted in the event of a reorganization of the
       share capital of the Company by a stock split, reverse stock split,
       combination or reclassification of the shares, as well as for a
       distribution of bonus shares. Such adjustment shall be made by the Board,
       whose determination in this matter shall be final and binding.

15.    RIGHTS TO CHANGES

       The Plan or the Option Agreement shall not affect, in any way, the
       rights, powers or freedoms of the Company or its shareholders to make or
       authorize: any sale, transfer or any change whatsoever in all or any part
       of the Company's assets, obligations or business, or any other business,
       commercial or corporate act or proceeding, whether of a similar character
       or otherwise; any or all adjustments, recapitalizations, reorganizations
       or other changes in the Company's capital structure or business; any
       merger or consolidation of the Company; any issue of bonds, debentures,
       shares (including preferred or prior preference shares ahead of or

<PAGE>
                                       9

       affecting the existing shares of the Company including the shares into
       which the Options granted hereunder are exercisable or the Exercised
       Shares or the rights thereof, etc.); or the dissolution or liquidation of
       the Company; and none of the above acts or authorizations shall entitle
       the Grantee to any right or remedy, including, without limitation, a
       right of compensation for any dilution resulting from any issuance of any
       shares or of any other securities in the Company to any person or entity
       whatsoever.

16.    NO EMPLOYMENT OBLIGATIONS

       Nothing in the Plan, the Option Agreements or in any Option granted
       hereunder shall guarantee the Grantee's employment in the Company and no
       obligation of the Company as to the length of employment of the Grantee
       or as to any other term of employment shall be implied by same; the
       Company reserves the right to terminate the employment of any employee
       pursuant to such employee's terms of employment and any law.

17.    NO REPRESENTATION

       The Company does not and shall not, through this Plan or through any
       Option Agreement, make or be deemed to make any representation toward any
       Grantee with regard to the Company, its business, its value or with
       regard to the Company's shares in general, and the Exercised Shares in
       particular, their value or rights.

       The Grantee, upon entering the Option Agreement, represents and warrants
       toward the Company, that his consent to the grant of the Options issued
       in favor of him and their exercise (if so exercised), is, in no respect,
       made on the basis of any representation or warranty made by the Company
       or by any of its directors, officers, shareholders or employees, and is
       made based only upon his examination and expectations of the Company, on
       an "as is" basis. The Grantee waives any claim whatsoever of "non
       conformity" of any kind or any other cause of action or claim of any kind
       with respect to the Options and/or the Shares exercised thereupon.

18.    TAX CONSEQUENCES

       All tax consequences arising from the grant or exercise of any Option,
       the payment for or the transfer of the Exercised Shares to the Grantee,
       or from any other event or act (of the Company or the Grantee) hereunder,
       shall be borne solely by the Grantee, and the Grantee shall indemnify the
       Company and hold it harmless from and against any and all liability for
       any such tax or interest or penalty.

       The Company and the Trustee may withhold from any payment to which the
       Grantee may be entitled to from the Company, the amount of the tax and/or
       other mandatory payment the withholding of which is required with respect
       to the Options and/or the Exercised Shares under any law.

19.    SUBORDINATION

       It is clarified that the Grant of the Options hereunder is subject to the
       approval, if necessary, by the relevant tax authorities of the Plan and
       the Trustee, in accordance with the Tax Laws. It is also clarified that
       the Plan and the Option Agreement are subject to the provisions of the
       Tax

<PAGE>
                                       10

       Laws which accordingly shall be deemed an integral part of each, and
       which shall prevail over any term that is not consistent with the Tax
       Laws.

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