Document:

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                                                                    Exhibit 10.3

                             ACCORD NETWORKS LTD.
                            2000 SHARE OPTION PLAN

     1. Purposes of the Plan. The purposes of this Share Option Plan are to
        --------------------
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
Accord Networks Ltd. (the "Company") and its Subsidiaries and to promote the
success of the Company's business. Options granted under the Plan may be
Incentive Stock Options or Nonstatutory Stock Options, as determined by the
Administrator at the time of grant.

     2. Definitions. As used herein, the following definitions shall apply:
        -----------

        (a) "Administrator" means the Board or any of its Committees as shall be
             -------------
administering the Plan, in accordance with Section 4 hereof.

        (b) "Applicable Laws" means the requirements relating to the
             ---------------
administration of share option plans under the applicable laws of the State of
Israel (except for matters with respect to the Code and the I.R.S., and, in such
cases, the laws of the United States shall apply).

        (c) "Articles" means the Articles of Association of the Company.
             --------

        (d) "Board" means the Board of Directors of the Company.
             -----

        (e) "Code" means the U.S. Internal Revenue Code of 1986, as amended.
             ----

        (f) "Committee" means a committee of Directors appointed by the Board in
             ---------
accordance with Section 4 hereof and the Articles.

        (g) "Company" means Accord Networks Ltd., a corporation incorporated
             -------
under the laws of the State of Israel.

        (h) "Consultant"  means any  person  who is  engaged  by the  Company
            ----------
or any Parent or Subsidiary of the Company to render consulting or advisory
services to such entity.

        (i) "Director" means a member of the Board of Directors of the Company.
             --------

        (j) "Employee" means any person, including Officers, employed by the
             --------
Company or any Parent or Subsidiary. An Employee shall not cease to be an
Employee in the case of (i) any leave of absence approved by the Company or (ii)
transfers between locations of the Company or between the Company, its Parent,
any Subsidiary, or any successor. For purposes of Incentive Stock Options, no
such leave may exceed ninety days, unless reemployment upon expiration of such
leave is guaranteed by statute or contract. If reemployment upon expiration of a
leave of absence approved by the Company is not so guaranteed, on the 181st day
of such leave any Incentive Stock
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Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.

        (k) "Exchange Act" means the Securities Exchange Act of 1934, as
             ------------
amended.

        (l) "Fair Market Value" means, as of any date, the value of a Share
             -----------------
determined as follows:

  (a)   If the Shares are listed on a U.S national securities exchange or the
        Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock
        Market, their Fair Market Value shall be the closing sales price for
        such Shares (or the closing bid, if no sales were reported) as quoted on
        such exchange or system for the last market trading day prior to the
        time of determination, as reported in The Wall Street Journal or such
        other source as the Administrator deems reliable;

  (b)   If the Shares are listed on the Tel Aviv Stock Exchange, but are not
        traded on a U.S national securities exchange or the Nasdaq National
        Market or The Nasdaq Small Cap Market, their Fair Market Value shall be
        the closing sales price for such Shares (or the closing bid if no sales
        were reported) as quoted on such exchange for the last market trading
        day prior to the time of determination, as reported in Globes, HaAretz
        or such other source as the Administrator deems reliable;

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

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

        (m) "Incentive Stock Option" means an Option intended to qualify as an
             ----------------------
incentive stock option within the meaning of Section 422 of the Code.

        (n) "Nonstatutory Stock Option" means an Option not intended to qualify
as an Incentive Stock Option and which do not necessarily comply with the United
States law.

        (o) "Officer"  means a person who is an officer of the Company within
             -------
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

        (p) "Option" means a share option granted pursuant to the Plan.
             ------

        (q) "Option  Agreement" means a written  agreement  between the Company
             -----------------
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.

        (r) "Optioned Shares" means the Shares subject to an Option.
             ---------------

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        (s) "Optionee" means the holder of an outstanding Option granted under
             --------
the Plan.

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

        (u) "Plan" means this 1999 Share Option Plan.
             ----

        (v) "Service Provider" means an Employee, or Consultant.
             ----------------

        (w) "Share" means a share of the Company's Ordinary Shares having a
             -----
nominal value of NIS 0.01, as adjusted in accordance with Section 11 below.

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

     3. Shares Subject to the Plan. Subject to the  provisions of Section 11 of
        --------------------------
the Plan, the maximum aggregate number of Shares that may be subject to option
and sold under the Plan is 750,000 Shares. The Shares may be authorized, but
                           -------
unissued, or reacquired.

        If an Option expires or becomes unexercisable without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued under
the Plan shall not be returned to the Plan and shall not become available for
future distribution under the Plan.

     4. Administration of the Plan.
        --------------------------

        (a) Procedure. The Plan shall be administered by the Board or a
            ---------
Committee appointed by the Board, subject to the Articles, which Committee shall
be constituted to comply with Applicable Laws.

        (b) Powers of the Administrator. Subject to the provisions of the Plan
            ---------------------------
and, in the case of a Committee, the specific duties delegated by the Board to
such Committee, and subject to the approval of any relevant authorities, the
Administrator shall have the authority, in its discretion:

            (a) to recommend to the Board to update the Fair Market Value;

            (b) to grant Options and to select the Service Providers to whom
                Options may from time to time be granted hereunder;

            (c) to determine the number of Shares to be covered by each such
                award granted hereunder;

            (d) to approve forms of Option Agreement for use under the Plan;

            (e) to determine the terms and conditions of any Option granted
                hereunder;

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            (f) to prescribe, amend and rescind rules and regulations under the
                Plan;

            (g) to construe and interpret the terms of the Plan and awards
                granted pursuant to the Plan.

        (c) Effect of Administrator's  Decision. All decisions, determinations
            -----------------------------------
and interpretations of the Administrator shall be final and binding on all
Optionees.

     5. Eligibility.
         -----------

        (a) Nonstatutory Stock Options may be granted to Service Providers.
Incentive Stock Options may be granted only to Employees.

        (b) Each Option shall be designated in the Option Agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding
such designation, to the extent that the aggregate Fair Market Value of the
Shares with respect to which Incentive Stock Options are exercisable for the
first time by the Optionee during any calendar year (under all plans of the
Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be
treated as Nonstatutory Stock Options. For purposes of this Section 5(b),
Incentive Stock Options shall be taken into account in the order in which they
were granted. The Fair Market Value of the Shares shall be determined as of the
time the Option with respect to such Shares is granted.

        (c) The Plan shall not confer upon any Optionee any right with respect
to continuing the Optionee's relationship as a Service Provider with the
Company, nor shall it interfere in any way with his or her right or the
Company's right to terminate such relationship at any time, with or without
cause.

     6. Term of Plan. The Plan shall become effective upon its adoption by the
        ------------
Board. However, the Plan shall be submitted to the shareholders of the Company
for approval within twelve (12) months of the Board's approval thereof. No
Incentive Stock Options granted under the Plan may be exercised prior to
approval of the Plan by the shareholders and if the shareholders fail to approve
the Plan within twelve (12) months of the Board's approval thereof, any
Incentive Stock Options previously granted hereunder shall be automatically
converted to Nonstatutory Stock Options without any further act. The Plan shall
continue in effect for a term of ten (10) years, unless sooner terminated under
Section 13 of the Plan.

     7. Term of Option. The term of each Option shall be stated in the Option
        --------------
Agreement; provided, however, that the term of an Incentive Stock Option shall
be no more than ten (10) years from the date of grant thereof; provided, further
that the term of an Incentive Stock Option granted to an Optionee who, at the
time the Option is granted, owns shares representing more than ten percent (10%)
of the voting power of all classes of issued and outstanding share capital of
the Company or any Parent or Subsidiary, shall be five (5) years from the date
of grant or such shorter term as may be provided in the Option Agreement.

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     8. Option Exercise Price and Consideration.
        ---------------------------------------

        (a) The per share exercise price for the Shares to be issued pursuant to
exercise of an Option shall be such price as is determined by the Administrator,
but shall be subject to the following:

            (i)  In the case of an Incentive Stock Option

                 (A) granted to an Employee who, at the time of the grant of
such Incentive Stock Option, owns shares representing more than ten percent
(10%) of the voting power of all classes of issued and outstanding share capital
of the Company or any Parent or Subsidiary, the exercise price shall be no less
than 110% of the Fair Market Value per Share on the date of grant.

                 (B) granted to any Employee other than an Employee described in
the preceding subparagraph, the per Share exercise price shall be no less than
100% of the Fair Market Value per Share on the date of grant.

            (ii) Notwithstanding the foregoing, pursuant to a merger or other
corporate transaction, Options may be granted in substitution for options held
by service providers of another corporation with per Share exercise prices of
less than 100% of Fair Market Value on the date of grant.

        (b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the date of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note, (4) consideration received by the Company under a
formal cashless exercise program adopted by the Company in connection with the
Plan, or (5) any combination of the foregoing methods of payment. To the extent
that the consideration paid for the Shares is denominated in US Dollars, the
exchange rate to be used to obtain a New Israeli Shekel value of such
consideration shall be the noon buying rate as reported by the Federal Reserve
Bank of New York (expressed in New Israeli Shekels per unit of US Dollar) on the
date of exercise of the Option. The Administrator shall determine, at its own
discretion, the type of consideration to be accepted by the Company. Unless
determined otherwise the consideration shall be paid to the Company in US
Dollars.

     9. Exercise of Option.
        ------------------

        (a) Procedure for Exercise; Rights as a Shareholder. Any Option granted
            -----------------------------------------------
hereunder shall be exercisable according to the terms of the Plan and the Option
Agreement, and at such times and under such conditions as determined by the
Administrator and set forth in the Option Agreement. An Option may not be
exercised for a fraction of a Share.

            An Option shall be deemed exercised when the Company receives: (i)
written notice of exercise (in accordance with the Option Agreement) from the
person entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon exercise of
an Option shall be registered in the name of the Optionee.

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            Until the consummation of the initial underwritten public offering
of equity securities of the Company pursuant to an effective registration
statement, prospectus or similar document in Israeli or such other jurisdiction
as is determined by the Board (the "IPO"), the Company shall have the right to
demand from the Optionee at any time that the same shall provide, and the
Optionee shall provide, any certificate, declaration or other document which the
Company shall consider to be necessary or desirable pursuant to any law, whether
local or foreign, including any certificate or agreement which the Company shall
require, if any, from the Optionees as members of a class of shareholders, or
any certificate, declaration or other document the obtaining of which shall be
deemed by the Board to be appropriate or necessary for the purpose of raising
capital for the Company (including pursuant to a public offering of securities),
of merging the Company with another company (whether the Company is the
surviving entity or not), or of reorganization of the Company, including, in the
event of a consolidation or merger of the Company or any sale, lease, exchange
or other transfer of all or substantially all of the assets or Shares of the
Company, the sale or exchange, as the case may be, of any Shares the Grantee may
have purchased hereunder all as shall be deemed necessary or desirable by the
Board.

            Until the Shares are issued (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or any other rights as a shareholder shall exist with
respect to the Shares, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such Shares within 30 days after the Option
is exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the Shares are issued, except as provided
in Section 11 of the Plan.

            Exercise of an Option in any manner shall result in a decrease in
the number of Shares thereafter available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.

        (b) Termination of Relationship as a Service Provider. If an Optionee
ceases to be a Service Provider, other than upon the Optionee's death or
disability, the Optionee may exercise his or her Options within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). If, on the date
of termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.

        (c) Disability of Optionee. If an Optionee ceases to be a Service
            ----------------------
Provider as a result of the Optionee's disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of termination, but in no event
later than the expiration date of the term of such Option as set forth in the
Option Agreement. If, on the date of termination, the Optionee is not vested as
to the entire Option, the Shares covered by the unvested portion of the Option
shall revert to the Plan. If, after termination, the Option is not exercised
within the time specified herein, the Option shall terminate, and the Shares
covered by such Option shall revert to the Plan. If such disability is not a
"disability" as such term is defined in Section 22(e)(3) of the Code, in the
case of an Incentive Stock Option such Incentive Stock Option shall
automatically cease to be treated as an Incentive Stock Option and shall

                                      -6-
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be treated for tax purposes as a Nonstatutory Stock Option on the day of three
months and one day following such termination.

        (d) Death of Optionee. If an Optionee dies while a Service Provider, the
            -----------------
Option may be exercised within such period of time as is specified in the Option
Agreement to the extent that the Option is vested on the date of death (but in
no event later than the expiration of the term of such Option as set forth in
the Option Agreement) by the Optionee's estate or by a person who acquires the
right to exercise the Option by bequest or inheritance. If, at the time of
death, the Optionee is not vested as to the entire Option, the Shares covered by
the unvested portion of the Option shall revert to the Plan. If the Option is
not so exercised within the time specified herein, the Option shall terminate,
and the Shares covered by such Option shall revert to the Plan.

        (e) Termination for Cause. If an Optionee ceases to be a Service
            ---------------------
Provider for Cause (as such term is defined below), all options held by or on
behalf of such Grantee shall immediately expire upon the earlier of such
termination or notice of termination (unless the Option Agreement provides
otherwise), and the Shares covered by such Option shall revert to the Plan.

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

        10. Non-Transferability of Options. Unless provided otherwise by the
            ------------------------------
Administrator, Options may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent and may be exercised, during the lifetime of the Optionee, only by the
Optionee.

        11. Adjustments Upon Changes in Capitalization or Merger.
            ----------------------------------------------------

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

            In the event that the Company shall issue any of its Shares or other
securities as bonus shares or a stock dividend upon or with respect to any
Shares which shall at the time be subject to an Option hereunder, each Optionee
upon exercising such Option shall be entitled to receive (for the purchase price
payable upon such exercise), the Shares as to which he or she is exercising such
Option and, in addition thereto (at no additional cost), such number of shares
of the

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class or classes in which such bonus shares or stock dividend were declared, and
such amount of Shares (and the amount in lieu of fractional Shares) as is equal
to the Shares which he or she would have received had he or she been the holder
of the Shares as to which he or she is exercising his or her Option at all times
between the date of grant of such Option and the date of its exercise.

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

        (c) Merger or Asset Sale. In the event of a merger of the Company with
            --------------------
or into another corporation, or the sale of substantially all of the assets of
the Company, each outstanding Option shall be assumed or an equivalent option
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Option, the Optionee shall fully vest in and have
the right to exercise the Option as to all of the Optioned Stock, including
Shares as to which it would not otherwise be vested or exercisable. If an Option
becomes fully vested and exercisable in lieu of assumption or substitution in
the event of a merger or sale of assets, the Administrator shall notify the
Optionee in writing or electronically that the Option shall be fully exercisable
for a period of fifteen (15) days from the date of such notice, and the Option
shall terminate upon the expiration of such period. For the purposes of this
paragraph, the Option shall be considered assumed if, following the merger or
sale of assets, the option confers the right to purchase or receive, for each
Share of Optioned Shares immediately prior to the merger or sale of assets, the
consideration (whether shares, cash, or other securities or property) received
in the merger or sale of assets by holders of Shares for each Share held on the
effective date of the transaction (and if such holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the merger or sale of assets is not solely ordinary shares (or their
equivalent) of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation, provide for the consideration to
be received upon the exercise of the Option, for each Share of Optioned Shares,
to be solely ordinary shares (or their equivalent) of the successor corporation
or its Parent equal in fair market value to the per Share consideration received
by holders of in the merger or sale of assets.

        12. Date of Grant. The date of grant of an Option shall, for all
            -------------
purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Board. Notice
of the determination shall be given to each Service Provider to whom an Option
is so granted within a reasonable time after the date of such grant.

        13. Amendment and Termination of the Plan.
            -------------------------------------

            (a) Amendment and Termination. The Board may at any time amend,
                -------------------------
alter, suspend or terminate the Plan.

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            (b) Shareholder Approval. The Board shall obtain shareholder
                --------------------
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.

            (c) Effect of Amendment or Termination. No amendment, alteration,
                ----------------------------------
suspension or termination of the Plan shall adversely affect the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company. Termination of the Plan shall not affect the Administrator's
ability to exercise the powers granted to it hereunder with respect to Options
granted under the Plan prior to the date of such termination.

        14. Conditions Upon Issuance of Shares.
            ----------------------------------

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

            (b) Investment Representations. As a condition to the exercise of an
                --------------------------
Option, the Administrator may require the person exercising such Option to
represent and warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.

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

        16. Reservation of Shares. The  Company, during the term of this Plan,
            ---------------------
shall at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

        17. Shareholder Approval. The Plan shall be subject to approval by the
            --------------------
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.

                                      -9-<PAGE>

                                                                    Exhibit 10.4

                             ACCORD NETWORKS, LTD.
                 2000 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

     1.  Purpose.  The purpose of the Accord Networks, Ltd. 2000 Non-Employee
         -------
Director Stock Option Plan (the "Plan") is to advance the interests of Accord
Networks, Ltd. (the "Company") by encouraging ownership of the Company's
ordinary shares, and such other securities of the Company as may be substituted
for such shares pursuant to Section 6 hereof (the "Shares") by certain non-
employee directors of the Company, thereby giving such directors an increased
incentive to devote their efforts to the success of the Company.

     2.  Administration.  Grants of options under this Plan are automatic and
         --------------
shall be made subject to and in accordance with the Israeli Companies Ordinance
(New Version) 5743-1983 or any other law or statute replacing it. This Plan is
intended to be a "formula plan" for purposes of Section 16(b) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and shall be interpreted
accordingly. The Board of Directors of the Company, or a committee thereof, has
authority to interpret the Plan and otherwise administer the plan in accordance
with its terms.

     3.  Eligibility.  Except as provided otherwise in this Section 3, options
         -----------
under the Plan shall be granted in accordance with Section 5 to each Non-
Employee Director (as defined below) of the Company; provided that Shares remain
available for grant hereunder in accordance with Section 4. For purposes of this
Plan, a "Non-Employee Director" shall mean each member of the Company's Board of
Directors who is not an employee of the Company or of any affiliate of the
Company. A Non-Employee Director to whom an option is granted under the Plan
shall be referred to hereinafter as a "Grantee."

     4.  Shares Subject to Plan.  The Shares subject to the Plan shall be
         ----------------------
authorized but unissued or reacquired Shares. Subject to adjustment in
accordance with the provisions of Section 6 of the Plan, the maximum number of
Shares for which options may be granted under the Plan shall be 200,000, and the
initial adoption of the Plan by the Board of Directors of the Company and the
approval of the Plan by the shareholders of the Company shall constitute a
reservation of 200,000 authorized but unissued, or reacquired, Shares for
issuance only upon the exercise of options granted under the Plan. In the event
that any outstanding option granted under the Plan for any reason expires or is
terminated prior to the end of the period during which options may be granted
under the Plan, the Shares allocable to the unexercised portion of such option
may again be subject in whole or in part to any option granted under the Plan.

     5.  Terms and Conditions of Options.  Options granted pursuant to the Plan
         -------------------------------
shall be evidenced by Stock Option Agreements in such form as may be approved by
the Board of Directors, which agreements shall be duly executed and delivered on
behalf of the Company. The Stock Option Agreements shall contain such terms,
provisions and conditions not inconsistent with the Plan as may be determined by
the Board. The options shall be granted in compliance with and subject to the
following terms and conditions:
<PAGE>

     (a) Grant.  Each Non-Employee Director of the Company shall be granted an
         -----
option to purchase 25,000 Shares, subject to adjustment as provided in Section
6, on the later of (i) the date of approval of the Plan by the Company's
shareholders, or (ii) the date such person first becomes a Non-Employee
Director. In addition, as of the day following the first annual meeting of the
Company's shareholders that occurs more than one year after the person first
becomes a Non-Employee Director and on the day following each subsequent annual
meeting of the Company's shareholders, if such person is serving as a Non-
Employee Director as of such date, such Non-Employee Director shall be granted
an option to purchase 2,500 Shares, subject to adjustment as provided in Section
6. Each such day that options are to be granted under the Plan is referred to
hereinafter as a "Grant Date."

     If on any Grant Date, Shares are not available under this Plan to grant to
Non-Employee Directors the full amount of a grant contemplated by the
immediately preceding paragraph, then each Non-Employee Director shall receive
an option (a "Reduced Grant") to purchase Shares in an amount equal to the
number of Shares then available under the Plan divided by the number of Non-
Employee Directors as of the applicable Grant Date.  Fractional Shares shall be
ignored and not granted.

     If a Reduced Grant has been made and, thereafter, during the term of this
Plan, additional Shares become available for grant (e.g., because of the
forfeiture or lapse of an option), then each person who was a Non-Employee
Director both on the Grant Date on which the Reduced Grant was made and on the
date additional Shares become available (a "Continuing Non-Employee Director")
shall receive an additional option to purchase Shares. The number of newly
available Shares shall be divided equally among the options granted to the
Continuing Non-Employee Directors; provided, however, that the aggregate number
of Shares subject to a Continuing Non-Employee Director's additional option plus
any prior Reduced Grant to the Continuing Non-Employee Director on the
applicable Grant Date shall not exceed 2,500 Shares (subject to adjustment
pursuant to Section 6). If more than one Reduced Grant has been made, available
options first shall be granted with respect to the earliest such Grant Date.

     (b)  Option Price.  The option price for each option granted under the Plan
          ------------
shall be the Fair Market Value (as defined below) of the Shares subject to the
option on the date of grant of the option. For purposes of the Plan, the "Fair
Market Value" on any date, means:

          (i) If the Shares are listed on a U.S national securities exchange or
     the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq
     Stock Market, their Fair Market Value shall be the closing sales price for
     such Shares (or the closing bid, if no sales were reported) as quoted on
     such exchange or system for the last market trading day prior to the time
     of determination, as reported in The Wall Street Journal or such other
     source as the Administrator (as defined herein) deems reliable. The
     Administrator is defined as the Board of Directors or a Committee appointed
     by the Board, subject to the Articles of Association of the Company as
     shall be in effect from time to time, which Committee shall be constituted
     to comply with all applicable laws;

                                      -2-
<PAGE>

          (ii) If the Shares are listed on the Tel Aviv Stock Exchange, but are
     not traded on a U.S national securities exchange or the Nasdaq National
     Market or The Nasdaq Small Cap Market, their Fair Market Value shall be the
     closing sales price for such Shares (or the closing bid if no sales were
     reported) as quoted on such exchange for the last market trading day prior
     to the time of determination, as reported in Globes, HaAretz or such other
     source as the Administrator deems reliable;

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

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

     (c) Medium and Time of Payment.  The option price shall be payable in full
         --------------------------
upon the exercise of an option in cash or in such other form as shall be
determined by the Company at or after the date of grant. To the extent permitted
under Regulation T of the Federal Reserve Board, and subject to applicable
securities laws, options may be exercised through a broker in a so-called
"cashless exercise" whereby the broker sells the option Shares and delivers cash
sales proceeds to the Company in payment of the exercise price.

     (d) Term.  Each option granted under the Plan shall, to the extent not
         ----
previously exercised, terminate and expire on the date ten (10) years after the
date of grant of the option, unless earlier terminated as provided hereinafter
in Section 5(g).

     (e) Vesting and Exercisability.  Each option granted under this Plan shall
         --------------------------
vest (become exercisable) in equal annual installments over the four-year period
following the Date of Grant.

     Notwithstanding the foregoing, in the event of a Change in Control (as
hereinafter defined) of the Company, the options shall become fully vested and
exercisable. For purposes of the Plan and any options granted hereunder, a
"Change in Control" means and includes each of the following:

     (i) The acquisition by any individual, entity or group (within the meaning
     of Section 13(d)(3) or 14(d)(2) of the 1934 Act) (a "Person") of beneficial
     ownership (within the meaning of Rule 13d-3 promulgated under the 1934 Act)
     of 25% or more of the combined voting power of the then outstanding voting
     securities of the Company entitled to vote generally in the election of
     directors (the "Outstanding Company Voting Securities"); provided, however,
     that for purposes of this subsection (i), the following acquisitions shall
     not constitute a Change of Control: (1) any acquisition by a Person who is
     on January 1, 2000 the beneficial owner of 25% or more of the Outstanding
     Company Voting Securities, (2) any acquisition directly from the Company,
     (3) any acquisition by the Company, (4) any acquisition by any employee
     benefit plan (or related trust) sponsored or maintained by the Company or
     any corporation controlled by the Company, or (5) any acquisition by any

                                      -3-
<PAGE>

     corporation pursuant to a transaction which complies with clauses (1), (2)
     and (3) of subsection (ii) of this definition; or

     (ii) Consummation of a reorganization, merger or consolidation or sale or
     other disposition of all or substantially all of the assets of the Company
     (a "Business Combination"), in each case, unless, following such Business
     Combination, (1) all or substantially all of the individuals and entities
     who were the beneficial owners of the Outstanding Company Voting Securities
     immediately prior to such Business Combination beneficially own, directly
     or indirectly, more than 50% of the combined voting power of the then
     outstanding voting securities entitled to vote generally in the election of
     directors of the corporation resulting from such Business Combination
     (including, without limitation, a corporation which as a result of such
     transaction owns the Company or all or substantially all of the Company's
     assets either directly or through one or more subsidiaries) in
     substantially the same proportions as their ownership, immediately prior to
     such Business Combination of the Outstanding Company Voting Securities, and
     (2) no Person (excluding any corporation resulting from such Business
     Combination or any employee benefit plan (or related trust) of the Company
     or such corporation resulting from such Business Combination) beneficially
     owns, directly or indirectly, 25% or more of the combined voting power of
     the then outstanding voting securities of such corporation except to the
     extent that such ownership existed prior to the Business Combination, and
     (3) at least a majority of the members of the board of directors of the
     corporation resulting from such Business Combination were members of the
     Company's Board of Directors at the time of the execution of the initial
     agreement, or of the action of the Board, providing for such Business
     Combination; or

     (iii)  Approval by the shareholders of the Company of a complete
     liquidation or dissolution of the Company.

     (f) Method of Exercise.  All options granted under the Plan shall be
         ------------------
exercised by an irrevocable written notice directed to the Secretary of the
Company at the Company's principal place of business on a form approved by the
Company. Unless the exercise is a broker-assisted "cashless exercise" as
described in Section 5(c), such written notice shall be accompanied by payment
in full of the option price for the Shares for which such option is being
exercised. The Company shall make delivery of certificates representing the
Shares for which an option has been exercised within a reasonable period of
time; provided, however, that the Company shall have no obligation to deliver
any certificate or certificates upon exercise of an option until one of the
following conditions shall be satisfied: (i) the shares with respect to which
the option has been exercised are at the time of the issue of such shares
effectively registered under applicable federal and state securities laws as now
in force or hereafter amended, or (ii) counsel for the Company shall have given
an opinion that such shares are exempt from registration under Federal and state
securities laws as now in force or hereafter amended; and the Company has
compiled with all applicable laws and regulations with respect thereto,
including without limitation all regulations required by any stock exchange upon
which the Company's outstanding Shares are then listed. If any further law,
regulation or agreement requires the Company to take any action with respect to
the Shares for which an option has been exercised before the issuance thereof,
then the date of

                                      -4-
<PAGE>

delivery of such Shares shall be extended for the period necessary to take such
action. Certificates representing Shares for which options are exercised under
the Plan may bear such restrictive legends as may be necessary or desirable in
order to comply with applicable securities laws. Nothing contained in the Plan
shall be construed to require the Company to register any Shares underlying
options granted under this Plan.

     (g) Effect of Termination of Directorship or Death.
         -----------------------------------------------

         (i)   Termination of Directorship.  Upon termination of any Grantee's
               ---------------------------
     membership on the Board of Directors of the Company for any reason other
     than for Cause or death, the options held by the Grantee under the Plan
     shall terminate ninety (90) days following the date of termination of the
     Grantee's membership on the Board of Directors or, if earlier, on the date
     of expiration of the options as provided by Section 5(d) of the Plan. If
     the Grantee's membership on the Board of Directors is terminated for Cause
     (as defined herein), all options granted to such Grantee shall expire upon
     such termination. The term "Cause" as used herein shall include, but shall
     not be limited to, gross neglect of duty, engaging in any activity which is
     in conflict with or adverse to the business or other interests of the
     Company, willful misconduct on the part of Grantee, misfeasance or
     malfeasance of duty causing a violation of any law which is reasonably
     determined to be detrimental to the Company, and breach of a fiduciary duty
     owed to the Company.

         (ii)  Death.  In the event of the death of a Grantee, the Grantee's
               -----
     personal representatives, heirs or legatees (the "Grantee's Successors")
     may exercise the options held by the Grantee on the date of death, upon
     proof satisfactory to the Company of their authority. The Grantee's
     Successors must exercise any such options within one (1) year after the
     Grantee's death and in any event prior to the date on which the options
     expire as provided by Section 5(d) of the Plan. Such exercise otherwise
     shall be subject to the terms and conditions of the Plan.

     (h) Transferability of Options.  Any option granted pursuant to the Plan
         --------------------------
shall be assignable or transferable by the Grantee by will, by the laws of
descent and distribution, or pursuant to a domestic relations order that would
satisfy Section 414(p)(1)(A) of the Internal Revenue Code of 1986, as amended,
if such provision applied to an option under the Plan. In addition, any option
granted pursuant to the Plan shall be transferable by the Grantee to any of the
following permitted transferees, upon such reasonable terms and conditions as
the Board of Directors may establish: any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-
in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
Grantee's household (other than a tenant or employee), a trust in which these
persons (or the Grantee) have more than fifty percent of the beneficial
interests, a foundation in which these persons (or the Grantee) control the
management of assets, and any other entity in which these persons (or the
Grantee) own more than fifty percent of the voting interests.

                                      -5-
<PAGE>

     (i) Rights as Shareholder.  Neither the Grantee nor the Grantee's
         ---------------------
Successors shall have rights as a shareholder of the Company with respect to
Shares covered by the Grantee's option until the Grantee or the Grantee's
Successors become the holder of record of such Shares.

     (j) No Grants after Ten Years.  No options shall be granted except within a
         -------------------------
period of ten (10) years after the effective date of the Plan.

     6.  Adjustments Upon Changes in Capitalization; Business Transactions.
         ------------------------------------------------------------------

     (a) In the event of a corporate transaction involving the Company
(including, without limitation, any stock dividend, stock split, extraordinary
cash dividend, recapitalization, reorganization, merger, consolidation, split-
up, spin-off, combination or exchange of shares), the authorization limits under
Section 4 shall be adjusted proportionately, and the Board may adjust options to
preserve the benefits or potential benefits of the options. Action by the Board
may include: (i) adjustment of the number and kind of shares which may be
delivered under the Plan; (ii) adjustment of the number and kind of shares
subject to outstanding options; (iii) adjustment of the exercise price of
outstanding options; and (iv) any other adjustments that the Board determines to
be equitable. Without limiting the foregoing, in the event a stock dividend or
stock split is declared upon the Ordinary Shares, the authorization limits under
Section 4 shall be increased proportionately, and the Ordinary Shares then
subject to each option shall be increased proportionately without any change in
the aggregate purchase price therefor.

     (b) In the event of a Change in Control of the Company, each option granted
under the Plan which is outstanding but unvested as of the effective date of the
Change in Control shall become exercisable pursuant to Section 5 hereof. In
addition, the Board shall make appropriate provision in order to preserve but
not exceed the value of outstanding options, for the continuation of all
outstanding options by substituting on an equitable basis for the shares then
subject to such options the consideration payable with respect to the
outstanding Ordinary Shares in connection with the Change in Control.

     7.  Effective Date and Termination of Plan.
         --------------------------------------

     (a) Effective Date.  The Plan shall become effective upon approval of the
         --------------
same by the Board of Directors of the Company, and the shareholders of the
Company.

     (b) Termination.  The Plan shall terminate on the second day following the
         -----------
2010 annual meeting of shareholders of the Company, but the Board of Directors
may terminate the Plan at any time prior to such date. The Board of Directors
may, at any time and from time to time, amend or modify the Plan without
shareholder approval; provided, however, that: (i) the Board may condition any
amendment or modification on the approval of shareholders of the Company if such
approval is necessary or deemed advisable with respect to tax, securities or
other applicable laws, policies or regulations; and (ii) that the Board may not
without approval by the shareholders of the Company, increase the maximum number
of Ordinary Shares as to which options may be granted under the Plan (except by
adjustment pursuant to Section 6 herein) or extend the

                                      -6-
<PAGE>

termination date of the Plan. No amendment modification or termination of the
Plan shall adversely affect the rights of the Grantees who have outstanding
options without the consent of such Grantees.

     8.  No Obligation to Exercise Option.  The granting of an option shall
         --------------------------------
impose no obligation upon the Grantee to exercise such option.

     The foregoing is hereby acknowledged as being the Accord Networks Ltd. 2000
Non-Employee Director Stock Option Plan as adopted by the Board of Directors of
the Company on January 26, 2000.

                                      ACCORD NETWORKS LTD.

                                      By:_________________________________
                                      Its:________________________________

                                      -7-

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