Document:

EXHIBIT 4.1

                             MIPS TECHNOLOGIES, INC.
                      2002 NON-QUALIFIED STOCK OPTION PLAN
              (adopted by the Board of Directors on April 25, 2002)

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                             MIPS TECHNOLOGIES, INC.
                       2002 NONQUALIFIED STOCK OPTION PLAN
              (adopted by the Board of Directors on April 25, 2002)

1.   Purpose

           The purposes of the Plan are to (a) promote the long-term success of
the Company and to increase stockholder value by providing Eligible Individuals
with incentives to contribute to the long-term growth and profitability of the
Company and (b) assist the Company in attracting, retaining and motivating
highly qualified individuals. The Plan is intended to benefit a broad base of
the employees and consultants of the Company.

2.   Definitions

           For purposes of the Plan, the following terms shall be defined as
follows:

           "Administrator" means the Committee or the individual or individuals
to whom the Committee delegates authority under the Plan in accordance with
Section 3(d).

           "Award Document" means a written document approved in accordance with
Section 3 which sets forth the terms and conditions of the Stock Option granted
to the Participant. An Award Document may be in the form of (i) an agreement
between the Company that is executed by an officer on behalf of the Company and
is signed by the Participant or (ii) a certificate issued by the Company that is
executed by an officer on behalf of the Company but does not require the
signature of the Participant.

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

           "Business Combination" means and includes each and all of the
following occurrences:

           (i)    a consolidation or merger pursuant to which more than 75% of
     the Company's Majority Voting Stock is transferred to different holders,
     except for a transaction intended primarily to change the state of the
     Company's incorporation;

           (ii)   more than 75% of the assets of the Company are sold or
     otherwise disposed of; or

           (iii)  the Company dissolves or liquidates or effects a partial
     liquidation involving more than 75% of its assets.

           "Cause" means the termination of Employee's employment as a result
of: (i) an act or acts of dishonesty undertaken by such Employee intended to
result in personal gain by the Employee, (ii) persistent failure to perform the
duties and obligations of such Employee which is not remedied in a reasonable
period of time after receipt of written notice from Employer, (iii) violation of
confidentiality or proprietary information obligations to or agreements entered
into with the Employer, (iv) use, sale or distribution of illegal drugs on the
Employer's premises,

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(v) threatening, intimidating or coercing or harassing
fellow employees, or (vi) the commission by such Employee of a felony.

           "Change in Control" means:

           (i)    a Business Combination.

           (ii)   the acquisition of any Person (as such term is used in
     Sections 13(d) and 14(d) of the Exchange Act as Beneficial Owner (as such
     term is used in Rule 13d-3 promulgated under the Exchange Act), directly or
     indirectly, of fifty percent (50%) or more of the combined voting power of
     the outstanding shares of capital stock of the Company's then outstanding
     securities with respect to the election of the directors of the Board.

           (iii)  During any period of three (3) consecutive years, individuals
     who, at the beginning of such period, constitute the Board (the "Incumbent
     Board") cease for any reason to constitute at least a majority of the
     Board, provided that any person becoming a Director of the Board subsequent
     to the date of adoption of this Plan whose election, or a nomination for
     election by the Company's shareholders, was approved by the vote of at
     least a majority of the directors then comprising the Incumbent Board
     (other than an election or nomination of any individual whose initial
     assumption of office is in connection with an actual or threatened election
     contest relating to the election of the directors of the Board, as such
     terms are used in Rule 14a-11 of Regulation 14A promulgated under the
     Exchange Act) shall be, for these purposes, considered as though such
     person were a member of the Incumbent Board.

           "Code" means the Internal Revenue Code of 1986, as amended, and the
applicable rulings and regulations (including any proposed regulations)
thereunder.

           "Committee" means the committee of the Board, any successor committee
thereto or any other committee appointed from time to time by the Board to
administer the Plan. The Committee shall consist of at least two members and
shall serve at the pleasure of the Board.

           "Common Stock" means the common stock, par value $.001 per share, of
the Company. In the event the Company has more than one class of Common Stock,
the class of Common Stock shall be as designated in the Award Document.

           "Company" means MIPS Technologies, Inc., a Delaware corporation, or
its successors.

           "Consultant" means any person other than an Employee, including an
advisor, who provides services to the Company or any Subsidiary, except in
connection with a capital raising transaction.

           "Eligible Individuals" means Employees and Consultants.

           "Employee" means any person employed by the Company, Company's parent
or any Subsidiary. A Participant shall not cease to be an Employee in the case
of (i) any leave of

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absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its parent, any Subsidiary, or any successor.

           "Employer" means the Company, its parent, or a Subsidiary, as
applicable, that employs the particular Employee.

           "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the applicable rulings and regulations thereunder.

           "Fair Market Value" means, with respect to a share of Common Stock,
the fair market value thereof as of the relevant date of determination, as
determined in accordance with a valuation methodology approved by the Committee.
In the absence of any alternative valuation methodology approved by the
Committee, the Fair Market Value of a share of Common Stock shall equal the
closing selling price of a share of Common Stock as reported on the composite
tape for securities listed on the Nasdaq National Market, or such other national
securities exchange as may be designated by the Committee, or, in the event that
the Common Stock is not listed for trading on a national securities exchange but
is quoted on an automated system, on such automated system, in any such case on
the valuation date (or, if there were no sales on the valuation date, the
average of the highest and the lowest quoted selling prices as reported on said
composite tape or automated system for the most recent day during which a sale
occurred).

           "Good Reason" for voluntary resignation means (i) the Employer
reduces by ten percent (10%) or more the Employee's compensation at the rate in
effect immediately prior to the Change in Control or (ii) without the Employee's
express written consent, the Employer requires the Employee to change the
location of his or her job or office, so that he or she will be based at a
location more than fifty (50) miles from the location of his or her job or
office immediately prior to the Change in Control. For these purposes,
"Compensation" means base salary, exclusive of bonus, incentive compensation and
shift differential, paid by the Employer as consideration for the Employee's
service.

           "Majority Voting Stock" means the class of the Company's voting stock
which, as of the time of determination, possesses the right to elect a majority
of the Board.

           "Nonqualified Stock Option" means a Stock Option which is not an
incentive stock option within the meaning of Section 422 of the Code.

           "Participant" means an Eligible Individual to whom a Stock Option has
been granted under the Plan.

           "Plan" means this MIPS Technologies, Inc. 2002 Non-qualified Stock
Option Plan, as amended from time to time.

           "Stock Option" means an award to purchase shares of Common Stock
granted to an Eligible Individual pursuant to Section 7 hereof.

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

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           "Substitute Award" means an Award granted upon assumption of, or in
substitution for, outstanding awards previously granted by a company or other
entity in connection with a corporate transaction, such as a merger,
combination, consolidation or acquisition of property or stock.

3.   Administration of the Plan

           (a)    Power and Authority of the Committee. The Plan shall be
     administered by the Committee, which shall have full power and authority,
     subject to the express provisions hereof:

           (i)    to select Participants from the Eligible Individuals;

           (ii)   to grant Stock Options in accordance with the Plan;

           (iii)  to determine the number of shares of Common Stock subject to
     each Stock Option;

           (iv)   to determine the terms and conditions of each Stock Option,
     including, without limitation, those related to vesting, forfeiture,
     payment and exercisability, and the effect, if any, of the termination of a
     Participant's status as an Employee or Consultant of the Company, its
     parent, or a Subsidiary, and including the authority to amend the terms and
     conditions of a Stock Option after the granting thereof to a Participant in
     a manner that is not, without the consent of the Participant, prejudicial
     to the rights of such Participant in such Stock Option;

           (v)    to specify and approve the provisions of the Award Documents
     delivered to Participants in connection with their Stock Options;

           (vi)   to construe and interpret any Award Document delivered under
     the Plan;

           (vii)  to prescribe, amend and rescind rules and procedures relating
     to the Plan;

           (viii) to vary the terms of Stock Options to take account of tax,
     securities law and other regulatory requirements of foreign jurisdictions;

           (ix)   subject to the provisions of the Plan and subject to such
     additional limitations and restrictions as the Committee may impose, to
     delegate to one or more officers of the Company some or all of its
     authority under the Plan;

           (x)    to employ such legal counsel, independent auditors and
     consultants as it deems desirable for the administration of the Plan and to
     rely upon any opinion or computation received therefrom; and

           (xi)   to make all other determinations and to formulate such
     procedures as may be necessary or advisable for the administration of the
     Plan.

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           (b)    Plan Construction and Interpretation.  The Committee shall
     have full power and authority, subject to the express provisions hereof, to
     construe and interpret the Plan.

           (c)    Determinations of Committee Final and Binding.  All
     determinations by the Committee in carrying out and administering the Plan
     and in construing and interpreting the Plan shall be final, binding and
     conclusive for all purposes and upon all persons interested herein.

           (d)    Delegation of Authority.  The Committee may, but need not,
     from time to time delegate some or all of its authority under the Plan to
     an Administrator consisting of one or more members of the Committee or of
     one or more officers of the Company; provided, however, that the Committee
     may not delegate its authority under Sections 3(b) and 10 of the Plan.  Any
     delegation hereunder shall be subject to the restrictions and limits that
     the Committee specifies at the time of such delegation or thereafter.
     Nothing in the Plan shall be construed as obligating the Committee to
     delegate authority to an Administrator, and the Committee may at any time
     rescind the authority delegated to an Administrator appointed hereunder or
     appoint a new Administrator.  At all times, the Administrator appointed
     under this Section 3(d) shall serve in such capacity at the pleasure of the
     Committee.  Any action undertaken by the Administrator in accordance with
     the Committee's delegation of authority shall have the same force and
     effect as if undertaken directly by the Committee, and any reference in the
     Plan to the Committee shall, to the extent consistent with the terms and
     limitations of such delegation, be deemed to include a reference to the
     Administrator.

           (e)    Liability of Committee. No member of the Committee shall be
     liable for any action nor determination made in good faith, and the members
     of the Committee shall be entitled to indemnification and reimbursement in
     the manner provided in the Company's certificate of incorporation as it may
     be amended from time to time. In the performance of its responsibilities
     with respect to the Plan, the Committee shall be entitled to rely upon
     information and advice furnished by the Company's officers, the Company's
     accountants, the Company's counsel and any other party the Committee deems
     necessary, and no member of the Committee shall be liable for any action
     taken or not taken in reliance upon any such advice.

           (f)    Action by the Board. Anything in the Plan to the contrary
     notwithstanding, any authority or responsibility which, under the terms of
     the Plan, may be exercised by the Committee may alternatively be exercised
     by the Board.

4.   Effective Date and Term

           The Plan shall become effective upon its adoption by the
Board. In no event shall any Awards be made under the Plan after the tenth
anniversary of the date of the Board's adoption of the Plan.

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5.   Shares of Common Stock Subject to the Plan

           Subject to adjustment as provided in Section 9(b) hereof, the
number of shares of Common Stock that may be issued pursuant to Stock Options
under the Plan (the "Section 5 Limit") shall be 1,000,000 shares. Shares issued
under this Plan may be either authorized but unissued shares, treasury shares or
any combination thereof.

6.   Eligible Individuals

           Stock Options may be granted by the Committee to Eligible
Individuals. An individual's status as an Administrator will not, by itself,
affect his or her eligibility to participate in the Plan.

7.   Stock Options

           (a)    Terms of Stock Options Generally.  A Stock Option shall
     entitle the Participant to whom the Stock Option was granted to purchase a
     specified number of shares of Common Stock during a specified period at a
     price that is determined in accordance with Section 7(b) below.  Only
     Nonqualified Stock Options may be granted under the Plan.  Stock Options
     may be granted in combination with, in replacement of, or as alternatives
     to grants of rights under any other employee compensation plan of the
     Company, including the plan of any acquired entity, or may be granted in
     satisfaction of the Company's obligations under any such plan.  Shares
     issued or transferred pursuant to Stock Options or other rights granted
     upon assumption of, or in substitution for, outstanding awards previously
     granted by a company or other entity acquired by the Company or with which
     the Company combines shall not count against the Section 5 limit.  The
     Committee shall fix the vesting and exercisability conditions applicable to
     a Stock Option.

           (b)    Terms Set Forth in Award Document. The terms and provisions of
     a Stock Option shall be set forth in a written Award Document approved by
     the Committee and delivered or made available to the Participant as soon as
     administratively practicable following the date of such grant of Stock
     Option. The vesting, exercisability, payment and other restrictions
     applicable to a Stock Option (which may include, without limitation,
     restrictions on transferability or provision for mandatory resale to the
     Company) shall be determined by the Committee and set forth in the
     applicable Award Document. Notwithstanding the foregoing, the Committee may
     accelerate the date on which any Stock Option first becomes exercisable.

           (c)    Exercise Price. The exercise price per share of Common Stock
     under a Stock Option shall be fixed by the Committee at the time of grant
     or, alternatively, shall be determined by a method specified by the
     Committee at the time of grant. Notwithstanding the foregoing, the exercise
     price per share of a Stock Option that is a Substitute Award may be less
     than the Fair Market Value per share on the date of award, provided that
     the excess of:

           (i)    the aggregate Fair Market Value (as of the date such
     Substitute Award is granted) of the shares of Common Stock subject to the
     Substitute Award, over

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           (ii)   the aggregate exercise price thereof,

does not exceed the excess of:

           (iii)  the aggregate fair market value (as of the time immediately
     preceding the transaction giving rise to the Substitute Award, such fair
     market value to be determined by the Committee) of the shares of the
     predecessor entity that were subject to the award assumed or substituted
     for by the Company, over

           (iv)   the aggregate exercise price of such shares.

           (d)    Option Term.  The term of each Stock Option shall be fixed by
     the Committee and, subject to Section 3(a)(viii) above, shall not exceed
     ten years from the date of grant.

           (e)    Method of Exercise.  Subject to the provisions of the
     applicable Award Document, the exercise price of a Stock Option may be paid
     in cash or previously owned shares or a combination thereof.  In accordance
     with the rules and procedures established by the Committee for this
     purpose, the Stock Option may also be exercised through a "cashless
     exercise" procedure approved by the Committee involving a broker or dealer
     approved by the Committee, that affords Participants the opportunity to
     sell immediately some or all of the shares underlying the exercised portion
     of the Stock Option in order to generate sufficient cash to pay the Stock
     Option exercise price and/or to satisfy withholding tax obligations related
     to the Stock Option.

           (f)    Termination as Employee or Consultant.  If a Participant
     ceases to be an Employee or Consultant, the Participant may exercise his or
     her Stock Option within such period of time as is specified in the Award
     Document to the extent that the Stock Option is vested on the date of
     termination (but in no event later than the expiration of the term of such
     Stock Option as set forth in the Award Document).  The date of a
     Participant's termination as an Employee or Consultant for any reason shall
     be determined in the sole discretion of the Committee.  In the absence of a
     specified time in the Award Document, the Stock Option shall remain
     exercisable for three (3) months following the Participant's termination as
     an Employee or Consultant and then terminate, unless otherwise provided in
     this Plan.  If, on the date of termination, the Participant is not vested
     as to his or her entire Stock Option, the Shares covered by the unvested
     portion of the Stock Option shall revert to the Plan.  If, after
     termination, the Participant does not exercise the vested portion of his or
     her Stock Option within the period of time as is specified in the Award
     Document (or this Plan, if not specified in the Award Document), the Shares
     covered by such vested portion of the Stock Option shall revert to the
     Plan.

           (g)    Accelerated Vesting Upon Death or Disability.  In the event a
     Participant terminates his or her service with the Company, its parent or a
     Subsidiary due to Participant's death or disability (as defined in Section
     22(e)(3) of the Code), all Stock Options granted to Participant shall
     become fully vested and exercisable upon such termination and remain
     exercisable for the period of time stated in the Participant's Award
     Document, but in no event later than the expiration of the term of such
     Stock

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     Option as set forth in the Award Document. In the absence of a specified
     time in the Award Document, the Stock Option shall remain exercisable for
     twelve (12) months following the Participant's termination due to the
     Participant's death or disability and then terminate. If, after
     termination, the Participant does not exercise the vested portion of his or
     her Stock Option within the period of time as is specified in the Award
     Document (or this Plan if not specified in the Award Document), the shares
     covered by such vested portion of the Stock Option shall revert to the
     Plan.

8.   Certain Restrictions

           (a)    Transfers. Unless the Committee determines otherwise, no Stock
     Option shall be transferable other than by will or by the laws of descent
     and distribution or pursuant to a domestic relations order.

           (b)    Exercise. During the lifetime of the Participant, a Stock
     Option shall be exercisable only by the Participant or by a permitted
     transferee to whom such Stock Option has been transferred in accordance
     with Section 8(a).

9.   Recapitalization or Reorganization

           (a)    Authority of the Company and Stockholders.  The existence of
     the Plan, the Award Documents and the Stock Options granted hereunder shall
     not affect or restrict in any way the right or power of the Company or the
     stockholders of the Company to make or authorize any adjustment,
     recapitalization, reorganization or other change in the Company's capital
     structure or its business, any merger or consolidation of the Company, any
     issue of stock or of options, warrants or rights to purchase stock or of
     bonds, debentures, preferred or prior preference stocks whose rights are
     superior to or affect the Common Stock or the rights thereof or which are
     convertible into or exchangeable for Common Stock, or the dissolution or
     liquidation of the Company, or any sale or transfer of all or any part of
     its assets or business, or any other corporate act or proceeding, whether
     of a similar character or otherwise.

           (b)    Change in Capitalization.  Notwithstanding any provision of
     the Plan or any Award Document, the number and kind of shares authorized
     for issuance under Section 5 above may be equitably adjusted in the sole
     discretion of the Committee in the event of a stock split, stock dividend,
     recapitalization, reorganization, merger, consolidation, extraordinary
     dividend, split-up, spin-off, combination, exchange of shares, warrants or
     rights offering to purchase Common Stock at a price substantially below
     Fair Market Value or other similar corporate event affecting the Common
     Stock in order to preserve, but not increase, the benefits or potential
     benefits intended to be made available under the Plan.  In addition, upon
     the occurrence of any of the foregoing events, the number of outstanding
     Stock Options and the number and kind of shares subject to any outstanding
     Stock Option and the exercise price per share, if any, under any
     outstanding Stock Option may be equitably adjusted (including by payment of
     cash to a Participant) in the sole discretion of the Committee in order to
     preserve the benefits or potential benefits intended to be made available
     to Participants granted Stock Options.  Such adjustments shall be made by
     the Committee, whose determination as to what

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     adjustments shall be made, and the extent thereof, shall be final. Unless
     otherwise determined by the Committee, such adjusted Stock Options shall be
     subject to the same vesting schedule and restrictions to which the
     underlying Stock Option is subject.

           (c)    Business Combination.  Except as otherwise specified in the
     applicable Award Document, in the event of a Business Combination, each
     outstanding Stock Option shall be assumed or an equivalent option or award
     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 Stock Options, the Committee may, in its
     discretion, provide for the Participant to fully vest in and have the right
     to exercise the Stock Option as to all of the Common Stock, including
     shares as to which it would not otherwise be vested or exercisable.  If in
     lieu of assumption or substitution in the event of a Business Combination,
     a Stock Option becomes fully vested and exercisable, then the Committee
     shall notify the Participant in writing or electronically of the change in
     the Stock Option and that the Stock Option shall terminate fifteen (15)
     days from the date of such notice (to the extent applicable).  For the
     purposes of this Section 9(c), the Stock Option shall be considered assumed
     if, following the merger or sale of assets, the award confers the right to
     purchase or receive on the same terms and conditions as the Stock Option,
     for each share of Common Stock subject to the Stock Option immediately
     prior to the Business Combination, the consideration (whether stock, cash,
     or other securities or property) received in the Business Combination by
     holders of Common Stock for each share held on the effective date of the
     transaction (and if 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 Business Combination is not solely common stock of the successor
     corporation or its parent, the Committee may, with the consent of the
     successor corporation, provide for the consideration to be received upon
     the exercise of the Stock Option, for each share of Common Stock subject to
     the Stock Option, to be solely common stock of the successor corporation or
     its parent equal in fair market value to the per share consideration
     received by holders of Common Stock in the Business Combination.

           (d)    Change in Control. In the event of the involuntary termination
     of an Employee's employment with the Company or a Subsidiary not for Cause
     or an Employee's termination of employment with the Company or a Subsidiary
     for Good Reason within twenty-four months after a Change in Control of the
     Company, all of such Employee's outstanding Stock Options shall become
     vested and exercisable.

10.  Amendments; Termination

           The Board or Committee may at any time and from time to time alter,
amend, suspend or terminate the Plan in whole or in part; provided, however,
that any amendment which under the requirements of any applicable law or stock
exchange rule must be approved by the stockholders of the Company shall not be
effective unless and until such stockholder approval has been obtained in
compliance with such law or rule. No termination or amendment of the Plan may,
without the consent of the Participant to whom a Stock Option has been granted,
adversely affect the rights of such Participant under such a Stock Option.
Notwithstanding any

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provision herein or in any Award Document to the contrary, the Board or
Committee shall have broad authority to amend the Plan or any Stock Option under
the Plan to take into account changes in applicable tax laws, securities laws,
accounting rules and other applicable state and federal laws.

11.  Miscellaneous Provisions

           (a)    Tax Withholding.  The Company may require any individual
     entitled to receive a payment in respect of a Stock Option to remit to the
     Company, prior to such payment, an amount sufficient to satisfy any
     federal, state or local tax withholding requirements.  The Company shall
     also have the right to deduct from all cash payments made pursuant to or in
     connection with any Stock Option any federal, state or local taxes required
     to be withheld with respect to such payments.  In addition, the Company may
     permit any individual to whom a Stock Option has been made to satisfy, in
     whole or in part, such obligation to remit taxes, by directing the Company
     to withhold shares of Common Stock that would otherwise be received by such
     individual upon settlement or exercise of such Stock Option or by
     delivering to the Company shares of Common Stock owned by the individual
     prior to exercising the option, subject to such rules as the Committee may
     establish from time to time.

           (b)    No Right to Grants or Employment. No Eligible Individual or
     Participant shall have any claim or right to receive grants of Awards under
     the Plan. Nothing in the Plan or in any Stock Option or Award Document
     shall confer upon any Employee any right to continued employment with the
     Employer or interfere in any way with the right of the Employer to
     terminate the employment of any of its employees at any time, with or
     without cause.

           (c)    Other Compensation. Nothing in this Plan shall preclude or
     limit the ability of the Employer to pay any compensation to a Participant
     under the Employer's other compensation and benefit plans and programs.

           (d)    Other Employee Benefit Plans. Any Stock Option granted
     pursuant to the Plan shall not be included in, nor have any effect on, the
     determination of benefits under any other employee benefit plan or similar
     arrangement provided by the Employer, unless otherwise specifically
     provided for under the terms of such plan or arrangement or by the
     Committee.

           (e)    Unfunded Plan. The Plan is intended to constitute an unfunded
     plan for incentive compensation. Prior to the payment or settlement of any
     Stock Option, nothing contained herein shall give any Participant any
     rights that are greater than those of a general creditor of the Company. In
     its sole discretion, the Committee may authorize the creation of trusts or
     other arrangements to meet the obligations created under the Plan to
     deliver Common Stock or payments in lieu thereof with respect to Stock
     Options hereunder.

           (f)    Securities Law Restrictions. The Committee may require each
     Eligible Individual purchasing or acquiring shares of Common Stock pursuant
     to a Stock Option

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     under the Plan to represent to and agree with the Company in writing that
     such Eligible Individual is acquiring the shares for investment and not
     with a view to the distribution thereof. All certificates for shares of
     Common Stock delivered under the Plan shall be subject to such
     stock-transfer orders and other restrictions as the Committee may deem
     advisable under the rules, regulations, and other requirements of the
     Securities and Exchange Commission, any exchange upon which the Common
     Stock is then listed, and any applicable federal or state securities law,
     and the Committee may cause a legend or legends to be put on any such
     certificates to make appropriate reference to such restrictions. No shares
     of Common Stock shall be issued hereunder unless the Company shall have
     determined that such issuance is in compliance with, or pursuant to an
     exemption from, all applicable federal and state securities laws.

           (g)    Compliance with Rule 16b-3. Notwithstanding anything contained
     in the Plan or in any Award Document to the contrary, if the consummation
     of any transaction under the Plan would result in the possible imposition
     of liability on a Participant pursuant to Section 16(b) of the Exchange
     Act, the Committee shall have the right, in its sole discretion, but shall
     not be obligated, to defer such transaction or the effectiveness of such
     action to the extent necessary to avoid such liability, but in no event for
     a period longer than six months.

           (h)    Award Document. In the event of any conflict or inconsistency
     between the Plan and any Award Document, the Plan shall govern, and the
     Award Document shall be interpreted to minimize or eliminate any such
     conflict or inconsistency.

           (i)    Expenses. The costs and expenses of administering the Plan
     shall be borne by the Company.

           (j)    Application of Funds. The proceeds received from the Company
     from the sale of Common Stock or other securities pursuant to grants of
     Stock Options shall be used for general corporate purposes.

           (k)    Deferral. The Committee may, in its discretion and as provided
     in the applicable Award Document, permit a Participant to defer receipt of
     the shares underlying a Stock Option upon exercise pursuant to the terms of
     any deferred compensation plan maintained by the Company.

           (l)    Applicable Law. Except as to matters of federal law, the Plan
     and all actions taken thereunder shall be governed by and construed in
     accordance with the laws of the State of Delaware without giving effect to
     conflicts of law principles.

                                       11CONSENT OF INDEPENDENT AUDITORS

      We consent to the incorporation by reference in the Registration Statement
on: (a) Form S-8  (333-94995)  pertaining to the 1996 CSI Stock Option Plan, the
1999 Section 3(i) Share Option Plan,  the 1999 Employee  Stock Purchase Plan and
the 1999 Non-Employee Directors Stock Option Plan of Commtouch Software Ltd.;(b)
Form F-3  (333-89773)  pertaining to the resale of 2,052,051  ordinary shares of
Commtouch  Software Ltd. by Vulcan Ventures  Incorporated,  InfoSpace  (formerly
"Go2Net,  Inc.")  and  Microsoft  Corporation  and  a  warrant  exercisable  for
1,136,000 ordinary shares of Commtouch Software Ltd. by InfoSpace;  and (c) Form
F-3 (333-46192)  pertaining to the sale by Commtouch  Software Ltd. of 4,000,000
of its ordinary shares; (d) Form S-8 (333-65532) pertaining to the 1999 Employee
Stock Purchase Plan, the 1999  Non-Employee  Directors Stock Option Plan and the
Wingra  Technologies,  LLC 1998 Unit Option Plan;  and (e) Form F-3  (333-68248)
pertaining to the resale of 1,406,612 ordinary shares of Commtouch Software Ltd.
by  investors in Wingra,  of our report dated  February 27, 2002 with respect to
the consolidated  financial  statements and schedule of Commtouch  Software Ltd.
included  in this  Annual  Report on Form 20-F for the year ended  December  31,
2001.

                                         Yours truly,

Tel-Aviv, Israel                         KOST, FORER and GABBAY
April 26, 2002                           A Member of Ernst & Young International

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