Document:

EXHIBIT 10.4

                                 POWERDSINE LTD.

                          SECTION 102 STOCK OPTION PLAN

1.      PURPOSE. PowerDsine Ltd. (the "COMPANY") Section 102 Stock Option Plan
(the "PLAN") is intended to (i) provide a method whereby employees (including
officers and directors who are employees) of the Company who are making and are
expected to continue making substantial contributions to the successful
management and growth of the Company (the "PARTICIPANTS") may be offered an
opportunity to acquire Ordinary Shares of the Company, of nominal value NIS 0.10
each, subject to adjustment for share splits and combinations ("ORDINARY SHARES"
or "SHARES"), in order to increase their proprietary interests in the Company
and their incentive to remain in and advance in the employ of the Company and,
(ii) attract and retain personnel of experience and ability by granting such
persons an opportunity to acquire Ordinary Shares in order to obtain a
proprietary interest in the Company. Accordingly, the Company may, from time to
time, grant options to purchase Ordinary Shares of the Company on the terms and
conditions hereinafter established, to such employees as may be selected in the
manner hereinafter provided (the "OPTION(S)"). Options and the Shares issuable
thereunder shall be held in escrow for the benefit of such employees by or in
the name of an escrow agent approved for such purposes by the Israel Tax
Authority (the "TRUSTEE"). A Participant to whom an Option has been duly granted
in accordance with the provisions of this Plan may sometimes be referred to
herein as an "OPTION HOLDER".

2.      APPLICATION OF SECTION 102 OF THE INCOME TAX ORDINANCE

        (a)     The provisions governing the exemption of tax for options
granted or shares issued to employees as embodied in Section 102 of the Israel
Income Tax Ordinance (New Version) (the "ORDINANCE") and its regulations, Income
Tax Rules (Tax Benefits in Stock Issuance to Workers) 5349-1989 (the "RULES")
shall be applied to the Plan, and the Options. The Trustee and each Participant
in this Plan shall comply with the Ordinance and Rules and with the Escrow
Agreement entered into between the Company and the Trustee.

        (b)     No Participant in this Plan shall claim an exemption from
Israeli tax pursuant to Sections 95 or 97(a) of the Income Tax Ordinance (New
Version) or pursuant to the Law for the Encouragement of Industry (Taxes)
5729-1960 in connection with a transfer by such Participant of an Option prior
to the end of the "Holding Period" as defined in Rule 1(i) of the Rules.

        (c)     Each Participant shall be obligated to immediately notify the
Company and the Trustee of his/her request, if any, to the Income Tax Authority
pursuant to Rule 6(b) of the Rules in the event the Shares underlying the
Options are registered on any stock exchange. Nothing herein shall obligate the
Company to register its shares or any portion of its shares on a stock exchange.

        (d)     The Options and the Shares issued upon exercise of the Options,
as the case may be, shall be held by the Trustee for two (2) years from the date
of the grant of the Option. After the two (2) year holding period and subject to
any further period under Section 7(f), the Trustee may release the Options to
the Participant only after (i) the receipt by the Trustee of an acknowledgment
from the Income Tax Authority that the Participant has paid any applicable tax
due pursuant to the Ordinance and the Rules, or (ii) the Trustee withholds any
applicable tax due pursuant to the Ordinance and Rules.

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        (e)     In the event a share dividend (bonus shares) is declared on
Shares acquired pursuant to an Option, such dividend shares shall be subject to
the provisions of Sections 2 and 7 and the holding period for such dividend
shares shall be measured from the commencement of the holding period for the
Option.

        (f)     The exemption under Section 102 of the Ordinance shall be
forfeited and the Option Holder shall be required to pay any applicable tax
promptly at such time as: (i) the Option Holder's employment is terminated
during the two (2) year holding period (other than because of death or some
other reason acceptable to the Income Tax Authority); (ii) the Company or the
Option Holder fail to comply with one or more other conditions for the exemption
as required by the Ordinance, Rules or Income Tax Authority; or (iii) the Income
Tax Authority withdraws or cancels the exemption for the Plan or the particular
Option Holder. Notwithstanding the loss of an exemption, the Trustee shall
continue to hold the Option (to the extent the Option remains exercisable
following termination of employment) for the remainder of the applicable holding
period under Section 102 of the Ordinance.

3.      ADMINISTRATION. The Plan shall be administered by a Stock Option
Committee (the "COMMITTEE") appointed by the Board of Directors of the Company
(the "BOARD"). The Committee shall consist of no fewer than three (3) members
who may also be members of the Board and participate in the Plan.

        Subject to: (i) the terms and conditions of the Plan; and (ii) relevant
commitments of the Company; and (iii) provisions of the Israeli Companies Law
5759-1999, as same may be amended or replaced from time to time (the "COMPANIES
LAW"), the Committee shall have full power and authority, in its discretion,
from time to time, and at any time, to recommend to the Board, or subject to any
applicable law, to determine on the following matters: (a) designation of
Participants to whom Options shall be granted; (b) the terms and provisions of
the Notice of Grant of an Option to be executed by the Company and by each
Participant receiving an Option under this Plan (the "NOTICE OF GRANT"); (c) the
number of Shares to be covered by each Option; (d) provisions concerning , the
time(s) at which and the extent to which an Option shall be granted, any
conditions upon which the vesting of an Option may be accelerated and the nature
and duration of restrictions as to transferability or restrictions constituting
substantial risk of forfeiture; (e) acceleration of the right of a Participant
to exercise, in whole or in part, any previously granted Option; (f) other terms
and conditions of Options; (g) except as hereinafter provided, the Option
exercise price and the term during which the Options may be exercised; (h)
interpretation of the provisions and supervision over the administration of the
Plan; and (i) any other matter which is necessary or desirable for, or
incidental to administration of the Plan.

        Appointment and removal of members of the Committee and the work
procedures of the Committee, including but not limited to, convening meetings,
quorum for meetings, adjournment and majority provisions shall be as for other
committees of the Company's Board, as same are set forth in the Company's
Articles of Association, as same may be in effect from time to time (the
"ARTICLES").

4.      INTERPRETATION AND AMENDMENT. The interpretation, construction or
determination of any provisions of the Plan by the Board shall be final and
conclusive. No member of the Board or the Committee shall be liable for any
action or determination made in good faith with respect to the Plan.

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        The Board may, at any time, amend, alter, suspend or terminate the Plan;
provided, however, that any such action shall not impair any Options previously
granted under the Plan.

5.      PARTICIPANTS. Options may be granted under the Plan for the benefit of
key employees of the Company (including employees who are also directors or
officers of the Company).

        Receipt of stock options under any other stock option plan maintained by
the Company shall not, for that reason, preclude a Participant from receiving
Options under the Plan, provided however, that no Participant shall be granted
Options if prior to the grant or as a result of the exercise of the Option, such
Participant would hold, directly or indirectly in his/her name or with a
relative as defined in the Ordinance (i) 10% of the outstanding shares of the
Company, (ii) 10% of the voting power of the Company, (iii) the right to hold or
purchase 10% of the outstanding equity or voting power, or (iv) the right to
obtain 10% of the "profit" of the Company as defined in the Ordinance.

6.      ORDINARY SHARES.

        (a)     The number of Ordinary Shares which may be issued under the Plan
from time to time shall be determined from time to time by the Board.

        (b)     Shares issued under Options within two (2) years from the date
of the grant will be issued to the Trustee for the benefit of the Participant. .

        (c)     In the event that a Participant's rights to Shares cease to vest
under an Option, such Shares may be reissued under new Options allocated
pursuant to the Plan.

        (d)     The Company shall at all times during the term of any
outstanding Option under the Plan, reserve and keep available, such number of
Ordinary Shares as will be sufficient to satisfy the requirements all
outstanding Options. The Company shall pay all original issue taxes, if any,
with respect to the issuance of Ordinary Shares pursuant to an exercise of an
Option and all other fees and expenses necessarily incurred by the Company in
connection with such exercise. The Company shall use its best efforts to comply
with all laws and regulations which, in the opinion of its legal counsel, shall
be applicable to the Company in connection with the Plan.

        (e)     All share certificates issued upon a valid exercise of an Option
under the Plan shall be endorsed with the following legend, or with a legend
substantially similar hereto:

        "The shares represented by this certificate, have not been
        registered under the Securities Act of 1933 or under the
        securities laws of any state. These shares have been acquired
        for investment and not with a view to distribution or resale,
        and may not be sold, transferred, pledged or hypothecated in the
        absence of an effective registration statement for such shares
        under the Securities Act of 1933 and such state securities laws
        as maybe applicable or the delivery to POWERDSINE LTD. of an
        opinion of counsel, reasonably acceptable to it, to the effect
        that registration is not required under such Act or such state
        securities laws.

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        The foregoing restrictions terminate when the shares may be
        freely transferred without restriction under Rule 144, under the
        Securities Act of 1933, or any successor thereto, and may be
        disregarded thereafter.

        Any disposition of any interest in the securities represented by
        this certificate is subject to certain restrictions, and the
        securities represented by this certificate are subject to an
        option and option terms, contained in PowerDsine Ltd.'s stock
        option plan and notice of grant between the record holder hereof
        and the Company, a copy of which will be mailed to any holder of
        this certificate without charge within five (5) days of receipt
        by the Company of a written request therefore".

7.      TERMS AND CONDITIONS OF OPTIONS. Options granted pursuant to the Plan
shall be subject to terms as the Committee shall, from time to time, approve,
but subject, nevertheless, to the following terms and conditions:

        (a)     The total number of Ordinary Shares to which an Option relates
shall be specified in the Notice of Grant.

        (b)     No fractional Shares shall be issued with respect to any Option.

        (c)     The Option exercise price per Ordinary Share issuable upon the
exercise of an Option, as the case may be, shall be such amount as may be
determined by the Board or the Committee and such price shall be set forth in
the Notice of Grant.

        (d)     Notwithstanding any other provision of the Plan, the term of an
Option shall be for a period of not more than ten (10) years and one (1) day
from the date such Option is granted.

        (e)     An Option must be granted within ten (10) years of the date the
Plan is adopted by the Board.

        (f)     Notwithstanding any other provisions of the Plan, the Trustee
shall hold the Option, in favor of an Option Holder or his/her successors or
heirs for at least two (2) years after the grant of the Option or such longer
period as may be required for the full exercise of the Option.

        (g)     Subject to sub-section (f), the Notice of Grant shall state the
time or times at which it may be exercised in whole or in part (but in no event
earlier than two (2) years from the date of the grant).

        (h)     Subject to Section 7A below, holders of Shares issued pursuant
to an Option may be permitted to vote their shares, including through the
Trustee, as the case may be, in any meeting of holders of Ordinary Shares.

        (i)     The provisions of this Section 7 relating to the time of
exercise, restrictions against disposition and vesting of the Options shall be
applied according to terms and conditions, and at such other time and dates, as
the Board or the Committee may from time to time establish.

7A.     LIMITATIONS AND RESTRICTIONS ON ORDINARY SHARES. Subject to applicable
law, the Option Holder shall have no rights of a shareholder with respect to
Ordinary Shares to be acquired by the exercise of the Option until a
certificate(s) representing such Shares are

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issued to him/her or the Trustee for his/her benefit, as the case may be. Upon
issuance of a certificate(s) to the Option Holder or the Trustee on his/her
behalf, as the case may be, shall have the rights of a shareholder and shall be
subject to the terms and conditions that apply to the holders of the Company's
shares as same are contained in the Articles.

8.      TERMINATION OF EMPLOYMENT.

        (a)     DISABILITY AND RETIREMENT. If the Option Holder ceases to be
employed by the Company as a result of his/her Disability (as defined herein) or
his/her retirement with the consent of the Company, then any Option that is
exercisable by him/her at the time he/she ceases to be employed by the Company,
and only to the extent such Option is exercisable as of such time, may be
exercised by him/her within two (2) years after the date of Disability or one
(1) year after the date of retirement with the consent of the Company. As used
herein, "Disability" shall mean any physical or mental illness or injury as a
result of which the Option Holder remains absent from work or is otherwise
prevented from rendering his/her services to the Company for: (x) a period of
two (2) consecutive months; or (y) an aggregate of two (2) months in any twelve
(12) month period. Disability shall occur upon the end of such period.

        (b)     DISMISSAL WITHOUT CAUSE. If the Option Holder ceases to be
employed by the Company as a result of his/her dismissal without cause, then any
portion of the Option that is exercisable by him/her at the time he/she ceases
to be employed by the Company, and only to the extent such Option is exercisable
as of such time, may be exercised by him/her within sixty (60) days after the
date he/she ceases to be employed by the Company.

        (c)     DISMISSAL WITH CAUSE. If the Option Holder ceases to be employed
by the Company as a result of his/her dismissal for cause (as such term is
defined in the Option Holder's individual employment agreement with the Company,
OR if there is no such employment agreement, then cause shall mean termination
of employment which under Israeli law denies the holder's entitlement to
severance pay), then the rights of the Option Holder with respect to the Option
granted to him/her shall terminate immediately whether or not all or any portion
of the Option is then exercisable. However, the Board may, in its sole
discretion, determine that the Option, to the extent that it has vested and is
exercisable by the Option Holder at the time he/she ceases to be employed by the
Company, and only to the extent that the Option has vested and is exercisable as
of such time, may be exercised by him/her within thirty (30) days after such
termination of employment.

        (d)     Notwithstanding the foregoing, any termination of employment
prior to the expiration of the two (2) year period required under Section 102 of
the Ordinance and Rules may subject the Option Holder to forfeiture of the tax
benefits available under Section 102 of the Ordinance.

        (e)     Except as provided hereof, an Option may not be exercised
unless, at the time the Option is exercised and at all times from the date the
Option was granted to the Option Holder, the Option Holder shall then be and
shall have been, an employee of the Company.

9.      DEATH. Subject to the provisions of Section 102 of the Ordinance, if an
Option Holder shall die while in the employ of the Company, his/her estate,
personal representative or beneficiary shall have the right to exercise the
entire Option granted to the Option Holder pursuant to the Plan at any time
within two (2) years from the date of his/her death (or within such shorter
period as may be determined by the Board), in respect of the total number of

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Shares as to which he/she would have been entitled to exercise at the date of
his/her death.

9A.     LEGAL PROCEEDINGS. In the event of the institution of any legal
proceedings directed to the validity of the Plan or the Option, the Company may,
in its sole discretion, and without incurring any liability therefore to the
Option Holder, terminate the Option.

10.     STOCK SPLITS, MERGERS, ETC. In case of any Change in Capitalization (as
defined below), appropriate adjustments shall be made by the Board, whose
determination shall be final, to the number of Shares and Option exercise price
per Share which may be purchased under outstanding Options. The Company may
provide for immediate maturity of all outstanding Options prior to the
effectiveness of such merger, sale of assets or similar transaction, with all
Options not being exercised within the time period specified by the Board being
terminated. Solely for purposes of the Plan, "CHANGE IN CAPITALIZATION" shall
mean any increase, reduction or change or exchange of shares for a different
number or kind of shares or other securities by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, issuance of warrants or
rights, dividend or other distribution (whether in the form of cash, stock or
other property), stock split, spin-off, combination or exchange of shares,
repurchase of shares, change in corporate structure or otherwise.

11.     TRANSFERABILITY.

        (a)     Options are not assignable or transferable, except by will or
the laws of descent and distribution to the extent set forth in Section 9 and,
Options, during the lifetime of the Option Holder, may be exercised only by
him/her. More particularly (but without limiting the generality of the
foregoing), the Option may not be, except as provided above, pledged or
hypothecated in any way, assignable by operation of law, or subject to
execution, attachment or similar process. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of the Option contrary to the
provisions of the Plan, and the levy of any execution, attachment, or similar
process upon the Option, shall be null and void and without effect; provided,
however, that if the Option Holder shall die while in the employ of the Company
his/her estate, personal representative, or beneficiary shall have the right to
exercise the Option to the extent provided in Section 9 above.

        (b)     The sale and/or transfer of the Shares subject to an Option to
any third party shall require the consent of the Board. The Board shall not
consent to a share transfer to a third party in the event that such third
party's shareholding in the Company may, in the Board's opinion, prejudice the
Company's interests.

        (c)     Without derogating from the above, the rights of first refusal
set forth in the Company's Articles with regard to the sale and/or transfer of
shares shall apply to the Shares underlying any Option.

12.     EXERCISE OF OPTIONS. An Option may be exercised by written notice to the
Company at its offices. The notice shall refer to the Option being exercised
(specific reference to the Notice of Grant of the Option and its date) and the
number of Ordinary Shares in respect of which the Option is being exercised. The
exercise notice shall be signed by the Option Holder and shall be accompanied by
payment in full of the exercise price stated in the Notice of Grant of Option.

        The Company shall issue the Shares, in the name of the Trustee for the
benefit of the person(s) exercising the Option and deliver a share
certificate(s) to the Trustee representing

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such Shares as soon as practicable following the exercise by the Option Holder
and payment of the exercise price to the Company.

        If the Option is being exercised by a person(s) other than the Option
Holder, pursuant to Section 9 above, such notice shall be accompanied by
appropriate proof of the right of such person(s) to exercise the Option.

13.     NOTICE OF GRANT OF OPTION. Notice of Grant of Options under the Plan
shall be in writing, duly executed and delivered by or on behalf of the Company
and the Option Holder, shall contain such terms and conditions as the Committee
deems advisable. If there is any conflict between the terms and conditions of
any Notice of Grant of Option and of the Plan, the terms and conditions of the
Plan shall prevail.

14.     PAYMENT.

        (a)     The Option Holder shall waive a portion of his/her salary
payment in consideration for the Option.

        (b)     The exercise price, shall be payable in cash or by certified
check. The Board, in its sole discretion, may allow payment in cash, at the
minimum, nominal value of the Ordinary Shares being exercised and execution of a
recourse promissory note for the balance of the Option exercise price.

15.     WITHHOLDING TAX AND OTHER RESTRICTIONS ON ISSUING SHARES. The exercise
of each Option shall be subject to the condition that if at any time the Company
shall determine in its discretion that the satisfaction of withholding tax or
other withholding liabilities, or that the listing, registration, or
qualification of any shares otherwise deliverable upon such exercise upon any
securities exchange or under any national, state or federal law, or that the
consent or approval of any regulatory body, is necessary or desirable as a
condition of, or in connection with, such exercise in the delivery or purchase
of shares pursuant thereto, then in any such event, such exercise shall not be
effective unless such withholding, listing, registration, qualification, consent
or approval shall have been effected or obtained free of any conditions not
acceptable to the Company.

        The Company may require an additional payment equal to all applicable
withholding taxes which may be imposed on the difference between the exercise
price of the Ordinary Shares issuable upon the exercise of an Option and the
fair market value of such Shares as of the date of exercise (which sum will be
paid in due course by the Company to the applicable agencies as income taxes
withheld on income resulting from the exercise of the Option).

16.     TERM OF PLAN. The Plan shall terminate ten (10) years after the Plan is
adopted by the Board, subject to earlier termination as provided in Section 9A
above.

17.     APPLICATION OF FUNDS. The proceeds received by the Company from the sale
of Ordinary Shares or the exercise of Options granted under the Plan will be
used for general corporate purposes.

18.     OBLIGATION TO EXERCISE OPTION. The granting of an Option shall impose no
obligation on the Option Holder to exercise such Option.

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19.     CONTINUANCE OF EMPLOYMENT. Neither the Plan nor the Grant of an Option
in a Notice of Grant of Option shall impose any obligation on the Company to
continue the employment of any Option Holder, and nothing in the Plan or the
grant of an Option in a Notice of Grant of Option shall confer upon any Option
Holder any right to continue in the employ of the Company or conflict with the
right of either to terminate such employment at any time.

20.     ENFORCEABILITY. The provisions of this Plan shall be binding upon the
Option Holder, his/her estate, personal representatives and beneficiaries.

21.     LOCK-UP. In any registration of the Company's shares, any Option Holder
shall abide by a "lock-up" period of up to one hundred and eighty (180) days, if
requested by the underwriter or the Company in such registration.

22.     EFFECTIVENESS OF THE PLAN. The Plan shall become effective on the date
of its adoption by the Board, but subject, nevertheless, to such approvals as
may be required by any public authorities, including but not limited to the
Income Tax Authority and the fulfillment of any other requirement under any
applicable law.

23.     NOTICES. Each notice relating to the Plan and the Notice of Grant of an
Option shall be in writing and delivered in person or by first class mail,
postage prepaid, to the address last known of the person/entity to be notified.
Each notice shall be deemed given on the date it is received. The Company's
address is: 1 Hanagar Street, Neve Neeman B Industrial Zone, P.O.B 7220, Hod
Hasharon 45421, Israel.

24.     GOVERNING LAW. This Plan and the Notice of Grant shall be governed by
and construed under the laws of the State of Israel.EXHIBIT 10.5

                                 POWERDSINE LTD.

                         2003 ISRAELI SHARE OPTION PLAN
                         ------------------------------

1.      PURPOSE

The  purpose of this Plan (as  defined  in  Section  2.1 below) is to secure for
PowerDsine  Ltd., a company  incorporated  under the laws of the State of Israel
(the  "COMPANY")  and its  shareholders  the benefits  arising from ownership of
share  capital by  employees,  officers  and  directors  of the  Company and its
Affiliates (as defined in Section 2.1 below),  who are expected to contribute to
the Company's future growth and success.

2.      DEFINITIONS

2.1     DEFINED TERMS

Initially,  capitalized  terms,  as used in this Plan,  shall  have the  meaning
ascribed thereto as set forth below:

ADMINISTRATOR           Means the Company's  Board,  or a committee to which the
                        Board  shall have  delegated  power to act on its behalf
                        with  respect to this Plan.  Subject to the Articles (as
                        defined  herein),   the   Administrator,   if  it  is  a
                        committee, shall consist of at least two (2) members, or
                        such greater number as may be determined by the Board.

AFFILIATE(S)            Means  a  present  or  future  entity  that  either  (i)
                        Controls the Company or is Controlled by the Company; or
                        (ii) is  Controlled  by the same  person or entity  that
                        Controls the Company. Control is defined herein.

ALLOCATE and/or         With respect to Options, means the allocation of Options
ALLOCATED               by  the   Company   to  the   Trustee  on  behalf  of  a
                        Participant.

ARTICLES                The Articles of  Association  of the Company,  as may be
                        amended from time to time.

BOARD                   The board of directors of the Company.

CAUSE                   when  used  in  connection  with  the  termination  of a
                        Participant's   employment  with,  or  services  to  the
                        Company or an  Affiliate,  and forming the basis of such
                        termination: (a) the definition ascribed to Cause in the
                        individual  employment  agreement or services  agreement
                        between  the  Company   and/or  its  Affiliate  and  the
                        Participant,  (b) if no  such  definition  exists,  then
                        anyone of the following:  (i)  termination of engagement
                        by the Company or an Affiliate,  which under Israeli law
                        denies the  Participant's  entitlement to severance pay;
                        (ii)  dishonesty  toward the  Company  or an  Affiliate,
                        (iii)   insubordination   with  respect  to   reasonable
                        directives of the Participant's  direct supervisor or to
                        directives of the Board, (iv) substantial malfeasance or
                        nonfeasance of duty, (v)  embezzlement  of the Company's
                        or an

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<PAGE>

                        Affiliate's  funds,  (vi)  unauthorized   disclosure  of
                        confidential  information,  (vii) conduct  substantially
                        prejudicial to the business of the Company or Affiliate,
                        (viii) any substantial breach by the Participant of his/
                        her  employment  or  service   agreement  or  any  other
                        obligations towards Company or an Affiliate.

CHANGE IN               Any increase,  reduction or change or exchange of shares
CAPITALIZATION          for a  different  number  or kind  of  shares  or  other
                        securities    by   reason    of   a    reclassification,
                        recapitalization,  merger,  assets sale,  consolidation,
                        reorganization, issuance of warrants or rights, dividend
                        or  other  distribution  (whether  in the  form of cash,
                        shares  or  other  property),   share  split,  spin-off,
                        combination or exchange of shares, repurchase of shares,
                        or change in corporate structure.

COMMENCEMENT DATE       Means  the  date on  which  the  vesting  schedule  with
                        respect  to  a  Grant  of  Options  begins,  and  unless
                        otherwise determined by the Administrator,  shall be the
                        date on which such Grant of Options is Allocated.

CONTROL and/or          Shall have the meaning  ascribed  thereto in Section 102
CONTROLLED              (as defined herein).

DISABILITY              Means, (A) the definition of such term in the individual
                        employment  or  services  agreement  between the Company
                        and/or an Affiliate  and the  Participant,  or (B) if no
                        such  definition  exists,  then any  physical  or mental
                        illness  or injury as a result of which the  Participant
                        remains absent from work or is otherwise  precluded from
                        rendering  his/her  services  to the  Company  and/or an
                        Affiliate,  for,  (i) a  period  of two (2)  consecutive
                        months,  or (ii) an  aggregate  of two (2) months in any
                        twelve (12) month  period.  Disability  shall occur upon
                        the end of such period.

EXERCISE PRICE          Means,  the price  determined  by the  Administrator  in
                        accordance  with  Section  7.1 below,  to be paid to the
                        Company upon exercise of a granted Option and conversion
                        of such Option into Underlying Shares.

GRANT LETTER            Means a letter  from the  Company or an  Affiliate  to a
                        Participant, in which the Participant is notified of the
                        decision to grant  Participant  Options according to the
                        terms of this  Plan.  The Grant  Letter  shall  specify,
                        among  other  things (i) the Tax Track that the  Company
                        chooses in accordance with Section 11 of this Plan; (ii)
                        the Exercise Price;  (iii) the number of Options granted
                        to the Participant; and (iv) the time(s) at which all or
                        portions of an  outstanding  Option  becomes  vested and
                        exercisable by the Participant.

GRANT OF OPTIONS        Means  the  grant  of  Options  by  the   Company  to  a
                        Participant pursuant to a Grant Letter.

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<PAGE>

HOLDING PERIOD          Means the period in which the Allocated  Options granted
                        to a Participant under Tax Tracks Through a Trustee, or,
                        upon exercise of the Options,  the Underlying Shares are
                        to be held by the Trustee on behalf of the  Participant,
                        in accordance  with Section 102, and pursuant to the Tax
                        Track selected by the Company.

IPO                     Means  the  initial  public  offering  of the  Company's
                        shares and the listing of such shares for trading on any
                        recognized   stock  exchange  or   over-the-counter   or
                        computerized securities trading system.

LAW                     Means the laws of the State of Israel,  as are in effect
                        from time to time.

MERGER TRANSACTION      Means  (i) a sale  of all  or  substantially  all of the
                        assets  of the  Company;  or (ii) a sale  (including  an
                        exchange) of all or  substantially  all of the shares of
                        the  capital  stock of the  Company;  or (iii) a merger,
                        consolidation or like transaction of the Company with or
                        into another corporation.

NOTICE OF EXERCISE      A notice of  exercise of Options as set forth in Section
                        7.4 below.

OPTION                  Means the right granted to a Participant to purchase one
                        (1) Share of the Company.

PARTICIPANT             Employee(s), officer(s) or director(s) of the Company or
                        any  Affiliate,  provided  that  such  person  does  not
                        Control  the  Company,  on  behalf  of whom an Option is
                        Allocated pursuant to this Plan.

PLAN or OPTION PLAN     Means this 2003 Israeli  Share  Option  Plan,  as may be
                        amended from time to time.

RETIREMENT              Means the termination of a Participant's employment as a
                        result of his/her reaching the earlier of (i) the age of
                        retirement  prescribed  by  Law;  or  (ii)  the  age  of
                        retirement  specified  in the  Participant's  employment
                        agreement;  or (iii) the Company's  written  consent for
                        retirement.

SECTION 102             Means Section 102 of the Israeli Tax  Ordinance,  as may
                        be amended from time to time.

SECTION 102 RULES       Means the Income Tax Rules (Tax  Relief for  Issuance of
                        Shares to Employees),  2003, as may be amended from time
                        to time.

SHARE(S)                Means Ordinary  Shares of the Company,  of nominal value
                        NIS 0.10  each,  subject  to  adjustment  for any  share
                        splits,  combinations  or  share  dividends  having  the
                        effect of a share split.

                                       3
<PAGE>

SHARE REGISTER          The  Company's   shareholder   register   maintained  in
                        accordance with the provisions of applicable Law.

TAX ORDINANCE           Means the Israeli  Income Tax Ordinance  [New  Version],
                        1961, as amended, and any regulations,  rules, orders or
                        procedures promulgated thereunder.

TAX TRACK               Means  anyone of the three tax  tracks  described  under
                        Section 102, specifically:  (1) the "Capital Gains Track
                        Through a  Trustee";  (2)  "Income  Tax Track  Through a
                        Trustee";  or  (3)  the  "Income  Tax  Track  Without  a
                        Trustee";  each as more fully described in Sections 11.1
                        and 11.2 below.

TERM OF THE OPTIONS     Means, with respect to granted but unexercised  Options,
                        the time period set forth in Section 9 below.

TERMINATION OF          Termination   of  the  employment   relationship   of  a
EMPLOYMENT              Participant  who is  either  an  employee,  director  or
                        officer of the  Company or an  Affiliate,  by either the
                        Company, an Affiliate or the Participant.

TRUSTEE                 Means a  trustee  appointed  by the  Company  to hold in
                        trust,  Allocated  Options  and  the  Underlying  Shares
                        issued  upon  exercise  of such  Options,  on  behalf of
                        Participants.

TAX YEAR                A year beginning on January 1 and ending on December 31.

UNDERLYING SHARES       Means  Shares  issued or to be issued  upon  exercise of
                        Granted Options, all in accordance with this Plan.

2.2     GENERAL

Without  derogating from the meanings  ascribed to the capitalized  terms above,
all singular  references  in this Plan shall  include the plural and vice versa,
and reference to one gender shall include the other,  unless otherwise  required
by the context.

3.      SHARES AVAILABLE FOR OPTIONS

3.1     The total number of Underlying  Shares  reserved for issuance under this
        Plan and any modification thereof, shall be determined from time to time
        by the Board.  Such number of Shares shall be subject to  adjustment  as
        required  for the  implementation  of the  provisions  of this Plan,  in
        accordance with the provisions of Section 4 below.

3.2     If Options Granted and/or  Allocated under this Plan expire or otherwise
        terminate in accordance  with the provisions of this Plan,  such expired
        or  terminated  Options  shall become  available  for future  Grants and
        Allocations under this Plan.

                                       4
<PAGE>

4.      ADJUSTMENTS

        (a)     In case of any Change in Capitalization, and in order to prevent
diminution or enlargement of the benefits or potential  benefits  intended to be
made available  under this Plan,  appropriate  adjustments  shall be made by the
Administrator,  whose  determination  shall be final, to the number and class of
Shares which may be purchased and delivered under this Plan,  and/or the number,
class,  and price of Shares  covered  by each  outstanding  Option,  and/or  the
Exercise  Price under  outstanding  Options.  The Company  may, but shall not be
obligated to, provided for immediate  maturity of all outstanding  Options prior
to the  effectiveness  of such  Change in  Capitalization,  with all Options not
being  exercised  within the time period  specified by the  Administrator  being
terminated. Upon the occurrence of any such adjustment,  references in this Plan
to Shares and  Underlying  Shares  shall be  construed to mean the Shares of the
Company subject to this Plan, as determined by the  Administrator  and following
such adjustment.

        (b)     If the Change in  Capitalization  is the  distribution of a cash
dividend,  the  Company  shall  transfer  to the  Trustee the amount of dividend
resulting  from the  Underlying  Shares  held by the  Trustee for the benefit of
Participants  in accordance  with the provisions of this Plan. The Trustee shall
deduct all applicable  taxes from the dividend amount and transfer the remaining
dividend amount to such Participants.

5.      ADMINISTRATION OF THE PLAN

5.1     POWER

Subject to the Law,  the  Articles  and any  resolution  to the  contrary by the
Board, the Administrator is authorized,  in its sole and absolute discretion, to
exercise all powers and authorities either specifically granted to it under this
Plan or necessary or advisable  in the  administration  of this Plan,  including
without limitation,

(A)     To determine:

        (i)     The  Participants  in the Plan,  and the number of Options to be
                Granted   for  the   benefit   of  each   Participant.   If  the
                Administrator  is a committee of the Board,  then this authority
                shall be deemed to be an  authority to make  recommendations  to
                the Board, which  recommendations  may or may not be approved by
                the Board in it sole discretion;

        (ii)    The time(s) at which Options shall be Granted;

        (iii)   The Exercise Price for any Granted Option;

        (iv)    The vesting period and schedule of any Granted Option;

        (v)     Whether,  to what extent, and under what circumstances an Option
                may be settled, canceled, forfeited, exchanged, or surrendered;

        (vi)    Any terms and conditions in addition to those  specified in this
                Plan under which an Option may be Granted; and

        (vii)   Any measures,  and to take any actions,  as are deemed necessary
                or advisable for the  administration  and implementation of this
                Plan.

                                       5
<PAGE>

(B)     To  interpret  the  provisions  of this  Plan  and to take  all  actions
        resulting therefrom, including without limitation,

        (i)     Subject to Section 7 below,  to accelerate the date on which any
                Granted Option under this Plan becomes vested and exercisable;

        (ii)    To waive or amend  provisions  of this Plan relating to exercise
                of Options,  including  exercise of Options after termination of
                employment for any reason; and

        (iii)   To  amend  any  of  the  terms  of  this  Plan,   or  any  prior
                determinations of the Administrator.

(C)     The  Administrator  may,  at  any  time,  and  when  applicable,   after
        consultation with the Trustee,  amend, alter,  suspend or terminate this
        Plan.  Termination  of this Plan shall not  affect  the  Administrator's
        ability to exercise the powers  granted to it hereunder  with respect to
        Options granted under this Plan prior to the date of such termination.

5.2     LIMITATIONS

Notwithstanding  the  provisions  of  Section  5.1  above,  no  interpretations,
determinations or actions of the  Administrator  shall contradict the provisions
of Section 102, and no waiver or amendment  with respect to this Plan shall have
an  adverse  affect on the  rights of any  Participant  in  connection  with any
Granted  Option under this Plan without first  obtaining the written  consent of
the Participant being adversely affected.

6.      GRANT AND ALLOCATION OF OPTIONS

6.1     CONDITIONS FOR GRANT OF OPTIONS

Options may be granted at any time after:

        (A)     This Plan has been approved by the necessary corporate bodies of
                the Company; and

        (B)     All other approvals,  consents or requirements  necessary by Law
                have been received or met.

6.2     CONDITIONS FOR ALLOCATION OF OPTIONS

Options may be  allocated  thirty (30) days after a request for approval of this
Plan has been  submitted by the Company for approval,  to the Israeli Income Tax
Authorities pursuant to the requirements of the Tax Ordinance.

6.3     DATE OF GRANT OR ALLOCATION

        (A)     The date on which  Options  shall be deemed  Granted  under this
                Plan  shall  be the  date on  which  the  Company  notifies  the
                Participant that an Option has been Granted thereto.

        (B)     The date on which Options shall be deemed  Allocated  under this
                Plan shall be the date on which the Company notifies the Trustee
                that an Option has been  Allocated in the name of the Trustee on
                behalf of a Participant.

                                       6
<PAGE>

7.      EXERCISE OF OPTIONS

7.1     EXERCISE PRICE

The Exercise  Price per  Underlying  Share  deliverable  upon the exercise of an
Option shall be determined by the Administrator. The Exercise Price shall be set
forth in the Grant Letter.

7.2     VESTING SCHEDULE

        (a)     Options shall vest (i.e.,  Options shall become  exercisable) at
the dates set forth in the Grant Letter (the "VESTING DATES").  An Option may be
subject  to such  other  terms  and  conditions  on the  time(s)  when it may be
exercised as the Administrator may deem appropriate.  The vesting  provisions of
individual Options may vary.

        (b)     Unless otherwise  determined by the  Administrator,  all Options
Granted on a certain date shall be subject to the continued  employment  with or
service to the Company or Affiliate by the Participant, from the date the Option
is  Granted  until  the end of the last  Vesting  Dates  set  forth in the Grant
Letter.

7.3     MINIMUM EXERCISE

        (a)     When exercising an Option,  and unless  restricted by the number
of  Underlying  Shares  available for exercise,  the  Participant  must exercise
his/her  right to a minimum of one (1) unit of the Option.  For the  purposes of
this Plan, one (1) 'UNIT' of an Option shall equal ten (10)  Underlying  Shares.
An Option may not be exercised for fractional Shares.

        (b)     The  exercise  by a  Participant  of a  portion  of the  Options
granted  shall not cause the  expiration,  termination  or  cancellation  of the
remaining  portions  of  Options  that  have  vested  and  that  are held by the
Participant or the Trustee on behalf of the Participant.

7.4     MANNER OF EXERCISE

An Option may be exercised by a Participant at any time according to the Vesting
Dates in the following manner:

        (A)     NOTICE OF EXERCISE

        The Participant shall sign and deliver to the Company,  at its principal
        office,  with a copy  to the  Trustee  (if  the  Options  are  held by a
        Trustee),  a notice of exercise of Option,  in the form  determined  for
        such purpose by the Administrator  (the "NOTICE OF EXERCISE").  Any form
        of Notice of  Exercise  must  include  the  following  details:  (i) the
        identity of the Participant, (ii) the number of Options being exercised,
        and (iii) the aggregate  Exercise Price to be paid for all Options being
        exercised (the "PURCHASE PRICE").

        (B)     PAYMENT OF EXERCISE PRICE

        Payment by the Participant to the Company of the Purchase Price shall be
        made in case or by  certified  check,  in U.S.  dollars  or New  Israeli
        Shekels  ("NIS"),  and if  payment  is made in NIS,  to the  extend  the
        Exercise Price is noted in U.S. dollars,  the amount shall be calculated
        at the representative rate of exchange known on the date of payment. The
        Administrator  may,  in its sole  discretion,  accept  any other form of
        payment from the Participant.

                                       7
<PAGE>

        (C)     ALLOCATION OF SHARES

        Upon the delivery of a duly signed Notice of Exercise and the payment to
        the  Company  of  the  Purchase  Price,  the  Company  shall  issue  the
        Underlying  Shares to the Trustee  (according to the applicable  Holding
        Period) or to the Participant, as the case may be.

8.      WAIVER OF OPTION RIGHTS

        (a)     At  any  time  prior  to the  expiration  of  any  Granted  (but
unexercised)  Option,  a  Participant  may  waive his  rights to such  Option by
providing the Company, at its principal office, written notice expressly waiving
his/her  rights to the Option(s)  (the "WAIVER  NOTICE").  A Waiver Notice shall
specify  the  number  of  Options  being  waived  and  shall  be  signed  by the
Participant.

        (b)     Upon receipt by the Company of the Waiver  Notice,  such Options
shall expire and become  available for future Grants and Allocations  under this
Plan.

9.      TERM OF THE OPTIONS

Unless earlier  terminated  pursuant to the provisions of this Plan, all Granted
but  unexercised  Options shall expire and cease to be  exercisable at 5:00 p.m.
Israel time on the tenth (10th)  anniversary  of the  Commencement  Date of such
Options.

10.     TERMINATION OF EMPLOYMENT

10.1    VOLUNTARY  TERMINATION BY PARTICIPANT AND TERMINATION BY COMPANY NOT FOR
        CAUSE

        (a)     If  Termination  of Employment is  voluntarily  initiated by the
Participant  or is initiated by the Company other than for Cause  (circumstances
of  Termination  of  Employment  being  ultimately  determined by the Company or
Affiliate, in their sole discretion), then any vested but unexercised Options on
the  date of  Termination  of  Employment,  Granted  to the  Participant  may be
exercised,  provided they have not previously expired,  not later than the first
to occur of: (i) sixty (60) days after the date of Termination of Employment; or
(ii) the end of the Term of the Options.

        (b)     All other  Granted  but  unvested  Options  for the benefit of a
Participant shall expire upon the date of Termination of Employment.

10.2    TERMINATION FOR CAUSE

        (a)     If  Termination  of Employment is initiated by the Company or an
Affiliate for Cause, the Participant's right to exercise any unexercised Options
Granted to such Participant, whether vested or not on the date of Termination of
Employment,  shall cease as of such date of Termination  of Employment,  and the
Options shall thereupon expire.

        (b)     If,  subsequent to the  Termination of Employment for any reason
other  than for Cause,  but prior to the  exercise  of  Options  Granted to such
Participant,  the  Administrator  determines that, either prior or subsequent to
the Participant's Termination of Employment,  the Participant engaged in conduct
which would constitute Cause, then the Participant's  right to exercise his/her,
whether  or  not  vested  on  the  date  of  Termination  of  Employment,  shall
immediately  cease  upon such  determination  and the  Options  shall  thereupon
expire.

        (c)     A  determination  by the  Administrator  as to the  existence of
Cause shall be final and conclusive for all purposes of this Plan.

                                       8
<PAGE>

10.3    TERMINATION BY REASON OF DEATH, RETIREMENT, OR DISABILITY

        (a)     DEATH. If Termination of Employment is by reason of death of the
Participant,  his/her estate,  personal  representative  or  beneficiaries  may,
exercise the  Participant's  Options,  to the extent that the Participant  would
have been  entitled to do so at the time of his/her  death,  at any time but not
later  than the first to occur of:  (i) two (2)  years  following  Participant's
death; or (ii) the end of the Term of the Options.

        (b)     DISABILITY  AND  RETIREMENT.  If Termination of Employment is by
reason of  Retirement  or Disability of the  Participant,  the  Participant  may
exercise any portion of the Options  which have vested on the date of Retirement
or Disability, at any time but not later than the first to occur of: (i) one (1)
year  after  the  date of  Retirement  and  two  (2)  years  after  the  date of
Disability,  as the case may be; or (ii) the end of the Term of the Options. All
other Granted Options for the benefit of a Participant and which have not vested
on the date of Disability or  Retirement,  as the case may be, shall expire upon
the date of Retirement or Disability, as applicable.

10.4    EXCEPTIONS

Notwithstanding  the  provisions  of Sections  10.1,  10.2 and 10.3  above,  the
Administrator  may,  for  individual  special  circumstances  and  in  its  sole
discretion,  extend the periods during which a Participant, or upon the death of
a  Participant,   his/her  estate,  personal  representative  or  beneficiaries,
exercise any vested Options.

10.5    TRANSFER OF EMPLOYMENT OR SERVICE

Subject to the receipt of appropriate approvals from the Israeli Tax Authorities
(if required),  a Participant's right to Granted Options or the exercise thereof
under  this  Plan,  shall  not  terminate  or  expire  solely as a result of the
transfer of the  Participant  from the employ of the Company to an  Affiliate or
vice versa, whether as an employee, officer or director.

11.     TRUST ARRANGEMENT AND HOLDING PERIOD

11.1    TRUSTEE TAX TRACKS

        (a)     If the Company  elects to Grant  Options  pursuant to either (i)
the Capital Gains Track Through a Trustee,  or (ii) the Income Tax Track Through
a Trustee, then, in accordance with the requirements of Section 102, the Company
shall  appoint a Trustee  who will hold the  Allocated  Options  and  Underlying
Shares issued upon exercise of Options, in trust on behalf of each Participant.

        (b)     The Holding Period for the Options and Underlying Shares in each
of the above referenced tracks will be as follows:

        (A)     THE CAPITAL  GAINS TAX TRACK  THROUGH A TRUSTEE - if the Company
                elects to Allocate the Options  according to the  provisions  of
                this track,  then the Holding  Period will be  twenty-four  (24)
                months  from the end of the Tax Year in which the  Options  were
                Allocated to the Trustee on behalf of the  Participant,  or such
                shorter   period  as  may  be   approved   by  the  Israeli  Tax
                Authorities.

        (B)     INCOME TAX TRACK  THROUGH A TRUSTEE - if the  Company  elects to
                Allocate Options according to the provisions of this track, then
                the  Holding  Period  will be twelve (12) months from the end of
                the Tax Year in which the Options were  Allocated to the Trustee
                on behalf of the  Participant,  or such shorter period as may be
                approved by the Israeli Tax Authorities.

                                       9
<PAGE>

        (C)     Subject to the  provisions  of Section  102 and the  Section 102
                Rules,  Participants  are prohibited from (i) receiving from the
                Trustee,   or  (ii)  selling  or  otherwise   disposing  of  the
                Underlying  Shares  prior to the end of the  applicable  Holding
                Period. Notwithstanding the foregoing, if a Participant sells or
                otherwise  disposes of Underlying  Shares held by the Trustee on
                his/her  behalf,  prior  to the  end of the  applicable  Holding
                Period (a "Breach"),  the  Participant  shall be responsible for
                the payment of all applicable  taxes imposed as a result of such
                Breach, in accordance with the provisions of the Rules.

        (D)     If the  Company  distributes  rights,  including  an issuance of
                bonus shares,  in connection with Options  originally  Allocated
                (the "Additional  Rights"),  all such Additional Rights shall be
                Allocated  and/or  issued  to the  Trustee  for the  benefit  of
                Participants, and shall be held by the Trustee for the remainder
                of the  Holding  Period  applicable  to the  Options  originally
                Allocated. Such Additional Rights shall be treated in accordance
                with the provisions of the applicable Tax Track.

11.2    INCOME TAX TRACK WITHOUT A TRUSTEE

If the Company  elects to Grant  Options  according  to the  provisions  of this
track,  then the Options will not be subject to a Holding Period.  To the extent
the Company elects this track,  then it reserves the right,  upon an exercise of
Options by a Participant under this Tax Track, to issue the Underlying Shares to
the  Trustee,  who shall  hold such  Underlying  Shares  for the  benefit of the
Participant,  for the  purpose  of  ensuring  due  payment  of any and all taxes
ensuing there-from,  all in accordance with the provisions of Section 16 of this
Plan.

11.3    TRACK SELECTION

The Company, in its sole discretion,  shall elect under which of the above three
(3) Tax Tracks each Option is Granted and shall  notify the  Participant  in the
Grant Letter, which Tax Track applies to each Granted Option.

11.4    CONCURRENT CONDITIONS

The Holding Period, if any, is in addition to the vesting period as specified in
the individual Grant Letter for each Participant. The Holding Period and vesting
period may run concurrently, but neither is a substitute for the other, and each
are independent terms and conditions for Options Granted under this Plan.

11.5    TRUST AGREEMENT

The terms and  conditions  applicable  to the  trust  relating  to the Tax Track
selected by the  Company,  as  appropriate,  shall be set forth in an  agreement
between the Company and the Trustee (the "TRUST AGREEMENT").

12.     TERM OF SHARES HELD IN TRUST

No  Shares or  Additional  Rights  issued by the  Company  to the  Trustee,  nor
Underlying Shares issued upon exercise of Options,  shall be held by the Trustee
on behalf of any  Participant  for a period longer than ten (10) years after the
end of the Term of the Options.  The Administrator shall instruct the Trustee as
to the transfer of these Shares  following  the period set forth in this Section
12.

                                       10
<PAGE>

13.     RIGHTS AS A SHAREHOLDER

Except as specified in this Plan or in the Grant  Letter,  a  Participant  shall
have all the rights and obligations of a shareholder of the Company with respect
to Shares  issued under this Plan,  including all  obligations  specified in the
Articles of Association of the Company.

14.     NO SPECIAL EMPLOYMENT RIGHTS

Nothing  contained  in this  Plan or any  Grant  Letter  shall  confer  upon any
Participant  any right with  respect to the  continuation  of  employment  by or
service to the Company or an Affiliate or to interfere in any way with the right
of the Company or an  Affiliate to terminate  such  employment  or service or to
increase or decrease the  compensation of the  Participant  with respect to such
employment or service.

15.     RESTRICTIONS ON DISPOSITION OF OPTIONS AND SHARES

15.1    OPTIONS

        (a)     Options  Granted under this Plan:  (i) are not  transferable  by
Participants  other than by will or the laws of descent and during the  lifetime
of a Participant may be exercised only by the  Participant;  and (ii) whether or
not fully paid, may not be sold,  assigned,  transferred,  pledged,  encumbered,
hypothecated or otherwise disposed of (each, a "DISPOSITION"); and (iii) are not
assignable  by  operation  of  law,  and  shall  not be  subject  to  execution,
attachment or similar process.

        (b)     During  the  lifetime  of a  Participant,  each  and all of such
Participant's  rights to purchase the Underlying Shares may be exercised only by
the Participant.

        (c)     Any  attempted  Disposition  contrary to the  provisions of this
Plan,  and the levy of any  execution,  attachment  or similar  process  upon an
Option, whether directly or indirectly, shall be null and void.

15.2    SHARES

        (a)     For as long as the Company is a private  company,  as defined in
applicable Law, no Disposition of the Underlying  Shares issued upon exercise of
a Granted Option, may be effected for a period of six (6) months and one (1) day
following the date on which the Underlying  Shares have been exercised (the "SIX
& DAY PERIOD").

        (b)     In addition to the foregoing and unless otherwise  determined by
the  Administrator,  prior to the earlier to occur of: (1) the Company's IPO; or
(2) the end of a four (4) year  period  commencing  on the date such  Underlying
Shares were issued to the  Trustee as a result of the  exercise of Options  (the
"RESTRICTION  PERIOD"),  no Disposition of the Shares may be effected  except in
the manner  described in the  provisions  of this Section 15.  Unless  otherwise
determined by the  Administrator,  any Underlying Shares issued upon exercise of
Options,  will be held by the Trustee until the earlier to occur of a Merger, as
detailed in Section 15.3 below, an IPO or the end of the Restriction Period.

Following  the end of the  Restriction  Period  and the  Six & Day  Period,  any
Disposition  of  Underlying  Shares  shall be subject to the  provisions  of the
Articles.

                                       11
<PAGE>

15.3    MERGERS

In a Merger  Transaction,  subject to obtaining the applicable  approvals of the
Israeli Tax Authorities,  the Administrator in its sole discretion,  may, but is
not obligated to decide:

        (A)     If, and to what  extent the vesting  period of unvested  Options
                shall be accelerated;

        (B)     If, and how vested  Options,  including  Options with respect to
                which the  vesting  period  has been  accelerated  according  to
                Section 15.3(A) above, may be exercised, replaced and/or sold by
                the Trustee or the Company, as the case may be, on the behalf of
                Participants; and

        (C)     The manner in which  Underlying  Shares  issued upon exercise of
                the Options  and held by the Trustee on behalf of  Participants,
                shall be  replaced  and/or  sold by the Trustee on behalf of the
                Participant.

15.4    ACCELERATION PROVISION

The  Administrator  may, in its sole  discretion,  include in  individual  Grant
Letters,  provisions  according to which, in Merger Transaction,  all or some of
the unvested Options, shall automatically accelerate.

15.5    BRING ALONG PROVISIONS

Prior to an IPO, the bring along  provisions  contained  in the  Articles  shall
apply to the  Participants  with  respect to the  Underlying  Shares held by the
Trustee on their behalf.

15.6    LOCK UP

In addition to any Holding Period,  in any  registration of the Company's shares
on any stock  exchange,  including  an IPO,  all  Participants  shall abide by a
lock-up period of up to one hundred and eighty (180) days, or such longer period
of time, all to the extent required by the  underwriter(s) in such registration.
For removal of doubt, extension of the period stated herein will not require the
individual  consent of each  Participant and shall be automatic upon the request
of said underwriter(s), in the sole discretion of the underwriter(s).

15.7    RIGHTS OF ORDINARY SHARES

Unless  specifically  restricted by this Plan and/or the provisions of the Grant
Letter, the Shares issuable to a Participant upon a due exercise of an Option or
any other securities of the Company so issuable, shall have the rights set forth
in the  Articles,  and  shall be  subject  to the  obligations  set forth in the
Articles for holders of the same class of securities. Upon the registration of a
Participant in the Share Register,  the Participant shall be entitled to receive
a copy of the Articles at his/her request.

16.     TAX MATTERS

        (a)     This Plan shall be governed  by, and shall  conform  with and be
interpreted in compliance  with, the requirements of Section 102 and any written
approval  from the  Israeli  Tax  Authorities.  All tax  consequences  under any
applicable  law  (other  than  stamp  duty)  which may  arise  from the Grant or
Allocation of Options,  from the exercise thereof or from the holding or sale of
Underlying  Shares (or other securities  issued under this Plan) by or on behalf
of the  Participant,  shall  be the  sole  liability  of  the  Participant.  The
Participant  shall indemnify the Company and/or  Affiliate,  as the case may be,
and hold them  harmless,  against and from any liability for any such tax or any
penalty, interest or indexing.

                                       12
<PAGE>

        (b)     If the  Company  elects to  Allocate  Options  according  to the
provisions  of the  Income  Tax Track  Without a Trustee  (Section  11.2 of this
Plan),  and if prior to the  exercise of any and/or all of these  Options,  such
Participant ceases to be an employee,  director, or officer of the Company or an
Affiliate,  the Participant  shall deposit with the Company a guarantee or other
security as required by law, in order to ensure the payment of applicable  taxes
upon the exercise of such Options.

17.     WITHHOLDING TAXES

        (a)     Whenever an amount  constitutes  withholding tax and such amount
relates to Options Granted to a Participant and/or Underlying Shares issued upon
the exercise thereof,  is due from the Participant  and/or the Company and/or an
Affiliate  and/or the Trustee,  the Company  and/or an Affiliate  shall have the
right to require payment of such withholding tax from a Participant in an amount
sufficient  to satisfy  any  applicable  withholding  tax  requirements  related
thereto.  Furthermore,  whenever  Shares or any other non-cash  assets are to be
delivered pursuant to the exercise of an Option, or transferred thereafter,  the
Company and/or an Affiliate  shall have the right to require the  Participant to
remit to the  Company  and/or to the  Affiliate,  or to the Trustee an amount in
cash sufficient to satisfy any applicable  withholding tax requirements  related
thereto. If such amount is not timely remitted, the Company and/or the Affiliate
shall have the right to withhold or set-off  (subject  to  applicable  Law) such
Shares or any other non-cash assets,  pending payment by the Participant of such
amounts.

        (b)     Until all taxes have been paid in accordance  with Rule 7 of the
Section 102 Rules, no Disposition in the Options and/or Underlying Shares may be
effected,  and no power of  attorney  or  instrument  of  transfer,  whether for
immediate or future use may be validly given.  Notwithstanding the foregoing,  a
Disposition in the Options and/or  Underlying  Shares may be validly effected in
accordance  with  the  provisions  of  Section  19  below,  provided  that,  the
transferee  thereof  shall be subject to the  provisions  of Section 102 and the
Section 102 Rules as would have been applicable to the deceased Participant were
he or she to have survived.

18.     NO TRANSFER OF OPTIONS BY TRUSTEE

The  Trustee  is  prohibited  from  transferring  Options  to any  third  party,
including a Participant,  except in accordance with  instructions  received from
the Administrator.

19.     TRANSFER OF RIGHTS UPON DEATH OF A PARTICIPANT

No  transfer  of any right to an  Option or  Underlying  Share  issued  upon the
exercise  thereof by will or by the laws of descent and  distribution,  shall be
effective to bind the Company unless, the Company shall have been furnished with
the following signed and notarized documents:

        (A)     A  written  request  for such  transfer  and a copy of the legal
                documents creating and confirming the right of the person acting
                with respect to the Participant's estate and of the transferee;

        (B)     A  written  consent  by the  transferee  to pay any  amounts  in
                connection  with the Options and  Underlying  Shares any payment
                due according to the provisions of this Plan and otherwise abide
                by all the terms of this Plan; and

        (C)     Any such other evidence as the  Administrator may deem necessary
                to  establish  the  right  to  the  transfer  of the  Option  or
                Underlying  Share  issued  upon  the  exercise  thereof  and the
                validity of the transfer.

                                       13
<PAGE>

20.     NO RIGHT OF OTHERS TO OPTIONS

Subject to the provisions of this Plan, no person other than a Participant shall
have any right with  respect to Options  Granted to the  Participant  under this
Plan.

21.     EXPENSES AND RECEIPTS

The expenses incurred in connection with the  administration  and implementation
of this  Plan  (including  any  applicable  stamp  duty)  shall  be borne by the
Company. Any proceeds received by the Company in connection with the exercise of
any Option may be used for general corporate purposes.

22.     REQUIRED APPROVALS

The  effectiveness  of this Plan is  subject  to the  receipt  of all  approvals
required under Section 102 and the Law.

23.     GOVERNING LAW

This Plan and all documents delivered or executed by the Company or an Affiliate
in  connection  herewith  shall be governed by,  construed and  administered  in
accordance  with the Law. The  district  courts of Tel  Aviv-Jaffa  shall be the
appropriate and exclusive venue for any disputes arising under and in connection
with this Plan and any and all  documents  delivered  or executed in  connection
hereto.

24.     TREATMENT OF PARTICIPANTS

The Company and/or an Affiliate are under no obligation to treat Participants in
a uniform  manner.  Subject to the  requirements  of the Law resulting  from the
Company's  election  of a  particular  Tax Track,  the terms of each  Option may
differ, in the sole discretion of the Administrator,  from other Options Granted
under this Plan at the same time, or at any other time.  The  Administrator  may
also grant more than one (1)  Option to a given  Participant  during the term of
this Plan,  either in addition to, or in  substitution  for, one or more Options
previously Granted to that Participant.

25.     NO CONFLICTS

If there is a conflict  between the terms of this Plan and a Grant  Letter,  the
provisions of this Plan shall prevail.

26.     PARTICIPANT UNDERTAKINGS

By entering into this Plan,  the  Participant  shall (1) agree and  acknowledges
that he/she have received and read this Plan and the Grant Letter; (2) undertake
all the provisions set forth in: Section 102 (including provisions regarding the
applicable Tax Track that the Company has elected), the 102 Rules, the Plan, the
Grant  Letter and the Trust  Agreement;  and (3)  subject to the  provisions  of
Section  102 and the  Rules,  undertake  not to sell or release  the  Underlying
Shares from trust before the end of the Holding Period (if any).

27.     ENFORCEABILITY

The  provisions  of this Plan shall be  binding  upon the  Participant,  his/her
estate, personal representatives, heirs and beneficiaries.

                                       14
<PAGE>

28.     NOTICES

Each notice relating to this Plan and any Grant Letter issued hereunder shall be
in writing and delivered in person or by first class mail,  postage prepaid,  to
the address last known of the person to be notified. Each notice shall be deemed
given on the date it is received.  If  delivered  in person,  it shall be deemed
received upon such  delivery.  If sent by mail,  it shall be deemed  received no
later than five (5) business days following its mailing.  The Company's  address
for notice purposes is:

PowerDsine Ltd.
Attn: Sharon Eckstein, Vice President for Human Resources
and/or Geri Katz, Chief Financial Officer
1 Hanagar Street, P.O.B 7220
Hod Hasharon 45421
Israel

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