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                                                                    EXHIBIT 10.4


                                   NETECT LTD.

                     1998 INTERNATIONAL EMPLOYEE STOCK PLAN

                       (AS AMENDED THROUGH JUNE 30, 2000)

         1. PURPOSE. The purpose of the Netect Ltd. 1998 International Employee
Stock Plan (the "Plan") is to encourage key employees of all current and future
non-Israeli subsidiaries (herein collectively referred to as "Related
Corporations") of Netect Ltd., an Israeli corporation (the "Company") and other
non-Israeli individuals who render services to the Company or a Related
Corporation, by providing opportunities to participate in the ownership of the
Company and its future growth through (a) the grant of options which qualify as
"incentive stock options" ("ISOs") under Section 422(b) of the Internal Revenue
Code of 1986, as amended (the "Code"); (b) the grant of options which do not
qualify as ISOs ("Non-Qualified Options"); (c) awards of stock in the Company
("Awards"); and (d) opportunities to make direct purchases of stock in the
Company ("Purchases"). Both ISOs and Non-Qualified Options are referred to
hereafter individually as an "Option" and collectively as "Options." Options,
Awards and authorizations to make Purchases are referred to hereafter
collectively as "Stock Rights." As used herein, the terms "parent" and
"subsidiary" mean "parent corporation" and "subsidiary corporation,"
respectively, as those terms are defined in Section 424 of the Code.

         2. ADMINISTRATION OF THE PLAN.

                           A. BOARD OR COMMITTEE ADMINISTRATION. The Plan shall
                  be administered by the Board of Directors of the Company (the
                  "Board") or, subject to paragraph 2(D) (relating to compliance
                  with Section 162(m) of the Code), by a committee appointed by
                  the Board (the "Committee"). Hereinafter, all references in
                  this Plan to the "Committee" shall mean the Board if no
                  Committee has been appointed. Subject to ratification of the
                  grant or authorization of each Stock Right by the Board (if so
                  required by applicable state law), and subject to the terms of
                  the Plan, the Committee shall have the authority to (i)
                  determine to whom (from among the class of employees eligible
                  under paragraph 3 to receive ISOs) ISOs shall be granted, and
                  to whom (from among the class of individuals and entities
                  eligible under paragraph 3 to receive Non-Qualified Options
                  and Awards and to make Purchases) Non-Qualified Options,
                  Awards and authorizations to make Purchases may be granted;
                  (ii) determine the time or times at which Options or Awards
                  shall be granted or Purchases made; (iii) determine the
                  purchase price of shares subject to each Option or Purchase,
                  which prices shall not be less than the minimum price
                  specified in paragraph 6; (iv) determine whether each Option
                  granted shall be an ISO or a Non-Qualified Option; (v)
                  determine (subject to paragraph 7) the time or times when each
                  Option shall become exercisable and the duration of the
                  exercise period; (vi) extend the period during which
                  outstanding Options may be exercised; (vii) determine whether
                  restrictions such as repurchase



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                  options are to be imposed on shares subject to Options, Awards
                  and Purchases and the nature of such restrictions, if any; and
                  (viii) interpret the Plan and prescribe and rescind rules and
                  regulations relating to it. If the Committee determines to
                  issue a Non-Qualified Option, it shall take whatever actions
                  it deems necessary, under Section 422 of the Code and the
                  regulations promulgated thereunder, to ensure that such Option
                  is not treated as an ISO. The interpretation and construction
                  by the Committee of any provisions of the Plan or of any Stock
                  Right granted under it shall be final unless otherwise
                  determined by the Board. The Committee may from time to time
                  adopt such rules and regulations for carrying out the Plan as
                  it may deem advisable. 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 or any Stock Right granted
                  under it.

                           B. COMMITTEE ACTIONS. The Committee may select one of
                  its members as its chairman, and shall hold meetings at such
                  time and place as it may determine. A majority of the
                  Committee shall constitute a quorum and acts of a majority of
                  the members of the Committee at a meeting at which a quorum is
                  present, or acts reduced to or approved in writing by all the
                  members of the Committee (if consistent with applicable state
                  law), shall be the valid acts of the Committee. From time to
                  time the Board may increase the size of the Committee and
                  appoint additional members thereof, remove members (with or
                  without cause) and appoint new members in substitution
                  therefor, fill vacancies however caused, or remove all members
                  of the Committee and thereafter directly administer the Plan.

C.       GRANT OF STOCK RIGHTS TO BOARD MEMBERS.

                  1)     Stock Rights may be granted to members of the Board.
                         All grants of Stock Rights to members of the Board
                         shall in all respects be made in accordance with the
                         provisions of this Plan applicable to other eligible
                         persons. Members of the Board who either (i) are
                         eligible to receive grants of Stock Rights pursuant to
                         the Plan or (ii) have been granted Stock Rights may
                         vote on any matters affecting the administration of the
                         Plan or the grant of any Stock Rights pursuant to the
                         Plan, except that no such member shall act upon the
                         granting to himself or herself of Stock Rights, but any
                         such member may be counted in determining the existence
                         of a quorum at any meeting of the Board during which
                         action is taken with respect to the granting to such
                         member of Stock Rights.

                  2)     No Options shall be awarded to directors or
                         shareholders or other interested parties, directly or
                         indirectly, other than: (i) an employee of the company
                         or subsidiary; (ii) members of Advisory Committee if
                         established, (iii) directors who do not hold equity or
                         rights convertible or exercisable into equity, except
                         by a unanimous vote of the Board of Directors.

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                           D. PERFORMANCE-BASED COMPENSATION. The Board, in its
                  discretion, may take such action as may be necessary to ensure
                  that Stock Rights granted under the Plan qualify as "qualified
                  performance-based compensation" within the meaning of Section
                  162(m) of the Code and applicable regulations promulgated
                  thereunder ("Performance-Based Compensation"). Such action may
                  include, in the Board's discretion, some or all of the
                  following (i) if the Board determines that Stock Rights
                  granted under the Plan generally shall constitute
                  Performance-Based Compensation, the Plan shall be
                  administered, to the extent required for such Stock Rights to
                  constitute Performance-Based Compensation, by a Committee
                  consisting solely of two or more "outside directors" (as
                  defined in applicable regulations promulgated under Section
                  162(m) of the Code), (ii) if any Non-Qualified Options with an
                  exercise price less than the fair market value per Ordinary
                  Share are granted under the Plan and the Board determines that
                  such Options should constitute Performance-Based Compensation,
                  such options shall be made exercisable only upon the
                  attainment of a pre-established, objective performance goal
                  established by the Committee, and such grant shall be
                  submitted for, and shall be contingent upon shareholder
                  approval and (iii) Stock Rights granted under the Plan may be
                  subject to such other terms and conditions as are necessary
                  for compensation recognized in connection with the exercise or
                  disposition of such Stock Right or the disposition of Ordinary
                  Shares acquired pursuant to such Stock Right, to constitute
                  Performance-Based Compensation.

         3. ELIGIBLE EMPLOYEES AND OTHERS. ISOs may be granted only to employees
of the Company or any Related Corporation. Non-Qualified Options, Awards and
authorizations to make Purchases may be granted to any employee, officer or
director (whether or not also an employee) or consultant of the Company or any
Related Corporation. The Committee may take into consideration a recipient's
individual circumstances in determining whether to grant a Stock Right. The
granting of any Stock Right to any individual or entity shall neither entitle
that individual or entity to, nor disqualify such individual or entity from,
participation in any other grant of Stock Rights.

         4. STOCK. The stock subject to Stock Rights shall be authorized but
unissued Ordinary Shares of the Company, NIS .01 par value per share (the
"Ordinary Shares"). The aggregate number of shares which may be issued pursuant
to the Plan is 770,000, subject to adjustment as provided in paragraph 13. If
any Option granted under the Plan shall expire or terminate for any reason
without having been exercised in full or shall cease for any reason to be
exercisable in whole or in part, the unpurchased Ordinary Shares subject to such
Option shall again be available for grants of Stock Rights under the Plan.

         No employee of the Company or any Related Corporation may be granted
Options to acquire, in the aggregate, more 364,000 Ordinary Shares under the
Plan during any fiscal year of the Company. If any Option granted under the Plan
shall expire or terminate for any reason without having been exercised in full
or shall cease for any reason to be exercisable in whole or in part, the shares
subject to such Option shall be included in the determination of the aggregate



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number of Ordinary Shares deemed to have been granted to such employee under the
Plan.

         5. GRANTING OF STOCK RIGHTS. Stock Rights may be granted under the Plan
at any time on or after February 19, 1998 and prior to February 18, 2008. The
date of grant of a Stock Right under the Plan will be the date specified by the
Committee at the time it grants the Stock Right; provided, however, that such
date shall not be prior to the date on which the Committee acts to approve the
grant.

         6. MINIMUM OPTION PRICE; ISO LIMITATIONS.

                           A. PRICE FOR NON-QUALIFIED OPTIONS, AWARDS AND
                  PURCHASES. Subject to paragraph 2(D) (relating to compliance
                  with Section 162(m) of the Code), the exercise price per share
                  specified in the agreement relating to each Non-Qualified
                  Option granted, and the purchase price per share of stock
                  granted in any Award or authorized as a Purchase, under the
                  Plan may be less than the fair market value of an Ordinary
                  Share of the Company on the date of grant; provided that, in
                  no event shall such exercise price or such purchase price be
                  less than the minimum legal consideration required therefor
                  under the laws of any jurisdiction in which the Company or its
                  successors in interest may be organized.

                           B. PRICE FOR ISOS. The exercise price per share
                  specified in the agreement relating to each ISO granted under
                  the Plan shall not be less than the fair market value per
                  Ordinary Share on the date of such grant. In the case of an
                  ISO to be granted to an employee owning stock possessing more
                  than ten percent (10%) of the total combined voting power of
                  all classes of stock of the Company or any Related
                  Corporation, the price per share specified in the agreement
                  relating to such ISO shall not be less than one hundred ten
                  percent (110%) of the fair market value per Ordinary Share on
                  the date of grant. For purposes of determining stock ownership
                  under this paragraph, the rules of Section 424(d) of the Code
                  shall apply.

                           C. $100,000 ANNUAL LIMITATION ON ISO VESTING. Each
                  eligible employee may be granted Options treated as ISOs only
                  to the extent that, in the aggregate under this Plan and all
                  incentive stock option plans of the Company and any Related
                  Corporation, ISOs do not become exercisable for the first time
                  by such employee during any calendar year with respect to
                  stock having a fair market value (determined at the time the
                  ISOs were granted) in excess of $100,000. The Company intends
                  to designate any Options granted in excess of such limitation
                  as Non-Qualified Options, and the Company shall issue separate
                  certificates to the optionee with respect to Options that are
                  Non-Qualified Options and Options that are ISOs.

                           D. DETERMINATION OF FAIR MARKET VALUE. If, at the
                  time an Option is granted under the Plan, the Company's
                  Ordinary Shares are publicly traded, "fair market value" shall
                  be determined as of the date of grant or, if the prices or
                  quotes


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                  discussed in this sentence are unavailable for such date, the
                  last business day for which such prices or quotes are
                  available prior to the date of grant and shall mean (i) the
                  average (on that date) of the high and low prices of an
                  Ordinary Share on the principal national securities exchange
                  on which the Ordinary Shares are traded, if the Ordinary
                  Shares are then traded on a national securities exchange; or
                  (ii) the last reported sale price (on that date) of an
                  Ordinary Share on the Nasdaq National Market, if the Ordinary
                  Shares are not then traded on a national securities exchange;
                  or (iii) the closing bid price (or average of bid prices) last
                  quoted (on that date) by an established quotation service for
                  over-the-counter securities, if the Ordinary Shares are not
                  reported on the Nasdaq National Market. If the Ordinary Shares
                  are not publicly traded at the time an Option is granted under
                  the Plan, "fair market value" shall mean the fair value of an
                  Ordinary Share as determined by the Committee after taking
                  into consideration all factors which it deems appropriate,
                  including, without limitation, recent sale and offer prices of
                  an Ordinary Share in private transactions negotiated at arm's
                  length.

         7. OPTION DURATION. Subject to earlier termination as provided in
paragraphs 9 and 10 or in the agreement relating to such Option, each Option
shall expire on the date specified by the Committee, but not more than (i) ten
years from the date of grant in the case of Options generally and (ii) five
years from the date of grant in the case of ISOs granted to an employee owning
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Related Corporation, as determined
under paragraph 6(B). Subject to earlier termination as provided in paragraphs 9
and 10, the term of each ISO shall be the term set forth in the original
instrument granting such ISO, except with respect to any part of such ISO that
is converted into a Non-Qualified Option pursuant to paragraph 16.

         8. EXERCISE OF OPTION. Subject to the provisions of paragraphs 9
through 12, each Option granted under the Plan shall be exercisable as follows:

                           A. VESTING. The Option shall either be fully
                  exercisable on the date of grant or shall become exercisable
                  thereafter in such installments as the Committee may specify.

                           B. FULL VESTING OF INSTALLMENTS. Once an installment
                  becomes exercisable, it shall remain exercisable until
                  expiration or termination of the Option, unless otherwise
                  specified by the Committee.

                           C. PARTIAL EXERCISE. Each Option or installment may
                  be exercised at any time or from time to time, in whole or in
                  part, for up to the total number of shares with respect to
                  which it is then exercisable, provided, however, that each
                  installment (other than the final exercise for shares subject
                  to the Option) may be exercised only in lots of five (5)
                  shares.



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                           D. ACCELERATION OF VESTING. The Committee shall have
                  the right to accelerate the date that any installment of any
                  Option becomes exercisable. In the event of merger or
                  consolidation which results in a change in more than 50% of
                  the members of the Board (a "Change in Control"), any
                  unexercised Options granted under the plan to an Officer of
                  the Company (an employee whose title is vice president or
                  above), shall have vesting accelerated by 1 year upon the
                  effective date of the Change in Control. However, if any
                  Officer is terminated for any reason other than for cause
                  within six months of such Change in Control, any unvested
                  Options granted to such Officer shall immediately vest on the
                  date of termination. As used herein, "cause" shall mean
                  conduct involving one or more of the following: (i) the
                  substantial and continuing failure of the Employee, after
                  notice thereof, to render services to the Company or Related
                  Corporation in accordance with the terms or requirements of
                  his or her employment; (ii) disloyalty, gross negligence,
                  willful misconduct, dishonesty or breach of fiduciary duty to
                  the Company or Related Corporation; (iii) the commission of an
                  act of embezzlement or fraud; (iv) deliberate disregard of the
                  rules or policies of the Company or Related Corporation which
                  results in direct or indirect loss, damage or injury to the
                  Company or Related Corporation; (v) the unauthorized
                  disclosure of any trade secret or confidential information of
                  the Company or Related Corporation; or (vi) the commission of
                  an act which constitutes unfair competition with the Company
                  or Related Corporation or which induces any customer or
                  supplier to breach a contract with the Company or Related
                  Corporation. Notwithstanding the foregoing, the Committee
                  shall not, without the consent of an optionee, accelerate the
                  permitted exercise date of any installment of any Option
                  granted to any employee as an ISO (and not previously
                  converted into a Non-Qualified Option pursuant to paragraph
                  16) if such acceleration would violate the annual vesting
                  limitation contained in Section 422(d) of the Code, as
                  described in paragraph 6(C).

         9. TERMINATION OF EMPLOYMENT. Unless otherwise specified in the
agreement relating to such ISO, if an ISO optionee ceases to be employed by the
Company and all Related Corporations other than by reason of death or disability
as defined in paragraph 10, no further installments of his or her ISOs shall
become exercisable, and his or her ISOs shall terminate on the earlier of (a)
three months after the date of termination of his or her employment, or (b)
their specified expiration dates, except to the extent that such ISOs (or
unexercised installments thereof) have been converted into Non-Qualified Options
pursuant to paragraph 16. For purposes of this paragraph 9, employment shall be
considered as continuing uninterrupted during any bona fide leave of absence
(such as those attributable to illness, military obligations or governmental
service) provided that the period of such leave does not exceed 90 days or, if
longer, any period during which such optionee's right to reemployment is
guaranteed by statute or by contract. A bona fide leave of absence with the
written approval of the Committee shall not be considered an interruption of
employment under this paragraph 9, provided that such written approval
contractually obligates the Company or any Related Corporation to continue the
employment of the optionee after the approved period of absence. ISOs granted
under the Plan


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shall not be affected by any change of employment within or among the Company
and Related Corporations, so long as the optionee continues to be an employee of
the Company or any Related Corporation. Nothing in the Plan shall be deemed to
give any grantee of any Stock Right the right to be retained in employment or
other service by the Company or any Related Corporation for any period of time.

         10.      DEATH; DISABILITY.

                           A. DEATH. If an ISO optionee ceases to be employed by
                  the Company and all Related Corporations by reason of his or
                  her death, any ISO owned by such optionee may be exercised, to
                  the extent otherwise exercisable on the date of death, by the
                  estate, personal representative or beneficiary who has
                  acquired the ISO by will or by the laws of descent and
                  distribution, until the earlier of (i) the specified
                  expiration date of the ISO or (ii) six months from the date of
                  the optionee's death.

                           B. DISABILITY. If an ISO optionee ceases to be
                  employed by the Company and all Related Corporations by reason
                  of his or her disability, such optionee shall have the right
                  to exercise any ISO held by him or her on the date of
                  termination of employment, for the number of shares for which
                  he or she could have exercised it on that date, until the
                  earlier of (i) the specified expiration date of the ISO or
                  (ii) six months from the date of the termination of the
                  optionee's employment. For the purposes of the Plan, the term
                  "disability" shall mean "permanent and total disability" as
                  defined in Section 22(e)(3) of the Code or any successor
                  statute.

         11. ASSIGNABILITY. No Stock Right shall be assignable or transferable
by the optionee except by will or by the laws of descent and distribution, and
during the lifetime of the optionee shall be exercisable only by such optionee.
Except as set forth in the previous sentence, during the lifetime of a grantee
each Stock Right shall be exercisable only by such grantee.

         12. TERMS AND CONDITIONS OF OPTIONS. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to Ordinary Shares issuable
upon exercise of Options. The Committee may specify that any Non-Qualified
Option shall be subject to the restrictions set forth herein with respect to
ISOs, or to such other termination and cancellation provisions as the Committee
may determine. The Committee may from time to time confer authority and
responsibility on one or more of its own members and/or one or more officers of
the Company to execute and deliver such instruments. The proper officers of the
Company are authorized and directed to take any and all action necessary or
advisable from time to time to carry out the terms of such instruments.



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         13. ADJUSTMENTS. Upon the occurrence of any of the following events, an
optionee's rights with respect to Options granted to such optionee hereunder
shall be adjusted as hereinafter provided, unless otherwise specifically
provided in the written agreement between the optionee and the Company relating
to such Option:

                           A. STOCK DIVIDENDS AND STOCK SPLITS. If the Ordinary
                  Shares shall be subdivided or combined into a greater of
                  smaller number of shares or if the Company shall issue any
                  Ordinary Shares as a stock dividend on its outstanding
                  Ordinary Shares, the number of Ordinary Shares deliverable
                  upon the exercise of Options shall be appropriately increased
                  or decreased proportionately, and appropriate adjustments
                  shall be made in the purchase price per share to reflect such
                  subdivision, combination or stock dividend.

                           B. CONSOLIDATIONS OR MERGERS. If the Company is to be
                  consolidated with or acquired by another entity in a merger or
                  other reorganization in which the holders of the outstanding
                  voting stock of the Company immediately preceding the
                  consummation of such event, shall, immediately following such
                  event, hold, as a group, less than a majority of the voting
                  securities of the surviving or successor entity, or in the
                  event of a sale of all or substantially all of the Company's
                  assets or otherwise (each, an "Acquisition"), the Committee or
                  the board of directors of any entity assuming the obligations
                  of the Company hereunder (the "Successor Board"), shall, as to
                  outstanding Options, either (i) make appropriate provision for
                  the continuation of such Options by substituting on an
                  equitable basis for the shares then subject to such Options
                  either (a) the consideration payable with respect to the
                  outstanding Ordinary Shares in connection with the
                  Acquisition, (b) shares of stock of the surviving or successor
                  corporation or (c) such other securities as the Successor
                  Board deems appropriate, the fair market value of which shall
                  not materially exceed the fair market value of Ordinary Shares
                  subject to such Options immediately preceding the Acquisition;
                  or (ii) upon written notice to the optionees, provide that all
                  Options must be exercised, to the extent then exercisable or
                  to be exercisable as a result of the Acquisition, within a
                  specified number of days of the date of such notice, at the
                  end of which period the Options shall terminate; or (iii)
                  terminate all Options in exchange for a cash payment equal to
                  the excess of the fair market value of the shares subject to
                  such Options (to the extent then exercisable or to be
                  exercisable as a result of the Acquisition) over the exercise
                  price thereof.

                           C. RECAPITALIZATION OR REORGANIZATION. In the event
                  of a recapitalization or reorganization of the Company (other
                  than a transaction described in subparagraph B above) pursuant
                  to which securities of the Company or of another corporation
                  are issued with respect to the outstanding Ordinary Shares, an
                  optionee upon exercising an Option shall be entitled to
                  receive for the purchase price paid upon such exercise the
                  securities he or she would have received if he or she had
                  exercised such Option prior to such recapitalization or
                  reorganization.


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                           D. MODIFICATION OF ISOS. Notwithstanding the
                  foregoing, any adjustments made pursuant to subparagraphs A, B
                  or C with respect to ISOs shall be made only after the
                  Committee, after consulting with counsel for the Company,
                  determines whether such adjustments would constitute a
                  "modification" of such ISOs (as that term is defined in
                  Section 424 of the Code) or would cause any adverse tax
                  consequences for the holders of such ISOs. If the Committee
                  determines that such adjustments made with respect to ISOs
                  would constitute a modification of such ISOs or would cause
                  adverse tax consequences to the holders, it may refrain from
                  making such adjustments.

                           E. DISSOLUTION OR LIQUIDATION. In the event of the
                  proposed dissolution or liquidation of the Company, each
                  Option will terminate immediately prior to the consummation of
                  such proposed action or at such other time and subject to such
                  other conditions as shall be determined by the Committee.

                           F. ISSUANCES OF SECURITIES. Except as expressly
                  provided herein, no issuance by the Company of shares of stock
                  of any class, or securities convertible into shares of stock
                  of any class, shall affect, and no adjustment by reason
                  thereof shall be made with respect to, the number or price of
                  shares subject to Options. No adjustments shall be made for
                  dividends paid in cash or in property other than securities of
                  the Company.

                           G. FRACTIONAL SHARES. No fractional shares shall be
                  issued under the Plan and the optionee shall receive from the
                  Company cash in lieu of such fractional shares.

                           H. ADJUSTMENTS. Upon the happening of any of the
                  events described in subparagraphs A, B or C above, the class
                  and aggregate number of shares set forth in paragraph 4 hereof
                  that are subject to Stock Rights which previously have been or
                  subsequently may be granted under the Plan shall also be
                  appropriately adjusted to reflect the events described in such
                  subparagraphs. The Committee or the Successor Board shall
                  determine the specific adjustments to be made under this
                  paragraph 13 and, subject to paragraph 2, its determination
                  shall be conclusive.

         14. MEANS OF EXERCISING OPTIONS. An Option (or any part or installment
thereof) shall be exercised by giving written notice to the Company at its
principal office address, or to such transfer agent as the Company shall
designate. Such notice shall identify the Option being exercised and specify the
number of shares as to which such Option is being exercised, accompanied by full
payment of the purchase price therefor either (a) in cash or by check, (b) at
the discretion of the Committee, through delivery of Ordinary Shares having a
fair market value equal as of the date of the exercise to the cash exercise
price of the Option, (c) at the discretion of the Committee, by delivery of the
grantee's personal recourse note bearing interest payable not


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less than annually at no less than 100% of the lowest applicable Federal rate,
as defined in Section 1274(d) of the Code, (d) at the discretion of the
Committee and consistent with applicable law, through the delivery of an
assignment to the Company of a sufficient amount of the proceeds from the sale
of the Ordinary Shares acquired upon exercise of the Option and an authorization
to the broker or selling agent to pay that amount to the Company, which sale
shall be at the participant's direction at the time of exercise, or (e) at the
discretion of the Committee, by any combination of (a), (b), (c) and (d) above.
If the Committee exercises its discretion to permit payment of the exercise
price of an ISO by means of the methods set forth in clauses (b), (c), (d) or
(e) of the preceding sentence, such discretion shall be exercised in writing at
the time of the grant of the ISO in question. The holder of an Option shall not
have the rights of a shareholder with respect to the shares covered by such
Option until the date of issuance of a stock certificate to such holder for such
shares. Except as expressly provided above in paragraph 13 with respect to
changes in capitalization and stock dividends, no adjustment shall be made for
dividends or similar rights for which the record date is before the date such
stock certificate is issued.

         If Ordinary Shares are used in payment of the purchase price, such
Ordinary Shares must have been legally and beneficially owned by the optionee
for at least six months.

         15. TERM AND AMENDMENT OF PLAN. This Plan was adopted by the Board on
February 19, 1998, subject, with respect to the validation of ISOs granted under
the Plan, to approval of the Plan by the stockholders of the Company at the next
Meeting of Stockholders or, in lieu thereof, by written consent. If the approval
of stockholders is not obtained prior to February 19, 1999, any grants of ISOs
under the Plan made prior to that date will be rescinded. The Plan shall expire
at the end of the day on February 18, 2008 (except as to Options outstanding on
that date). Subject to the provisions of paragraph 5 above, Options may be
granted under the Plan prior to the date of stockholder approval of the Plan.
The Board may terminate or amend the Plan in any respect at any time, except
that, without the approval of the stockholders obtained within 12 months before
or after the Board adopts a resolution authorizing any of the following actions:
(a) the total number of shares that may be issued under the Plan may not be
increased (except by adjustment pursuant to paragraph 13); (b) the provisions of
paragraph 3 regarding eligibility for grants of ISOs may not be modified; (c)
the provisions of paragraph 6(B) regarding the exercise price at which shares
may be offered pursuant to ISOs may not be modified (except by adjustment
pursuant to paragraph 13); and (d) the expiration date of the Plan may not be
extended. Except as otherwise provided in this paragraph 15, in no event may any
action of the Board or stockholders alter or impair the rights of a grantee,
without such grantee's consent, under any Stock Right previously granted to such
grantee.

         16. MODIFICATIONS OF ISOS; CONVERSION OF ISOS INTO NON-QUALIFIED
OPTIONS. Subject to paragraph 13(D), without the prior written consent of the
holder of an ISO, the Committee shall not alter the terms of such ISO (including
the means of exercising such ISO) if such alteration would constitute a
modification (within the meaning of Section 424(h)(3) of the Code). The
Committee, at the written request or with the written consent of any optionee,
may in its discretion take such actions as may be necessary to convert such
optionee's ISOs (or any installments or portions of installments thereof) that
have not been exercised on the date of


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                                       11


conversion into Non-Qualified Options at any time prior to the expiration of
such ISOs, regardless of whether the optionee is an employee of the Company or a
Related Corporation at the time of such conversion. Such actions may include,
but shall not be limited to, extending the exercise period or reducing the
exercise price of the appropriate installments of such ISOs. At the time of such
conversion, the Committee (with the consent of the optionee) may impose such
conditions on the exercise of the resulting Non-Qualified Options as the
Committee in its discretion may determine, provided that such conditions shall
not be inconsistent with this Plan. Nothing in the Plan shall be deemed to give
any optionee the right to have such optionee's ISOs converted into Non-Qualified
Options, and no such conversion shall occur until and unless the Committee takes
appropriate action. Upon the taking of such action, the Company shall issue
separate certificates to the optionee with respect to Options that are
Non-Qualified Options and Options that are ISOs.

         17. APPLICATION OF FUNDS.  The proceeds received by the Company from
the sale of shares pursuant to Options granted and Purchases authorized under
the Plan shall be used for general corporate purposes.

         18. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION. By accepting an ISO
granted under the Plan, each optionee agrees to notify the Company in writing
immediately after such optionee makes a Disqualifying Disposition (as described
in Sections 421, 422 and 424 of the Code and regulations thereunder) of any
stock acquired pursuant to the exercise of ISOs granted under the Plan. A
Disqualifying Disposition is generally any disposition occurring on or before
the later of (a) the date two years following the date the ISO was granted or
(b) the date one year following the date the ISO was exercised.

         19. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a
Non-Qualified Option, the transfer of a Non-Qualified Stock Option pursuant to
an arm's-length transaction, the grant of an Award, the making of a Purchase of
Ordinary Shares for less than its fair market value, the making of a
Disqualifying Disposition (as defined in paragraph 18), the vesting or transfer
of restricted stock or securities acquired on the exercise of an Option
hereunder, or the making of a distribution or other payment with respect to such
stock or securities, the Company may withhold taxes in respect of amounts that
constitute compensation includible in gross income. The Committee in its
discretion may condition (i) the exercise of an Option, (ii) the transfer of a
Non-Qualified Stock Option, (iii) the grant of an Award, (iv) the making of a
Purchase of Ordinary Shares for less than its fair market value, or (v) the
vesting or transferability of restricted stock or securities acquired by
exercising an Option, on the grantee's making satisfactory arrangement for such
withholding. Such arrangement may include payment by the grantee in cash or by
check of the amount of the withholding taxes or, at the discretion of the
Committee, by the grantee's delivery of previously held Ordinary Shares or the
withholding from the Ordinary Shares otherwise deliverable upon exercise of any
Option having an aggregate fair market value equal to the amount of such
withholding taxes.

         20. GOVERNMENTAL  REGULATION.  The Company's obligation to sell and
deliver the Ordinary Shares under this Plan is subject to the approval of any
governmental authority required in connection with the authorization, issuance
or sale of such shares.


<PAGE>   12
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         Government regulations may impose reporting or other obligations on the
Company with respect to the Plan. For example, the Company may be required to
send tax information statements to employees and former employees that exercise
ISOs under the Plan, and the Company may be required to file tax information
returns reporting the income received by grantees of Options in connection with
the Plan.

         21. GOVERNING LAW. With respect to each grantee of a Stock Right, the
validity and construction of the Plan and the instruments evidencing Options
shall be governed by the laws of the jurisdiction whose laws govern the terms of
employment of said grantee.

Amendments

1) 100 for 1 stock split 6/25/98

2) re granting of options to directors 7/19/98 shareholders meeting

3) increase in option pool 10/15/98

4) only shares held for 6 months may be used in payment