<PAGE>
                                                                     EXHIBIT 2.2

 
                           SHARE PURCHASE AGREEMENT
                           ------------------------

This Share Purchase Agreement (the "Agreement") is entered into by and among the
following:

1.   EBY-SEMANTICA (TESTING METHODS) LIMITED,
     formally EBY SOFTWARE LIMITED,
     a company formed according to the laws
     of Ireland registration number 221998,
     having its principal office at
     65 Wigmore Street, London, WIH OHR
     (hereinafter "EBY LTD").

2.   SOFTWARE IDEAS, INC.,
     a company formed according to the 
     laws of Nevis, a Caribbean Island,
     formed on October 16, 1995
     having its principal offices at
     Landstr. Hauptstr. 2/266, A-1030 Wien
     (hereinafter "the Seller).

3.   MERCURY INTERACTIVE (ISRAEL) LTD.,
     a company formed according to the
     laws of the State of Israel, registered
     company number 51-14066-7, having
     its principal offices at 2 Hayotzrim Street,
     Or-Yehuda 60218, Israel
     (hereinafter "the Buyer").

WHEREAS EBY LTD. is the legal owner of the rights in and to the know-how and 
technology owned, as described in Appendix 1 attached to this Agreement and 
                                  ----------
hereinafter to be known as the "Technology"; and

WHEREAS the Seller is the legal owner of 100% of the outstanding ordinary shares
of EBY LTD. (hereinafter the "Shares") and is interested in selling all of the 
Shares to the Buyer; and

WHEREAS the Buyer is interested in acquiring the Shares to become the sole legal
owner of EBY LTD. for the main purpose of acquiring the rights to the 
"Technology".

NOW THEREFORE, in consideration of the representations, warranties, covenants, 
and agreements of the parties hereinafter set forth, the parties hereto, 
intending to be legally bound, do hereby agree as follows:

1.   Sale and Purchase of Shares
     ---------------------------

     1.1  Sale and Purchase of Shares
          ---------------------------

          (a)  The Seller is selling the Shares at the price of US $3,000 dollar
               per Share for an aggregate purchase price of US $ 3,000,000,
               ("the Purchase Price"). The Buyer agrees to such purchase of the
               Shares and receiving ownership of EBY LTD. as a going concern,
               paying no more than the Purchase Price and subject to the Seller
               paying all existing debt, liabilities and obligations of EBY LTD.
               and subject to Section 6.7 herein.
<PAGE>
 
                                     - 2 -

     1.2  Escrow of Purchase Price 
          ------------------------

          At the Closing, the Buyer shall cause the Purchase Price to be 
          deposited with Advocate Joseph Shefet, who agrees to act as escrow 
          agent (the "Escrow Agent"), under an escrow agreement in the form 
          attached hereto as Appendix 2 (the "Escrow Agreement"). The Escrow 
                             ----------
          Agent shall hold and distribute the Purchase Price in accordance with 
          the provisions of the Escrow Agreement.

     1.3  Closing
          -------

          (a)  Subject to satisfaction or waiver of the conditions precedent to 
               the obligations of the parties hereto and the execution and 
               delivery of this Agreement and all other documents required by 
               this Agreement, the sale and purchase of the Shares shall take 
               place at the offices of Zysman, Aharoni, Gayer, 60 Yehuda HaLevi 
               Street, Tel-Aviv 65797, Israel, on or before January 15, 1996, or
               other time and place as the Buyer and Seller designate orally or 
               in writing (which time and place are designated as the 
               "Closing").

          (b)  At the Closing the Seller shall deliver (i) properly executed
               transfer bill of shares certificates signed by the Seller
               representing the Shares the Buyer is purchasing, to be given to
               the Escrow Agent, (ii) written technical documentation of the
               know-how and source codes of the Technology appearing in Appendix
               1 herein, to be given prior to or at the Closing to the Buyer,
               (iii) a copy of two respective resolutions of the Seller and EBY
               LTD.'s board of directors approving the Agreement and the
               transfer of the Shares to the Buyer, (iv) a letter of resignation
               of Seller's representatives as directors and managers of EBY LTD.
               to be effective upon the Buyer receiving the Shares from the
               Escrow Agent, such letter to be held by the Escrow Agent, and (v)
               the written opinion of the Seller's and EBY LTD.'s counsel as
               described herein to be given to the Buyer at the Closing. Within
               ten days from the signing of this Agreement at Closing, the Buyer
               shall make the payment of the Purchase Price by bank transfer of
               the Purchase Price to the Escrow Agent's bank account as follows:
               To the main branch of B.A.W.A.G (BLZ 14000), 5 Turchlauben,
               Vienna, Austria, account no. 10051-094-811.

          (c)  Payment shall be made to the Seller by the Buyer in U.S. dollars.

2.   REPRESENTATIONS AND WARRANTIES OF THE SELLER AND EBY LTD
     --------------------------------------------------------

     The Seller and EBY LTD. hereby jointly and severally represent and warrant
     that the representations and warranties of the Seller and EBY LTD. in this
     Section 2 are correct and complete as of the date of this Agreement and
     will be correct and complete as of the Closing (as though made then and as
     though the Closing were substituted for the date of this Agreement in this
     Section 2), except as set forth in the disclosure schedule delivered by the
     Seller and EBY LTD. to the Buyer on the date hereof, a copy of which is
     attached as Appendix 3 (hereinafter the "Disclosure Schedule").
                 ----------
          
<PAGE>
 
                                     - 3 -

     The Disclosure Schedule will specifically identify the relevant
     subparagraph contained in Section 2, provided that any information or
     disclosure contained in the Disclosure Schedule shall be deemed to qualify
     each of the representations and warranties set forth in this Section 2. The
     Seller and EBY LTD. jointly and severally represent and warrant as follows:

     2.1  Organization, Good Standing and Qualification
          ---------------------------------------------

          The Seller and EBY LTD. are duly organized, validly existing and in
          good standing under the laws of Ireland and the Island of Nevis,
          respectively, and have all requisite corporate power and authority to
          carry on business as now conducted in each of the jurisdictions listed
          in the Disclosure Schedule and are not required to be so qualified by
          applicable law or regulation in any other jurisdiction based on the
          nature of each of their operations or the ownership of each of their
          assets. EBY LTD. does not own, directly, or indirectly, any interest
          or investment (whether equity or debt) in any corporation,
          partnership, business, trust or other entity. EBY LTD.'s Memorandum
          and Articles of Association are attached as Appendix 4 herein, and are
                                                      ----------
          complete and correct.

     2.2  Capitalization and Voting Rights
          --------------------------------

          (a)  The authorized capital of EBY LTD. consists immediately prior to 
               the Closing, of one million Ordinary Shares, par value one Irish 
               Sterling per share ("Ordinary Shares"), of which one thousand 
               Ordinary Shares are issued and outstanding and one hundred 
               percent owned by the Seller.

          (b)  No additional shares of EBY LTD. have been reserved to be issued,
               either directly or indirectly, upon exercise of options, warrants
               or other arrangements to employees, officers, directors and 
               consultants of the Seller and/or EBY LTD., or third parties. The
               Seller is the owner, beneficially and of record, of all the
               Shares, free and clear of all liens, encumbrances, security
               agreements, equities, options, claims, charges and restrictions,
               and has full power to transfer the Shares to the Buyer without
               obtaining the consent or approval of any other person or
               government entity. The Seller will convey to the Buyer good,
               valid and marketable title to the Shares.

     2.3  Employees; Officers
          -------------------

          (a)  There are no officers or employees of EBY LTD. as of the date of 
               the Closing. EBY LTD. will be required to pay any compensation, 
               payments and benefits associated with the termination and/or 
               transfer of the employees and officers. Any employees and 
               officers hired in the future from EBY LTD. will be required to 
               sign confidentiality and non-competition agreements as deemed 
               necessary by the Buyer.

     2.4  Authorization
          -------------

          All corporate action on the part of the Seller and EBY LTD. directors 
          and shareholders necessary for the authorization,
<PAGE>
 
                                    - 4 -
 
          execution and delivery of this Agreement, the performance of all
          obligations of the Seller and EBY LTD. hereunder, and the
          authorization, issuance and delivery of the Shares has been taken or 
          will be taken prior to the Closing. This Agreement constitutes a valid
          and legally binding obligation of Seller and EBY LTD. enforceable in 
          accordance with its terms.

     2.5  Valid Purchase of Shares
          ------------------------

          The Shares being purchased by the Buyers hereunder, when transferred, 
          sold and delivered in accordance with the terms hereof for the 
          consideration expressed herein, will be fully paid and nonassessable.

     2.6  Litigation
          ----------

          (a)  There are no claims, actions, suits, proceedings or
               investigations pending or currently threatened against the Seller
               and/or EBY LTD. and/or its directors and officers, which question
               the validity of this Agreement or the right to enter into it, or
               to consummate the transaction contemplated hereby, or which might
               result either individually or in the aggregate in any material
               adverse changes in the assets, conditions, affairs or prospects
               of EBY LTD., except as described on the Disclosure Schedule, if
               any.

          (b)  The foregoing includes, without limitation, actions pending or
               threatened involving the prior employment of any of the Seller's
               and/or EBY LTD.'s employees and/or consultants,, their use in 
               connection with their business of any information or techniques 
               allegedly proprietary to any of their former employers or 
               consultancy arrangements, or their obligations under any 
               agreements with prior employers or consultancy arrangements.

          (c)  The Seller and/or EBY LTD. is not a party or subject to the
               provisions of any order, writ, injunction, judgement or decree of
               any court or government agency or instrumentality and there is no
               action, suit, proceeding or investigation against either, by any
               government agency or instrumentality currently pending or which 
               any one of them intends to initiate.

     2.7  Technology
          ----------

          (a)  EBY LTD. owns all right, title and interest in or to the 
               Technology.

          (b)  The Seller shall provide to the Buyer a package of written 
               technical information describing the Technology in detail as used
               for the Seller's own use and in enough detail that the Buyer is 
               satisfied that it has received the Technology acquired. Such 
               package shall be furnished by the Seller in the form of one copy 
               in the English language. Seller shall not retain any trade secret
               or confidential materials constituting the technology.
<PAGE>
 
                                     - 5 -

          (c)  The Seller shall have its management representatives stay in 
               contact from time to time with the Buyer's. Whenever reasonably 
               requested by the Buyer, the Seller will review with the Buyer the
               scope and content of the written information and documentation of
               the Technology, of interest to the Buyer, and work out practical
               procedures for promptly disclosing any item of Technology not
               clear to the Buyer.

          (d)  The Technology is sufficient for its business as now conducted 
               and as proposed to be conducted and such Technology does not 
               conflict with, or infringe upon, the rights of others, including 
               on any copyrights, patents, trademarks, trade names, trade 
               secrets or other intellectual property rights of others. No 
               shareholder, officer, director or, to the best of the knowledge 
               of the Seller and EBY LTD., no employee of EBY LTD., nor any 
               spouse, child or other relative of any of these persons owns or 
               has any interest, directly or indirectly in the Technology.

          (e)  EBY LTD. has exclusive ownership rights to the Technology, is the
               owner of all the software (including without limitation, source
               code, object code, data, files, tables, and documentation), and
               other copyrighted or copyrightable materials included in the 
               Technology. The Seller and EBY LTD. have obtained, where 
               required, the right to use, copy, modify and distribute any 
               third-party programming and materials contained in the Technology
               and any technical documentation pursuant to any licenses from 
               third parties.

          (f)  The Seller and EBY LTD. have not received any communications 
               alleging that it or they, has or have, violated, or by conducting
               the business of EBY LTD. as proposed by the Buyer, would violate
               any of the copyrights, patents, trade secrets or other 
               proprietary rights of any other person or entity, nor are the 
               Seller and EBY LTD. aware of any infringement of the foregoing 
               rights by others.

          (g)  EBY LTD. is not obligated under any contract (including licenses,
               covenants or commitments of any nature) or other agreement, or 
               subject to any judgement, decree or order of any court or 
               administrative agency, that would interfere with the use of its 
               respective best efforts to promote the interests of itself or 
               that would conflict with it's business as proposed to be 
               conducted by the Buyer.

     2.8  Compliance with Other Instruments and Laws
          ------------------------------------------

          (a)  EBY LTD. is not in default of any provisions of its respective 
               Memorandum, Articles of Association or Protocols, of any 
               instrument, judgement, order, writ, decree or contract to which 
               it is a party or by which it is bound or, of any provision of law
               applicable to it.
<PAGE>
 
                                      -6-
 
     (b)  The execution, delivery and performance of this Agreement and the
          consummation of the transactions contemplated hereby will not result
          in any such violation of applicable statutes, laws and regulations, or
          be in conflict with or constitute, with or without the passage of time
          and giving of notice, either a default under any such provision,
          instrument, judgement, order, writ, decree or contract or an event
          which results in the creation of any lien, charge or encumbrance upon
          any assets of EBY LTD..

2.9  Agreements; Default
     ------------------

(a)  The Appendices, including the Disclosure Schedule contain all outstanding
     contracts, licenses, agreements or understandings to which EBY LTD. is a
     party or by which EBY LTD. or any of EBY LTD.'s assets are bound. There are
     no agreements, understandings or proposed transactions between EBY LTD.
     and/or the Seller (regarding the Seller's involvement with EBY LTD.), any
     of its officers, directors, shareholders, affiliates, or any affiliate
     thereof, except as identified in the Disclosure Schedule, if any. There is
     no default, or event that with notice or lapse of time, or both, would
     constitute a default, by EBY LTD., or to the best knowledge and belief of
     EBY LTD. or the Seller, any other party to any of the contracts, agreements
     or understandings listed in the Disclosure Schedule.

(b)  The consummation of the transactions contemplated by this Agreement will
     not result in or constitute any of the following: (i) a default, breach or
     violation or an event that, with notice or lapse of time or both, would
     constitute a default, breach or violation of the Memorandum and Articles of
     Association of EBY LTD., or any contract, license, agreement or
     understanding to which EBY LTD. or the Seller is a party or by which EBY
     LTD. or its property is bound; (ii) an event that would permit any party to
     terminate any or to accelerate the maturity of any indebtedness or other
     direct or indirect obligation of EBY LTD.; or (iii) the creation or
     imposition of any lien, charge or encumbrance on any of the properties of
     EBY LTD.

2.10 Disclosure
     ----------

     (a)  The Seller and EBY LTD. have fully provided the Buyer with all the
          information which the Buyer has requested for deciding whether or not
          to purchase the Shares and all information which they believe is
          reasonably necessary to enable the Buyer to make such a decision.

     (b)  None of the statements or certificates made or delivered by the Seller
          or EBY LTD. in connection with this Agreement contains any untrue
          statement of a material fact or omits to state a material fact
          necessary to make the statement herein or therein misleading.


<PAGE>
 
                                      -7-

2.11 Title to Property and Assets
     ----------------------------

     EBY LTD. owns its property and assets including without limitation the
     Technology and all rights in such Technology, free and clear of all
     mortgages, liens, loans and encumbrances. With respect to the property and
     assets it leases, EBY LTD. is in compliance with such leases and, to the
     best of its knowledge, holds valid leaseholds interest free of any liens,
     claims or encumbrances.

2.12 Tax Returns, Payments and Elections
     -----------------------------------

     EBY LTD. has timely filed all tax returns and reports as required by law
     and the returns and reports are true and correct in all material respects,
     and paid all taxes and other assessments as due in all jurisdictions and
     residences in which it operates and resides. EBY LTD. has duly paid,
     deposited or accrued on its books of account, any and all taxes it is
     required to pay or which is obligated to withhold from amounts owing to any
     employee. No current or deferred liability for taxes attributable to any
     period ending (or the portion of such period ending) after the Closing Date
     has been incurred by EBY LTD. other than in the ordinary course of
     business. There is no action, suit, proceeding, investigation, audit,
     claim, demand, deficiency or additional assessment in progress, pending or
     threatened against EBY LTD. with respect to any tax nor is there any basis
     thereof. EBY LTD. is not a party to any tax sharing, allocation or
     indemnity agreement. EBY LTD. has not waived any statute or limitations in
     respect of any taxes or agreed to any extension of time with respect to an
     assessment of deficiency with respect to such taxes. For purposes of this
     Agreement, the terms "tax" and "taxes" shall mean all taxes and any tax
     including, without limitation, all income, sales, value added, employment,
     profit, payroll, use, trade, property, excise, unitary, transfer,
     registration, transferee or secondary liability for taxes, penalties,
     interests, fines, duties, withholdings, assessments and charges assessed or
     imposed by any governmental authority.

2.13 Labor Agreements and Actions
     ----------------------------

     (a)  EBY LTD. is not bound by or subject to (and none of its assets or
          properties are bound by or subject to) any written or oral, express or
          implied, contract, commitment or arrangement with any labor union, and
          no labor union has requested or has sought to represent any of the  
          employees, representatives or agents of EBY LTD.

     (b)  There is no strike or other labor dispute involving EBY LTD. pending,
          or to the best knowledge threatened, which could have a material
          adverse effect on the assets, properties, financial condition,
          operating results, or business of EBY LTD. (as such business is
          presently conducted and as it is proposed to be conducted), nor is EBY
          LTD. aware of any labor organization activity involving its employees.
<PAGE>
 
                                      -8-

     2.14 Financial Statements
          --------------------

          (a)  If the Buyer does not exercise the option under Section 7 of this
               Agreement, the Buyer will receive from the Escrow Agent as per
               the Escrow Agreement herein attached as Appendix 2, a copy of the
               balance sheet and income statement of EBY LTD. at November 30,
               1995, presented in U.S. Dollars according to U.S. generally
               accepted accounting principles, ("the Financial Statements"). The
               Financial Statements will be complete and correct in all material
               respects and fairly represent the financial position of EBY LTD.
               as of the date thereof, and there will be no material changes in
               the Financial Statements to be attached and incorporated in this
               Agreement as Appendix 5 from the date of the Financial Statements
                            ----------
               dated November 30, 1995 until receipt of the Financial Statements
               to be given to the Buyer.

          (b)  As of the signing of this Agreement, the date of the Financial
               Statements of November 30, 1995 to be given to the Nuyeras stated
               herein this Agreement, and up to the time the Shares are
               transferred to the Buyer from the Ecrow Agent, EBY LTD. has no or
               will not have any debt, liability or obligation of any nature,
               whether accrued, absolute, contingent or otherwise, and whether
               due or to become due, that is not or will not be reflected or
               adequately reserved against in the November 30, 1995 balance
               sheet, expect for those (i) that have been incurred in the
               ordinary course of business after November 30, 1995, in an
               individual amount of less than $5,000 or in an aggregate amount
               of less than $15,000 or (ii) that are not required by generally
               accepted accounting principles to be included in the November 30,
               1995 balance sheet.

     2.15 Applicable Securities Laws
          --------------------------

          The Shares being sold to the Buyer will not require registration with
          the Securities and Exchange Commission or any governmental agency of
          any country. It is understood by the Seller and EBY Ltd. that the
          Buyer will be required under the regulations of the Securities and
          Exchange Commission to make a disclosure concerning the acquisition of
          the Shares and to file a copy of this Agreement with the Securities
          and Exchange Commission.

     2.16 Power of Attorney or Suretyship
          -------------------------------

          EBY LTD. has no power of attorney outstanding nor any other agreement
          of agency (whether as principal or agent) nor has it any obligation or
          liability, either actual, accrued, accruing or contingent, as
          guarantor, surety, consignor, endorser, co-maker, indemnitor or
          otherwise in respect of any person, corporation, partnership, joint
          venture, association, organization or other entity.
<PAGE>
 
                                      -9-

     2.17 Insurance
          ---------

          The Disclosure Schedule contains a true and correct list of insurance
          policies held by EBY LTD. concerning its business and properties. EBY
          LTD. has provided to the Buyer copies of all such insurance policies.
          Such insurance or comparable insurance will be maintained in full
          force and effect to and including the Closing.

     2.18 Banks
          -----

          The Disclosure Schedule lists the names and addresses of all banks or
          other financial institutions at which EBY LTD. has an account, deposit
          or safe deposit, together with a list of names of all persons
          authorized to draw on these accounts or deposits or to have access to
          these boxes.
 
     2.19 Environmental Matters
          ---------------------

          EBY LTD. has no liability, actual or contingent, for any claims,
          costs, suits or damages of any kind or nature arising out of the
          presence of any hazardous materials, in under or on any property that
          EBY LTD. has at any time owned, operated, occupied or leased. There
          are no environmental proceedings against the Seller or EBY LTD., nor
          are they subject to any claim, investigation, action, proceeding,
          injunction or decree relating to environmental issues. All
          environmental permits held by EBY LTD. are listed in the Disclosure
          Schedule, if any.

     2.20 Representations Complete
          ------------------------

          The Seller and EBY LTD have disclosed all material information
          relating specifically to the business, operations and prospects of EBY
          LTD. None of the representations and warranties made by the Seller
          and/or EBY LTD. herein or in any appendix, exhibit, schedule or
          certificate furnished by either of them, or on their behalf, pursuant
          to this Agreement, contains or at the Closing, will contain any untrue
          statement of a material fact, or omits to state any material fact
          required to be stated therein or necessary in order to make the
          statements made, in the light of the circumstances under which they
          were made, to be considered misleading.
     
3.   Representations and Warranties of the Buyer     
     -------------------------------------------  

     The Buyer represents and Warrants to the Seller that:

     3.1  Company Existence; Authorization
          -------------------------------- 

          The Buyer is duly organized and properly registered in the
          jurisdiction of their organization. All action on the part of the
          Buyer, its officers, directors and shareholders necessary for the
          authorization, execution and delivery of this Agreement, and the
          performance of all obligations hereunder has been taken or will be
          taken prior to the Closing, and this Agreement constitutes a valid and
          legally binding obligation of the Buyer enforceable in accordance with
          its terms, subject only to laws affecting the rights and remedies of
          creditors.
<PAGE>
 
                                    - 10 -

          The execution, delivery and performance of this Agreement will not 
          violate any provision of the charter documents of the Buyer, or of any
          instrument, judgment, order, writ, decree or contract to which it is a
          party or by which it is bound or, to its knowledge, of any provision 
          of law, rule or regulation applicable to the Buyer.

     3.2  Disclosure of Information
          -------------------------

          It believes it has received all the information it considers necessary
          or appropriate for deciding whether to purchase the Shares. The Buyer 
          further represents that it had an opportunity to ask questions and 
          receive answers from the Seller and EBY LTD. regarding the terms and 
          conditions of the purchase of the Shares and has reviewed the relevant
          written documents of EBY LTD.. The foregoing, however, does not limit 
          or modify the representations and warranties of the Seller and EBY 
          LTD. in Section 2 of this Agreement or the right of the Buyer to rely 
          thereon.

4.   Conditions Precedent to the Buyer's Obligations at Closing
     ----------------------------------------------------------

     The obligations of the Buyer to enter into the transaction contemplated by 
     this Agreement are subject to the satisfaction, or waiver in writing by the
     Buyer, at or before the Closing of each of the following conditions.

     4.1  Representations and Warranties
          ------------------------------

          The representations and warranties of the Seller and EBY LTD.
          contained in this Agreement, the covenant not to compete and the
          appendices hereto, or any written statement delivered by the Seller or
          EBY LTD. under this Agreement, shall be true and correct on the date
          hereof and on and as of the Closing as though made on such date,
          except as amended by the Seller and EBY Ltd. at the Closing and which 
          amendment shall be specifically approved by the Buyer.

     4.2  Performance
          -----------

          The Seller and EBY LTD. shall have performed and complied with all 
          covenants, agreements, obligations and conditions contained in this 
          Agreement that are required to be performed, satisfied or complied 
          with by it on or before the Closing.

     4.3  Proceedings, Documents and Certificates
          ---------------------------------------

          All corporate and other proceedings in connection with the 
          transactions contemplated at the Closing and all documents incident 
          thereto shall be reasonably satisfactory in form and substance to the
          Buyer's counsel, and the Buyer and/or the Escrow Agent shall have
          received all such counterpart, original and certified or other copies
          of such documents as they may reasonably request. The Escrow Agent
          shall receive and hold on behalf of the Buyer the following documents:
<PAGE>
 
                                    - 11 -

          (i) a certificate, dated the Closing, signed by the Seller, and
          President and Chief Financial Officer of EBY LTD. certifying that the
          conditions set forth in this Section 4 have been fulfilled, (ii) a
          certificate as to the good standing of EBY LTD. and (iii) certificates
          of no outstanding tax liability of EBY LTD. from the appropriate
          authorities of Ireland and the United Kingdom.

     4.4  Written Opinion of the Seller's and EBY LTD.'s Legal Counsel
          ------------------------------------------------------------

          A written legal opinion from the legal counsel(s) of the Seller and
          EBY LTD., to be addressed to the Buyer and to be permitted to be read
          by relevant third parties, dated the day of the Closing, will be given
          stating the following:

          (a)  The Seller and EBY LTD. has been duly incorporated, where and 
               when, and list of the present shareholders;

          (b)  Statement of the existing capitalization of the Seller and EBY 
               LTD.;

          (c)  Shares to be sold to and purchased by the Buyer are validly 
               issued and are outstanding shares of EBY LTD.;

          (d)  Whereby at Closing, the Buyer's purchase of the Shares from the 
               Seller will result in the Buyer acquiring 100% ownership and 
               control of EBY LTD..

          (e)  Legal counsel knows of no litigation, proceeding or investigation
               which might result in any material adverse change in the business
               of the Seller and EBY LTD. and ownership of the Shares at 
               closing;

          (f)  The sale of the Shares does not require the approval of any
               government or third party approval other than the shareholders of
               the Seller and will not violate any securities laws in the
               U.S.A., Israel or elsewhere in the world;

          (g)  The total payment of the Purchase Price will be used to pay two 
               existing obligations of EBY LTD. as follows: (1) The Seller,
               Software Ideas, Inc., will receive $2,875,000 with respect to the
               agreement dated October 18, 1995, between EBY LTD. and the
               Seller, and (2) Fiering & Sjolie Handelsgesellschaft m.b.H. will 
               receive $125,000 with respect to an agreement dated November 29, 
               1995. After such payments, EBY LTD. has no current or deferred 
               liability to the Seller, EBY LTD.'s employees, or any third 
               party.

          (h)  EBY LTD. owes no current or deferred taxes anywhere in the world 
               as of the Closing.
<PAGE>
 
                                    - 12 -

     4.5  Necessary Consents
          ------------------

          All necessary agreements and consents of any third parties to the
          consummation of the transactions contemplated by this Agreement, or
          otherwise pertaining to the matters covered by it, shall have been 
          obtained by the Seller and EBY LTD. and delivered to the Buyer 
          including, without limitation, any and all required consents of any 
          foreign or state securities law commissioner.

     4.6  Resignations of Officers and Directors
          --------------------------------------

          All directors and officers of EBY LTD. shall have delivered to the 
          Escrow Agent their resignation as officers and directors of EBY LTD., 
          effective as of the release of the Shares to the Buyer, and such 
          resignations shall be given to the Buyer, simultaneously upon release 
          of the Shares.

     4.7  Escrow Agreement
          ----------------

          The Seller and EBY LTD. shall have executed and delivered the Escrow 
          Agreement in the form attached hereto as Appendix 2.

     4.8  Technology Acquisition Agreements
          ---------------------------------

          The Buyer has been supplied an executed copy of the agreement dated 
          October 18, 1995, between EBY LTD. and the Seller, and an executed 
          copy of the agreement dated November 29, 1995, between EBY LTD. and 
          Fiering & Sjolie Handelsgesellschaft m.b.H., regarding acquisition of
          the Technology in Appendix 1. Such agreements constitute valid and
          legally binding obligations of the parties and enforceable in
          accordance with their terms.

5.   Conditions Precedent to the Seller's Obligations at Closing
     -----------------------------------------------------------

     The obligations of the Seller to enter into the transactions contemplated 
     by this Agreement, are subject to the satisfaction, or waiver in writing by
     the Seller, at or before the Closing of each of the following conditions:

     5.1  Representations and Warranties
          ------------------------------

          The representations and warranties of the Buyer contained in this 
          Agreement shall be true and as of the Closing with the same effect as 
          though such representations and warranties had been made on and as of 
          the Closing.

     5.2  Payment of Consideration
          ------------------------

          The Buyer shall have delivered the consideration specified in Section 
          1 of this Agreement.

<PAGE>
 
                                    - 13 -
 
6.   Obligations of the Seller After Closing
     ---------------------------------------

     6.1  Survival of Representations, Warranties and Covenants
          -----------------------------------------------------

          The representations, warranties and covenants of the Seller and EBY
          LTD. contained in this Agreement or in any certificate, document or
          instrument delivered pursuant hereto, shall survive the Closing for a
          period of three (3) years.

     6.2  Indemnification
          ---------------

          (a)  For the period set forth in Section 6.1, the Seller shall
               indemnify, defend, and hold harmless the Buyer and EBY LTD. and
               their respective affiliates, successors and assigns, against and
               in respect of any and all claims, demands, losses, costs, 
               expenses, obligations, liabilities, damages, recoveries, and 
               deficiencies, including interest, penalties and attorneys fees 
               (collectively referred to as "Losses") that EBY LTD. or the Buyer
               shall directly or indirectly incur or suffer and which arise out
               of, or are caused or occasioned by, the incorrectness, untruth,
               or breach of any warranty, representation, covenant or agreement
               made in this Agreement, or the other exhibits hereto, and all 
               actions and suits incident thereto including any and all personal
               debts, liabilities or obligations of The Seller, whether past, 
               future, fixed, contingent or otherwise. Notwithstanding for 
               foregoing liability of The Seller under this Section 6.2 shall be
               limited as set forth in Sections 6.2(b) and 6.2(c).


          (b)  Except with respect to claims based on fraud, the rights of The
               Buyer and EBY LTD. under this Article VII shall be the exclusive
               remedy under this Agreement for claim based on the incorrectness,
               untruth or breach of any warranty, representation, covenant or
               agreement in this Agreement, or the other exhibits to this 
               Agreement and all actions and suits incident thereto including 
               any and all personal debts, liabilities or obligations of the 
               Seller, whether past, future, fixed, contingent or otherwise and 
               the Seller shall in any event have no liability with respect to 
               any other claim (whether in contract, tort, or otherwise) with 
               respect to or relating to this Agreement, to Escrow Agreement, or
               the other exhibits to the Agreement.

          (c)  The Buyer will give notice pursuant to Section 11.6 as soon as
               reasonably practicable to the Seller of any claim by the Buyer
               for indemnification under this Section or any action or suit
               against the Buyer or EBY LTD. which, if successfully prosecuted, 
               would result in the proof of incorrectness, untruth or breach of 
               any warranty, representation or agreement made under this 
               Agreement, the Escrow Agreement, or other exhibits or appendices 
               to the Agreement hereto by such persons. Any such notice shall 
               include a description of the basis for the claim or the action or
               suit in sufficient detail so that the Seller can adequately 
               evaluate the nature of the Buyer's claim.
<PAGE>
 
                                    - 14 -

               The failure promptly to notify the Seller shall not relieve the
               Seller of its obligations hereunder except to the extent that the
               failure to so notify materially prejudices the Seller's ability
               to defend such claim, action or suit. The Seller shall be
               entitled to control the defense, settlement or other disposition
               of any such claim, and the Buyer agrees to cooperate with, and to
               cause EBY LTD. to cooperate with the Seller in any such defense,
               including, without limitation, by revealing all information
               pertinent thereto within such person's control and by testing for
               and on behalf of the Buyer, EBY LTD. or the Seller. The Seller
               shall have the right, but not the obligation, to compromise or
               settle any such claim:

               (i)  with the prior consent of the Buyer which consent shall not
                    be unreasonably withheld; or

               (ii) without the prior consent of the Buyer if the consent of the
                    Buyer was solicited in writing prior to settlement or
                    compromise and such consent was unreasonably withheld.

               The Seller, in the defense of any such claim, except with the
               consent of the Buyer, shall not consent to the entry of any
               judgement or enter into any settlement that does not include as
               an unconditional term thereof the giving by the claimant or
               plaintiff to the Buyer and EBY LTD. of a release from all
               liability in respect to such claim or litigation.

          (d)  Notwithstanding any provision to the contrary in this Agreement,
               the Buyer and EBY LTD., at their sole option, and at their sole
               expense, shall have the right but not the obligation, to
               participate in, though not control, the defense, settlement or
               other disposition of any action or suit against the Buyer or EBY
               LTD. which, if successfully prosecuted, could give rise to a
               claim of indemnification against the Seller hereunder.

     6.3  Further Assurances
          ------------------

          At the request of the Buyer, the Seller and his respective successors 
          and assigns, at any time after the Closing, shall execute, acknowledge
          and deliver any further deeds, assignments, conveyances and other
          assurances, documents, and instruments of transfer, reasonably
          requested by the Buyer, and will take any other action consistent with
          the terms of this Agreement that may reasonably be requested by the 
          Buyer for the purpose of assigning, transferring, granting, conveying,
          and confirming or reducing to possession or quiet enjoyment the Shares
          to be conveyed and transferred to the Buyer by this Agreement or any 
          rights assumed by or granted to the Buyer hereunder.
<PAGE>
 
                                    - 15 -

     6.4  Waiver of Intellectual Property Claims
          --------------------------------------

          The Seller covenants and agrees that it will not now, or at any time 
          in the future, directly or indirectly claim or assert in any action
          that the products, conduct or operations of EBY LTD. or the Buyer or
          any of its affiliates, or the practice of the Technology by any of
          them, infringes or otherwise violates any intellectual property rights
          of the Seller or any of its affiliates or licensees.

     6.5  Waiver of Contribution
          ----------------------

          The Seller expressly acknowledges and agrees that EBY LTD. is becoming
          a wholly-owned subsidiary of the Buyer on the Closing and although EBY
          LTD. is a party to this Agreement and has joined in the 
          representations, warranties and covenants made hereunder, the purpose 
          of the representations, warranties and covenants and the 
          indemnification provisions contained herein are primarily, but not
          exclusively, intended to confer upon the Buyer the right to proceed
          against the Seller and the Seller shall not allege or seek
          contribution from EBY LTD. for claims made by the Buyer hereunder and
          the Seller hereby waives all rights to so allege or so seek.

     6.6  Covenant Not To Compete
          -----------------------

          The Seller agrees that after the Closing, the Seller or its associates
          will not compete, directly or indirectly, engage in the development, 
          manufacture, market or service in the software testing and 
          verification markets dealing with the Technology described in Appendix
          1.

     6.7  Use of Purchase Price
          ---------------------

          The Seller agrees that after Closing and upon the date of release of
          the Purchase Price by the Escrow Agent to the Seller, to pay within
          five days, the amount of $125,000 to Fiering & Sjolie
          Handelsgesellschaft m.b.H. ("Fiering & Sjolie") with respect to the 
          agreement dated November 29, 1995, between EBY LTD. and Fiering & 
          Sjolie, and to accept the remainder of the Purchase Price, $2,875,000,
          as payment in full for the outstanding obligation between the Seller 
          and EBY LTD. based on the agreement dated October 18, 1995.

7.   Option to Acquire Technology
     ----------------------------

     7.1  For 120 days from the Closing, upon written notice to EBY LTD. and the
          Seller, the Buyer may, at its sole discretion, elect to rescind its 
          purchase of the Shares of EBY LTD. under this Agreement in exchange 
          for the acquisition from EBY LTD. and the Seller of all Technology. 
          EBY LTD. and the Seller agree to execute such a technology purchase 
          agreement attached as Appendix 6 herein, and that the Purchase Price 
                                ----------
          paid to the Seller at the Closing under this Agreement will constitute
          full payment for the Technology under such technology purchase 
          agreement.
<PAGE>
 
                                    - 16 -

     7.2  Failure of the Seller and EBY LTD. to pass all documents to the Buyer
          as required under this Agreement would be considered good reason and
          cause for the Buyer, at the Buyer's choice, not to exercise the option
          herein described above.

8.   Confidentiality
     ---------------

     8.1  It is agreed by the parties to this Agreement that the nature of the 
          transaction herein is confidential, and as such information herein 
          will only be disclosed on an as needed basis to facilitate the 
          transaction and on an as required basis.

     8.2  Such confidential information specifically includes all source code,
          system and user documentation, and other technical documentation
          pertaining to the Technology and software programs, including any 
          proposed design and specifications for future products and products in
          development, marketing plans, and all other technical and business 
          information concerning the Technology and the Buyer's business.

     8.3  Notwithstanding Sections 8.1 and 8.2, the parties may disclose 
          confidential information where necessary to any regulatory authorities
          or governmental agencies pursuant to legal process or if required by 
          court order or decree.

     8.4  For purposes of this Agreement, information shall not be deemed 
          confidential if such information is available in full from public 
          sources, if such information is received from a third party not under 
          an obligation to keep such information confidential, or if the 
          recipient can conclusively demonstrate that such information was 
          independently developed by the recipient.

     8.5  The parties agree that money damages will not be a sufficient remedy 
          for any breach of this Section 8 and that, in addition to all other 
          remedies, the non breaching party shall be entitled to specific 
          performance and injunctive relief or other equitable relief as 
          remedies for any breach or threatened breach.

     8.6  In the event that the transactions contemplated by this Agreement 
          shall not be consummated, all such information which shall be in 
          writing shall be returned to the party furnishing the same, including 
          to, to the extent reasonably practicable, all copies or reproductions 
          thereof which may have been prepared and such information will be kept
          confidential.

     8.7  The parties hereto will mutually agree in advance on the form, timing 
          and contents of announcements and disclosures regarding the 
          transactions contemplated by this Agreement. The parties agree that 
          the Buyer may issue a press release announcing the execution of this 
          Agreement. Following the Closing, the Buyer shall have the right to 
          make public disclosures of the terms of this Agreement and the 
          consummation of the transactions contemplated hereby without the 
          written consent of the Seller.
<PAGE>
 
                                     -17-

9.   Taxes Liabilities and Foreign Exchange
     --------------------------------------

     The consideration to be paid by the Buyer to the Seller for the Shares will
     be according to Section 1 of this Agreement and each party will be
     responsible for its own tax liabilities and government approvals such as
     foreign exchange regulations.

10.  Termination Prior to Closing
     ----------------------------
     
     This Agreement may be terminated at any time prior to the Closing as 
     follows:

     10.1  By the mutual consent of the Parties in writing.

     10.2  Without liability, if Closing shall not have occurred on or before 
           January 15, 1996.

     10.3  Without liability, if a party shall fail to perform any material
           aspect of this Agreement or materially breach its representations,
           warranties, agreements, or covenants contained herein, provided such
           breach shall not be cured within ten days after such party has been
           notified in writing of the other party's intent to terminate this
           Agreement pursuant hereto.

     10.4  Termination of this Agreement pursuant to this Section 10 shall
           terminate all obligations of the parties hereunder, except for the
           obligations of Confidentiality set forth herein.

11.  Miscellaneous
     -------------

     11.1  Survival
           --------

           The representations and warranties of the parties to this Agreement,
           contained in or made pursuant to this Agreement shall survive the
           execution and delivery of this Agreement and

           the Closing and shall in no way be affected by any investigation of
           the subject matter thereof made by or on behalf of the parties.

     11.2  Successors and Assigns
           ----------------------

           Except as otherwise provided herein, the terms and conditions of this
           Agreement shall inure to the benefit of and be binding upon the
           respective successors and assigns of the parties. Nothing in this
           Agreement, express or implied, is intended to confer upon any party
           other than the parties hereto or their respective successors and
           assigns, any rights, obligations, or liabilities under or by reason
           of this Agreement, except as expressly provided in this Agreement.

<PAGE>
 
                                    - 18 -

11.3  Settlement of Disputes; Arbitration; Governing Law
      --------------------------------------------------

      (a) In the event of an occurrence of any dispute of disagreement, the
          Parties shall first exert their best efforts in good faith to resolve
          the matter amicably between themselves as provided for in this
          Section. Within 30 days after written demand by either party, the
          Parties shall each designate a representative from among those
          personnel acquainted with the work involved who shall discuss and
          attempt to resolve the dispute or disagreement at the offices of the
          Buyer in Israel, or such other place agreeable to the Parties.

          If a resolution has not been reached within 90 days from the date on
          which the written demand for such working-level discussions was
          originally made, then the Parties may go to binding arbitration, to
          the Israeli Institute of Commerical Arbitration Association. The award
          of such arbitration shall be binding upon the parties.

      (b) It is agreed that the substantive law governing this Agreement will be
          the law of the State of Israel and any disputes resolved in
          arbitration will be governed as such.

11.4  Counterparts
      ------------

      This Agreement may be executed in two or more counterparts, each of which
      shall be deemed an original, but all of which together shall constitute
      one and the same instrument.

11.5  Titles, Subtitles, Preamble and Appendices
      ------------------------------------------

      The Titles and subtitles used in this Agreement are used for convenience
      only and are not to be considered in interpreting this Agreement. The
      Preamble and Appendices are an integral and inseparable part of this
      Agreement.

11.6  Notices
      -------

      Unless otherwise provided, any notice required or permitted under this
      Agreement with respect to parties shall be given in writing and shall be
      deemed effectively given upon personal delivery to the party to be
      notified or fourteen (14) business days after deposit with a National Post
      Office, for dispatch by registered or certified mail, postage prepaid and
      addressed to the party to be notified at the address set forth in this
      section as follows:

      For the Seller and EBY LTD.:
               Dr. Leopold Specht, Advocate
               Franziskanerplatz 3/1
               1010 Wien
               Telephone: (0222) 5129074
               Fax: (0222) 512 5125377



<PAGE>
        For the buyer:
                Mr. Aryeh Feingold
                Mercury Interactive (Israel) Ltd.
                2 Hayotzrim Street
                Or-Yehuda 60218, Israel
                Telephone: (03) 5388888 
                Fax: (03) 5331617

        
        or at such other address as such party may designate by written notice
        to the other parties; if by facsimile transmission within 48 hours of
        receipt; in the case of an internationally recognized overnight courier,
        on the next business day after the date when sent. Any party may change
        its address for purposes of this paragraph by giving notice of the new
        address to each of the other parties in the manner set forth above.


11.7    Expenses
        --------

        Irrespective of whether the Closing is effected, the Buyer to this
        Agreement shall bear the costs and expenses incurred with respect to the
        negotiation, execution, delivery and performance of this Agreement. The
        Seller shall pay all such costs and expenses incurred by EBY LTD. and
        the Seller, provided, however, that the Buyer shall pay, promptly after
        the Closing, the reasonable itemized legal fees and costs of counsel to
        the Seller and EBY LTD., up to an aggregate maximum amount of $60,000.
        There are no finder's fees or broker's fees regarding this Agreement.
        The Seller and the Buyer each agree to indemnify and hold harmless the
        other against any loss, liability, damage, cost, claim, or expense
        incurred by reason of any brokerage commission, or finder's fee alleged
        to be payable because of any act, omission or statement of the
        indemnifying party.

11.8    Assignment
        ----------

        The Seller and EBY LTD. shall not assign this Agreement without first
        obtaining the written consent of the Buyer. The Buyer shall not assign
        this Agreement to any entity without first obtaining the written consent
        of the Seller and EBY LTD., which consent shall not be unreasonably
        held, provided, however that the Buyer may assign its rights and
        obligations hereunder to any successor or successors of the Buyer by way
        of reorganization, merger or consolidation and any assignee of all or
        substantially all of its business and assets or more than 50% of its
        shares of outstanding capital stock.


11.9    Entire Agreement, Amendments and Waivers
        ----------------------------------------

        This Agreement and the appendices hereto constitute the entire agreement
        between the parties pertaining to the agreements, representations,
        warranties, covenants and understandings of the parties and expressly
        supersedes the Letter of Intent between the parties dated October 19,
        1995. No supplement, modification, or amendment of this Agreement shall
        be binding unless executed by all the parties. Any term of this
        Agreement may be amended and the observance of any term of this
        Agreement may be waived (either generally or in a


                                      19
<PAGE>
 
                                    - 20 -

          particular instance and either retroactively or prospectively), only
          with the written consent of all the parties hereto. No waiver of any
          of the provisions of this Agreement shall be deemed, or shall
          constitute a waiver of any other provision, whether or not similar,
          nor shall any waiver constitute a continuing waiver.

    11.10 Severability
          ------------

          Should any provision of this Agreement be determined to be invalid, it
          shall be severed from this Agreement and the remaining provisions
          shall remain in full force and effect.

    11.11 Parties in Interest
          -------------------

          Nothing in this Agreement, express or implied, is intended to confer 
          any rights or remedies under or by reason of this Agreement on any 
          persons other than the parties to it and their respective and 
          permitted successors and assigns, nor is anything in this Agreement 
          intended to relieve or discharge the obligation or liability of any 
          third persons to any party to this Agreement, nor shall any provision 
          give any third persons any right of subrogation or action over against
          any party to this Agreement.

    11.12 Advice of Legal Counsel
          -----------------------

          Each party to this Agreement acknowledges and represents that it has 
          been represented by its own legal counsel in connection with the
          transactions contemplated by this Agreement, with the opportunity to
          seek advice as to its legal rights from such counsel. Each party
          further represents that it has been independently advised as to the
          tax consequences of the transactions contemplated by this Agreement
          and is not relying on any representations or statements made by any
          other party as to such consequences.

IN ATTESTING THERETO, THE PARTIES BELOW STATE THAT THEY ARE PROPERLY EMPOWERED 
AND AUTHORIZED BY THEIR RESPECTIVE ENTITIES AND/OR AS INDIVIDUALS, TO EXECUTE 
THIS AGREEMENT AND HAVE SIGNED THIS AGREEMENT AS OF THE DATE SO INDICATED.

  *****        12.12.95                 *****                 *****
----------------------------            -----------------------------
The Seller            date              The Buyer              date

By: Lissovskaia Tatiana                 By:__________________________
   -------------------------  

Title:______________________            Title:_______________________

*****          12-12-95
----------------------------
EBY LTD.              date

By: Leopold Sperhl
   -------------------------

Title:______________________