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                                                                    EXHIBIT 10.3


                           ARI NETWORK SERVICES, INC.
                         1993 DIRECTOR STOCK OPTION PLAN
                 (Amended and Restated as of December 10, 1998)



1.  PURPOSE OF THE PLAN


         The purpose of the Plan is to attract and retain superior Directors, to
provide a stronger incentive for such Directors to put forth maximum effort for
the continued success and growth of the Company and its Subsidiaries and, in
combination with these goals, to encourage stock ownership in the Company by
Directors.

2.  DEFINITIONS

         Unless the context otherwise requires, the following terms shall have
the meanings set forth below:

                  (a) "Administrator" shall mean any committee of the Board of
                  Directors or any executive officer or officers of the Company
                  designated by the Board of Directors.

                  (b) "Board of Directors" shall mean the entire board of
                  directors of the Company, consisting of both Employee and
                  non-Employee members.

                  (c) "Code" shall mean the Internal Revenue Code of 1986 as
                  amended.

                  (d) "Company" shall mean ARI Network Services, Inc., a
                  Wisconsin corporation.

                  (e) "Director" shall mean an individual who is a member of the
                  Board of Directors and is not an Employee.

                  (f) "Disability" shall mean a physical or mental incapacity
                  which results in a Director no longer serving as a member of
                  the Board of Directors.

                  (g) "Effective Date" shall mean May 21, 1993, or such other
                  date as the Board of Directors may establish as the Effective
                  Date.

                  (h) "Employee" shall mean an individual who is employed by the
                  Company or a Subsidiary.

                  (i) "Exchange Act" shall mean the Securities Exchange Act of
                  1934, as amended.

                  (j) "Market Price" shall mean the closing price of the Shares
                  as reported on the National Association of Securities Dealers,
                  Inc. Automated Quotation - National Market System ("NASDAQ").
                  However, if at any time the Shares are listed on any exchange,
                  "Market Price" shall mean the average of the highest and
                  lowest prices at which Shares are sold on such exchange. In
                  the absence of reported sales on NASDAQ or on such exchange on
                  any trading date, "Market Price" shall mean the reported
                  closing price for the Shares on NASDAQ or such exchange on the
                  day immediately preceding such date during which there were
                  sales of Shares. 


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                  (k) "Option" shall mean an option which does not comply with
                  the provisions of Section 422 of the Code and which is granted
                  under the Plan to purchase Shares.

                  (l) "Option Agreement" shall mean the agreement between the
                  Company and a Director whereby an Option is granted to such
                  Director.

                  (m) "Plan" shall mean this 1993 Director Stock Option Plan.

                  (n) "Share" shall mean a share of the $0.001 par value common
                  stock of the Company.

                  (o) "Subsidiary" shall mean a subsidiary corporation of the
                  Company as defined in Section 424(f) of the Code.

                  (p) "Triggering Event" shall mean the first to occur of any of
                  the following:


                              (1) the acquisition (other than from the Company),
                        by any person, entity or group (within the meaning of
                        Section 13(d)(3) or 14(d)(2) of the Exchange Act),
                        directly or indirectly, of beneficial ownership (within
                        the meaning of Rule 13d-3 under the Exchange Act) of 20%
                        or more of the then outstanding shares of common stock
                        of the Company or voting securities representing 20% or
                        more of the combined voting power of the Company's then
                        outstanding voting securities entitled to vote in the
                        election of directors; provided, however, that no
                        Triggering Event shall be deemed to have occurred as a
                        result of an acquisition of shares of common stock or
                        voting securities of the Company by any other
                        corporation or other entity with respect to which,
                        following such acquisition, more than 50% of the
                        outstanding shares of the common stock or voting
                        securities entitled to vote in the election of directors
                        are then beneficially owned, directly or indirectly, by
                        the persons who were the Company's shareholders
                        immediately prior to such acquisition in substantially
                        the same proportions as their ownership, immediately
                        prior to such acquisition, of the Company's then
                        outstanding common stock; or

                              (2) any merger or consolidation of the Company
                        with any other corporation, other than a merger or
                        consolidation which results in more than 60% of the
                        outstanding shares of the common stock, and voting
                        securities representing more than 60% of the combined
                        voting power of the then outstanding voting securities
                        entitled to vote in the election of directors, of the
                        surviving or consolidated corporation being then
                        beneficially owned, directly or indirectly, by the
                        persons who were the Company's shareholders immediately
                        prior to such acquisition in substantially the same
                        proportions as their ownership, immediately prior to
                        such acquisition, of the Company's then outstanding
                        common stock; or

                              (3) any liquidation or dissolution of the Company
                        or the sale or other disposition of all or substantially
                        all of the assets of the Company; provided, however,
                        that the transfer of substantially all of the Company's
                        assets to a wholly owned Subsidiary in connection with
                        any corporate reorganization of the Company shall not be
                        deemed to be a Triggering Event for purposes of the
                        Plan; or




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                              (4) the Company shall enter into any agreement
                        (whether or not conditioned on shareholder approval)
                        providing for or contemplating, or the Board of
                        Directors shall approve and recommend that the
                        shareholders of the Company accept, or approve or adopt,
                        or the shareholders of the Company shall approve, any
                        acquisition that would be a Triggering Event under
                        clause (1), above, or a merger or consolidation that
                        would be a Triggering Event under clause (2), above, or
                        a liquidation or dissolution of the Company or the sale
                        or other disposition of all or substantially all of the
                        assets of the Company; or

                              (5) whether or not conditioned on shareholder
                        approval, the issuance by the Company of common stock
                        representing a majority of the outstanding common stock,
                        or voting securities representing a majority of the
                        combined voting power of the outstanding voting
                        securities of the Company entitled to vote in the
                        election of directors, after giving effect to such
                        transaction.

         Following the occurrence of an event which is not a Triggering Event
         whereby there is a successor holding company to the Company, or, if
         there is no such successor, whereby the Company is not the surviving
         corporation in a merger or consolidation, the surviving corporation or
         successor holding company (as the case may be), for purposes of this
         definition, shall thereafter be referred to as the Company.

3.  ADMINISTRATION

         The Plan shall be administered by the Administrator. The terms and
conditions under which Options may be granted are set forth in Paragraph 6. The
Administrator shall have the authority to interpret the provisions of the Plan,
to establish such rules and procedures as may be necessary or advisable to
administer the Plan and to make all determinations necessary or advisable for
the administration of the Plan; provided, however, that no such interpretation
or determination shall change or affect the eligibility of Directors to receive
Options, the number of Shares covered by or the timing of any Option grant under
the Plan or the terms and conditions thereof.

4.  SHARES RESERVED UNDER PLAN

         The aggregate number of Shares which may be issued or sold under the
Plan and which are subject to outstanding Options at any time shall not exceed
one hundred fifty thousand (150,000) Shares, which may be treasury Shares or
authorized but unissued Shares, or a combination of the two, subject to
adjustment as provided in Paragraph 10 hereof. Any Shares subject to an Option
which expires or terminates for any reason (whether by voluntary surrender,
lapse of time or otherwise) and is unexercised as to such Shares may again be
the subject of an Option under the Plan subject to the limits set forth above. A
Director shall be entitled to the rights and privileges of ownership with
respect to the Shares subject to the Option only after actual purchase and
issuance of such Shares pursuant to exercise of all or part of an Option.

5.  PARTICIPATION

         Only Directors shall be eligible to receive Options under the Plan.









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6.  OPTIONS: TERMS AND CONDITIONS

         Each Option granted under the Plan shall be evidenced by a written
Option Agreement which shall comply with and be subject to the following terms
and conditions:

         (a)      Number of Option Shares Granted; Grant Date.


                  (i)      Initial Options. Each Director initially elected to
                           the Board of Directors after the Effective Date shall
                           be granted an Option to purchase such number of
                           Shares as shall be determined by the Board of
                           Directors, on the date of such initial election (the
                           "Initial Options").

                  (ii)     Annual Option Grants. On the first business day of
                           each calendar year, each Director who has not within
                           the prior twelve months received an Initial Option
                           under Subparagraph 6(a)(i), above, shall be granted
                           an Option to purchase one hundred twenty five (125)
                           Shares.

                                    (iii) Attendance Grants. Each Director shall
                           be granted an Option to purchase two hundred fifty
                           (250) Shares for each meeting of the Board of
                           Directors attended by such Director and eighty seven
                           (87) Shares for each meeting of a committee of the
                           Board attended by such Director. Such Options shall
                           be granted as of the day of the meeting. .

                                    (iv)  Other Grants. Each Director shall be
                           entitled to receive an option to purchase such number
                           of Shares for performing other services for the
                           Company if and as shall be determined from time to
                           time by the Board of Directors.

                  In the event that the number of Shares available for grant
                  under the Plan is insufficient to make all grants hereby
                  specified on the relevant date, then all Directors who are
                  entitled to a grant on such date shall share ratably in the
                  number of Shares then available for grant under the Plan.

         (b)      Option Exercise Price. The per share purchase price of the
                  Shares purchasable under each Option shall be equal to one
                  hundred percent (100%) of the fair market value per Share. The
                  fair market value per Share referred to in the preceding
                  sentences shall be the Market Price for the date of grant of
                  such Option.

         (c)      Exercise Period. Subject to acceleration as provided below, or
                  unless accelerated earlier by the Board of Directors, an
                  Option shall become exercisable for all of the Shares covered
                  thereby one year after the date of grant. If a Director's
                  tenure ends during the applicable one-year period due to death
                  or Disability, each Option of such Director shall become
                  immediately exercisable as to 100% of the Shares covered
                  thereby. If a Director's tenure ends during such period for
                  any reason other than death or Disability (i) any Initial
                  Options or granted during such period shall become immediately
                  exercisable as to 100% of the Shares covered thereby; and (ii)
                  all other Options granted during such period shall lapse
                  immediately as to one twelfth (1/12th) of the Shares covered
                  by such Options for each month or portion of a month remaining
                  in such one year period at the time of the termination.










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                  Upon the occurrence of a Triggering Event, each Option
                  outstanding under this Plan shall become immediately
                  exercisable as to 100% of the Shares covered thereby. Once any
                  portion of an Option becomes exercisable, it shall remain
                  exercisable for the shortest period of (i) 10 years after the
                  date of grant; (ii) one year (or such longer period permitted
                  by the Board of Directors) after a Director's tenure on the
                  Board of Directors terminates due to death or Disability; or
                  (iii) three months (or such longer period permitted by the
                  Board of Directors) after a Director's tenure on the Board of
                  Directors terminates for any reason other than death or
                  Disability.

         (d)      Payment of Exercise Price. The purchase or exercise price
                  shall be payable in whole or in part in cash or Shares; and
                  such price shall be paid in full at the time that an Option is
                  exercised. If a Director elects to pay all or a part of the
                  purchase or exercise price in Shares, such Director shall make
                  such payment by delivering to the Company a number of Shares
                  already owned by the Director equal in value to the purchase
                  or exercise price. All Shares so delivered shall be valued at
                  their Market Price on the business day immediately preceding
                  the day on which such Shares are delivered.

7.  TRANSFERABILITY

         Except as otherwise provided herein, or permitted by the Board of
Directors, an Option granted to a Director under this Plan shall not be
transferable or subject to execution, attachment or similar process, and during
the lifetime of the Director shall be exercisable only by the Director. A
Director shall have the right to transfer the Option upon such Director's death,
either by the terms of such Director's will, trust agreement or under the laws
of descent and distribution, and all such distributees shall be subject to all
terms and conditions of this Plan to the same extent as would the Director,
except as otherwise expressly provided herein.

8.  EXERCISE

          An Option shall be exercisable by a Director's giving written notice
of exercise to the Secretary of the Company specifying the number of Shares to
be purchased accompanied by payment in full of the required exercise price or
other arrangements satisfactory to the Company have been made to assure payment
of the exercise price. The Company shall have the right to delay the issue or
delivery of any Shares under the Plan until (a) the completion of such
registration or qualification of such Shares under any federal or state law,
ruling or regulation as the Company shall determine to be necessary or
advisable, and (b) receipt from the Director of such documents and information
as the Company may deem necessary or appropriate in connection with such
registration or qualification.

9.  SECURITIES LAWS

         Each Option Agreement shall contain such representations, warranties
and other terms and conditions as shall be necessary in the opinion of counsel
to the Company to comply with all applicable federal and state securities laws.

10.  ADJUSTMENT PROVISIONS

         In the event of any stock dividend, split-up, recapitalization, merger,
consolidation, combination or exchange of shares, or the like, as a result of
which shares of any class shall be issued with respect to the outstanding
Shares, or the Shares shall be changed into the same or a different number of
the same or another class of stock, or into securities of another person, cash
or other property (not including a regular








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cash dividend), the total number of Shares authorized to be offered in
accordance with Paragraph 4, the number of Shares subject to each outstanding
Option, the exercise price applicable to each such Option, and/or the
consideration to be received upon exercise of each such Option shall be
appropriately adjusted.

11.  TAXES

         The Company shall be entitled to pay or withhold the amount of any tax
which it believes is required as a result of the exercise of any Option under
the Plan, and the Company may defer making delivery of Shares obtained pursuant
to the exercise of an Option until arrangements satisfactory to it have been
made with respect to any such withholding obligations. If a withholding
obligation should arise, a Director exercising an Option may, at his election,
provided applicable laws and regulations are complied with, satisfy his
obligation for payment of withholding taxes either by having the Company retain
a number of Shares having an aggregate Market Price on the date the Shares are
withheld equal to the amount of the withholding tax or by delivering to the
Company Shares already owned by the Director having an aggregate Market Price on
the business day immediately preceding the day on which such Shares are
delivered equal to the amount of the withholding tax.

12.  EFFECTIVENESS OF THE PLAN

         The Plan, subject to shareholder approval, shall become effective on
and as of the Effective Date.

13.  TERMINATION AND AMENDMENT

         The Board of Directors of the Company may terminate the Plan or make
such modifications or amendments thereof or to any Option as it shall deem
advisable, including, but not limited to, such modifications or amendments as it
shall deem advisable in order to conform to any law or regulation applicable
thereto. No termination, modification or amendment of the Plan or any Option
may, without the consent of a Director, adversely affect the rights of such
Director under an outstanding Option then held by the Director.

14.  TENURE

         The grant of an Option pursuant to the Plan is no guarantee that a
Director will be renominated, reelected or reappointed as a Director; and
nothing in the Plan shall be construed as conferring upon a Director the right
to continue to be associated with the Company as a Director or otherwise.











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