<PAGE>
                                                                    Exhibit 10.5
                                                                    ------------


                     THE 2000 AMENDMENT AND RESTATEMENT TO

                           INVESTORS RIGHTS AGREEMENT
                           ==========================




THIS 2000 AMENDMENT AND RESTATEMENT (hereinafter the "Agreement") to the
Amendment and Restatement to the Investors Rights Agreement dated June 1 1999 is
made as of the 5th day of April, 2000, by and among RTS Software Ltd., an
Israeli company (the "Company"), the Investors identified in Schedule 1 attached
hereto (the "1996 Investors"), the Investors identified in Schedule 2 attached
hereto (the "1998 Investors"), the Investors identified in Schedule 3 attached
hereto (the "1999 Investors"), (the 1996 Investors, the 1998 Investors and the
1999 Investors are referred to collectively as the "Existing Investors") the
investors identified in Schedule 4 attached hereto (the "New Investors") (the
Existing Investors and the New Investors are referred to collectively as the
"Investors") and the Founders identified in Schedule 5 attached hereto (the
"Founders").

                              W I T N E S S E T H:


WHEREAS     the 1996 Investors and the Company have entered into an Investors
            Rights Agreement dated September 30, 1996 (the "1996 Investors
            Rights Agreement"); and

WHEREAS     the 1996 Investors and the 1998 Investors (other than GE Capital
            Equity Holdings, Inc. (formerly GE Capital Advent Investment Corp.)
            ("GE Capital") have entered into an Amendment and Restatement to the
            1996 Investors Rights Agreement dated February 27, 1998 (the "1998
            Investors Rights Agreement").

WHEREAS     the 1996 Investors and the 1998 Investors have entered into an
            Amendment and Restatement to the 1998 Investors Rights Agreement
            dated April 22, 1998 (the "Second 1998 Investors Rights Agreement");

WHEREAS     the Existing Investors have entered into an Amendment and
            Restatement to the Second 1998 Investors Rights Agreement dated June
            1, 1999 (the "1999 Investors Rights Agreement");

WHEREAS     the Investors and the Company wish to amend and restate the 1999
            Investors Rights Agreement so that, as of the date first mentioned
            above, all the provisions of the 1999 Investors Rights Agreement
            would have no further force or effect and would be replaced by all
            the provisions of this Agreement as detailed below; and
<PAGE>

                                      -2-

WHEREAS     the Investors are the holders of issued and outstanding Series A
            Preferred Shares par value NIS 0.1 each of the Company (the "Series
            A Preferred Shares"), Series B Preferred Shares par value NIS 0.1
            each of the Company (the "Series B Preferred Shares"), Series C-1
            Preferred Shares par value NIS 0.1 each of the Company (the "Series
            C-1 Preferred Shares"), the Series C-2 Preferred Shares par value
            NIS 0.1 each (the "Series C-2 Preferred Shares"), the Company's
            Convertible Debentures issued under the Loan and Investment
            Agreement of even date herewith (the "Convertible Debentures") and a
            portion of the Ordinary Shares par value NIS 0.1 each (collectively
            with any Ordinary Shares par value NIS 0.1 per share issued upon
            conversion of the Convertible Debentures, the "Ordinary Shares").
            The Series C-1 Preferred Shares and the Series C-2 Preferred Shares
            shall be referred to herein collectively as the "Series C Preferred
            Shares" and the Series A Preferred Shares, Series B Preferred Shares
            and Series C Preferred Shares and any shares (other than Ordinary
            Shares) issued upon conversion of the Convertible Debentures shall
            be referred to herein collectively as the "Preferred Shares"); and

WHEREAS     the Investors and the Company desire to set forth certain matters
            regarding the ownership of the shares of the Company.

     NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the parties (or that portion of the parties to the 1999 Investors
Rights Agreement required in order to amend the 1999 Investors Rights Agreement)
hereby agree that the provisions of the 1999 Investors Rights Agreement would,
as of the date first mentioned above, have no further force or effect and would
be replaced in its entirety with the provisions detailed below as follows:

1.     Affirmative Covenants
       ---------------------

     1.1.  Delivery of Financial Statements
           --------------------------------

           The Company shall deliver (i) the New Investors, Eucalyptus and
           Access until the consummation of the Company's IPO (as defined in
           Section 1.7 below) and (ii) shall otherwise deliver to each Investor,
           for so long as such Investor is the record holder of Ordinary Shares,
           or other securities convertible into Ordinary Shares ("Ordinary Share
           Equivalents"), in either case constituting at least four percent (4%)
           of the Ordinary Shares (assuming, for purposes of such calculation,
           the conversion into Ordinary Shares of all Ordinary Share
           Equivalents):

           1.1.1.  As soon as practicable, but in any event within ninety (90)
                   days after the end of each fiscal year of the Company, a
                   consolidated balance sheet of the Company as of the end of
                   such year, and statements of income and statements of cash
                   flow of the Company for such year (the "Audited Annual
                   Financial Statements"), setting forth in each case in
                   comparative form the figures for the previous fiscal year,
                   all
<PAGE>

                                      -3-

                   in reasonable detail, prepared in accordance with United
                   States generally accepted accounting principles ("GAAP"),
                   audited by a firm of Independent Certified Public Accountants
                   in the State of Israel who are members of the Israeli
                   Institute of Certified Public Accountants, and accompanied by
                   an opinion of such firm which opinion shall state that such
                   balance sheet and statements of income and cash flow have
                   been prepared in conformity with GAAP, and present fairly in
                   all material aspects the financial position of the Company as
                   of their date, and that the audit by such accountants in
                   connection with such financial statements has been conducted
                   in accordance with generally accepted auditing standards.

          1.1.2.   As soon as practicable, but in any event within forty five
                   (45) days after the end of each quarter of each fiscal year
                   of the Company, an unaudited consolidated balance sheet of
                   the Company as at the end of each such period and unaudited
                   consolidated statements of (i) income and (ii) cash flow of
                   the Company for such period (the "Unaudited Quarterly
                   Financial Statements") and, in the case of the first, second
                   and third quarterly periods, for the period from the
                   beginning of the current fiscal year to the end of such
                   quarterly period, setting forth in each case in comparative
                   form the figures for the corresponding period of the previous
                   fiscal year, all in reasonable detail and except as otherwise
                   stated therein, fairly presenting the financial position of
                   the Company as of their date subject to (x) there being no
                   footnotes contained therein and (y) changes resulting from
                   year-end audit adjustments.

          Notwithstanding the foregoing, if reasonably requested by the Clal
          Group (as defined in Schedule 4 hereto), the Company shall provide the
          Clal Investors with the Company's Audited Annual Financial Statements
          within thirty (30) days after the end of each fiscal year of the
          Company. Without derogating from the provisions of Section 1.6 below,
          the Clal Group may attach information regarding the Company which is
          derived from the Company's Audited Annual Financial Statements and
          Unaudited Quarterly Financial Statements to Clal Group's reports to
          the extent required in writing by the Israeli Securities Authority
          provided that the Clal Group has promptly notified in writing the
          Company of such disclosure requirement at least 20 days prior to
          making such disclosure; and provided further that the Company has had
          a reasonable opportunity to contest such disclosure.

     1.2.  Accounting
           ----------

           The Company will maintain and cause each of its Subsidiaries to
           maintain a system of accounting established and administered in

<PAGE>

                                      -4-

           accordance with GAAP (in the case of each Subsidiary (as defined
           below) in the jurisdiction in which it is incorporated) consistently
           applied, and will set aside on its books and cause each of its
           operating Subsidiaries to set aside on its books all such proper
           reserves as shall be required by GAAP (in the case of each Subsidiary
           in the jurisdiction in which it is incorporated). For purposes of
           this Section 1.2, "Subsidiary" means any corporation or entity at
           least a majority of whose voting securities are at the time owned by
           the Company, or by one or more Subsidiaries, or by the Company and
           one or more Subsidiaries.

     1.3.  Insurance
           ---------

           The Company will maintain fire and casualty insurance policies
           substantially as in effect on the date of this Agreement. In addition
           to the foregoing, the Company shall maintain from financially sound
           and reputable insurers (and shall pay all premiums and maintain in
           full force and effect), term life insurance (with the Company named
           as beneficiary) on the lives of each of Samuel HaCohen and Vladimir
           Morgenstern, each in the amount of two million United States dollars
           ($2,000,000).

     1.4.  Proprietary Information and Non-Competition Agreements
           ------------------------------------------------------

           From and after September 30, 1996, the Company and its subsidiaries
           have not and will not employ, or otherwise contract with any person
           who will have access to confidential information with respect to the
           Company and its operations unless such person has executed and
           delivered a Proprietary Information and Non-Competition Agreement to
           the satisfaction (as to substance and form) of the Company's Board of
           Directors.

     1.5.  Annual Plan; Monthly Report
           ----------------------------

           The management of the Company shall establish annually an operating
           plan and budget for the Company (the "Annual Plan") in consultation
           with the Board. The Annual Plan for the following year shall be
           submitted to the Board of Directors for its approval at least
           fourteen (14) days prior to the first day of the year covered by such
           Annual Plan.

           The management of the Company shall submit to the Company's Board of
           Directors as soon as practicable, but in any event within thirty (30)
           days after the end of each month, an unaudited consolidated balance
           sheet of the Company as at the end of such month, and an unaudited
           estimated consolidated statement of income and statements of cash
           flow for such month.

     1.6.  Confidentiality
           ---------------

           The Investors agree that any information with respect to the Company


<PAGE>

                                      -5-

           or any of its subsidiaries obtained pursuant (a) to this Agreement,
           the Investment and Loan Agreement dated as of April 5, 2000 (the
           "Investment and Loan Agreement") and Amendment and Restatement to the
           Shareholders Agreement dated April 5, 2000 (the "2000 Shareholders
           Agreement"); (b) the 1999 Investors Rights Agreement, the Second 1998
           Investors Rights Agreement and the Share Purchase Agreement (the
           "1999 Share Purchase Agreement") dated as of June 1, 1999 entered
           into by and among the purchasers detailed in Schedule 1.1 to that
           Agreement and the Company; (c) the Second Amendment and Restatement
           to the Shareholders Agreement (the "1999 Shareholders Agreement")
           entered into by the parties detailed in Schedules 1, 2 and 3 to that
           Agreement dated June 1, 1999 and (d) in addition with respect to the
           1996 Investors and the 1998 Investors, the information obtained
           pursuant to the Share Purchase Agreement dated as of April 22, 1998
           entered into by and among GE Capital and the Company and the
           Amendment and Restatement to the Amendment and Restatement to the
           Shareholders Agreement (the "Second 1998 Shareholders Agreement")
           entered into by the parties detailed in Schedules 1, 2 and 3 to that
           Agreement dated as of April 22, 1998, and (e) in addition, with
           respect to the 1996 Investors and the 1998 Investors, other than GE
           Capital, the information obtained pursuant to the Share Purchase
           Agreement dated as of February 26, 1998 entered into by and among the
           purchasers detailed in Schedule 1.1 to that Agreement and the
           Company, the information obtained pursuant to the 1998 Investors
           Rights Agreement and the information obtained pursuant to the
           Amendment and Restatement to the Shareholders Agreement dated as of
           February 27, 1998 (the "1998 Shareholders Agreement"), and (f) with
           respect to the 1996 Investors, the information obtained pursuant to
           the Share Purchase Agreement dated as of September 30, 1996 entered
           into by and among the purchasers detailed in Schedule 1.1 to that
           Agreement and the Company, the information obtained pursuant to the
           1996 Investors Rights Agreement and the information obtained pursuant
           to the Shareholders Agreement entered into by the parties detailed in
           Schedule 1 to that agreement dated as of 30, September, 1996 (the
           "1996 Shareholders Agreement") except for information which became
           publicly known not due to any action or inaction of any of the
           Investors, will not be disclosed without the prior written consent of
           the Company; provided that, in connection with periodic reports to
                        --------
           their shareholders or partners, the Investors may, without first
           obtaining such written consent, make general statements, not
           containing technical information, regarding the nature and progress
           of the Company's business; and provided further, that the Investors
                                          --------
           may provide summary information regarding the Company's financial
           information in their reports to the respective shareholders or
           partners, but may not annex to such reports the full financial
           information to be provided hereunder by the Company; and provided
                                                                    --------
           further, however, that in the event that an Investor is required to
           annex financial information obtained to such reports, such Investor
           shall exert its reasonable efforts to avoid annexing such financial
           information, in a manner consistent with


<PAGE>

                                 -6-

           applicable law and practice, but to the extent that its efforts are
           unsuccessful, such Investor shall be entitled to annex such financial
           information to such reports. Notwithstanding the foregoing, GE
           Capital may disclose such information to its affiliates and permitted
           transferees pursuant to Section 2.3 of the Shareholders Agreement,
           solely for purposes of monitoring the performance and prospects of,
           and managing its investment in, the Company.

     1.7.  Termination of Financial Information Rights
           -------------------------------------------

           The Company's obligation to deliver the financial statements and
           other information under Section 1.1 shall terminate and shall be of
           no further force or effect upon the closing of the Company's initial
           firmly underwritten public offering of its Ordinary Shares pursuant
           to an effective registration statement under the United States
           Securities Act of 1933, as amended (the "Securities Act"), or
           equivalent law of another jurisdiction, at a price per share of not
           less than six United States Dollars and ninety nine cents ($6.99)
           (adjusted for share combination or subdivision or other
           recapitalization of the Company's shares) with net proceeds to the
           Company of not less than seven million five hundred thousand United
           States Dollars ($7,500,000) (the "IPO"). Thereafter, the Company
           shall deliver to the Investors, and its assignees or transferees,
           such financial information as the Company from time to time provides
           to other holders of its shares.

     1.8.  The STAR Shareholders (as such term is defined in the Shareholders
           Agreement), ATV (as defined in Schedule 1), the JPV Investors (as
           such term is defined in Schedule 1), and the Clal Group shall each,
           at any time that such group not actually designate a director to the
           Board of Directors, be entitled to designate a non-voting observer to
           the Company's Board of Directors. Such observer shall be entitled to
           attend all Board of Directors meetings, shall be entitled to receive
           all documents and information provided to any director, but will not
           be entitled to vote at any Board of Directors meeting. Any observer
           may only be removed from office by the holders who designated such
           observer. Should such group's holding of the Company's shares be
           reduced so that such holder holds less than four percent (4%) of the
           issued and outstanding share capital of the Company (assuming for
           purposes of such determination, that all options and warrants to
           purchase the Company's shares have been exercised), then such group
           will cease to possess the right to designate an observer, and any
           observer so designated will automatically and without further action
           be removed from office.

     1.9.  In addition, in the event that Bessemer Venture Partners IV L.P.
           designates a person to the Company's Board of Directors which is not
           affiliated with the Bessemer Investors (as such a term is defined in
           Schedule 2 hereto) or any of them and such designee is approved by a
           majority of the Company's Board of Directors (excluding an existing
<PAGE>

                                      -7-

           director designated by Bessemer Venture Partners IV L.P, if any) then
           the Bessemer Investors would be entitled to designate a non-voting
           observer to the Company's Board of Directors; provided, however, that
           such approval by a majority of the other directors shall in no way be
           a condition to such designee becoming a director or serving as a
           director. Such observer shall be entitled to attend all Board of
           Directors meetings, shall be entitled to receive all documents and
           information provided to any director, but will not be entitled to
           vote at any Board of Directors meeting. Such observer may only be
           removed from office by the holders who designated such observer.
           Should the Bessemer Investors' holding of the Company's shares be
           reduced to less than four percent (4%) of the issued and outstanding
           share capital of the Company (assuming for purposes of such
           determination, that all options and warrants to purchase the
           Company's shares have been exercised) then such group will cease to
           possess the right to designate an observer, and any observer so
           designated will automatically and without further action be removed
           from office.

     1.10. GE Capital shall be entitled to designate a non-voting observer to
           the Company's Board. Such observer, who shall be selected by GE
           Capital and approved by the Company's Board (which approval shall not
           be unreasonably withheld), shall be entitled to attend all Board
           meetings, shall be entitled to receive all documents and information
           provided to any director, but will not be entitled to vote at any
           Board meeting. Such observer may only be removed from office by GE
           Capital. Should the holdings of GE Capital (together with its
           permitted transferees pursuant to Section 2.3 of the Shareholders
           Agreement) in the aggregate be reduced to less than two percent (2%)
           of the issued and outstanding share capital of the Company (assuming
           for purposes of such determination, that all options and warrants to
           purchase the Company's shares have been exercised), then such group
           will cease to possess the right to designate an observer, and any
           observer so designated will automatically and without further action
           be removed from office. The documents and other information received
           by the GE Capital observer pursuant to this paragraph shall be used
           by such observer and by GE Capital and its affiliates and permitted
           transferees pursuant to Section 2.3 of the Shareholders Agreement,
           solely for purposes of monitoring the performance and prospects of
           and managing their investment in the Company.

2.   Pre-emptive Right
     -----------------

     Until the IPO, the Company hereby grants to each Investor rights of first
     refusal to purchase such Investor's pro-rata share (or any portion thereof)
     of New Securities (as defined below) that the Company may, from time to
     time, propose to sell and issue. The Investor's pro rata share shall be the
     ratio of the number of shares of the Company's Ordinary Shares (assuming
     for purposes of this Section that all Preferred Shares have been converted
     into Ordinary Shares) then held by the Investor as of the date of the
     Rights Notice (as defined
<PAGE>

                                      -8-

     in Section 2(b)), to the sum of the total number of Ordinary Shares
     outstanding as of such date.

     This right of first refusal shall be subject to the following provisions:

(a)  "New Securities" shall mean any Ordinary Shares or Preferred Shares of any
     kind of the Company, whether now or hereafter authorized, and rights,
     options, or warrants to purchase said Ordinary Shares or Preferred Shares,
     and securities of any type whatsoever that are, or may become, convertible
     into said Ordinary Shares or Preferred Shares; provided, however, that "New
                                                    --------  -------
     Securities" shall not include (i) securities issuable upon conversion of
     Preferred Shares; (ii) securities offered to the public in the IPO; (iii)
     securities issued in connection with the acquisition of another
     corporation, business entity or line of business of another business entity
     by the Company by merger, consolidation, purchase of all or substantially
     all of the assets, or other reorganization as a result of which the Company
     owns not less than fifty percent (50%) of the voting power of such
     corporation; (iv) the Company's Ordinary Shares or Preferred Shares issued
     in connection with any stock split, stock dividend, recapitalization,
     reclassification or similar event by the Company; (v) securities authorized
     by the Company's Board of Directors (including the affirmative vote of at
     least two (2) of the Directors appointed by the holders of Preferred
     Shares) to be issued in connection with the acquisition of assets by the
     Company or supply arrangements for the Company; (vi) Ordinary Shares or
     options, or any other securities convertible into Ordinary Shares to be
     issued to employees, directors, contractors, or consultants of the Company
     in accordance with the Board of Directors' resolutions; (vii) securities
     issued to a Strategic Investor (as defined below); (viii) securities issued
     upon the exercise of outstanding options and warrants or any other
     convertible securities granted at or prior to the date of the Closing of
     the Investment and Loan Agreement; or (ix) securities to be sold and issued
     by the Company which securities have been exempt from the definition of
     "New Securities" by a resolution unanimously adopted, in the best interest
     of the Company, by all the directors lawfully entitled to vote on such a
     resolution.

     "Strategic Investor" in this Agreement shall mean an investor which is
     capable of materially contributing, directly or indirectly, (other than by
     investing capital in the Company) to the Company's marketing, distribution
     or sales and which is approved as such by at least two of the Directors
     appointed by the holders of Preferred Shares of which one is the Preferred
     C-1 Director (as defined in the Company's Articles of Association).

(b)  If the Company proposes to issue New Securities, it shall give the
     Investors written notice (the "Rights Notice") of its intention, describing
     the New Securities, the price, the general terms upon which the Company
     proposes to issue them, and the number of shares that the Investor has the
     right to purchase under this Section 2. Each Investor shall have twenty-one
     (21) days from delivery of the Rights Notice to agree to purchase (i) all
     or any part of its pro-rata share of such New Securities and (ii) all or
     any part of the pro-rata share of any other shareholder (including for this
     purpose any permitted transferee of
<PAGE>

                                      -9-

     such holder) entitled to such rights to the extent that such other
     shareholder does not elect to purchase its full pro-rata share, in each
     case for the price and upon the general terms specified in the Rights
     Notice, by giving written notice to the Company setting forth the quantity
     of New Securities to be purchased. If the Investors who elect to purchase
     their full pro-rata shares also elect to purchase in the aggregate more
     than 100% of the New Securities, such New Securities shall be sold to such
     Investors in accordance with their respective pro-rata shares.

(c)  If the Investors fail to exercise in full the right of first refusal within
     the period or periods specified in Section 2(b), the Company shall have
     ninety (90) days after delivery of the Rights Notice to sell the unsold New
     Securities at a price and upon general terms no more favorable to the
     purchasers thereof than specified in the Company's notice. If the Company
     has not sold the New Securities within said ninety (90) day period the
     Company shall not thereafter issue or sell any New Securities without first
     offering such securities to the Investors in the manner provided above.

(d)  The pre-emptive right mentioned herein shall not be in addition to the pre-
     emptive right described in Article 11(b) of the Articles of Association
     adopted as of the date of this Agreement, but shall be subject to the
     provisions of such Article 11(b).

3.   Registration
     ------------

     The following provisions govern the registration of the Company's
     securities:

     3.1.  Definitions
           -----------

           As used in this Agreement, the following terms have the following
           meanings:

           "Form S-3" means Form S-3 or Form F-3 under the Securities Act, as in
            --------
           effect on the date hereof or any registration form under the
           Securities Act subsequently adopted by the Securities and Exchange
           Commission ("SEC") which permits inclusion or incorporation of
           substantial information by reference to other documents filed by the
           Company with the SEC.

           "Founders" means: Samuel HaCohen, Vladimir Morgenstern Yitzhak Chemo,
            --------
           Shimon Katz and Sequel Technology Ltd.

           "Founders' Shares" means all Ordinary Shares owned by the Founders.
            ----------------

           "Holder" means any holder of outstanding Registrable Shares or shares
            ------
           convertible into Registrable Shares who acquired such Registrable
           Shares or shares convertible into Registrable Shares in a transaction
           or series of transactions not involving any registered public
           offering.

           "Initiating Holders" means Holders holding more than fifty percent
           ------------------

<PAGE>

                                     -10-

           (50%) of the Registrable Shares, assuming for purposes of such
           determination the conversion of all shares convertible into
           Registrable Shares.

           "Register," "registered" and "registration" refer to a registration
            ---------   ----------       ------------
           effected by filing a registration statement in compliance with the
           Securities Act and the declaration or ordering by the Commission of
           effectiveness of such registration statement, or the equivalent
           actions under the laws of another jurisdiction.

           "Registrable Shares" means all Ordinary Shares issuable upon
            ------------------
           conversion of the Preferred Shares and Convertible Debentures, all
           Ordinary Shares issued by the Company in respect of such shares and
           all Ordinary Shares that the Investors may hereafter purchase
           pursuant to their warrants, preemptive rights or rights of first
           refusal, or Ordinary Shares issued on conversion or exercise of other
           securities so purchased; provided, however, that any Ordinary Shares
                                    --------
           that could be sold by the holder thereof (in accordance with
           applicable law) within six (6) months without the registration of
           such shares, shall not be deemed to be Registrable Shares.

           "SEC" means the U.S. Securities and Exchange Commission.
            ---

     3.2.  Incidental Registration
           -----------------------

           If the Company at any time proposes to register any of its
           securities, other than in a demand registration under Section 3.3 of
           this Agreement, it shall give notice to the Holders and Founders of
           such intention. Upon the written request of any Holder or Founder
           given within twenty (20) days after receipt of any such notice, the
           Company shall include in such registration all of the Registrable
           Shares or Founders' Shares, as the case may be, indicated in such
           request, so as to permit the disposition of the shares so registered.
           Notwithstanding any other provision of this Section 3.2, if the
           managing underwriter advises the Company in writing that marketing
           factors require a limitation of the number of shares to be
           underwritten, then there shall be excluded from such registration and
           underwriting to the extent necessary to satisfy such limitation,
           first shares held by shareholders other than the Holders and Founders
           (pro rata to the total number of Registrable Shares held by each of
           the Holders of such group), then shares held by the Founders (pro
           rata to the total number of Registrable Shares held by each of the
           Holders of such group), then to the extent necessary, shares held by
           the Holders (pro rata to the respective total number of Registrable
           Shares held by each of the Holders).

     3.3.  Demand Registration
           -------------------

           At any time during the period beginning one (1) year following the
           closing of the IPO, (a) the Initiating Holders may request in writing
           that all or part of the Registrable Shares shall be registered for
           trading on
<PAGE>

                                      -11-


          any securities exchange on which the Company's shares are otherwise
          traded, and (b) after the Company has completed at least one (1)
          registration at the request of the Holders, the Founders holding a
          majority of the Founders' Shares may request in writing that all or
          part of the Founders Shares shall be registered for trading on any
          securities exchange on which the Company's shares are otherwise
          traded. Any request under this Section must request the registration
          of shares in a minimum amount of five million United States dollars
          ($5,000,000) (or, if on Form S-3, one million United States dollars
          ($1,000,000)). Within twenty (20) days after receipt of any such
          request, the Company shall give written notice of such request to the
          other Holders (and following the first such registration, the
          Founders) and shall include in such registration all Registrable
          Shares (and following the first such registration, the Founders
          Shares) held by all such Holders (or following the first such
          registration, the Founders) who wish to participate in such demand
          registration and provide the Company with written requests for
          inclusion therein within fifteen (15) days after the receipt of the
          Company's notice. Thereupon, the Company shall effect the registration
          of all Registrable Shares (and, in the case of a request submitted by
          the Founders, Founders Shares) as to which it has received requests
          for registration for trading on the securities exchange specified in
          the request for registration; provided, however, that the Company
                                        --------
          shall not be required to effect any registration under this Section
          3.3 within a period of twelve (12) months following the effective date
          of a previous registration. Notwithstanding any other provision of
          this Section 3, if the managing underwriter advises the Holders (and
          following the first such registration, the Founders) in writing that
          marketing factors require a limitation of the number of shares to be
          underwritten, then there shall be excluded from such registration and
          underwriting to the extent necessary to satisfy such limitation, first
          shares held by shareholders other than the Holders and Founders (pro
          rata to the total number of Registrable Shares held by each of the
          Holders of such group), then shares which the Company may wish to
          register for its own account, then shares held by the Founders (pro
          rata to the total number of Registrable Shares held by each of the
          Holders of such group) and thereafter, to the extent necessary, shares
          held by the Holders (pro rata to the respective total number of
          Registrable Shares held by each of the Holders), provided, however,
                                                           --------
          that in any event all Registrable Shares must be included in such
          registration prior to any other shares of the Company. The Company
          shall not register securities for sale for its own account in any
          registration requested pursuant to this Section 3.3 unless permitted
          to do so by the written consent of Holders (or, in the case of a
          registration requested by Founders, Founders) who hold at least 66% of
          the Registrable Shares (or, in the case of a registration requested by
          Founders, Founders Shares) as to which registration has been
          requested. The Company shall not be required to effect more than four
          (4) registrations at the request of the Initiating Holders under this
          Section 3.3 and two (2) registrations at the request of the Founders
<PAGE>

                                      -12-

          under this Section 3.3.

     3.3A Notwithstanding the provisions of Section 3.2 and 3.3 hereof, if the
          Company consummates a subsequent investment in the Company's share
          capital yielding to the Company gross proceeds of at least US$10
          million of which at least US$5 million are invested by third parties
          who are not shareholders of the Company prior to such investment
          ("Private Placement") then, the holders of the Convertible Debentures
          shall be entitle to the same registration rights granted to the
          investors in such Private Placement.

     3.4. Designation of Underwriter
          --------------------------

          (a)  In the case of any registration effected pursuant to Section 3.3,
               (i) the majority of the Holders participating shall have the
               right to designate the managing underwriter(s) in any
               underwritten offering provided that such managing underwriter(s)
               shall be either one of the Lead Underwriter or Co-Manager in the
               Company's IPO or an underwriter which is among the twenty (20)
               leading underwriting firms as measured by revenues and (ii) the
               Company and all Holders and Founders participating in such
               underwritten registration shall enter into an underwriting
               agreement in customary form with the underwriter or underwriters
               selected for such underwriting.

          (b)  In the case of any registration initiated by the Company, the
               Company shall have the right to designate the managing
               underwriter in any underwritten offering and any Holders or
               Founders participating in such underwritten registration shall
               enter into an underwriting agreement in customary form with the
               underwriter or underwriters selected for such underwriting.

     3.5. Expenses
          --------

          All expenses incurred in connection with any registration under
          Section 3.2 and Section 3.3 (including the preparation of the
          registration statement) shall be borne by the Company; provided,
                                                                 --------
          however, that each of the Holders or Founders participating in such
          -------
          registration shall pay its pro rata portion of the fees, discounts or
          commissions payable to any underwriter and any fees of counsel to such
          Holders or Founders.

     3.6. Indemnification
          ---------------

          In the event any Ordinary Shares are included in a registration
          statement in accordance herewith:

          (a)  To the extent permitted by law, the Company will indemnify and
               hold harmless each one of the Holders and/or Founders, the
               partners, officers, directors and shareholders of each one of the
               Holders and/or Founders, legal counsel and accountants for each
<PAGE>

                                      -13-

               one of the Holders and/or Founders, any underwriter (as defined
               in the Securities Act) for such Holder and/or Founder and each
               person, if any, who controls Holder and/or Founder or underwriter
               within the meaning of the Securities Act or the 1934 Act against
               any losses, expenses, claims, damages, or liabilities to which
               they become subject under the Securities Act, the 1934 Act or
               other United States federal or state laws or the securities laws
               of the State of Israel or any other jurisdiction in which the
               Registrable Shares are sold, insofar as such losses, expenses,
               claims, damages, or liabilities (or actions in respect thereof)
               arise out of or are based upon any of the following statements,
               omissions or violations (collectively a "violation"): (i) any
               untrue statement of a material fact contained in such
               registration statement, including any preliminary prospectus or
               final prospectus contained therein or any amendments or
               supplements thereto; (ii) the omission or alleged omission to
               state therein a material fact required to be stated therein, or
               necessary to make the statements therein not misleading in light
               of the circumstances under which they were made, or (iii) any
               violation or alleged violation by the Company of the Securities
               Act, the 1934 Act, any Federal or state securities law or any
               rule or regulation promulgated under the Securities Act, the 1934
               Act or any federal or state securities law, or any of the
               securities laws of the State of Israel or any other jurisdiction
               in which the Registrable Shares are sold or any rule or
               regulation thereunder; and the Company will reimburse each such
               Holder, Founder, officer or director, underwriter or controlling
               person for any legal or other expenses reasonably incurred by
               them in connection with investigating or defending any such loss,
               claim, damage, liability, or action; provided, however, that the
               indemnity agreement contained in this Section 3.6(a), shall not
               apply to amounts paid in settlement of any such loss, claim,
               damage, liability, or action if such settlement is effected
               without the consent of the Company (which consent shall not be
               unreasonably withheld), nor shall the Company be liable to the
               Holders and/or Founders, underwriter or controlling person in any
               such case for any such loss, claim, damage, liability, or action
               to the extent that it arises out of or is based upon a Violation
               which occurs in reliance upon and in conformity with written
               information furnished to the Company expressly for use in
               connection with such registration by the Holders and/or Founders,
               underwriter or controlling person provided further, however, that
               the foregoing indemnity agreement with respect to any preliminary
               prospectus shall not inure to the benefit of any Holder and/or
               Founder or underwriter, or any person controlling such Holder
               and/or Founder or underwriter, from whom the person asserting any
               such losses, claims, damages or liabilities purchased shares in
               the offering, if a copy of the prospectus (as then amended or
               supplemented if the Company shall have furnished any amendments
               or supplements
<PAGE>

                                      -14-

               thereto) was not sent or given by or on behalf of such Holder
               and/or Founder or underwriter to such person, if required by law
               so to have been delivered, at or prior to the written
               confirmation of the sale of the shares to such person, and if the
               prospectus (as so amended or supplemented) would have cured the
               defect giving rise to such loss, claim, damage or liability.

          (b)  To the extent permitted by law, each selling Holder and/or
               Founder will indemnify and hold harmless the Company, each of its
               directors, each of its officers who have signed the registration
               statement, each person, if any, who controls the Company within
               the meaning of the Securities Act, any underwriter (within the
               meaning of the Securities Act) for the Company, any person who
               controls such underwriter, and any Holder and/or Founder selling
               securities in such registration statement or any directors or
               officers or any persons controlling such parties, against any
               losses, claims, expenses, damages, or liabilities to which any of
               the forgoing persons become subject under the Securities Act, the
               1934 Act or other United States federal or state securities law,
               or any of the securities laws of the State of Israel or any other
               jurisdiction in which the Registrable Shares are sold, insofar as
               such losses, expenses, claims, damages, liabilities (or actions
               in respect thereto) arise out of or are based upon any Violation
               (including alleged Violation), in each case to the extent (and
               only to the extent) that such Violation occurs in reliance upon
               and in conformity with written information furnished to the
               Company by such Holder and/or Founder expressly for use in
               connection with such registration; and each such Holder and/or
               Founder will reimburse any persons intended to be indemnified
               pursuant to this section 3.6(b) for any legal or other expenses
               reasonably incurred by such person in connection with
               investigating or defending any such loss, claim, damage,
               liability or action; provided, however, that the indemnity
               agreement contained in this Section 3.6(b) shall not apply to
               amounts paid in settlement of any such loss, claim, damage,
               liability or action if such settlement is effected without the
               consent of the Holders and/or Founders, which consent shall not
               be unreasonably withheld: provided that in no event shall any
               indemnity under this Section 3.6(b) exceed the gross proceeds
               from the offering received by such Holder and/or Founder.

          (c)  Promptly after receipt by an indemnified party under this Section
               3.6(c) of notice of the commencement of any action (including any
               governmental action), such indemnified party will, if a claim in
               respect thereof is to be made against any indemnifying party
               under this Section 3.6, notify the indemnifying party in writing
               of the commencement thereof and the indemnifying party shall have
               the right to participate in, and, to the extent the indemnifying
               party so desires, jointly with any other indemnifying party
<PAGE>

                                      -15-

               similarly noticed, to assume the defense thereof with counsel
               mutually satisfactory to the parties; provided, however, that an
               indemnified party (together with all other indemnified parties
               that may be represented without conflict by one counsel) shall
               have the right to retain its own counsel, with the fees and
               expenses to be paid by the indemnifying party, if representation
               of such indemnified party by the counsel retained by the
               indemnifying party would be inappropriate due to actual or
               potential differing interests between such indemnified party and
               any other party represented by such counsel in such proceeding.
               The failure to notify an indemnifying party in writing within a
               reasonable time of the commencement of any such action, if
               prejudicial to its ability to defend such action, shall relieve
               such indemnifying party of any liability to the indemnifying
               party under this Section 3.6, but the omission so to deliver
               written notice to the indemnifying party will not relieve it of
               any liability that it may have to any indemnified party otherwise
               than under this Section 3.6.

          (d)  if the indemnification provided for in this Section 3.6 is held
               by a court of competent jurisdiction to be unavailable to an
               indemnified party with respect to any loss, liability, claim,
               damage or expense referred to herein, then the indemnifying
               party, in lieu of indemnifying such indemnified party hereunder,
               shall contribute to the amount paid or payable by such
               indemnified party as a result of such loss, liability, claim,
               damage or expense in such proportion as is appropriate to reflect
               the relative fault of the indemnifying party on the one hand and
               of the indemnified party on the other in connection with the
               statements or omissions that resulted in such loss, liability,
               claim, damage or expense, as well as any other relevant equitable
               considerations. The relative fault of the indemnifying party and
               of the indemnified party shall be determined by reference to,
               among other things, whether the untrue or alleged untrue
               statement of a material fact or the omission to state a material
               fact relates to information supplied by the indemnifying party or
               by the indemnified party and the parties' relative intent,
               knowledge, access to information, and opportunity to correct or
               prevent such statement or omission.

          (e)  Notwithstanding the foregoing, to the extent that the provisions
               relating to indemnification and contribution contained in the
               underwriting agreement entered into in connection with the
               underwritten public offering are in conflict with the foregoing
               provisions, the provisions in the underwriting agreement shall
               control.

          (f)  The obligations of the Company, the Holders and the Founders
               under this Section 3.6 shall survive the completion of any
<PAGE>

                                      -16-

               offering of Registrable Shares and/or Founders Shares in a
               registration statement under this Section 3.

     3.7. Obligations of the Company
          --------------------------

          Whenever required under this Section 3 to effect the registration of
          any Registrable Shares, the Company shall, as expeditiously as
          possible:

          3.7.1.    prepare and file with the SEC a registration statement with
                    respect to such Registrable Shares and use its best efforts
                    to cause such registration statement to become effective,
                    and, upon the request of the holders of a majority of the
                    Registrable Shares registered thereunder, keep such
                    registration statement effective for a period of up to nine
                    (9) months or, if sooner, until the distribution
                    contemplated in the Registration Statement has been
                    completed.

          3.7.2.    prepare and file with the SEC such amendments and
                    supplements to such registration statement and the
                    prospectus used in connection with such registration
                    statement as may be necessary to comply with the provisions
                    of the Securities Act with respect to the disposition of all
                    Registrable Shares covered by such registration statement.

          3.7.3.    furnish to the Holders or the Founders, as the case may be,
                    such numbers of copies of a prospectus, including a
                    preliminary prospectus, in conformity with the requirements
                    of the Securities Act, and such other documents as they may
                    reasonably request in order to facilitate the disposition of
                    Registrable Shares owned by them.

          3.7.4.    use all reasonable efforts to register and qualify the
                    securities covered by such registration statement under such
                    other securities or Blue Sky laws of such jurisdictions as
                    shall be reasonably requested by the Holders or the
                    Founders, as the case may be, provided that the Company
                    shall not be required in connection therewith or as a
                    condition thereto to qualify to do business or to file a
                    general consent to service of process in any such states or
                    jurisdictions.

          3.7.5.    in the event of any underwritten public offering, enter into
                    and perform its obligations under an underwriting agreement,
                    in usual and customary form, with the managing underwriter
                    of such offering. Each Holder or Founder, as the case may
                    be, participating in such underwriting shall also enter into
                    and perform its obligations under such an agreement.

          3.7.6.    notify each holder of Registrable Shares or Founders' Shares
                    covered by such registration statement at any time when a
                    prospectus relating thereto is required to be delivered
                    under
<PAGE>

                                      -17-

                    the Securities Act or the happening of any event as a result
                    of which the prospectus included in such registration
                    statement, as then in effect, includes an untrue statement
                    of a material fact or omits to state a material fact
                    required to be stated therein or necessary to make the
                    statements therein not misleading in the light of the
                    circumstances then existing.

          3.7.7.    cause all Registrable Shares or Founders' Shares registered
                    pursuant thereunder to be listed on each securities exchange
                    on which similar securities issued by the Company are then
                    listed.

          3.7.8.    provide a transfer agent and registrar for all Registrable
                    Shares or Founders' Shares registered pursuant hereunder and
                    a CUSIP number for all such Registrable Shares or Founders
                    Shares, in each case not later than the effective date of
                    such registration.

          3.7.9.    furnish, at the request of any Holder or Founder requesting
                    registration of Registrable Shares or Founders' Shares, as
                    the case may be, pursuant to this Section 3, on the date
                    that such Registrable Shares are delivered to the
                    underwriters for sale in connection with a registration
                    pursuant to this Section 3, if such securities are being
                    sold through underwriters, or, if such securities are not
                    being sold through underwriters, on the date that the
                    registration statement with respect to such securities
                    becomes effective, (i) an opinion, dated such date, of the
                    counsel representing the Company for the purposes of such
                    registration, in form and substance as is customarily given
                    to underwriters in an underwritten public offering,
                    addressed to the underwriters, if any, and (ii) a letter
                    dated such date, from the independent certified public
                    accountant of the Company, in form and substance as is
                    customarily given by independent certified public
                    accountants to underwriters in an underwritten public
                    offering, addressed to the underwriters, if any.

     3.8. Reports Under Securities Exchange Act of 1934.
          ---------------------------------------------

          With a view to making available to the Holders and Founders the
          benefits of Rule 144 promulgated under the Securities Act and any
          other rule or regulation of the SEC that may at any time permit a
          Holder or Founder to sell securities of the Company to the public
          without registration or pursuant to a registration on Form S-3, the
          Company agrees to:

          (a)  make and keep public information available, as those terms are
               understood and defined in SEC Rule 144, at all times after the
               effective date of the IPO;
<PAGE>

                                      -18-

          (b)  file with the SEC in a timely manner all reports and other
               documents required of the Company under the Securities Act and
               the 1934 Act; and

          (c)  furnish to any Holder, so long as the Holder owns any Registrable
               Securities, forthwith upon request a written statement by the
               Company that it has complied with the foregoing subsections
               3.8(a) and 3.8 (b).


    3.9.  Assignment of Registration Rights
          ---------------------------------

          Any of the Holders or Founders may assign its rights to cause the
          Company to register Shares pursuant to this Section 3 to a transferee
          or transferees of all or any part of its Registrable Shares or
          Founders' Shares. The transferor shall, within twenty (20) days after
          such transfer, furnish the Company with written notice of the name and
          address of such transferee and the securities with respect to which
          such registration rights are being assigned, and the transferee's
          written agreement to be bound by this Section 3.

    3.10. Rights that may be Granted to Subsequent Investors
          --------------------------------------------------

          The Company may grant to investors in the Company only such rights of
          registration as shall be approved by a majority of the Board of
          Directors (which majority includes the affirmative vote of two of the
          Directors designated by the holders of Preferred Shares).

    3.11. Lock-Up
          -------

          In any registration of the Company's shares all Holders and Founders
          agree that any sales of Registrable Shares or Founders Shares may be
          subject to a "lock-up" period restricting such sales beginning thirty
          (30) days prior to, and (i) for up to one hundred and eighty (180)
          days following in the case of the Company's IPO or (ii) ninety (90)
          days in the case of any offering initiated during the period of two
          (2) years following the IPO, and all Holders will agree to abide by
          such customary "lock-up" period within the foregoing time limits as is
          required by the underwriter in such registration.

4.  Negative Covenants
    ------------------

    Until an IPO, the Investors agree that except as otherwise required by law,
    all the following decisions of the Company will be brought first to the
    Board of Directors of the Company for its approval and that in the event
    they participate in a vote on one of the matters described in this Section,
    they shall vote their Shares in the Company, and shall use their best
    efforts to cause the directors of the Company designated by each of them, in
    order that the Company shall not, without (if such decision may be taken by
    the Investors) the affirmative vote of the holders of record of at least
    sixty six and two thirds percent (662/3%) of the
<PAGE>

                                      -19-



       outstanding Preferred A Shares, Preferred B Shares and Preferred C Shares
       (all such Preferred Shares voting as one class) and the affirmative vote
       of the holders of record of at least sixty six and two thirds percent
       (662/3%) of the outstanding shares of Ordinary Shares, (voting as a
       separate class), and without (when the decision is brought to the Board
       of Directors) the consent of one of the Preferred Shares Directors (as
       defined in Section 6 of the Shareholders Agreement) and one of the
       Management Shares Directors (as defined in Section 6 of the Shareholders
       Agreement):

(i)    adopt any amendment of the Memorandum or Articles of Association of the
       Company or any other action which would have the effect of amending the
       specific rights, preferences or privileges of the Preferred Shares;

(ii)   authorize or issue any equity securities of any class with rights equal
       to or superior to those of the shares of Preferred Shares or other
       securities convertible into such securities, nor enter into any contract
       or grant any option for the issue of any such securities;

(iii)  merge with or consolidate into any corporation, firm or entity, or sell
       or otherwise dispose of all or substantially all of its assets;

(iv)   increase the number of Directors above eight (8);

(v)    declare or pay any dividend or other distribution of cash, shares, or
       other assets to the Company's shareholders in their capacity as such; and

(f)    appoint or remove from office either of the Company's legal adviser
       and/or auditors.

     For the purposes of this Section 4 the holders of the Convertible
     Debentures shall be entitled to vote as if the Convertible Debentures held
     thereby have been converted into Series C-2 Preferred Shares at a
     conversion price of $10 per share.

5.     Expenses
       --------

       The Company shall reimburse its members of the Board of Directors for
       overseas expenses incurred by directors in connection with overseas
       travel in order to participate in the Board of Directors meetings.

6.     Miscellaneous
       -------------

       6.1. Further Assurances
            ------------------

            Each of the parties hereto shall perform such further acts and
            execute such further documents as may reasonably be necessary to
            carry out and give full effect to the provisions of this Agreement
            and the intentions of the parties as reflected thereby.

       6.2. Governing Law; Jurisdiction
            ---------------------------
<PAGE>

                                      -20-


            This Agreement shall be governed by and construed according to the
            laws of the State of Israel, without regard to the conflict of laws
            provisions thereof. Any dispute arising under or in relation to this
            Agreement shall be resolved exclusively in the competent court for
            Tel Aviv-Jaffa district, and each of the parties hereby submits
            irrevocably to the exclusive jurisdiction of such court for any such
            dispute.

       6.3. Successors and Assigns; Assignment
            ----------------------------------

            Except as otherwise expressly limited herein, the provisions hereof
            shall inure to the benefit of, and be binding upon, the successors,
            assigns, heirs, executors, and administrators of the parties hereto.
            None of the rights, privileges, or obligations set forth in, arising
            under, or created by this Agreement may be assigned or transferred
            without the prior consent in writing of each party to this
            Agreement, with the exception of (a) assignments and transfers
            between the Investors, (b) assignments and transfers from an
            Investor to any other entity which controls, is controlled by or is
            under common control with, such Investor, (c) as to any Investor
            which is a partnership, in addition, assignments and transfers to
            its partners and to affiliated partnerships managed by the same
            management company or managing general partner or by an entity which
            controls, is controlled by, or is under common control with, such
            management company or managing general partner; (d) as to any
            shareholder's partner which is a limited liability company,
            following assignments and transfers by such shareholder to its
            partners which are limited liability companies, such limited
            liability companies may make assignments and transfers to such
            limited liability companies' respective members, or (e) as to GE
            Capital, any permitted transferee pursuant to Section 2.3 of the
            Shareholders Agreement; provided, however, that any
            transfers/assignment according to (c) and (d) above shall be
            permissible only provided that all said partners and company members
            of such partners nominate a single individual or a single entity as
            their representative to serve as such until the Company's IPO, with
            respect to all their affairs with the Company, which representative
            shall be their proxy and agent until the IPO to act in their name in
            all matters related to their rights as shareholders in the Company
            and provided further that any assignment of any rights or
            obligations by any of the parties to this Agreement to any assignee
            shall be permissible only if the party assigning rights or
            obligations has transferred all of the shares of the Company held by
            it/him to such assignee.

            Notwithstanding anything contained in this Agreement to the
            contrary, in the event GE Capital transfers more than 256,410
            Ordinary Shares (or Series C-1 Preferred Shares or warrants
            convertible or exercisable for such number of Ordinary Shares) to
            any person or entity (other than to a permitted transferee pursuant
            to Section 2.3 of the Shareholders Agreement), such transferee may,
            at the request of GE Capital, upon execution of appropriate
            documentation, become a party to this
<PAGE>

                                      -21-


            Agreement, with all the rights and obligations of a holder of the
            class (or classes) of securities then held by it (but without any of
            the rights specifically provided herein only to GE Capital), and
            such transferee and its subsequent transferees shall have the same
            right to transfer its rights hereunder to any transferee of all of
            its securities issued by the Company.

       6.4. Entire Agreement; Amendment and Waiver
            --------------------------------------

            This Agreement and the Schedules hereto constitute the full and
            entire understanding and agreement between the parties or any of
            them and supersedes any prior agreement between the parties or any
            of them with regard to the subject matters hereof and thereof. Any
            term of this Agreement may be amended and the observance of any term
            hereof may be waived (either prospectively or retroactively and
            either generally or in a particular instance) only following written
            notice to all of the Investors and with the written consent of (a)
            Investors holding at least ninety percent (90%) in interest of the
            Ordinary Shares (not including Ordinary Shares received upon
            conversion of Preferred Shares), (b) Investors holding at least
            ninety percent (90%) in interest of the Preferred A Shares and
            Preferred B Shares (including all Ordinary Shares received upon
            conversion of Preferred A Shares and Preferred B Shares), (voting
            together as a single class), and (c) Investors holding at least
            ninety percent (90%) in interest of the Preferred C Shares
            (including all Ordinary Shares received upon conversion of Preferred
            C Shares).

       6.5. Notices
            -------

            All notices and other communications required or permitted hereunder
            to be given to a party to this Agreement shall be in writing and
            shall be telecopied or mailed by registered or certified mail,
            postage prepaid, or otherwise delivered by hand or by messenger if
            sent to an address within Israel, or by Courier Service (such as
            Federal Express) if sent to an address outside of Israel, addressed
            to such party's address as set forth below or at such other address
            as the party shall have furnished to each other party in writing in
            accordance with this provision:


               if to the 1996 Investors: to the addresses set forth in Schedule
               1

               if to the 1998 Investors: to the addresses set forth in Schedule
               2.

               if to the 1999 Investors: to the addresses set forth in Schedule
               3.

               if to the New Investors: to the address set forth in Schedule 4.

               if to the Founders:   to the addresses set forth in Schedule 5.

               if to the Company:    RTS Software Ltd.
                                     Science Based Industries Campus
                                     P.O. Box 23504, Jerusalem 91230, Israel
<PAGE>

                                      -22-


                                     Facsimile: 972-2-5815-507

            or such other address with respect to a party as such party shall
            notify by ten (10) days advance written notice to each other party
            in writing as above provided. Any notice sent in accordance with
            this Section 6.5 shall be effective (i) if mailed five (5) business
            days after mailing, (ii) if sent by messenger, upon receipt, and
            (iii) if sent via telecopier, upon transmission and electronic
            confirmation of receipt or (if transmitted and received on a non-
            business day on the first business day following transmission and
            electronic confirmation of receipt).

       6.6. Delays or Omissions
            -------------------

            No delay or omission to exercise any right, power, or remedy
            accruing to any party upon any breach or default under this
            Agreement, shall be deemed a waiver of any other breach or default
            theretofore or thereafter occurring. Any waiver, permit, consent, or
            approval of any kind or character on the part of any party of any
            breach or default under this Agreement, or any waiver on the part of
            any party of any provisions or conditions of this Agreement, must be
            in writing and shall be effective only to the extent specifically
            set forth in such writing. All remedies, either under this Agreement
            or by law or otherwise afforded to any of the parties, shall be
            cumulative and not alternative.

       6.7. Severability
            ------------

            If any provision of this Agreement is held by a court of competent
            jurisdiction to be unenforceable under applicable law, then such
            provision shall be excluded from this Agreement and the remainder of
            this Agreement shall be interpreted as if such provision were so
            excluded and shall be enforceable in accordance with its terms;
            provided, however, that in such event this Agreement shall be
            --------
            interpreted so as to give effect, to the greatest extent consistent
            with and permitted by applicable law, to the meaning and intention
            of the excluded provision as determined by such court of competent
            jurisdiction.

       6.8. Counterparts
            ------------

            This Agreement may be executed in any number of counterparts, each
            of which shall be deemed an original and enforceable against the
            parties actually executing such counterpart, and all of which
            together shall constitute one and the same instrument.

       6.9. Administration of Certain Investors
            -----------------------------------

            For purposes of administrative simplicity, any right of the STAR
            Investors (as defined in Schedule 1), hereunder shall be exercised
            by SVM STAR Venture Capital Management Ltd. ("SVM"), and each of the
            STAR Investors hereby appoints SVM as its agent and proxy for such
            purposes. For purposes of determining the availability of any right

<PAGE>

                                      -23-


            or the applicability of any limitation under this Agreement, all
            Ordinary Shares or Preferred Shares, as the case may be, held by any
            of the STAR Investors (as defined in Schedule 1) and any transferee
            of any STAR Investor permitted under Section 8.3 of that certain
            Share Purchase Agreement dated as of February 26, 1998 entered into
            by and among the purchasers detailed in Schedule 1.1 to that
            agreement and the Company, shall be aggregated and the STAR
            Investors and any such transferees be viewed as a single Investor.
            For purposes of determining the availability of any right or the
            applicability of any limitation under this Agreement, all Ordinary
            Shares or Preferred Shares, as the case may be, held by Clal Venture
            Capital Ltd., Clalit Capital Fund, Clal Industries and Investments
            and by Clal Electronics Industries Ltd. and any assignee thereof
            shall be aggregated and the Clal Investors (as defined in Schedule
            1) and any such transferee be viewed as a single Investor. For
            purposes of determining the availability of any right or
            applicability of any limitation under this Agreement, all Ordinary
            Shares or Preferred Shares, as the case may be, held by Jerusalem
            Pacific Ventures (1994) Ltd. and Unicycle Trading Company and any
            assignee thereof shall be aggregated and the JPV Investors (as
            defined in Schedule 1) and any such transferees be viewed as a
            single Investor and for the purposes of administrative simplicity
            any rights of the JPV Investors (as defined in Schedule 1) hereunder
            shall be exercised by Jerusalem Pacific Ventures (1994) L.P. and
            Unicycle Trading Company hereby appoints Jerusalem Pacific Ventures
            (1994) L.P. as its agent and proxy for such purposes. For purposes
            of determining the availability of any right or the applicability of
            any limitation under this Agreement, all Ordinary Shares or
            Preferred Shares, as the case may be, held by Bessemer Venture
            Investors L.P., Bessemer Venture Partners IV L.P. or Bessec Ventures
            IV L.P., and any assignee of Bessemer Venture Investors L.P.,
            Bessemer Venture Partners IV L.P. or Bessec Ventures IV L.P., shall
            be aggregated and the Bessemer Investors (as defined in Schedule 2)
            and any such transferees be viewed as a single Investor and for the
            purposes of administrative simplicity any rights of the Bessemer
            Investors (as defined in Schedule 2) hereunder shall be exercised by
            Bessemer Venture Partners IV L.P. and each of the Bessemer Investors
            hereby appoints Bessemer Venture Partners IV L.P. as its agent and
            proxy for such purposes. For purposes of determining the
            availability of any right or applicability of any limitation under
            this Agreement, all Ordinary Shares or Preferred Shares, as the case
            may be, held by GE Capital or any permitted transferee thereof
            pursuant to Section 2.3 of the Shareholders Agreement, shall be
            aggregated and viewed as a single investor and for the purposes of
            administrative simplicity any rights of such Investors hereunder
            shall be exercised by GE Capital. For the purpose of determining the
            availability of any right or the applicability of any limitation
            under this Agreement, all Ordinary Shares and Preferred Shares held
            by any of Eucalyptus Ventures L.P., Eucalyptus Ventures (Cayman)
            L.P., Eucalyptus Ventures Affiliate Fund L.P., Eucalyptus Ventures
            (Israel) L.P. and Access Technology
<PAGE>

                                      -24-


            Partners L.P. and their permitted assignees shall be aggregated and
            the Eucalyptus Investors (as defined in Schedule 3) and any such
            permitted assignees shall be viewed as a single Investor and for the
            purposes of administrative simplicity, any rights of the Eucalyptus
            Investors (as defined in Schedule 3) hereunder shall be exercised by
            Eucalyptus Venture Management LLC and each of the Eucalyptus
            Investors hereby appoints Eucalyptus Venture Management LLC as its
            agent and proxy for such purposes.

    6.10.   Titles, Subtitles, Preamble and Schedules
            -----------------------------------------

            The titles and subtitles used in this Agreement are used for
            convenience only and are not to be considered in construing or
            interpreting this Agreement. The preamble and Schedules are an
            integral and inseparable part of this Agreement.

    6.11.   Prior Agreement
            ---------------

            This Agreement supersedes the 1999 Amendment and Restatement to
            Investors Rights Agreement, Second 1998 Amendment and Restatement to
            Investors Rights Agreement, the Amendment and Restatement to the
            Investors Rights Agreement dated as of February 27, 1998 and the
            Investors Rights Agreement dated as of September 30, 1996, among the
            Company and certain of the Investors (and their predecessors in
            interest).


                     [THIS SPACE INTENTIONALLY LEFT BLANK]
<PAGE>

                                      -25-


IN WITNESS WHEREOF the parties have signed this Agreement as of the date first
hereinabove set forth.

RTS Software Ltd.

By:  _______________________________



____________________________________
Clal Industries and Investments Ltd.

By:  _______________________________


____________________________________
Clal Electronics Industries Ltd.

By:  _______________________________


____________________________________
The Challenge Fund - Etgar II L.P.

By:  _______________________________


____________________________________
Koonras Technologies Ltd.

By:  _______________________________


____________________________________
Dubfam Investments Ltd.

By:  _______________________________


____________________                    ___________________
Eucalyptus Ventures L.P.                Eucalyptus Ventures (Cayman) L.P.
by its General Partner Eucalyptus       by its General Partner Eucalyptus
Venture Management L.L.C.               Venture Management L.L.C.


____________________                    ___________________
Eucalyptus Ventures (Israel) L.P.       Eucalyptus Ventures Affiliate Fund L.P.
by its General Partner Eucalyptus       its General Partner Eucalyptus
Venture Management L.L.C.               Venture Management L.L.C.


                                          Bessemer Venture Partners IV L.P.
GE Capital Equity Holdings, Inc.
<PAGE>

                                      -26-


By_______________________________       By        Deer IV & Co. LLC

  Bessemer Venture Investors L.P.       By: _______________________________

by        Deer IV & Co. LLC
by_______________________________

                                        ___________________________________
_________________________________         Bessec Ventures IV L.P.
Link Technologies Venture Capital
1 LLC.

by_______________________________
                                        by        Deer IV & Co. LLC
                                        by_________________________________


_________________________________       ___________________________________
SVE STAR Ventures Enterprises           SVE STAR Ventures Enterprises No
No III, A German Civil Law              IIIa, a German Civil Law Partnership
Partnership (with Limitation of         (with Limitation of liability)
liability)
By: SVM STAR Ventures                   By: SVM STAR Ventures
Management GMBH No.3                    Management GMBH No.3

by:______________________________       by: _______________________________


_________________
SVM STAR Ventures                       ___________________________________
Managementgesellschaft mbH              SVE STAR Ventures Enterprises No
No.3 & Co Beteiligungs KG               V,A German Civil Law partnership
                                        (with Limitation of liability)
By: SVM STAR Ventures
Management GMBH No.3                    By: SVM STAR Venture
                                        Management GMBH No.3

by:______________________________
                                        by:________________________________

                                        _____________________
                                        SVM Star Venture Management
                                        GmbH No.3

                                        by:________________________________

_________________________________       ___________________________________
Jerusalem Pacific Ventures (1994)       Clal Venture Capital L.P..
<PAGE>

                                      -27-


L.P.

by:___________________________          by:______________________________


______________________________
Unicycle Trading Company L.P.

by:___________________________

______________________________          _________________________________
Clalit Capital Fund L.P.                Advanced Technology Ventures IV
                                        L.P.

by:___________________________          by:______________________________


______________________________
STAR Management of Investments
 (1993) Limited Partnership

by:___________________________


______________________________          _________________________________
One Liberty Fund III L.P.               Gilde IT Fund B.V.

By:___________________________          By:______________________________


______________________________          _________________________________
Leumi & Co. Investment Bankers          Inter Cosma Ltd.
Ltd.

by:___________________________          by:______________________________


______________________________          _________________________________
Courses Technology Investments          Steps Technology Investments Ltd.
Ltd.

by:___________________________          by:______________________________



        ____________________                   _____________________
           Samuel HaCohen                      Sequel Technology Ltd.


        ____________________            by:______________________________
<PAGE>

                                      -28-

            Shimon Katz

        ____________________                   _____________________
            Yizhak Chemo                       Vladimir Morgernstern



________________________________        __________________________________
Hambrecht & Quist California            Hambrecht & Quist Employee Venture
by its                                  Fund, L.P. II
                                        by its General Partner Hambrecht &
                                        Quist Venture Management, L.L.C.

________________________________        __________________________________
Access Technology Partners, L.P.        Access Technology Partners Brokers
by its General Partner Access           Fund, L.P.
Technology Management, L.L.C.           by its General Partner Hambrecht &
and by its Managing Member              Quist Venture Management L.L.C.
Hambrecht & Quist Venture
Management, L.L.C.


________________________________        __________________________________
Hambrecht & Quist RTS Software          Migdal Eshcol Financim Ltd.
Investors, LLC
By:_____________________________        By:_______________________________
<PAGE>

                                      -29-


                                   SCHEDULE 1

                               THE 1996 INVESTORS

SVE STAR Ventures Enterprises No III , A German Civil Law Partnership (with
Limitation of liability);
Possartsrasse 9
D-81679 Munich, Germany

SVE STAR Ventures Enterprises No IIIa, a German Civil Law Partnership (with
Limitation of liability)
Possartsrasse 9
D-81679 Munich, Germany

SVM Star Venture Management GmbH No.3
Possartsrasse 9
D-81679 Munich, Germany

SVM STAR Ventures Managementgesellschaft mbH No.3 & Co. Beteiligungs KG
Possartsrasse 9
D-81679 Munich, Germany

SVE STAR Ventures Enterprises No. V, A German Civil Law partnership (with
Limitation of liability)
Possartsrasse 9
D-81679 Munich, Germany

STAR Management of Investments (1993) Limited Partnership
11 Galgalei Haplada St., Herzelia Pituach

(the "STAR Investors")

Clal Venture Capital L.P.
Clal Building,
Kiriat Atidim,
Tel Aviv, Israel
("Clal Venture Capital")

Clalit Capital Fund L.P.
Clal Building,
Kiriat Atidim,
Tel Aviv, Israel
("Clalit")
<PAGE>

                                      -30-


Jerusalem Pacific Ventures (1994) L.P.
505 Sansome St. (15th floor)
San francisco, CA 94111

Unicycle Trading Company L.P.
611 No. Oakhurst Drive
Beverly Hills, CA 90210

(hereinafter the "JPV Investors")

Advanced Technology Ventures IV L.P.
485 Ramona St. (Suite 200)
Palo Alto, CA 94301
("ATV")

One Liberty Fund III L.P.
Newtonlaan 91, PO Box 85067, the Netherlands

Gilde IT Fund B.V.
Newtonlaan 91, PO Box 85067, the Netherlands

Leumi & Co. Investment Bankers Ltd.
25 Kalisher St. Tel Aviv

InterCosma Ltd.
Atarot PO Box 1365, Jerusalem

Courses Technology Investments Ltd.
9 Achad Haam St., Tel Aviv

Steps Technology Investments Ltd.
9 Achad Haam St., Tel Aviv
<PAGE>

                                      -31-



                                  SCHEDULE 2

                              THE 1998 INVESTORS



GE Capital Equity Holdings, Inc.
120 Long Ridge Road
Stamford CT 06927
USA

(hereinafter "GE Capital")

Bessemer Venture Investors L.P.
c/o Bessemer Venture Partners
1025 Old County Road, Suite 205
Westbury, NY
11590 USA

Bessemer Venture Partners IV L.P.
1025 Old County Road, Suite 205
Westbury, NY
11590 USA

Bessec Ventures IV L.P.
c/o Bessemer Venture Partners
1025 Old County Road, Suite 205
Westbury, NY
11590 USA

(hereinafter: the "Bessemer Investors")

Link Technologies Venture Capital I LLC.
200 West Ninth Street Plaza, Wilmington
Delaware 19801, USA

SVE STAR Ventures Enterprises No III, A
German Civil Law Partnership
(with Limitation of liability);
Possartsrasse 9
D-81679 Munich, Germany

SVE STAR Ventures Enterprises No IIIa, a
German Civil Law Partnership
(with Limitation of liability)
Possartsrasse 9
D-81679 Munich, Germany

SVM Star Venture Management GmbH No.3
Possartsrasse 9
<PAGE>

                                      -32-

D-81679 Munich, Germany

SVM STAR Ventures Managementgesellschaft
mbH No.3 & Co. Beteiligungs KG
Possartsrasse 9
D-81679 Munich, Germany

SVE STAR Ventures Enterprises No. V,A
German Civil Law partnership (with Limitation
of liability)
Possartsrasse 9
D-81679 Munich, Germany

STAR Management of Investments (1993)
Limited Partnership
11 Galgalei Haplada St., Herzelia Pituach

(the "STAR Investors")

Clal Venture Capital L.P.
Clal Building
Kiriat Atidim,
Tel Aviv, Israel

Clalit Capital Fund L.P.
Clal Building
Kiriat Atidim,
Tel Aviv, Israel

Jerusalem Pacific Ventures (1994) L.P.
505 Sansome St. (15th floor)
San francisco, CA 94111

Advanced Technology Ventures IV L.P.
485 Ramona St. (Suite 200)
Palo Alto, CA 94301

Gilde IT Fund B.V.
Newtonlaan 91, PO Box 85067, the Netherlands

Courses Technology Investments Ltd.
9 Achad Haam St., Tel Aviv

Steps Technology Investments Ltd.
9 Achad Haam St., Tel Aviv
<PAGE>

                                      -33-

                                  SCHEDULE 3

                              THE 1999 INVESTORS


Eucalyptus Ventures L.P.
c/o Eucalyptus Venture Management L.L.C.
46 Rothschild Blvd.
Tel Aviv 66883
Israel

Eucalyptus Ventures (Cayman) L.P.
c/o Eucalyptus Venture Management L.L.C.
46 Rothschild Blvd.
Tel Aviv 66883
Israel

Eucalyptus Ventures (Israel) L.P.
c/o Eucalyptus Venture Management L.L.C.
46 Rothschild Blvd.
Tel Aviv 66883
Israel

Eucalyptus Ventures Affiliate Fund L.P.
c/o Eucalyptus Venture Management L.L.C.
46 Rothschild Blvd.
Tel Aviv 66883
Israel

Hambrecht & Quist California
One Bush Street
San Francisco, CA 94104
United States

Hambrecht & Quist Employee Venture Fund L.P. II
One Bush Street
San Francisco, CA 94104
United States

Access Technology Partners, L.P.
One Bush Street
San Francisco, CA 94104
United States

Access Technology Partners Brokers Fund L.P.
One Bush Street
San Francisco, CA 94104
United States
<PAGE>

                                      -34-

Hambrecht & Quist RTS Software Investors, LLC
One Bush Street
San Francisco, CA 94104
United States

Samuel HaCohen
15 Ben Zeev St., Jerusalem

Leumi & Co. Investment Bankers Ltd.
25 Kalisher St. Tel Aviv

Advanced Technology Ventures IV L.P.
485 Ramona St. (Suite 200)
Palo Alto, CA 94301

Link Technologies Venture Capital I LLC.
200 West Ninth Street Plaza, Wilmington
Delaware 19801, USA

Bessemer Venture Partners IV L.P.
1025 Old County Road, Suite 205
Westbury, NY
11590 USA

Bessec Ventures IV L.P.
c/o Bessemer Venture Partners
1025 Old County Road, Suite 205
Westbury, NY
11590 USA

GE Capital Equity Holdings, Inc.
120 Long Ridge Road
Stamford CT 06927
USA
<PAGE>

                                      -35-

                                  SCHEDULE 4

                               THE NEW INVESTORS



Clal Electronics Industries Ltd.
Clal Building,
Kiriat Atidim,
Tel Aviv, Israel

Clal Industries and Investments Ltd.
Clal Building,
Kiriat Atidim,
Tel Aviv, Israel

Clalit Capital Fund L.P.
Clal Building,
Kiriat Atidim,
Tel Aviv, Israel

(collectively with Clal Venture Capital, the "Clal Group" or the "Clal
Investors")

The Challenge Fund-Etgar II L.P.
1 Ha'shikma Street
Savyon, Israel 56530

Koonras Technologies Ltd.
21 Ha'arba'a Street,
Tel Aviv, Israel

Dubfam Investments Ltd.
284 Musgrave Road, Berea,
Durban, South Africa

InterCosma Ltd
Atarot PO Box 1365, Jerusalem

Migdal Eshcol Financim Ltd.
26 Saadia Gaon Street
Tel Aviv, Israel

Jerusalem Pacific Ventures (1994) L.P.
505 Sansome St. (15th floor)
San francisco, CA 94111

Unicycle Trading Company L.P.
611 No. Oakhurst Drive
<PAGE>

                                      -36-

Beverly Hills, CA 90210

Advanced Technology Ventures IV L.P.
485 Ramona St. (Suite 200)
Palo Alto, CA 94301

Link Technologies Venture Capital I LLC
200 West Ninth Street Plaza, Wilmington
Delaware  19801, USA

Bessemer Venture Partners IV L.P.
1025 Old County Road, Suite 205
Westbury, NY
11590 USA

Bessemer Venture Investors L.P.
c/o Bessemer Venture Partners
1025 Old County Road, Suite 205
Westbury, NY
11590 USA

Bessec Ventures IV L.P.
c/o Bessemer Venture Partners
1025 Old County Road, Suite 205
Westbury, NY
11590 USA

GE Capital Equity Holdings, Inc.
120 Long Ridge Road
Stamford CT 06927
USA

Eucalyptus Ventures L.P.
c/o Eucalyptus Venture Management L.L.C.
46 Rothschild Blvd.
Tel Aviv 66883
Israel

Eucalyptus Ventures(Cayman) L.P.
c/o Eucalyptus Venture Management L.L.C.
46 Rothschild Blvd
Tel Aviv 66883
Israel

Eucalyptus Ventures (Israel) L.P.
c/o Eucalyptus Venture Management L.L.C.
46 Rothschild Blvd.
Tel Aviv 66883
Israel
<PAGE>

                                      -37-

Eucalyptus Ventures Affiliate Fund L.P.
c/o Eucalyptus Venture Management L.L.C.
46 Rothschild Blvd.
Tel Aviv 66883
Israel

Hambrecht & Quist California
One Bush Street
San Francisco, CA 94104
United States

Hambrecht & Quist Employee Venture Fund L.P. II
One Bush Street
San Francisco, CA 94104
United States

Access Technology Partners, L.P.
One Bush Street
San Francisco, CA 94104
United States

Access Technology Partners Brokers Fund L.P.
One Bush Street
San Francisco, CA 94104
United States

Hambrecht & Quist RTS Software Investors, LLC
One Bush Street
San Francisco, CA 94104
United States
<PAGE>

                                      -38-

                                  SCHEDULE 5

                                 THE FOUNDERS


Samuel HaCohen
15 Ben Zeev St., Jerusalem

Vladimir Morgenstern
26 Lohamei Hagetaot St., Jerusalem

Yitzhak Chemo
24 David Meretz St., Jerusalem

Shimon Katz
54 Shmaryahu Levin St., Jerusalem

Sequel Technology Ltd.
c/o Hayman Friedlander
4 Hapalmah St., Kiriat Ono