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                                                                    EXHIBIT 4.01

                        PRECISE SOFTWARE SOLUTIONS LTD.,
                      1995 SHARE OPTION AND INCENTIVE PLAN

1.       Purpose & Construction

         1.1      The purpose of the Precise Software Solutions Limited 1995
                  Share Option and Incentive Plan (the "Plan") is to afford an
                  incentive to directors, officers, key employees and
                  consultants of Precise Software Solutions Limited (the
                  "Company"), and any subsidiary of the Company which now exists
                  or hereafter is organized or acquired by the Company, to
                  acquire a proprietary interest in the Company, to continue as
                  employees, to increase their efforts on behalf of the Company
                  and to promote the success of the Company's business.

         1.2      It is further intended that options granted by the Company to
                  its salaried employees and the optioned shares shall each
                  constitute "Shares" within the meaning of the Tax Rules (as
                  hereinafter defined).

2.       Definitions

         As used in the Plan, the following words and phrases shall have the
         meanings indicated opposite each of them, respectively:

         2.1      "Subsidiary" -- any company which is directly or indirectly
                  owned and/or controlled by the Company;

         2.2      "Shares" -- ordinary Shares of 0.02 N.I.S. each in the
                  Company;

         2.3      "Grantee" -- any person eligible to participate in the Plan;

         2.4      "Employee" -- a Grantee who is a salaried employee of the
                  Company proper;

         2.5      "Employment Agreement" -- the employment agreement entered
                  into between the Company (or a Subsidiary, as the case may be)
                  and a Grantee;

         2.6      "Disability" -- the inability of a Grantee to engage in any
                  substantial gainful activity by reason of any medically
                  determinable physical or mental impairment that can be
                  expected to result in death or that has lasted or can be
                  expected to last for a continuous period of not less than
                  twelve (12) months;

         2.7      "Option"(s) -- a grant to a Grantee of an option(s) to
                  purchase the Shares;

         2.8      "Optioned Shares" -- the Shares to which an option relates;

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         2.9      "Transfer of Control" -- the closing of a sale, by way of
                  private offering or otherwise, in terms of which at least
                  50.1% (fifty and one tenth of a percent) of the total combined
                  voting power of all classes of shares of the Company are
                  transferred from those shareholders who were holding such
                  voting power on the date the Plan was first implemented;

         2.10     "Tax Rules" -- the provisions set forth in Chapter B, part E,
                  section 102 of the Income Tax Ordinance (New Version), 1961
                  and in the Income Tax Rules (Income Tax Abatement on Allotment
                  of Shares To Employees), 1989;

         2.11     "Trustee" -- the trustee designated by the Company and (to
                  the extent required by the Tax Rules) approved by the Income
                  Tax Commissioner;

         2.12     "Restricted Period" -- the applicable period specified in the
                  Employment Agreement, which period, with respect to an
                  Employee, shall not be shorter than 24 months from the date on
                  which an Option was initialls Granted.

3.       Administration

         The Plan shall be administered by a committee (the "Committee,)
         established by the Board of Directors of the Company.

4.       Eligibility

         Persons designated by the Committee, shall be eligible to be granted
         Options hereunder. In determining the persons to whom Options shall be
         granted and the number of the Optioned Shares, the Committee, in its
         sole discretion, shall take into account the contribution by the
         eligible individuals to the management, growth and profitability of the
         business of the Company and such other factors as the Committee shall
         deem relevant.

5.       Shares

         5.1      The maximum number of Shares reserved for the grant of Options
                  under the Plan shall be determined by the Committee.

         5.2      If any outstanding Option should, for any reason expire, be
                  cancelled, or be terminated without having been exercised in
                  full, the Optioned Shares allocable to the unexercised,
                  cancelled or terminated portion of such option shall become
                  available for subsequent grants of Options to other Grantees.

6.       Terms & Conditions of Options

         Each Option granted pursuant to the Plan shall be evidenced by
         appropriate provisions in the applicable Employment Agreement, which
         provisions shall state the number of the Optioned Shares, the date(s)
         on which an option may be exercised and term of the Restricted Period.
         In addition, each Option shall be subject to the following terms and

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         conditions as well as such other terms and conditions, not inconsistent
         with the Plan, as the Committee may determine:

         6.1      the Option Price shall be a sum expressed in Israeli currency
                  as determined by the Committee.

         6.2      the manner of payment of the Option Price shall be in cash, at
                  the time of exercise of the Option;

         6.3      the term and the exercisability of options shall be as
                  described in Section 7 below.

7.       Exercisability of Options

         7.1      Options may be exercised, as to any or all of the Optioned
                  Shares, by giving written notice of such exercise to the
                  Committee or to its designated agent.

         7.2      Each Option may be exercised in one or in several cumulative
                  installments as specified in the Employment Agreement.

         7.3      Options must be exercised within 10 (ten) calendar years of
                  the date of their grant (hereinafter "the exercise Period").
                  Options not exercised within the Exercise Period shall be null
                  & void.

         7.4      Except as provided in Section 7.5 hereof, an Option may not be
                  exercised unless the Grantee (i) is then in the employment of
                  the Company or of a Subsidiary, and (ii) has remained
                  continuously so employed since the date of grant of the
                  Option.

         7.5      7.5.1    If a Grantee shall die while employed by the Company
                           or by a Subsidiary, or if the Grantee's employment
                           shall terminate by reason of Disability, all Options
                           theretofore granted to such Grantee (to the extent
                           otherwise exercisable) may, unless earlier terminated
                           in accordance with their terms, be exercised by the
                           Grantee or by the Grantee's estate or by a person who
                           acquired the right to exercise such Options by will
                           or inheritance or otherwise by reason of the death or
                           Disability of the Grantee. In the event that an
                           Option granted hereunder shall be exercised by the
                           legal representatives of a deceased or a disabled
                           Grantee, written notice of such exercise shall be
                           accompanied by such proof of the right of such legal
                           representative to exercise the applicable Option, as
                           the Committee shall reasonably require.

                  7.5.2    Upon the termination of employment (other than by
                           reason of retirement), a Grantee shall be entitled to
                           exercise the outstanding Options, within 30 days from
                           the day his employment has ended, regardless of the
                           reasons for the termination of employment.

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                  7.5.3    Upon reaching the age of retirement a Grantee shall
                           be entitled to exercise the then outstanding Options,
                           within 3 months from the last day of his employment.

8.       Non-transferability of Options

         Except as provided in Section 7.5.1 above, Options may not be sold,
         assigned, transferred, pledged, mortgaged or otherwise disposed of, and
         may be exercised, during the lifetime of the Grantee, only by the
         Grantee, or -- in the circumstances described in Section 9.2
         hereinafter -- only by the Trustee.

9.       Restricted Period

         9.1      During the Restricted Period, all the rights of the Grantee
                  to, and in, the Option and in the Optioned Shares shall be
                  vested in the Trustee.

         9.2      Options granted to Employees and exercisable within the
                  Restricted Period may be exercised only by the Trustee who
                  shall act upon the instructions of the Grantee.

         9.3      Shares issued in consequence of any Option exercised during
                  the Restricted Period shall be registered in the name of the
                  Trustee.

         9.4      For so long as the Shares remain registered in the name of the
                  Trustee, or until such time as the Grantee shall pay the full
                  amount of tax due in accordance with any applicable law (the
                  "Tax"), whichever occurs later, the Shares may not be sold,
                  assigned, transferred, pledged, mortgaged or otherwise
                  disposed of, except when transmitted by succession or by any
                  other applicable law.

         9.5      Certificates of Shares issued to the Trustee shall bear the
                  following legend:

                           "THESE SHARES MAY NOT BE SOLD, ASSIGNED, TRANSFERRED,
                           PLEDGED, MORTGAGED OR OTHERWISE DISPOSED OF, EXCEPT
                           IN ACCORDANCE WITH THE TERMS OF THE SHARE OPTION AND
                           INCENTIVE PLAN DEPOSITED AT THE COMPANY'S OFFICE."

                  and any attempt to dispose of any such Shares in contravention
                  of the aforementioned restrictions shall be null, void and
                  without effect.

         9.6      During the Restricted Period, the Grantee shall have the right
                  to receive dividends payable with respect to, and to vote, the
                  Shares held by the Trustee. To this end, the Trustee shall
                  remit to the Grantee all the dividends received from the
                  Company immediately upon their first receipt and shall supply
                  the Grantee, from time to time, with the necessary proxies to
                  enable the Grantee to participate at the General Meetings of
                  the Company and to vote thereat.

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         9.7      Each Grantee who is an Employee shall confirm to the Company
                  and to the Trustee, in writing: (i) his consent to the terms
                  and conditions of the Plan, and (ii) his waiver of any claim
                  to a tax exemption pursuant to Sections 95 or 97(a) of the
                  income Tax ordinance or under Chapter Seven of the Law for the
                  Encouragement of Industry (Taxes), 1969, with respect to the
                  transfer of the Shares within the Restricted Period.

         9.8      Upon the expiry of the Restricted Period and subject to any
                  other restrictions in terms of the Public Offering, the
                  Grantee shall be entitled to require the Trustee to transfer
                  the Shares to the Grantee (or to whom Grantee may designate),
                  provided that such transfer shall not take place unless and
                  until (i) the Grantee shall first pay the applicable Tax; and
                  (ii) such payment shall be evidenced by an appropriate
                  certificate provided to the Trustee by the Income Tax
                  Authorities.

         9.9      Any bonus shares issued by the Company with respect to the
                  Shares held by the Trustee shall be likewise registered in the
                  name of the Trustee and all the provisions of this Section 9
                  shall equally apply to such bonus shares.

         9.10     Without derogating from the provisions of this Section 9, the
                  Company shall be entitled to deduct from any cash emoluments
                  payable to the Grantee (by way of salary or otherwise) such
                  amounts of the Tax, if any, as may be required by law to be
                  withheld at source upon (or following) the exercise of an
                  Option and/or the issue of any Optioned Shares.

10.      Rights as a Shareholder

         A Grantee shall have no rights as a shareholder with respect to any
         optioned Shares until the date of the actual issuance of a Share
         certificate to him or to the Trustee (as the case may be).

         Notwithstanding the above, if prior to the exercise of any Option,
         there shall be declared and paid a dividend upon the Optioned Shares or
         the Optioned Shares will be split-up converted, exchanged, reclassified
         or in any way substituted for, or if bonus shares will be issued to
         shareholders, then the unexercised Option shall entitle the holder
         thereof, upon its future exercise, to such number and kind of shares or
         cash to which the Grantee would have been entitled, had he actually
         owned the shares at the time of said event.

         The terms of the Plan shall govern the issuance of any additional
         shares following the issuance of bonus shares or the split-up of
         shares.

         Notwithstanding any other provision of the Plan, in the event of a
         recapitalization, merger, consolidation, rights offering, separation,
         reorganization or liquidation, or any other change in the corporate
         structure or outstanding Shares, the Committee shall make such
         equitable adjustments to the number of Optioned Shares available
         hereunder or to any outstanding Option as it shall deem appropriate to
         prevent dilution or enlargement of rights.

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11.      No Rights to Employment

         11.1     Nothing in the Plan or in any agreement entered into pursuant
                  hereto, shall confer upon any Grantee the right to continue in
                  the employment of the Company or of any Subsidiary, or to
                  receive any remuneration or benefits not set forth in the Plan
                  or in such agreement, or to interfere with, or limit in any
                  way, the right of the Company or any such Subsidiary to
                  terminate such Grantee's employment.

         11.2     Options granted under the Plan shall not be affected by any
                  change in duties or position of a Grantee, as long as such
                  Grantee continues in the employment of the Company or of any
                  Subsidiary.