Document:

EXHIBIT 10.1
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                              EMPLOYMENT AGREEMENT
                              --------------------

            This Employment Agreement (the "Agreement") is made as of February
28, 2002, by and between Ben Nye (the "Executive") and Precise Software
Solutions, Inc. and any of its subsidiaries, divisions and affiliates (the
"Company"). The Agreement as amended supercedes the prior agreement dated
February 9, 2000.

            WHEREAS, the Executive and the Company deem it in their respective
best interests to enter into an agreement providing for the employment of the
Executive as the Company's Chief Financial Office ("CFO") and Chief Operating
Officer ("COO") subject to the terms and conditions hereinafter set forth; and

            WHEREAS, the Company agrees to use all the best efforts to recruit
in a timely manner a Chief Financial Officer ("CFO") who will assume all
financial roles and responsibilities on behalf of the company.

            THEREFORE, once the new CFO will join the Company, the Executive
will no longer serve as CFO and COO, but only as COO.

      NOW, THEREFORE, in consideration of the foregoing and the agreements
herein contained, the parties hereto hereby agree as follows:

1.    Employment. Subject to the terms and conditions set forth in this
      Agreement, the Company offers and the Executive hereby accepts employment
      in the role of CFO and COO, effective as of February 28, 2002 (the
      "Effective Date"). Once the new CFO will join the Company, the Executive
      will no longer serve as CFO and COO, but only as COO. The parties agree
      that such employment shall be full time and on an at-will basis, which
      means that either the Executive or the Company may, subject to the
      provisions of this Agreement, terminate the employment relationship (and
      this Agreement) at any time, for any or no reason, with or without cause,
      upon written notice to the other party. The term of this Agreement as from
      time to time may be modified and in effect, is hereafter referred to as
      "the term of his Agreement" or the "term hereof."

2.    Capacities and Performance. During the term hereof, the Executive shall
      serve the Company as its Chief Financial Officer and Chief Operating
      Officer. THEREFORE, once the new CFO will join the Company, the Executive
      will no longer serve as CFO and COO, but only as COO. The Executive shall
      report to the Company's CEO. The Executive shall comply with and perform,
      faithfully, diligently and to the best of his
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      ability, such directions and duties in relation to the business and
      affairs of the Company as may from time to time be vested in or requested
      of him by the Company. The Executive shall devote substantially all of his
      business time, attention and energies to the business of the Company as
      may from time to time be vested in or requested of him by the Company.
      Executive shall not work as an executive, independent consultant or agent
      for another entity, during the business hours of Precise, without the
      permission or Precise.

3.    Compensation and Benefits. As compensation for the satisfactory
      performance by the Executive of his duties and obligations hereunder to
      the Company and subject to the provisions of Section 5, the Executive
      shall receive:

      3.1   Base Salary. The Executive's initial base salary shall be paid a
            rate of $20,750 per month (the "Base Salary"). The Base Salary shall
            be payable in accordance with the customary payroll practices of the
            Company, but at least paid monthly, as may be established or
            modified from time to time and shall be subject to all applicable
            federal, state and/or local payroll and withholding taxes.

      3.2   Bonus.

            (a)   During the first year of employment the Company shall pay the
                  Executive a bonus of $37,000 per quarter for each fiscal
                  quarter end. All bonus payments will be subject to Company's
                  normal meritorious bonus practice described below based on
                  revenue and operating income attainment goals consistent with
                  those of the CEO and as described by 2002 MBO Plan approved by
                  the board

            (b)   Signing Bonus. None

      3.3   Stock Options.

            (a)   Subject to the approval by the Company's Board of Director
                  (the" Board") and subject to the terms, conditions and
                  restrictions of the Company's [1998 Share Option and Incentive
                  Plan] and a stock option agreement between the Company and the
                  Executive, the Executive shall be eligible to be granted
                  options, as established by and at the sole discretion of the
                  Board, to purchase shares of Company's common stock at the
                  fair market value for each year of employment.

            (b)   Acceleration of Vesting of Option for Business Combinations -
                  Upon a Transfer of Control (as defined in the Plan), 50% of
                  the employee's total
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                  unvested shares shall, immediately prior to the consummation
                  of such Transfer of Control, become vested in accordance with
                  Section 3 of the option agreement and immediately exercisable
                  by the Employee. In addition to the above, upon (1) a closing
                  of a Transfer of Control and (2) the occurrence of a
                  Termination Event (as defined below), the remaining 50% of the
                  unvested shares subject to this option shall, immediately
                  exercisable by Employee.

                  A Termination Event is defined as the involuntary termination
                  of employment of the Employee within one (1) year after the
                  closing of a Transfer of Control other than under Disgraceful
                  Circumstances In addition, a Termination Event shall also
                  include the following if such event has occurred within one
                  (1) year after the closing of a Transfer of Control: (1)
                  reduction in salary or reduction in the level of benefits of
                  the Employee as in effect on the date immediately prior to the
                  closing of the Transfer of Control: (2) a diminution in the
                  nature of scope of the Employee's authority, duties or
                  responsibilities in effect immediately prior to the closing of
                  the Transfer of Control; or (3) change in location of the
                  principle office to which the Employee must report of greater
                  that 50 miles.

      3.4   Vacation. Subject to and in accordance with the Company's policy.
            The Executive shall be eligible for 15 days of paid vacation per
            calendar year.

      3.5   Benefits. Subject to any contribution therefore generally required
            of executives of the Company, the Executive will be eligible to
            participate in the Company's benefits plans to the same extent as,
            and subject to the same terms, conditions and limitations applicable
            to other executives of the Company in similar positions. Such
            participation shall be subject to (i) the terms of the applicable
            plan documents, (ii) generally applicable Company policies, and
            (iii) the discretion of the Company and/or the Board or any
            administrative or other committee provided for in or contemplated by
            such plan. The Company's current plans and policies shall govern all
            other benefits. The Company may alter, modify, add to, or delete its
            employee benefits plans and/or policies at any time as the Company
            and/or the Board, in their sole judgment, determines to be
            appropriate.

      3.6   Relocation. None
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      3.7   Business Expenses. The Company shall pay or reimburse the Executive
            for all reasonable business expenses incurred or paid by the
            Executive in the performance of his duties and responsibilities
            hereunder, subject to (i) any reasonable expense policy set by the
            Company as may be modified from time to time, and (ii) such
            reasonable substantiation and documentation requirements as may be
            specified by the Company from time to time.

4.    Termination of Employment. The Executive's employment and this Agreement
      shall terminate under the following circumstances:

      4.1   Death or Disability. In the event of the Executive's death or
            Disability (as defined herein) during the term hereof, the
            Executive's employment and this Agreement shall immediately and
            automatically terminate and the Company shall pay to the Executive
            (or in the case of death, the Executive's designated beneficiary, or
            if no beneficiary has been designated by Executive, his estate), any
            Base, pro rata bonus and pro rata vested options earned but unpaid
            through the date of death or Disability. For the purposes of this
            Agreement, "Disability" shall mean any physical incapacity or mental
            incompetence (i) as a result of which the Executive is unable to
            perform substantially all his duties responsibilities hereunder for
            an aggregate of 120 days, whether or not consecutive, during any
            calendar year, and (ii) which cannot be reasonably accommodated by
            the Company without material undue hardship. Any determination of
            disability shall be made by a qualified physician or physicians
            selected by the Company and the Executive. The failure of the
            Executive to submit to a reasonable examination by such physician
            shall constitute determination of a permanent Disability.

      4.2   By the Company because of Disgraceful Circumstances.

            (a)   The Company may terminate the Executive's employment and this
                  Agreement because of Disgraceful Circumstances at any time
                  during the term hereof. The Company shall thereafter have no
                  further obligation or liability to the Executive relating to
                  the Executive's employment or this Agreement, other that Base
                  Salary and pro rata bonus earned but unpaid and pro rata
                  vested shares through the date of termination.

            (b)   The following events or conditions shall constitute
                  "Disgraceful Circumstances" for termination (which shall
                  hereafter only referred to as
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                  "Dismissal for Cause"): (i) willful gross negligence, willful
                  misconduct or willful breach of fiduciary duty to the Company
                  and its subsidiaries (ii) commission of an act of embezzlement
                  or fraud; (iii) deliberate disregard of the rules or policies
                  of the Company, Precise Ltd. or any Subsidiary which results
                  in direct material loss, damage or injury to the Company,
                  Precise Ltd. or any Subsidiary, (iv) the unauthorized
                  disclosure of any trade secret or confidential information of
                  the Company, Precise Ltd. or any Subsidiary which materially
                  harms the Company.

      4.3   By the Company. The Company may terminate the Executive's employment
            and this Agreement at any time, for any or no reason, during the
            term hereof. In the event of such termination, the Executive will be
            entitled to a continuation, for twelve (12) months from the date of
            the Executive's termination of employment, of (i) his salary in an
            amount equal to the Executive's Base Salary (in effect at the time
            of such termination) and full bonus based on company results (ii)
            pro rata monthly vesting of options, and (iii) payment of premiums
            (in the same amount as of the Executive's date of termination) on
            the Executive's behalf to continue his health insurance, to the
            extent the Executive elects to continue such coverage in accordance
            with and pursuant to the Consolidated Omnibus Budget Reconciliation
            Act of 1985 ("COBRA").

      4.4   By the Executive. The Executive also may terminate this Agreement
            and/or his employment with the Company for any or no reason during
            the term hereof upon 15 days' prior notice to the Company. Upon
            receipt of such notice, the Company may accelerate the Executive's
            termination and pay to the Executive (i) an amount equivalent to his
            base monthly salary (at that time) and (ii) pro rata bonus based on
            company's results for the quarter prior to the date of termination.
            The Executive shall also be entitled to exercise his stock options
            only with respect to those options in which he was fully vested as
            of the effective date of his termination. In the event Executive's
            termination is accelerated under this provision, vesting of options
            shall continue through the next vesting date within the remainder of
            the 15-day notice period. The Company shall thereafter have no
            further obligation or liability to the Executive relating to the
            Executive's employment or this Agreement, other that for (1) any
            Base Salary earned but unpaid through the date of termination (2)
            pro rata bonus earned but unpaid based on company's results for the
            quarter prior to the date of termination. (3) Reimbursement for
            business expenses through the date of termination.
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                                       6

5.    Effect of Termination. The provisions of this Section 5 shall apply in the
      event of termination of this Agreement and/or the Executive's employment
      pursuant to Sections

      5.1   Payment in Full. Payment by the Company to the Executive of any Base
            Salary, bonus, vested stock options, related benefit and other
            compensation amounts shall constitute the entire obligation of the
            Company to the Executive, except that nothing in this Section 5.1 is
            intended or shall be construed to affect the rights and obligations
            of the Company, on the one hand, and the Executive, on the other,
            with respect to any loans, stock warrants, stock pledge
            arrangements, option plans or other agreements to the extent said
            rights or obligations survive the Executive's termination of
            employment under the provisions of documents relating thereto.

      5.2   Termination of Benefits. Except for any right of continuation of
            benefits coverage to the extent provided herein and/or provided by
            COBRA or other applicable law, benefits shall terminate pursuant to
            the terms of the applicable benefit plans as of the termination date
            of the Executive's employment without regard to any continuation of
            Base Salary or other payments to the Executive following such
            termination date.

      5.3   Cessation of Compensation and Benefits. . If the Executive
            materially breaches his obligations under this Agreement and/or the
            Confidentiality Agreement, the Company may immediately cease payment
            of all compensation, severance and benefits described in this
            Agreement. The cessation of these payments shall be in addition to,
            and not as an alternative to, any other remedies at law or in equity
            available to the Company, including the right to seek specific
            performance or an injunction.

6.    Survival of Certain Provisions. The obligations of the Executive under the
      Confidentiality Agreement expressly survive any termination of the
      Executive's employment for up to twelve months, regardless of the manner
      of such termination, or termination of this Agreement.

7.    Conflicting Agreements. The Executive and Company hereby warrants that the
      execution of this Agreement and the performance of obligations hereunder
      will not
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      breach or be in conflict with any other agreement to which or by which the
      Executive or Company is a party or is bound and that the Executive is not
      now subject to and will not enter into any covenants against competition
      or similar covenants that would affect the performance of his obligations
      hereunder. Moreover, where this Agreement conflicts with other of the
      Company's agreements the terms included in this agreement will be
      determinative.

8.    Withholding Taxes. All payments made by the Company under this Agreement
      shall be subject to and reduced by any federal, state and/or local taxes
      or other amounts required to be withheld by the Company under any
      applicable law.

9.    Miscellaneous.

      9.1   Assignment. The Executive shall not assign this Agreement or any
            interest herein. The company may assign this Agreement. No such
            assignment shall be deemed a "termination" of the Executive's
            employment within the meaning of Section 4. This Agreement shall
            inure to the benefit of and be binding upon the successors and
            assigns of the Company.

      9.2   Severability. The Executive and Company agrees that each provision
            and the subparts of each provision herein shall be treated as
            separate and independent clauses and the unenforceability of any one
            clause shall in no way impair the enforceability of any of the other
            clauses of the Agreement. Moreover, if one or more of the provisions
            contained in this Agreement shall for any reason be held to be
            excessively broad as to scope, activity, subject or otherwise so as
            to be unenforceable at law, such provision or provisions shall be
            construed by the appropriate judicial body by limiting or reducing
            it or them, so as to be enforceable to the maximum extent compatible
            with the applicable law as it shall then appear. The Executive and
            Company hereby further agrees that the language of all parts of this
            Agreement shall in all cases be construed as a whole according to
            its fair meaning and not strictly for or against either of the
            parties.

      9.3   Waiver Amendment. Any waiver by the Company of a breach of any
            provision of this Agreement shall not operate or be construed as a
            waiver of any subsequent breach of such provision or any other
            provision hereof. In addition, any amendment to or modification of
            this Agreement or any waiver of any provision hereof must be in
            writing and signed by the Company and the Executive.

      9.4   Notices. All notices, requests and other communications provided for
            by this Agreement shall be in writing and shall be effective when
            delivered in person on
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            four business days after being deposited in the mail of the United
            States, postage prepaid, registered or certified, and addressed (a)
            in the case of the Executive, to the address set forth underneath
            his signature to this Agreement or (b) in the case of the Company,
            to the attention of Shimon Alon c/o Precise Software Solutions, Inc,
            690 Canton Street, Westwood, MA 02090; and/or to such other address
            as either party may specify by notice to the other.

      9.5   Entire Agreement. This Agreement, and any stock option agreement
            between the Company and the Executive constitute the entire
            agreement between the Company and the Executive with respect to the
            terms and conditions of the Executive's employment with the Company
            and supersede and cancel all prior communications, agreements and
            understandings, written or oral, between the Executive and the
            Company with respect to the terms and conditions of the Executive's
            employment with the Company.

      9.6   Counterparts. This Agreement may be executed in counterparts, each
            of which shall be original and all of which together shall
            constitute one and the same instrument.

      9.7   Governing Law. This Agreement, the employment relationship
            contemplated herein and any claim arising from such relationship,
            whether or not arising under this Agreement, shall be governed by
            and construed in accordance with the internal laws of the
            Commonwealth of Massachusetts without giving effect to any choice or
            conflict of laws provision or rule thereof, and this Agreement shall
            be deemed to be performable in such Commonwealth.

      9.8   Consent to Jurisdiction. The Executive and the Company agree to be
            in good faith seek arbitration to settle any differences. The
            arbitration will be in Boston, Massachusetts at the American
            Arbitration Association ("AAA") before a single arbitrator. Such
            arbitrator shall be selected in accordance with AAA's then current
            rules and regulation. In the event no settlement is reached, the
            Executive, by his execution hereof, hereby irrevocably submits to
            the exclusive jurisdiction of the state or federal courts of the
            Commonwealth of Massachusetts for the purpose of any claim or action
            arising out of or based upon this Agreement, the Executive's
            employment with the Company and/or termination thereof, or relating
            to the subject matter hereof, and agrees not to commence any such
            claim or action other than in the above-named courts.

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            IN WITNESS WHEREOF, this Agreement has been executed by the Company,
by its duly authorized representative, and by the Executive, as of the date
first above written.

                                            PRECISE SOFTWARE SOLUTIONS, INC.

                                            By: /s/ Shimon Alon
                                                ----------------------------
                                            Name: Shimon Alon
                                                  --------------------------
                                            Title: CEO
                                                   -------------------------

                                            THE EXECUTIVE

                                            /s/ J. Benjamin H. Nye
                                            --------------------------------
                                            Ben NyeEXHIBIT 10.2
                                                                    ------------

                         PRECISE SOFTWARE SOLUTIONS LTD.

                    AMENDED 2000 EMPLOYEE SHARE PURCHASE PLAN

ARTICLE 1 - PURPOSE.
--------------------

         This 2000 Employee Share Purchase Plan (the "Plan") is intended to
encourage ownership of ordinary shares of Precise Software Solutions Ltd. (the
"Company"), a corporation organized under the laws of the state of Israel, by
all employees of the participating companies (as defined in Article 17) so that
they may share in the growth of the Company by acquiring or increasing their
proprietary interest in the Company. The Plan is designed to encourage eligible
employees to remain in the employ of the Company and its participating
subsidiaries as defined in Article 17. The Plan is intended to constitute an
"employee stock purchase plan" within the meaning of Section 423(b) of the
Internal Revenue Code of 1986, as amended (the "Code").

ARTICLE 2 - ADMINISTRATION OF THE PLAN.
---------------------------------------

         The Plan may be administered by a committee appointed by the Board of
Directors of the Company (the "Committee"). The Committee shall consist of not
less than two members of the Company's Board of Directors. The Board of
Directors may from time to time remove members from, or add members to, the
Committee. Vacancies on the Committee, however caused, shall be filled by the
Board of Directors. The Committee may select one of its members as Chairman, and
shall hold meetings at such times and places as it may determine. Acts by a
majority of the Committee, or acts reduced to or approved in writing by a
majority of the members of the Committee, shall be the valid acts of the
Committee.

         The interpretation and construction by the Committee of any provisions
of the Plan or of any option granted under it shall be final, unless otherwise
determined by the Board of Directors. The Committee may from time to time adopt
such rules and regulations for carrying out the Plan as it may deem best,
provided that any such rules and regulations shall be applied on a uniform basis
to all employees under the Plan. No member of the Board of Directors or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any option granted under it.

         In the event the Board of Directors fails to appoint or refrains from
appointing a Committee, the Board of Directors shall have all power and
authority to administer the Plan. In such event, the word "Committee" wherever
used herein shall be deemed to mean the Board of Directors.

ARTICLE 3 - ELIGIBLE EMPLOYEES.
-------------------------------

         All employees of the participating companies whose customary employment
is more than 20 hours per week and for more than five months in any calendar
year and who have completed at least three months of service for the Company or
any of its participating subsidiaries shall be
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                                      P-2

eligible to receive options under the Plan to purchase ordinary shares of the
Company, and all eligible employees shall have the same rights and privileges
hereunder. Persons who are eligible employees on the first business day of any
Payment Period (as defined in Article 5) shall receive their options as of such
day. Persons who become eligible employees after any date on which options are
granted under the Plan shall be granted options on the first day of the next
succeeding Payment Period on which options are granted to eligible employees
under the Plan. In no event, however, may an employee be granted an option if
such employee, immediately after the option was granted, would be treated as
owning shares possessing five percent or more of the total combined voting power
or value of all classes of shares of the Company or of any parent corporation or
subsidiary corporation, as the terms "parent corporation" and "subsidiary
corporation" are defined in Section 424(e) and (f) of the Code. For purposes of
determining share ownership under this paragraph, the rules of Section 424(d) of
the Code shall apply, and shares which the employee may purchase under
outstanding options shall be treated as shares owned by the employee.

ARTICLE 4 - SHARES SUBJECT TO THE PLAN.
---------------------------------------

         The shares subject to the options under the Plan shall be authorized
but unissued ordinary shares of the Company, par value 0.03 NIS per share (the
"Ordinary Shares"), or Ordinary Shares reacquired by the Company, including
shares purchased in the open market. The aggregate number of shares which may be
issued pursuant to the Plan is 667,000, subject to adjustment as provided in
Article 12. If any option granted under the Plan shall expire or terminate for
any reason without having been exercised in full or shall cease for any reason
to be exercisable in whole or in part, the unpurchased shares subject thereto
shall again be available under the Plan.

ARTICLE 5 - PAYMENT PERIOD AND SHARE OPTIONS.
---------------------------------------------

         The first Payment Period during which payroll deductions will be
accumulated under the Plan shall commence on October 1, 2000 and shall end on
March 31, 2001. For the remainder of the duration of the Plan, Payment Periods
shall consist of the six-month periods commencing on April 1 and October 1 and
ending on September 30 and March 31 of each calendar year, or such other periods
as the Committee may from time to time adopt.

         Twice each year, on the first business day of each Payment Period, the
Company will grant to each eligible employee who is then a participant in the
Plan an option to purchase on the last day of such Payment Period, at the Option
Price hereinafter provided for, a maximum of 1,000 Ordinary Shares, on condition
that such employee remains eligible to participate in the Plan throughout the
remainder of such Payment Period. The participant shall be entitled to exercise
the option so granted only to the extent of the participant's accumulated
payroll deductions on the last day of such Payment Period. If the participant's
accumulated payroll deductions on the last day of the Payment Period would
enable the participant to purchase more than 1,000 Ordinary Shares except for
the 1,000-Ordinary Share limitation, the excess of the amount of the accumulated
payroll deductions over the aggregate purchase price of the 1,000 Ordinary
Shares shall be promptly refunded to the participant by the Company, without
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                                      P-3

interest. The Option Price per share for each Payment Period shall be the lesser
of (i) 85% of the average market price of the Ordinary Shares on the first
business day of the Payment Period and (ii) 85% of the average market price of
the Ordinary Shares on the last business day of the Payment Period, in either
event rounded up to the nearest cent. The foregoing limitation on the number of
shares subject to option and the Option Price shall be subject to adjustment as
provided in Article 12.

         For purposes of the Plan, the term "average market price" on any date
means (i) the average (on that date) of the high and low prices of the Ordinary
Shares on the principal national securities exchange on which the Ordinary
Shares are traded, if the Ordinary Shares are then traded on a national
securities exchange; or (ii) the last reported sale price (on that date) of the
Ordinary Shares on the NASDAQ National Market, if the Ordinary Shares are not
then traded on a national securities exchange; or (iii) the average of the
closing bid and asked prices last quoted (on that date) by an established
quotation service for over-the-counter securities, if the Ordinary Shares are
not reported on the NASDAQ National Market; or (iv) if the Ordinary Shares are
not publicly traded, the fair market value of the Ordinary Shares as determined
by the Committee after taking into consideration all factors which it deems
appropriate, including, without limitation, recent sale and offer prices of the
Ordinary Shares in private transactions negotiated at arm's length.

         For purposes of the Plan, the term "business day" means a day on which
there is trading on the NASDAQ National Market or the aforementioned national
securities exchange, whichever is applicable pursuant to the preceding
paragraph.

         No employee shall be granted an option which permits the employee's
right to purchase shares under the Plan, and under all other Section 423(b)
employee shares purchase plans of the Company and any parent or subsidiary
corporations, to accrue at a rate which exceeds $25,000 of fair market value of
such shares (determined on the date or dates that options on such shares were
granted) for each calendar year in which such option is outstanding at any time.
The purpose of the limitation in the preceding sentence is to comply with
Section 423(b)(8) of the Code. If the participant's accumulated payroll
deductions on the last day of the Payment Period would otherwise enable the
participant to purchase Ordinary Shares in excess of the Section 423(b)(8)
limitation described in this paragraph, the excess of the amount of the
accumulated payroll deductions over the aggregate purchase price of the shares
actually purchased shall be promptly refunded to the participant by the Company,
without interest.

ARTICLE 6 - EXERCISE OF OPTION.
-------------------------------

         Each eligible employee who continues to be a participant in the Plan on
the last day of a Payment Period shall be deemed to have exercised his or her
option on such date and shall be deemed to have purchased from the Company such
number of full Ordinary Shares reserved for the purpose of the Plan as the
participant's accumulated payroll deductions on such date will pay for at the
Option Price, subject to the 1,000-Ordinary Share limit of the option and the
Section 423(b)(8) limitation described in Article 5. If the individual is not a
participant on the last day of a Payment Period, then he or she shall not be
entitled to exercise his or her option. No fractions of Ordinary Shares may be
purchased under the Plan. Unused payroll deductions
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                                      P-4

remaining in a participant's account at the end of a Payment Period by reason of
the inability to purchase a fractional share shall be carried forward to the
next Payment Period.

ARTICLE 7 - AUTHORIZATION FOR ENTERING THE PLAN.
------------------------------------------------

         An employee may elect to enter the Plan by filling out, signing and
delivering to the Company an authorization:

         A. Stating the percentage to be deducted regularly from the employee's
      pay;

         B. Authorizing the purchase of shares for the employee in each Payment
      Period in accordance with the terms of the Plan; and

         C. Specifying the exact name or names in which Ordinary Shares
      purchased for the employee are to be issued as provided under Article 11
      hereof.

Such authorization must be received by the Company at least ten days before the
first day of the next succeeding Payment Period and shall take effect only if
the employee is an eligible employee on the first business day of such Payment
Period.

         Unless a participant files a new authorization or withdraws from the
Plan, the deductions and purchases under the authorization the participant has
on file under the Plan will continue from one Payment Period to succeeding
Payment Periods as long as the Plan remains in effect.

         The Company will accumulate and hold for each participant's account the
amounts deducted from his or her pay. No interest will be paid on these amounts.

ARTICLE 8 - MAXIMUM AMOUNT OF PAYROLL DEDUCTIONS.
-------------------------------------------------

         An employee may authorize payroll deductions in an amount (expressed as
a whole percentage) not less than one percent (1%) but not more than ten percent
(10%) of the employee's total compensation, including base pay or salary and any
overtime, bonuses or commissions.

ARTICLE 9 - CHANGE IN PAYROLL DEDUCTIONS.
-----------------------------------------

         Deductions may not be increased or decreased during a Payment Period.
However, a participant may withdraw in full from the Plan.

ARTICLE 10 - WITHDRAWAL FROM THE PLAN.
--------------------------------------

         A participant may withdraw from the Plan (in whole but not in part) at
any time prior to the last day of a Payment Period by delivering a withdrawal
notice to the Company.

         To re-enter the Plan, an employee who has previously withdrawn must
file a new authorization at least ten days before the first day of the next
Payment Period in which he or she
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                                      P-5

wishes to participate. The employee's re-entry into the Plan becomes effective
at the beginning of such Payment Period, provided that he or she is an eligible
employee on the first business day of the Payment Period.

ARTICLE 11 - ISSUANCE OF SHARES.
--------------------------------

         Certificates for Ordinary Shares issued to participants shall be
delivered as soon as practicable after each Payment Period by the Company's
transfer agent.

         Ordinary Shares purchased under the Plan shall be issued only in the
name of the participant, or if the participant's authorization so specifies, in
the name of the participant and another person of legal age as joint tenants
with rights of survivorship.

ARTICLE 12 - ADJUSTMENTS.
-------------------------

         Upon the happening of any of the following described events, a
participant's rights under options granted under the Plan shall be adjusted as
hereinafter provided:

         A. In the event that the Ordinary Shares shall be subdivided or
      combined into a greater or smaller number of shares or if, upon a
      reorganization, split-up, liquidation, recapitalization or the like of the
      Company, the Ordinary Shares shall be exchanged for other securities of
      the Company, each participant shall be entitled, subject to the conditions
      herein stated, to purchase such number of Ordinary Shares or amount of
      other securities of the Company as were exchangeable for the number of
      Ordinary Shares that such participant would have been entitled to purchase
      except for such action, and appropriate adjustments shall be made in the
      purchase price per share to reflect such subdivision, combination or
      exchange; and

         B. In the event the Company shall issue any of its Ordinary Shares as a
      dividend upon or with respect to the shares of the class which shall at
      the time be subject to option hereunder, each participant upon exercising
      such an option shall be entitled to receive (for the purchase price paid
      upon such exercise) the shares as to which the participant is exercising
      his or her option and, in addition thereto (at no additional cost), such
      number of shares of the class or classes in which such dividend or
      dividends were declared or paid, and such amount of cash in lieu of
      fractional shares, as is equal to the number of shares thereof and the
      amount of cash in lieu of fractional shares, respectively, which the
      participant would have received if the participant had been the holder of
      the shares as to which the participant is exercising his or her option at
      all times between the date of the granting of such option and the date of
      its exercise.

         Upon the happening of any of the foregoing events, the class and
aggregate number of shares set forth in Article 4 hereof which are subject to
options which have been or may be granted under the Plan and the limitations set
forth in the second paragraph of Article 5 shall also be appropriately adjusted
to reflect the events specified in paragraphs A and B above. Notwithstanding the
foregoing, any adjustments made pursuant to paragraphs A or B shall be made only
after the Committee, based on advice of counsel for the Company, determines
<PAGE>
                                      P-6

whether such adjustments would constitute a "modification" (as that term is
defined in Section 424 of the Code). If the Committee determines that such
adjustments would constitute a modification, it may refrain from making such
adjustments.

         If the Company is to be consolidated with or acquired by another entity
in a merger, a sale of all or substantially all of the Company's assets or
otherwise (an "Acquisition"), the Committee or the board of directors of any
entity assuming the obligations of the Company hereunder (the "Successor Board")
shall, with respect to options then outstanding under the Plan, either (i) make
appropriate provision for the continuation of such options by arranging for the
substitution on an equitable basis for the shares then subject to such options
either (a) the consideration payable with respect to the outstanding Ordinary
Shares in connection with the Acquisition, (b) securities of the successor
corporation, or a parent or subsidiary of such corporation, or (c) such other
securities as the Successor Board deems appropriate, the fair market value of
which shall not materially exceed the fair market value of the Ordinary Shares
subject to such options immediately preceding the Acquisition; or (ii) terminate
each participant's options in exchange for a cash payment equal to the excess of
(a) the fair market value on the date of the Acquisition, of the number of
Ordinary Shares that the participant's accumulated payroll deductions as of the
date of the Acquisition could purchase, at an option price determined with
reference only to the first business day of the applicable Payment Period and
subject to the 1,000-Ordinary Share, Code Section 423(b)(8) and fractional-share
limitations on the amount of shares a participant would be entitled to purchase,
over (b) the result of multiplying such number of shares by such option price.

         The Committee or Successor Board shall determine the adjustments to be
made under this Article 12, and its determination shall be conclusive.

ARTICLE 13 - NO TRANSFER OR ASSIGNMENT OF EMPLOYEE'S RIGHTS.
------------------------------------------------------------

         An option granted under the Plan may not be transferred or assigned and
may be exercised only by the participant.

ARTICLE 14 - TERMINATION OF EMPLOYEE'S RIGHTS.
----------------------------------------------

         Whenever a participant ceases to be an eligible employee because of
retirement, voluntary or involuntary termination, resignation, layoff,
discharge, death or for any other reason, his or her rights under the Plan shall
immediately terminate, and the Company shall promptly refund, without interest,
the entire balance of his or her payroll deduction account under the Plan.
Notwithstanding the foregoing, eligible employment shall be treated as
continuing intact while a participant is on military leave, sick leave or other
bona fide leave of absence, for up to 90 days, or for so long as the
participant's right to re-employment is guaranteed either by statute or by
contract, if longer than 90 days.

ARTICLE 15 - TERMINATION AND AMENDMENTS TO PLAN.
------------------------------------------------

         The Plan may be terminated at any time by the Company's Board of
Directors but such termination shall not affect options then outstanding under
the Plan. It will terminate in any case
<PAGE>
                                      P-7

when all or substantially all of the unissued Ordinary Shares reserved for the
purposes of the Plan have been purchased. If at any time Ordinary Shares
reserved for the purpose of the Plan remain available for purchase but not in
sufficient number to satisfy all then unfilled purchase requirements, the
available shares shall be apportioned among participants in proportion to the
amount of payroll deductions accumulated on behalf of each participant that
would otherwise be used to purchase stock, and the Plan shall terminate. Upon
such termination or any other termination of the Plan, all payroll deductions
not used to purchase shares will be refunded, without interest.

         The Committee or the Board of Directors may from time to time adopt
amendments to the Plan provided that, without the approval of the shareholders
of the Company, no amendment may (i) increase the number of shares that may be
issued under the Plan; (ii) change the class of employees eligible to receive
options under the Plan, if such action would be treated as the adoption of a new
plan for purposes of Section 423(b) of the Code; or (iii) cause Rule 16b-3 under
the Securities Exchange Act of 1934 to become inapplicable to the Plan.

ARTICLE 16 - LIMITS ON SALE OF SHARES PURCHASED UNDER THE PLAN.
--------------------------------------------------------------

         The Plan is intended to provide Ordinary Shares for investment and not
for resale. The Company does not, however, intend to restrict or influence any
employee in the conduct of his or her own affairs. An employee may, therefore,
sell shares purchased under the Plan at any time the employee chooses, subject
to compliance with any applicable federal or state securities laws and subject
to any restrictions imposed under Article 21 to ensure that tax withholding
obligations are satisfied. THE EMPLOYEE ASSUMES THE RISK OF ANY MARKET
FLUCTUATIONS IN THE PRICE OF THE SHARES.

ARTICLE 17 - PARTICIPATING SUBSIDIARIES.
----------------------------------------

         The term "participating subsidiary" shall mean any present or future
subsidiary of the Company, as that term is defined in Section 424(f) of the
Code, which is designated from time to time by the Board of Directors to
participate in the Plan. The Board of Directors shall have the power to make
such designation before or after the Plan is approved by the shareholders.

         The term "participating company" shall mean each participating
subsidiary and, if the Board of Directors designates the Company to participate
in the Plan, the Company.

ARTICLE 18 - OPTIONEES NOT SHAREHOLDERS.
----------------------------------------

         Neither the granting of an option to an employee nor the deductions
from his or her pay shall constitute such employee a shareholder of the shares
covered by an option until such shares have been actually purchased by the
employee.

ARTICLE 19 - APPLICATION OF FUNDS.
----------------------------------

         The proceeds received by the Company from the sale of Ordinary Shares
pursuant to options granted under the Plan will be used for general corporate
purposes.
<PAGE>
                                      P-8

ARTICLE 20 - NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.
-----------------------------------------------------------

         By electing to participate in the Plan, each participant that is
subject to federal income tax in the United States, agrees to notify the Company
in writing immediately after the participant transfers Ordinary Shares acquired
under the Plan, if such transfer occurs within two years after the first
business day of the Payment Period in which such Ordinary Shares were acquired.
Each such participant further agrees to provide any information about such a
transfer as may be requested by the Company or any subsidiary corporation in
order to assist it in complying with the tax laws. Such dispositions generally
are treated as "disqualifying dispositions" under Sections 421 and 424 of the
Code, which have certain tax consequences to participants and to the Company and
its participating subsidiaries.

ARTICLE 21 - WITHHOLDING OF ADDITIONAL INCOME TAXES.
----------------------------------------------------

         By electing to participate in the Plan, each participant acknowledges
that the Company and its participating subsidiaries are required to withhold
taxes with respect to the amounts deducted from the participant's compensation
and accumulated for the benefit of the participant under the Plan, and each
participant agrees that the Company and its participating subsidiaries may
deduct additional amounts from the participant's compensation, when amounts are
added to the participant's account, used to purchase Ordinary Shares or
refunded, in order to satisfy such withholding obligations. Each participant
further acknowledges that when Ordinary Shares are purchased under the Plan, the
Company and its participating subsidiaries may be required to withhold taxes
with respect to all or a portion of the difference between the fair market value
of the Ordinary Shares purchased and the purchase price, and each participant
agrees that such taxes may be withheld from compensation otherwise payable to
such participant. It is intended that tax withholding will be accomplished in
such a manner that the full amount of payroll deductions elected by the
participant under Article 7 will be used to purchase Ordinary Shares. However,
if amounts sufficient to satisfy applicable tax withholding obligations have not
been withheld from compensation otherwise payable to any participant, then,
notwithstanding any other provision of the Plan, the Company may withhold such
taxes from the participant's accumulated payroll deductions and apply the net
amount to the purchase of Ordinary Shares, unless the participant pays to the
Company, prior to the exercise date, an amount sufficient to satisfy such
withholding obligations. Each participant further acknowledges that the Company
and its participating subsidiaries may be required to withhold taxes in
connection with the disposition of shares acquired under the Plan and agrees
that the Company or any participating subsidiary may take whatever action it
considers appropriate to satisfy such withholding requirements, including
deducting from compensation otherwise payable to such participant an amount
sufficient to satisfy such withholding requirements or conditioning any
disposition of Ordinary Shares by the participant upon the payment to the
Company or such subsidiary of an amount sufficient to satisfy such withholding
requirements.
<PAGE>
                                      P-9

ARTICLE 22 - GOVERNMENTAL REGULATIONS.
--------------------------------------

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

         Government regulations may impose reporting or other obligations on the
Company with respect to the Plan. For example, the Company may be required to
identify Ordinary Shares issued under the Plan on its share ownership records
and send tax information statements to employees and former employees who
transfer title to such shares.

ARTICLE 23 - GOVERNING LAW.
---------------------------

         The validity and construction of the Plan shall be governed by the laws
of the state of Israel, without giving effect to the principles of conflicts of
law thereof.

ARTICLE 24 - APPROVAL OF BOARD OF DIRECTORS AND SHAREHOLDERS OF THE COMPANY.
----------------------------------------------------------------------------

         The Plan was adopted by the Board of Directors on March 7, 2000 and was
approved by the shareholders of the Company on April 12, 2000.

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