Document:

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                                                                    EXHIBIT 4.02

                         PRECISE SOFTWARE SOLUTIONS LTD.
                              AMENDED AND RESTATED
                      1998 SHARE OPTION AND INCENTIVE PLAN

         1.       Purpose & Construction.

         1.1.     The purpose of the PRECISE SOFTWARE SOLUTIONS LTD. 1998 Share
Option and Incentive Plan (hereinafter: the "Plan") is to afford an incentive to
directors, officers, and employees and consultants of PRECISE SOFTWARE SOLUTIONS
LTD. (hereinafter: the "Company"), and any subsidiary of the Company which now
exists or hereafter shall be 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.

         2.       Definitions.

As used in the Plan, the following terms shall have the meaning ascribed to them
hereunder, respectively, unless stated otherwise:

         2.1.     "Code" - the United States Internal Revenue Code of 1986, as
amended, and any rules and regulations promulgated thereunder.

         2.2.     "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; and, with respect to any Grantee that is a U.S. Employee with respect to
such U.S. Employee's ISOs, as otherwise defined under Sections 422(c)(6) and
22(e) of the Code.

         2.3.     "Employee" - an employee of the Company (or a Subsidiary, as
the case may be) which qualifies as an employee for the purpose of the relevant
tax rules and regulations; and, with respect to any employee that is a U.S.
Employee (as defined herein), as otherwise defined under the Code.

         2.4.     "Option Agreement" - the agreement entered into between the
Company (or a Subsidiary, as the case may be) and an Employee, director or
consultant of the Company for the purpose of granting Options pursuant to this
Plan.

         2.5.     "Exercise Period" - the period stated in the Option Agreement
when such Option may be exercised; provided, the period shall not exceed 10
(ten) calendar years starting on the date of its grant; provided, further, that
in the case of an ISO granted to a U.S. Employee owning stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company or any Subsidiary, the Exercise Period shall be the period
of 5 (five) years starting at the date of its grant.

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         2.6.     "Grantee" - Employees and any other person eligible to
participate in the Plan.

         2.7.     "Incentive Stock Options" or "ISOs" - Options which qualify as
"incentive stock options" under Section 422 of the Code.

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

         2.9.     "Optioned Shares" - the Shares to which an Option relates.

         2.10.    "Option Price" - the price payable per Share paid by the
Grantee with respect to the exercise of the Options.

         2.11.    "Public Offering" - the closing of the sale of the Company's
Shares in any public offering registered under the Securities Act of 1933, as
amended, or in accordance with the relevant Israeli securities laws or the
equivalent laws of any other jurisdiction.

         2.12.    "Shares" - Ordinary Shares of 0.03 NIS par value per share of
the Company, unless determined otherwise by the Board.

         2.13.    "Subsidiary" - any company which is directly or indirectly
owned and/or controlled by the Company; and, with respect to the grant of
Incentive Stock Options, as defined under Section 424 of the Code.

         2.14.    "Transfer of Control" - a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), whether or not the Company is in fact required to comply therewith;
provided that, without limitation, such a change in control shall be deemed to
have occurred if (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a corporation owned,
directly or indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding securities; provided,
however that transfer(s) of securities by an existing stockholder to its
affiliate(s) (as that term is defined under Rule 144 of the Securities Act of
1933, as amended) shall not be included in determining whether a person has
become a beneficial owner of 50% or more of the combined voting power of the
Company's then outstanding securities; (ii) the stockholders of the Company
approve a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) not more than 60% of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or (iii) the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially all of the
Company's assets.

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         2.15.    "U.S. Employee" - an Employee that is a United States citizen
or resident, as defined under the Code.

         2.16.    "Companies Law" - the Israeli Companies Law 5759-1999, as may
be amended or replaced from time to time.

         2.17.    "Ten Percent Shareholder" - a person who owns (or is deemed to
own pursuant to Section 424(d) of the Code) shares possessing more than ten
percent (10%) of the total combined voting power of all classes of shares of the
Company or of any of its affiliates.

         3.       Administration.

         The Plan shall be administered by a committee established by the Board
of Directors of the Company (the "Board") for this purpose, or by the Board's
compensation committee (hereinafter: the "Committee").

         4.       Eligibility.

         The Committee shall decide upon the overall number of Options to be
allocated for the purpose of granting said Options to Grantees. All grants to
the Grantees shall require the approval of the Board. Without derogating from
the above, Incentive Stock Options may be granted only to U.S. Employees of the
Company or its Subsidiaries.

         5.       Shares.

         5.1.     The maximum number of Shares to be granted as Options under
this Plan or any future sub-plans for designated Subsidiaries, shall not exceed
10,993,168. The Company shall at all times reserve the number of Shares required
to fulfill all of the Company's obligations, upon the exercise of all Options
granted to the Grantees.

         5.2.     If any outstanding Option should, for any reason expire, be
canceled, or be terminated without having been exercised in full, the Optioned
Shares allocable to the unexercised, canceled or terminated portion of such
Option shall become available for subsequent grants of Options to other
Grantees, and all such subsequent grants shall require the approval of the
Board. Any of such Shares which may remain unissued and which are not subject to
outstanding Options at the termination of the Plan shall cease to be reserved
for the purpose of the Plan.

         5.3.     Incentive Stock Options may be granted under this Plan at any
time on or after December 1, 1998 and prior to October 1, 2008.

         6.       Terms & Conditions of Options.

         6.1.     Each Option granted pursuant to the Plan shall be evidenced by
appropriate provisions in the applicable Option Agreement, which provisions
shall state, among other

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matters, the Option Price, the number of the Optioned Shares, and the applicable
vesting schedule which shall be determined by the Board and specified in the
Grantee's Option Agreement ("Vesting Schedule"). In addition, each Option shall
be subject to the following terms and conditions as well as such other terms and
conditions, not inconsistent with the Plan, as the Committee may determine:

                  6.1.1. the Option Price shall be determined by the Board;
provided, however, that the Option Price of any Option, including but not
limited to an ISO, granted under the Plan shall not be less than the fair market
value per share (as defined in Section 6.1.5) of the Optioned Shares on the date
of such Grant; and provided further, that if an ISO is granted to a U.S.
Employee owning stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any Subsidiary,
the price per share specified in the agreement relating to such ISO shall not be
less than one hundred ten percent (110%) of the fair market value per share of
the Optioned Shares on the date of grant, applying the rules of Section 424(d)
of the Code for purposes of determining stock ownership.

                  6.1.2. the manner of payment of the Option Price shall be in
cash, at the time of exercise of the Option, unless the Committee declares
otherwise; provided, however, that if, with respect to an ISO, the Committee
exercises its discretion to permit payment other than in cash at the time of
exercise, such discretion shall be exercised in writing at the time of the grant
of the ISO in question.

                  6.1.3. the exercisability of the Options shall be in
accordance with the terms and conditions described in this Section 6 and Section
7 below.

                  6.1.4. to the extent an Option is granted to a U.S. Employee
and such Option does not qualify as an ISO, such Option shall be deemed a
"non-qualified option" and shall be evidenced by an Option Agreement reflecting
the same.

                  6.1.5. "Fair market value" shall mean the fair value of a
Share as determined by the Committee after taking into consideration all factors
which it deems appropriate, including, without limitation, recent sale and offer
prices of a preferred share or ordinary share of the Company or a series a
ordinary share in private transactions negotiated at arm's length. If, at the
time an Option is granted under the Plan, the class of Shares subject to such
Option is publicly traded, "fair market value" for such class of Share shall be
determined as of the date of grant or, if the price or quotes discussed in this
sentence are unavailable for such date, the last business day for which such
prices or quotes are available prior to the date of grant and shall mean (i) the
average (on that date) of the high and low prices of such a Share on the
principal national securities exchange on which such Shares are traded, if such
Shares are then traded on a national securities exchange; or (ii) the last
reported sale price (on that date) of such a Share on the Nasdaq National
Market, if such Shares are not then traded on a national securities exchange; or
(iii) the closing bid price (or average of bid prices) last quoted (on that
date) by an established quotation service for over-the-counter securities, if
such Shares are not reported on the Nasdaq National Market.

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         6.2.     $100,000 Annual Limitation on ISO Vesting.

         Each U.S. Employee may be granted Options treated as ISOs only to the
extent that, in the aggregate under this Plan and all incentive stock option
plans of the Company and any Subsidiary, ISOs do not become exercisable for the
first time by such employee during any calendar year with respect to Optioned
Shares having a fair market value (determined at the time the ISOs were granted)
in excess of $100,000. The Company intends to designate any Options granted in
excess of such limitation as Options that do not qualify for ISO treatment, and
the Company shall issue separate certificates to the Grantee with respect to
Options that are ISOs and Options that do not qualify as ISOs.

         6.3.     Should the Grantee cease to be an Employee or should any
contractual relationship between the Company (or any Subsidiary, as the case may
be) and Grantee cease to exist (in the case Grantee is not an Employee) prior to
the completion of the Vesting Schedule, the remaining Options yet to be vested
shall expire.

         6.4      Per Grantee Limit.

         Subject to the adjustment under Section 9.2.5 hereunder, no Grantee may
be granted Options during any fiscal year to purchase more than 3,500,000
Shares.

         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, in such form and method as may be determined by the Company,
including but not limited to fax or e-mail messages.

         7.2.     The Options must be exercised within the Exercise Period.
Following the expiration of the Exercise Period, the Options shall become null &
void.

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

                  7.3.1. 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 at the time of death or Disability) 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, within one year of such termination of employment; provided, however,
that in the case of an Option that is treated as an ISO, a Disabled Grantee or
the Grantee's estate or a person who acquired the right to exercise such ISO by
will or inheritance or otherwise by reason of the death of the Grantee may
exercise such ISO (to the extent otherwise exercisable) only until the earlier
of (i) the specified expiration date of the ISO or (ii) one year from the date
of termination of the Grantee's

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employment. 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.

                  7.3.2. Subject to Section 7.4 below, upon the termination of
employment for any reason other than a disgraceful circumstance described in
Section 7.5 and to the extent exercisable at the time of termination of
employment, a Grantee shall be entitled to exercise the outstanding Options,
within three months from the day his employment has ended.

                  7.3.3. If, prior to the date of such termination of
employment, the Committee shall authorize an extension of the terms of all or
part of the Options beyond the date the Grantee could otherwise exercise the
Options, for a period not to exceed the period during which the Options by their
terms would otherwise have expired, then the Options may be exercise during such
extended period.

         7.4.     Notwithstanding the aforementioned, all the Options may only
be exercised, in accordance with and subject to the relevant Vesting Schedule
and specified expiration dates.

         7.5.     An Employee whose employment shall be terminated by the
Company (or any Subsidiary, as the case may be) under any kind of disgraceful
circumstances, shall have no right to exercise any vested Options granted to him
prior to said termination. "Disgraceful Circumstances" shall mean conduct
involving one or more of the following: (i) gross negligence, willful misconduct
or breach of fiduciary duty to the Company; commission of an act of embezzlement
or fraud; (iii) deliberate disregard of the rules or policies of the Company or
any Subsidiary which results in direct or indirect material loss, damage or
injury to the Company or any Subsidiary; (iv) the unauthorized disclosure of any
trade secret or confidential information of the Company; or (v) the commission
of an act which constitutes unfair competition with the Company or any
Subsidiary or which induces any customer or supplier to breach a contract with
the Company or any Subsidiary.

         7.6.     For the purpose of this Section 7 and Section 10 below, the
term "employed" shall include the employment of the Grantee by the Company or
any Subsidiary as an employee, consultant or director of the Company or any
Subsidiary.

         8.       Non-transferability of Options.

         Except as provided in Section 7.3.1 above or otherwise expressly
provided for in the Option Agreement, 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; provided, however, that
an ISO shall not be assignable or transferable by the Grantee except by will or
by the laws of descent and distribution and may be exercised, during the
lifetime of the Grantee, only by the Grantee.

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         9.       Rights as a Shareholder.

         9.1.     The Grantees shall not have any of the rights or privileges of
shareholders of the Company in respect of any Shares until the date of exercise
of any Options, nor shall they be deemed to be a class of shareholders or
creditors of the Company for purpose of the operation of Sections 350 and 351 of
the Companies Law or any successor to such section, until registration of the
Grantee as holder of such Shares in the Company's register of members upon
exercise of the Option in accordance with the provisions of the Plan.

         9.2.     Upon the occurrence of any of the following described events,
Grantee's rights to purchase Shares under the Plan shall be adjusted as
hereafter provided:

                  9.2.1. In the event of a merger of the Company with or into
another company (the "Successor Corporation") or the sale of all or
substantially all of the assets or shares of the Company (the "Transaction"),
the unexercised Options then outstanding under the Plan (the "Unexercised
Options"), shall be assumed, or substituted for an appropriate number of
Optioned Shares of each class of shares or other securities of the Successor
Corporation (or a parent or subsidiary of the Successor Corporation) as were
distributed to the shareholders of the Company in respect of the Transaction. In
the case of such assumption and/or substitution of shares, appropriate
adjustments shall be made to the Option Price to reflect such action, and all
other terms and conditions of the Option Agreements, such as the Vesting
Schedules, shall remain in force, subject to the sole discretion of the
Committee.

                  9.2.1. Notwithstanding the above and subject to any applicable
law, the Board or the Committee may determine with respect to certain option
agreements that there shall be a clause instructing that, if in any such
Transaction as described above, the Successor Corporation (or parent or
subsidiary of the Successor Corporation) does not agree to assume or substitute
for the Options, the Vesting Schedules shall be accelerated so that any unvested
Option or any portion thereof shall be immediately vested in full as of the date
which is ten (10) days prior to the effective date of such Transaction.

                  9.2.3 For the purposes of section 9.2.1 above, the Option
shall be considered assumed or substituted if, following the Transaction, the
Option confers upon its holder the right to purchase or receive, for each
Optioned Share subject to the Option immediately prior to the Transaction, the
consideration (whether shares, options, cash, or other securities or property)
equal the consideration received in the Transaction by the share holders for
each Share held on the effective date of the Transaction (and if such holders
were offered a choice of consideration, the type of consideration chosen by
holders of a majority of the outstanding shares); provided, however, that if
such consideration received in the Transaction is not solely ordinary shares (or
their equivalent) of the Successor Corporation or its parent or subsidiary (the
"Companies"), the Committee may, with the consent of the Successor Corporation,
provide for the consideration to be received upon the exercise of the Option to
be solely ordinary shares (or their equivalent) of the Companies equal in Fair
Market Value to the per Share consideration received by holders of a majority of
the outstanding Shares in the Transaction; and provided further that the
Committee may determine, in its discretion, that in lieu of such assumption or
substitution of Options for

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options of the Companies, such Options will be substituted for any other type of
asset or property.

                  9.2.4. If the Company is voluntarily liquidated or dissolved
while unexercised Options remain outstanding under the Plan, then any
outstanding Options held by the Grantee may be exercised in full or in part by
the Grantees (as shall be determined in each Option Agreement) by the Grantees
as of the effective dare of such liquidation or dissolution of the Company
without regard to the installment exercise provisions of Section 6.1. All such
outstanding Options may be exercised in full or in part by the Grantees as
determined in the Grantee's Option Agreement, by giving notice in writing to the
Company of their intention to so exercise.

                  9.2.5. If the outstanding shares of the Company shall at any
time be changed or exchanged by declaration of a share dividend (bonus shares),
share split, combination or exchange of shares, recapitalization, or any other
like event by or of the Company, and as often as the same shall occur, then the
number, class and kind of Shares subject to the Plan or subject to any Options
therefore granted, and the Option Prices, shall be appropriately and equitably
adjusted so as to maintain the proportionate number of Shares without changing
the aggregate Option Price, provided, however, that no adjustment shall be made
by reason of the distribution of subscription rights (rights offering) on
outstanding shares. Upon happening of any of the foregoing, the class and
aggregate number of Shares issuable pursuant to the Plan (as set forth in
Section 5 above), in respect of which Options have not yet been exercised, shall
be appropriately adjusted, as will be determined by the Board whose
determination shall be final.

                  9.2.6. Notwithstanding the foregoing, any adjustments made
pursuant to this Section 9.2 with respect to ISOs shall be made only after the
Committee, after consulting with counsel for the Company, determines whether
such adjustments would constitute a "modification" of such ISOs (as that term is
defined in Section 424 of the Code) or would cause any adverse tax consequences
for the holders of such ISOs, If the Committee determines that such adjustments
made with respect to ISOs would constitute a modification of such ISOs or would
cause adverse tax consequences to the holders, the Committee shall consult such
holders and the holders may refrain from having such adjustments made.

         10.      No Rights to Employment.

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

         10.2.    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.

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         11.      Governing Law.

         The Plan shall be governed by and construed and enforced in accordance
with the laws of the State of Israel applicable to contracts made and to be
performed therein, without giving effect to the principles of conflict of laws.
The competent courts of Tel-Aviv, Israel shall have sole jurisdiction in any
matters pertaining to the Plan.

         12.      Effective Date & Duration of the Plan.

         This Plan was adopted by the Board on November 23, 1998, subject, with
respect to the validation of ISOs granted under the Plan, to approval of the
Plan by the stockholders of the Company at the next meeting of stockholders or,
in lieu thereof, by written consent. If the approval of stockholders is not
obtained prior to November 23, 1999, any grants of ISOs under the Plan made
prior to that date will be treated as non-qualified options. The Plan shall be
effective as of the date of its adoption by the Board. The Plan shall expire at
the end of the day on October 1, 2008. Subject to the provisions of Section 5
above, Options may be granted under the Plan prior to the date of stockholder
approval of the Plan. The Board may terminate (except as to Options outstanding
on that date) or amend the Plan in any respect at any time, except that, the
Board may not take any of the following actions without the approval of the
stockholders obtained within 12 months before or after the Board adopts any of
the following such actions: (a) the total number of shares that may be issued
under the Plan may not be increased (except by adjustment pursuant to Section
9); (b) the provisions of Section 4 regarding eligibility for grants of ISOs may
not be modified; (c) the provisions of Section 6.1.1 regarding the Option Price
at which shares may be offered pursuant to ISOs may not be modified (except by
adjustment pursuant to Section 9); and (d) the expiration date of the Plan may
not be extended. Except as otherwise provided in this Section 12, no amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Grantee (with respect to an outstanding option), unless mutually agreed
otherwise between the Grantee and the Board, which agreement must be in writing
and signed by the Grantee and the Company. Termination of the Plan shall not
affect the Board's ability and authority to exercise, at its sole discretion,
any and all of the powers granted to it hereunder with respect to Options
granted under the Plan prior to the date of such termination.

         13.      Notice to Company of Disqualifying Disposition.

         By accepting an ISO granted under the Plan, each Grantee that is a U.S.
Employee agrees to notify the Company in writing immediately after such Grantee
makes a Disqualifying Disposition (as described in Sections 421, 422 and 424 of
the Code and regulations thereunder) of any Optioned Shares acquired pursuant to
the exercise of ISOs granted under the Plan. A Disqualifying Disposition is
generally any disposition occurring on or before the later of (a) the date two
years following the date the ISO was granted or (b) the date one year following
the date the ISO was exercised.

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         14.      Withholding of Additional Income Taxes.

         Upon the exercise of an Option, whether by a U.S. Employee or any other
Employee, that is not an ISO, or the making of a Disqualifying Disposition (as
defined in paragraph 13), the Company may withhold taxes in respect of amounts
that constitute compensation includible in gross income. The Committee in its
discretion may condition the exercise of an Option on the Grantee's making
satisfactory arrangement for such withholding. Such arrangement may include
payment by the Grantee in cash or by check of the amount of the withholding
taxes or, at the discretion of the Committee, by the Grantee's delivery of
previously held Company Shares or the withholding from the Optioned Shares
otherwise deliverable upon exercise of an Option shares having an aggregate fair
market value equal to the amount of such withholding taxes.

         Any tax liabilities of the Grantee arising from the grant or exercise
of any Option, from the payment for Shares covered thereby or from any other
event or act (of the Company, and/or its Subsidiaries, or the Grantee)
hereunder, shall be borne solely by the Grantee. The Company and/or its
Subsidiaries, may withhold taxes according to the requirements under the
applicable laws, rules, and regulations, including withholding taxes at source.
Furthermore, the Grantee shall agree to indemnify the Company and/or its
Subsidiaries and hold them harmless against and from any and all liabilities for
any such tax or interest or penalty thereon, including without limitation,
liabilities relating to the necessity to withhold, or to have withheld, any such
tax from any payment made to the Grantee, unless the said liability is a result
of default of the Company.

         The Committee shall not be required to release any Share certificate to
a Grantee until all required payments have been fully made.

         15.      Governing Regulations.

         The Plan, and the granting and exercise of Options hereunder, and the
obligation of the Company to sell and deliver Shares under such Options, shall
be subject to all applicable laws, rules, and regulations of the United States
or any other State having jurisdiction over the Company and the Grantee,
including the registration of the Shares under the United States Securities Act
of 1933, and to such approvals by any governmental agencies or national
securities exchanges as may be required. Nothing herein shall be deemed to
require the Company to register the Shares under the securities law of any
jurisdiction.

         16.      Lock-Up.

         Notwithstanding anything to the contrary contained herein, in
connection with any underwritten public offering by the Company of its Shares,
no Grantee shall directly or indirectly, sell or otherwise transfer,
hypothecate, pledge, grant or otherwise dispose of the Options (whether vested
or not vested), the exercised Shares, or Shares issued by the virtue of the
exercised Shares, whether in accordance with Section 9 of the Plan or as bonus
shares, without the prior written consent of the Company. Such restriction shall
be in effect for a period of up to ninety days (90), subject to the Board's
discretion, following the effective date of the registration statement filed by
the Company or for a longer period as may be requested by the Company.

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         In order to enforce the above restriction, the Company may impose
stop-transfer instructions with respect to the exercised Shares.

         17.      Multiple Agreements.

         The terms of each Option may differ from other Options granted under
the Plan at the same time, or at any other time. The Board may also grant more
than one Option to a given Grantee during the term of the Plan, either in
addition to, or in substitution for, one or more Options previously granted to
that Grantee.

         18.      The Status of the Agreement.

         Any interpretation of the Option Agreement will be made in accordance
with the Plan but in the event there is any contradiction between the provisions
of the Option Agreement and the Plan, the provisions of the Plan will prevail.

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                                   APPENDIX A
          TO AMENDED AND RESTATED 1998 SHARE OPTION AND INCENTIVE PLAN

         1.       SPECIAL PROVISIONS FOR PLAN PARTICIPANTS WHO ARE ISRAELI
RESIDENTS.

         The provisions specified hereunder shall apply only to options issued
to Grantees who are residents of the State of Israel or who are deemed to be
residents of the State of Israel for tax purposes. The Plan and this Appendix
are complimentary to each other and shall be read and deemed as one. In any case
of contradiction, whether explicit or implied, between the provisions of this
Appendix and the Plan, the provisions of this Appendix shall govern.

         2.       DEFINITIONS:

         Notwithstanding any other provision of the Plan, the following
additional definitions will apply to options granted pursuant to this Appendix:

         2.1      "Companies Law" means the Israeli Companies Law 5759-1999, as
may be amended or replaced from time to time.

         2.2      "Ordinance" means the Israeli Income Tax Ordinance (New
Version) 1961, as may be amended or replaced from time to time.

         2.3      "Trust" means trust in which 102 Options are held for the
benefit of a Participant.

         2.4      "Trustee" means a person designated by the Board and approved
in accordance with the provisions of section 102 of the Ordinance.

         2.5      "102 Options" means options granted pursuant to Section 102 of
the Israeli Income Tax Ordinance (New Version) 1961.

         2.6      "3(i) Options" means options granted pursuant to Section 3(i)
of the Israeli Income Tax Ordinance (New Version) 1961.

         2.7      "Section 102" means Section 102 of the Israeli Income Tax
Ordinance (New Version) 1961.

         2.8      "Section 3(i)" means Section 3(i) of the Israeli Income Tax
Ordinance (New Version) 1961.

         All capitalized terms contained herein which are not defined in Section
2 above, shall have the meaning attributed to them in the Plan.

                                       12

<PAGE>

         3.       GRANT OF OPTIONS AND ISSUANCE OF SHARES.

         Notwithstanding anything herein to the contrary, the Plan may also be
administered pursuant to certain provisions of Section 102 or Section 3(i) of
the Ordinance, the rules promulgated thereunder and the Israeli Companies Law,
with respect to Employees, directors, consultants or other service providers who
are Israeli residents.

         4.       GRANT OF OPTIONS.

         Notwithstanding any other provision of the Plan, the Board or the
Committee shall have full power and authority to designate Options as 102
Options or 3(i) Options, to determine the number of Ordinary Shares in the
Company to be covered by each Option, the provisions concerning the time or
times when and the extent to which the Options may be exercised, any conditions
upon which the vesting of the Options may be accelerated and the nature of
restrictions as to transferability or restrictions constituting substantial risk
of forfeiture.

         5.       TRUSTEE.

         Notwithstanding anything herein to the contrary, in the event that
Options are granted under the Plan pursuant to the provisions of Section 102,
then each 102 Option, and each Share acquired subsequently following any
realization of rights, shall be issued to a Trustee nominated by the Committee,
and approved in accordance with the provisions of Section 102 (the "Trustee")
and held for the benefit of the Grantees.

         Options granted under the Plan pursuant to the provisions of Section
3(i) of the Tax Ordinance may be granted to a Trustee.

         All certificates representing Options or Shares issued to the Trustee
shall be deposited with the Trustee, and shall be held by the Trustee until such
time that such Shares are released from the Trust as herein provided. The
Trustee shall hold the same pursuant to the instructions of the Board. The
Trustee shall not use the voting rights vested in such Shares and shall not
exercise such rights in any way whatsoever.

         6.       TAX CONSEQUENCES.

         6.1      Notwithstanding anything herein to the contrary, 102 Options
granted, or Shares purchased pursuant to thereto ("102 Shares") shall be held by
the Trustee for such period of time as required by Section 102 or any
regulations, rules or orders or procedures promulgated thereunder.

         Subject to the terms hereof, at any time after the release of Options
or Shares from the Trust (the "Release Date") with respect to any 102 Options or
102 Shares, each Grantee may require (but shall not be obligated to require) the
Trustee to release such 102 Options, or 102 Shares, provided that no securities
shall be released from the Trust to the Grantee until such Grantee has deposited
with the Trustee an amount of money which, in the Trustee's opinion, is
necessary to discharge such Grantee's tax obligations with respect to such 102
Options, or 102

                                       13

<PAGE>

Shares, or the Company has made other arrangements for the deduction of tax at
source acceptable to the Trustee.

         6.2      Notwithstanding any other provision of the Plan, upon sale by
an Grantee of any securities held in Trust, the Company shall (or shall cause
the Trustee to) withhold from the proceeds of such sale all applicable taxes,
shall remit the amount withheld to the appropriate Israeli tax authorities,
shall pay the balance thereof directly to such Grantee, and shall report to such
Grantee the amount so withheld and paid to the tax authorities. At the Board's
discretion, for purposes of simplicity and in order to ensure compliance with
local tax regulations, the exercise of the Options and the purchase and sale of
Shares issued upon the exercise of Options made under the Plan shall be executed
by the Company or its Subsidiaries, as appropriate.

         7.       ASSIGNABILITY AND SALE OF OPTIONS.

         Notwithstanding any other provision of the Plan, no 102 Option or 3(i)
Option, purchasable hereunder, whether fully paid or not, shall be assignable,
transferable or given as collateral or any right with respect to them given to
any third party whatsoever, and during the lifetime of the Grantee each and all
of such Grantee's rights to purchase Shares hereunder shall be exercisable only
by the Grantee. Any such action made directly or indirectly, for an immediate
validation or for a future one, shall be void.

         As long as 102 Options granted, or Shares purchased pursuant to thereto
are held by the Trustee in favor of the Grantee, than all rights the last
possesses over the Options or Shares are personal, can not be transferred,
assigned, pledged or mortgaged, other than by will or laws of descent and
distribution.

         The Grantee shall agree to indemnify the company and/or its
subsidiaries and/or the trustee and hold them harmless against and from any and
all liability for any such tax or interest or penalty thereon, including without
limitation, liabilities relating to the necessity to withhold, or to have
withheld, any such tax from any payment made to the Grantee,

         8.       DIVIDENDS.

         Notwithstanding any other provision of the Plan, any cash dividends
paid with respect to any Share issued upon exercise of Options granted under the
Plan and held by a Trustee on behalf of the Grantee shall be remitted to the
Grantee directly.

         9.       GOVERNING LAW AND JURISDICTION.

         Notwithstanding any other provision of the Plan, including without
limitation Section 11, with respect to Grantees subject to this Appendix, the
Plan and all instruments issued thereunder or in connection therewith shall be
governed by, and interpreted in accordance with, the laws of the State of Israel
applicable to contracts made and to be performed therein. The competent courts
of Tel-Aviv, Israel shall have sole jurisdiction in any matters pertaining to
this Appendix.

                                       14<PAGE>

                                                                    EXHIBIT 4.03

                         PRECISE SOFTWARE SOLUTIONS LTD.
                                STOCK OPTION PLAN
                  (F/K/A SAVANT CORPORATION STOCK OPTION PLAN)

PURPOSE. The purpose of this Stock Option Plan is to further the interests of
Precise Software Solutions Ltd., its Affiliates and its shareholders, by
providing incentives in the form of stock option grants to key employees,
officers, directors and consultants of the Company and its Affiliates, who
contribute materially to the Company's success and profitability. The grants
will recognize and reward outstanding individual performances and contributions
and will give persons receiving grants a proprietary interest in the Company,
thus enhancing their personal interest in the Company's continued success and
progress. This Plan also will assist the Company and its Affiliates in
attracting and retaining key persons. This Plan grants options that are intended
to be either (1) incentive stock options as defined under Code Section 422, and
will be taxed under that Section; or (2) non-incentive stock options, also known
as statutory stock options, and will be taxed under Code Section 83.

                             ARTICLE 1 - DEFINITIONS

1.1      "AFFILIATE" means (A) any corporation (other than the Company) in an
unbroken chain of corporations that includes the Company, if each of such
corporations, other than the last corporation in the chain, owns at least 50% of
the total voting power of one of the other corporations, and (B) any wholly-owed
limited liability company of any such corporation listed in Subsection (A)
above.

1.2      "AGREEMENT" means a written agreement entered into between the Company
and a Recipient that sets out the terms of the Option granted to the Recipient.

1.3      "BOARD" means the Company's board of directors.

1.4      "CHANGE OF CONTROL" occurs when (A) any person, including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended,
becomes the beneficial owner of 40% or more of the total number of shares
entitled to vote in electing directors to the Board, or (ii) the Company merges
with any other company or substantially all of the Company's assets are acquired
by any other company.

1.5      "CODE" means the Internal Revenue Code of 1986, as amended.

1.6      "COMMITTEE" means the Stock Option Committee of directors appointed by
the Board in accordance with Section 2 of this Plan, or if no such committee is
appointed, then the Board.

1.7      "COMPANY" means Precise Software Solutions Ltd.

1.8      "CONSULTANT" means any person who, or any employee of a firm that, is
engaged by the Company or any Affiliate to render services either for the
Company or an Affiliate, and any non-employee director of the company or an
Affiliate.

1.9      "CONTINUOUS SERVICE" means the absence of any interruption or
termination of service as an Employee or Consultant of the company or an
Affiliate. A person's Continuous Service is not considered interrupted because
of sick leave, military leave, or any other leave of absence approved by the
Company.

1.10     "DISPOSE OF" means pledge, hypothecate, give, assign, encumber, sell,
grant an option with respect to, or otherwise transfer, to any person regardless
of whether the person is a shareholder of the Company.

1.11     "EMPLOYEE" means any person, including officers, employed on an hourly
or salaried basis by the Company or any Affiliate of the Company that now exists
or later is organized or acquired by or acquires the Company.

1.12     "EXERCISE PRICE" means the price per Option Share at which an Option
may be exercised, as

                                        1

<PAGE>

determined by the Committee and as specified in the Recipient's Agreement.

1.13     "FAIR MARKET VALUE" means the fair market value of the Stock on the
Grant Date. If the Stock is not traded publicly on the Grant Date, then
Committee must determine the Shares' fair market value as of that date, using
factors that the Committee considers relevant, such as the price at which recent
sales have been made, the Stock's book value, and the Company's current and
projected earnings. The Committee's determination of fair market value will be
made in the Committee's sole and absolute discretion and will be final, binding
and conclusive for all purposes under this Plan. If the Stock is publicly traded
on the Grant Date, then the fair market value on that date is the mean between
the closing bid and asked prices of the Stock as reported by the National
Association of Securities Dealer Automated Quotations ("NASDAQ") on that date
or, if the Stock is listed on a stock exchange, then the mean between the high
and low sales prices of the Stock on that date, as reported in The Wall Street
Journal. If trading in the Stock or a price quotation does not occur on the
Grant Date, then the next preceding date on which the Stock was traded or a
price was quoted will determine the Stock's fair market value.

1.14     "GRANT DATE" means the date on which the Option is granted.

1.15     "ISO" means a stock option that is intended to be and is identified as
an "incentive stock option" and is granted under this Plan satisfying the
requirements of Code Section 422.

1.16     "NON-ISO" means a stock option granted under this Plan that is not
intended to be and is not identified as an ISO.

1.17     "OPTION" means an ISO, Non-ISO, or both granted under this Plan.

1.18     "OPTION SHAREHOLDER" means a person who has exercised his Option.

1.19     "OPTION SHARES" means shares issued upon exercise of an Option.

1.20     "RECIPIENT" means an Employee, Consultant, or other person receiving an
Option.

1.21     "SHARE" means a share of the Stock, as adjusted in accordance with
Section 13 of this Plan.

1.22     "STOCK" means Ordinary Shares of 0.03 NIS par value per share of the
Company, or such other class of shares or securities as to which the Plan may be
applicable under Section 13 of this Plan.

                           ARTICLE 2 - ADMINISTRATION

2.1      A committee of at least two members of the Board will administer this
Plan ("Committee"). The Committee will include at least one director who is not
an employee of the Company. All members of the Committee serve at the Board's
pleasure. If the Board does not appoint any members to the Committee, then the
Board will serve as the Committee.

2.2      Except as otherwise provided in this Plan, the Committee has the
exclusive power to select the Employee and Consultant participants in this Plan,
to establish the terms of the Options granted to each Recipient, and to make all
other determinations necessary or advisable under this Plan. The Committee has
the sole and absolute discretion to determine whether the performance of an
eligible Employee or Consultant warrants an award under this Plan and to
determine the amount of the award. The Committee has full and exclusive power to
construe and interpret this Plan; to prescribe, amend, and rescind rules and
regulations relating to this Plan, and to take all actions necessary or
advisable for the Plan's administration. The Committee, in the exercise of its
powers, may correct any defect or supply any omission, or reconcile any
inconsistency in this Plan, or in any Agreement, in the manner and to the extent
that the Committee deems necessary or expedient to make this Plan fully
effective. In exercising this power, the Committee may retain counsel at the
Company's expense. The Committee also has the power to determine the duration
and purposes of leaves of absence that may be granted to a Recipient without
constituting a termination of the Recipient's Continuous Service for purposes of
this Plan. The Committee has the authority to accelerate or to defer, with the
Recipient's consent, the exercise date of any Option; or with the Recipient's
consent, to re-price, cancel and re-grant, or otherwise adjust the exercise
price of an Option previously granted by the Committee. All

                                        2

<PAGE>

Committee determinations will be final and binding on all persons. A member of
the Committee will not be liable for performing any act or making any
determination in good faith.

                       ARTICLE 3 - SHARES SUBJECT TO PLAN

Subject to Section 13 of this Plan, the maximum, aggregate number of Shares
subject to Options under this Plan is 93,403 shares (unless later increased by a
Plan amendment). If an Option either expires or becomes unexercisable for any
reason without having been exercised, then the unpurchased Shares that were
subject to the Option will be available for other Options under this Plan.

                            ARTICLE 4 - PARTICIPANTS

4.1      ELIGIBILITY. Each Employee and Consultant of the Company and its
Affiliates, as the Committee in its sole discretion designates, is eligible to
participate in this Plan. Despite anything to the contrary in this Plan, only
Employees are eligible to receive ISO grants. The Committee's award of an Option
to a Recipient in any year does not require the Committee to award an Option to
that Recipient in any other year. Further, the Committee may award different
Options to different Recipients and has full discretion to choose whether to
grant Options to any eligible Employee or Consultant. The Committee may consider
such factors as it deems pertinent in selecting Recipients and in determining
the amount of their Options, including, without limitation, (A) the Company's
financial condition or its Affiliates; (B) expected profits for the current or
future years; (C) the contributions of a prospective participant to the
Company's success and profitability or its Affiliates; and (D) the adequacy of
the prospective participant's other compensation. Participants may include
persons to whom stock, stock options, stock appreciation rights, or other
benefits previously were granted under this Plan or another plan of the Company
or any Affiliate, whether or not the previously granted benefits have been
exercise fully or vested.

4.2      NO RIGHT OF EMPLOYMENT. A Recipient's right, if any, to continue to
serve the Company and its Affiliates as an officer, Employee, director,
Consultant, or otherwise will not be enlarged or otherwise affected by his
designation as a Recipient. Further, a person's status as a Recipient does not
in any way restrict the Company's or an Affiliate's right, as the case may be,
to terminate at any time the employment or affiliation of any Recipient.

                         ARTICLE 5 - OPTION REQUIREMENTS

Each Option granted to a Recipient under this Plan will contain such provisions
as the Committee at the Grant Date deems appropriate. Each Option granted to a
Recipient must satisfy the following requirements:

5.1      WRITTEN AGREEMENT. Each Option granted to a Recipient must be evidenced
by an Agreement. The Agreement's terms may differ from Recipient to Recipient.
The Agreement must include a description of the substance of each of the
requirements in this Section with respect to that particular Option, and must
indicate whether an Option is an ISO or Non-ISO.

5.2      NUMBER OF SHARES. Each Agreement must specify the number of Shares
subject to the Option.

5.3      EXERCISE PRICE. Except as provided in Section 5.12, the Exercise Price
of each Share subject to an ISO must be determined by the Committee to equal the
Share's Fair Market Value on the ISO Option's Grant Date. The Exercise Price of
each Share subject to a Non-ISO will be the price as determined by the Committee
in its sole discretion.

5.4      DURATION OF OPTION. Except as provided in Section 5.12, each Option
granted to a Recipient will expire on the tenth anniversary of the Option's
Grant Date or, at an earlier date set by the Committee in establishing the
Option's terms when granted. If the Recipient's Continuous Service with the
Company terminates before the Option's expiration date, then the Options owned
by the Recipient will expire on the earlier of the date stated in this Section
5.4 or the date provided elsewhere in this Article 5. Further, expiration of an
Option may be accelerated under Section 5.10 of this Plan.

5.5      VESTING OF OPTION AND EXERCISABILITY. A Recipient may not exercise any
Option until it becomes vested. Unless otherwise provided by the Committee in
establishing an Option's terms, an Option will vest

                                        3

<PAGE>

25% at the end of the first year, and 25% at the end of each following year,
becoming fully vested at the end of the fourth year.

5.6      DEATH. In the case of the Recipient's death, the Option will expire on
the one-year anniversary of the Recipient's death, or if earlier, the date
specified in Section 5.4 of this Plan. During the one-year period following the
Recipient's death, the Option may be exercised to the extent it could have been
exercised at the time the Recipient died with respect to any vested Options,
subject to any adjustment under Article 13 of this Plan.

5.7      DISABILITY. In the case of a Recipient's total and permanent disability
and his resulting termination of Continuous Service with the Company or any
Affiliate, the Option will expire on the one-year anniversary date of
Recipient's last day of Continuous Service, or, if earlier, the date specified
in Section 5.4 of this Plan. During the one-year period following the
Recipient's termination of Continuous Service by reason of disability, any
vested Option may be exercised as to the number of Shares for which the Option
could have been exercised at the time the Recipient became disabled, subject to
any adjustments under Article 13 of this Plan.

5.8      BANKRUPTCY. If the Recipient files or has filed against him a petition
in bankruptcy, all Options held by the Recipient will lapse immediately upon the
filing of such bankruptcy petition.

5.9      TERMINATION OF SERVICE. If the Recipient's Continuous Service with the
Company or any Affiliate ceases, for no reason or for any reason other than
death or disability, then all unvested Options held by the Recipient will lapse
immediately following the termination of the Recipient's Continuous Service with
the Company or any Affiliate. Any vested Option held by the Recipient as of his
termination date may continue to be exercised as otherwise provided in this Plan
for only 30 days after the Recipient's termination of Continuous Service.
However, the Committee, in its sole discretion, either at granting the Option or
at the time the Recipient's Continuous Service ceases, may delay the Option's
expiration date to a date after termination of the Recipient's Continuous
Service. The maximum delay that may be allowed is 60 days. During any such delay
of the Option's expiration date, the Option may be exercised only for the number
of Shares for which the Option could have been exercised on the termination date
with respect to any vested Options, subject to any adjustment under Article 13
of this Plan. Despite anything in this Plan to the contrary, if the recipient
(A) commits any act of malfeasance or wrongdoing affecting either the Company or
any Affiliate, (B) breaches any covenant not to compete or employment agreement
with either the Company or any Affiliate, (C) engages in conduct that would
warrant the Recipient's discharge for cause, or (D) discloses the number of
shares granted or other relevant terms of any Option to anyone other than
members of his or her immediate family or his or her personal financial
advisors, then any unexercised part of the Option will lapse immediately upon
the earlier of the occurrence of such event or the last day of the Recipient's
Continuous Service with the Company or any Affiliate.

5.10     CHANGE OF CONTROL. If a Change of Control occurs, then the Board either
may vote to terminate immediately all Options outstanding under the Plan as of
the Change of Control date or may vote to accelerate the Options' expiration to
the 10th day after the effective date of the Change of Control. If the Board
votes to terminate immediately the Options, then the Board must make a cash
payment to the Recipient equal to the difference between the Exercise Price and
the Fair Market Value of the Shares that would have been subject to the
terminated vested Options on the Change of Control date.

5.11     CONDITIONS REQUIRED FOR EXERCISE. Options granted to Recipients under
this Plan are exercisable only if the issuance of Shares under the exercise
complies with the applicable securities laws, as contemplated by Article 11 of
this Plan.

5.12     TEN PERCENT SHAREHOLDERS. An ISO granted to an Employee who, on the
Grant Date, owns stock possessing more than 10% of the total combined voting
power of all classes of stock of either the Company, any parent or any
Affiliate, will be granted only at an exercise price of 110% of Fair Market
Value on the Grant Date and will be exercisable only during a period not to
exceed 5 years immediately following the Grant Date. In calculating stock
ownership of any person, the attribution rules of Code section 424(d) will
apply. Further, in calculating stock ownership, any stock that the individual
may purchase under outstanding Options will not be considered.

5.13     MAXIMUM OPTION GRANTS. The aggregate Fair Market Value determined on
the Grant Date, of the

                                        4

<PAGE>

Company's Stock with respect to which any ISOs under this Plan and all other
plans of the Company or its Affiliates (within the meaning of Code Section
422(b)) may become exercisable by any individual for the first time in any
calendar year must not exceed $100,000. In spite of this Section 5.13's
limitations, the Company may grant Options in excess of this Section's
limitations, in which case the excess Options will be deemed Non-ISOs.

                         ARTICLE 6 - METHOD OF EXERCISE

An Option granted under this Plan will be deemed exercised when the person
entitled to exercise the Option (A) delivers written notice to the Company's
president (or his delegate) of the decision to exercise, (B) concurrently
tenders to the Company full payment for the Shares to be purchased under the
exercise, and (C) complies with the other requirements the Committee may have
established under this Plan. Payment for Shares with respect to which an Option
is exercised may be made in cash, certified check, or wholly or partially in the
form of Stock having a Fair Market Value equal to the exercise price. No person
will have the rights of a shareholder with respect to Shares subject to an
Option granted under this Plan until a certificate or certificates for the
Shares have been delivered to him. An Option granted under this Plan may not be
exercised in increments of less than 100 Shares, or, if less, 100% of the full
number of Shares as to which the Option can be exercised. A partial exercise of
an Option will not affect the holder's right to exercise the Option from time to
time in accordance with this Plan as to the remaining Shares subject to the
Option.

                         ARTICLE 7 - RIGHT OF REPURCHASE

7.1      REPURCHASE RIGHT. If the Recipient no longer maintains Continuous
Service with either the Company or any Affiliate for no reason or for any reason
("Service Termination") at any time after the grant of the Option under which
such Shares were issued, then at the Committee's discretion, Shares issued under
the exercise of an Option may be subject to a right, but not an obligation, of
repurchase by the Company (the "Right of Repurchase"). The Company may exercise
its Right of Repurchase at the price specified in Section 7.2. Shares issued
under this Plan may be transferred by the Recipient subject to the Right of
Repurchase. The Company must legend the Right of Repurchase on the stock
certificates evidencing such Shares and must take such other steps as it deems
necessary to ensure compliance with this restriction.

7.2      REPURCHASE PRICE. The price per Share at which the Company may exercise
the Right of Repurchase under Section 7(a) (the "Repurchase Price") will be the
higher of the Exercise Price of each Share paid by the Recipient, or the Shares'
Fair Market Value on the date the Company sends the notice to the Recipient of
the Company's exercising its Right of Repurchase under Section 7.1.

7.3      REPURCHASE PROCEDURE. The Company must exercise its Right of Repurchase
by sending written notice to the Recipient of the Company's taking such action
and specifying the number of Shares being repurchased. The Company's Right of
Repurchase will terminate if not exercised by written notice from the Company to
the Recipient within one year after the date of Service Termination or the last
date any Option granted to such Recipient is exercised, whichever is later. If
the Company exercises its Right of Repurchase, then the Recipient immediately
must deliver to the Company every stock certificate representing the Shares
being repurchased, together with appropriate assignments separate from
certificates or other appropriate transfer documents. The Company then must
promptly pay the total Repurchase Price in cash or a certified check to the
Recipient.

7.4      ELECTION TO DEFER PURCHASE OF OPTIONS SHARES.

         A.       In spite of anything to the contrary in this Article 7, a
         Recipient whose Shares were issued under an ISO may elect to defer the
         Company's Right of Repurchase with respect to such Shares under this
         Subsection 7.4(A) until the holding period requirements of Code Section
         422(a) are met. The Recipient's election must be in writing and must be
         in such form as the Committee may require. The Recipient must deliver
         his written election to the Company by certified mail no later than 7
         business days after the date on which the Recipient receives notice
         that the Company has elected to exercise its Right of Repurchase. A
         Recipient's election under this subsection 7.4(A) must pertain to all
         Shares issued to the Recipient and is irrevocable.

         B.       With respect to a Recipient making the election described in
         Subsection 7(A), the Company then

                                        5

<PAGE>

         must repurchase the Recipient's Shares on or before the date which is
         one year following the earlier of the date on which the Recipient dies
         or the date on which the holding period requirements of Code Section
         422(a) are met. The Repurchase Price of each Share remains as provided
         in Section 7.2 of this Plan.

7.5      BINDING EFFECT. The Company's Right of Repurchase inures to the benefit
of its successors and assigns and binds the Recipient's successors in
interested, personal representatives, heirs or legatees.

7.6      PAYMENT OF NET AMOUNT OWING. In spite of anything to the contrary in
this Plan, if the Company determines to exercise its Right of Repurchase under
this Article 7 before any Shares have been issued as a result of an exercise of
an Option, in lieu of issuing any Shares, the Company will have the right, but
not the obligation, to pay the Recipient the net amount owing to the Recipient.

7.7      TERMINATION OF RIGHT OF REPURCHASE. In spite of any other provision of
this Article 7, if the Company's Stock is listed on any United States securities
exchange or traded on any formal over-the-counter market in general use in the
United States at the time that the Recipient otherwise would be required to
transfer his Shares, the Company no longer will have the Right of Repurchase,
and the Recipient will have no obligation to comply with this Article 7.

                       ARTICLE 8 - RIGHT OF FIRST REFUSAL

8.1      RIGHT OF FIRST REFUSAL. Shares issued under the exercise of an Option
are subject to the requirement that if a Recipient proposes to sell, pledge, or
otherwise transfer any Shares (or any interest in such Shares) acquired under
the exercise of an Option to any person or entity, then the Company has a right
of first refusal (the "Right of First Refusal") with respect to such Shares. Any
Recipient desiring to transfer Shares (or an interest in such Shares) subject to
the Company's Right of First Refusal must give written notice (the "Transfer
Notice") to the Company describing fully the proposed transfer, including the
number of Shares proposed to be transferred, the proposed transfer price, and
the name and address of the proposed transferee. The Recipient and the proposed
transferee must both sign the Transfer Notice. It must constitute a binding
commitment of the Recipient and the proposed transferee to the transfer of the
Shares. The Company has the right to purchase the Shares subject to the Transfer
Notice on the terms contained in the Transfer Notice, subject to any change in
such terms permitted under Section 8.2 of this Plan. The Company must exercise
its Right of First Refusal by delivering written notice within 30 days after the
date the Company received the Transfer Notice. The Company's rights under this
Section 8.1 are freely assignable, in whole or in part.

8.2      TRANSFER OF SHARES. If the Company fails to exercise its Right of First
Refusal within 30 days after the date on which the Company received the Transfer
Notice, then the Recipient, not later than 2 months following receipt of the
Transfer Notice by the Company, may consummate a transfer of the Shares subject
to the Transfer Notice on the same terms contained in the Transfer Notice. Any
proposed transfer on terms different from those described in the Transfer
Notice, as well as any later proposed transfer by the Recipient, must again be
subject to the Company's Right of First Refusal and must again require
compliance with the procedure contained in Section 8.1 of this Plan. If the
Company exercises its Right of First Refusal, then the Recipient immediately
must endorse and deliver to the Company every stock certificate representing the
Shares being purchased, and the Company then must promptly pay the purchase
price in accordance with the terms contained in the Transfer Notice.

8.3      REPURCHASE PAYMENT. The amount payable to a Recipient under the
Company's exercise of its Right of First Refusal must be paid to the Recipient
in accordance with the Transfer Notice's terms or, at the Company's election,
may be paid in full either in cash or by a certified check.

8.4      BINDING EFFECT. The Company's Right of First Refusal inures to the
benefit of its successors and assigns and binds any transferee of the Shares,
including a proposed transferee of a transferee who acquired Shares in a
transaction where the Company failed to exercise its Right of First Refusal.

8.5      TERMINATION OF RIGHT OF FIRST REFUSAL. In spite of any other provision
of this Article 8, if the Company's Stock is listed on any United States
securities exchange or traded on any formal over-the-counter market in general
use in the United States at the time the Recipient desires to transfer his
Shares, then the Company no longer will have a Right of First Refusal, and the
Recipient will have no obligation to comply with this Article 8.

                                        6

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                ARTICLE 9 - LOAN FROM COMPANY TO EXERCISE OPTION

The Committee, in its discretion and subject to the requirements of applicable
law, may recommend to the Company that it lend the Recipient the funds needed by
him to exercise an Option. The Recipient must make application to the Company
for the loan, completing the forms and providing the information requested by
the Company. The loan will be secured by such collateral as the Company may
require, subject to its underwriting requirements and the requirements of
applicable law. The Recipient must execute a promissory note as well as any
other documents the Committee deems necessary.

                     ARTICLE 10 - DESIGNATION OF BENEFICIARY

Each Recipient must designate in the Agreement that he executes, a beneficiary
to receive Options awarded under this Plan in the event if the Recipient dies
prior to exercising his Options fully. If the Recipient does not designate a
beneficiary or if the beneficiary so designated does not survive the Recipient,
then the Recipient's estate will be deemed his beneficiary. A Recipient may
change his previously designated beneficiary by delivering written notice of the
beneficiary change to the Committee.

                    ARTICLE 11 - TAXES; COMPLIANCE WITH LAW;
                     APPROVAL OF REGULATORY BODIES; LEGENDS.

11.1     The Company either will withhold from payments otherwise due and owing
to a Recipient (or his designated beneficiary) or will require the Recipient (or
his designated beneficiary) to remit to the Company in cash, upon demand, an
amount sufficient to satisfy any federal (including income, FICA, and FUTA
amounts), state or local, withholding tax requirements at the time the Recipient
(or his designated beneficiary) recognizes income for federal, state, or local
tax purposes as the result of receiving Shares under this Plan as a condition to
the Company's issuing Shares upon an Option's exercise (whether to the Recipient
or to his designated beneficiary).

11.2     Options are exercisable, and Shares may be delivered, under this Plan,
only in compliance with all applicable federal and state laws and regulations
and the rules of all stock exchanges on which the Company's stock is listed at
any time. An Option is exercisable only if either (A) a registration statement
pertaining to the Shares to be issued upon exercise of the Option has been filed
with and declared effective by the Securities and Exchange Commission and
remains effective on the date of exercise, or (B) an exemption from the
registration requirements of applicable securities laws is available. This Plan
does not require the Company, however, to file a registration statement or to
assure the availability of an exemption. Any certificate issued to evidence
Shares issued under this Plan may bear such legends and statements, and will be
subject to such transfer restrictions, as the Committee deems advisable to
assure compliance with federal and state laws and regulations and with the
requirements of this Section and to reflect this Plan's provisions. No Option
may be exercised, and Shares may not be issued under this Plan, until the
Company has obtained the consent or approval of every regulatory body, federal
or state, having jurisdiction over such matters and the Committee deems
advisable, it being understood that the Company is not obligated to list,
register or qualify any Option or Shares under any securities laws. Any such
postponement does not extend the time within which any Option may be exercised.
Neither the Company, its directors nor its officers has any obligation or
liability to the Recipient of an Option or to a successor-in-interest with
respect to any Shares as to which such Option may lapse because of such
postponement.

11.3     The Committee may require that each person who acquires the right to
exercise an Option or to ownership of Shares by bequest or inheritance furnish
the Committee with reasonable evidence of ownership of the Option as a condition
to the person's exercising the Option. In addition, the Committee may require
such consents and releases of taxing authorities as the Committee deems
advisable.

11.4     With respect to persons subject to Section 16 of the Securities
Exchange Act of 1934 (the "1934 Act"), transactions under this Plan are intended
to comply with all applicable conditions of Rules 16b-3 under the 1934 Act or
Rule 16b-3's successors under the 1934 Act. To the extent any provision of this
Plan or action by the Committee fails to so comply, it will be deemed null and
void, to the extent permitted by law and deemed advisable by the Committee.

                                        7

<PAGE>

                           ARTICLE 12 - ASSIGNABILITY

An Option granted under this Plan is not transferable except by will or the laws
of descent and distribution. All rights of an Option are exercisable only by the
Recipient during his lifetime.

                  ARTICLE 13 - ADJUSTMENT UPON CHANGE OF SHARES

If a reorganization, merger, consolidation, reclassification, recapitialization,
combination or exchange of shares, stock split, stock dividend, rights offering,
or other expansion or contraction of the Company's Stock occurs, then the number
and class of Shares for which Options are authorized to be granted under this
Plan, the number and class of Shares then subject to Options previously granted
either to Employees or Consultants under this Plan, and the price per Share
payable upon exercise of each Option outstanding under this Plan will be
adjusted equitably by the Committee to reflect such changes. To the extent
deemed equitable and appropriate by the Board, and subject to any required
shareholders' action, in any merger, consolidation, reorganization, liquidation
or dissolution, any Option granted under this Plan will pertain to the
securities and other property to which a holder of the number of Shares of Stock
covered by the Option would have been entitled to receive in connection with
such event.

                   ARTICLE 14 - COMPANY'S GOVERNING DOCUMENTS

By exercising any Option, the holder of the Option takes his Shares subject to
the Company's Articles of Incorporation, Bylaws, Stockholders Agreement, and
other policies as they may then be in effect and as later amended from time to
time.

                    ARTICLE 15 - EXERCISE OF UNVESTED OPTIONS

The Committee may grant any Recipient the right to exercise any Option prior to
the complete vesting of the Option. Without limiting the generality of the
previous sentence, the Committee may provide that if an Option is exercised
prior to having vested completely, then the Shares issued upon such exercise
remain subject to vesting at the same rate as under the Option so exercised and
are subject to the Company's Right of Repurchase at the Repurchase Price with
respect to all unvested Shares if the Recipient's Continuous Service with the
Company or an Affiliate ceases for no reason or for any reason.

                        ARTICLE 16 - LIABILITY OF COMPANY

The Company and any Affiliate that is in existence or later may come into
existence will not be liable to any person for any tax consequences expected but
not realized by a Recipient or other person because of the exercise of an
Option.

                  ARTICLE 17 - AMENDMENT OR TERMINATION OF PLAN

17.1     The Board either may amend or may terminate this Plan from time to time
without shareholder approval. However, without shareholder approval, no
amendment will be effective if it attempts any of the following:

         A.       materially increases the benefit accruing to participants
         under this Plan;

         B.       increases the aggregate number of Shares that may be delivered
         upon exercising an Option granted under this Plan;

         C.       materially modifies the eligibility requirements for
         participation in this Plan; or

         D.       amends the requirements of Subsections A or B of this Section
         17.1.

17.2     Any amendment to this Plan, whether with or without shareholder
approval, that alters an Option that was granted before the amendment (unless
the alteration is expressly permitted under this Plan) will be effective only
with the Recipient's consent to whom the Option was granted or the holder
currently entitled to exercise the Option.

                                        8

<PAGE>

                           ARTICLE 18 - MISCELLANEOUS

18.1     EXPENSES OF PLAN. The Company bears the expense of administering the
Plan.

18.2     DURATION OF PLAN. Options may be granted under this Plan only during
the 10 years immediately following the Plan's effective date, unless the Plan is
terminated sooner under Subsection 17.1. All Options that are outstanding on the
Plan's termination date will remain in effect until the Options either are
exercised or otherwise expire.

18.3     APPLICABLE LAW. Maryland law, without regard to its conflict of laws
provisions, exclusively governs this Plan.

18.4     EFFECTIVE DATE. This Plan's effective date is the earlier of (A) the
date on which the Board adopts the Plan or (B) the date on which the
shareholders approve the Plan.

                                        9

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