Document:

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                                                                   Exhibit 4.12

                                NETEGRITY, INC.
                             1997 STOCK OPTION PLAN

1. Purpose of the Plan.

This stock option plan (the "Plan") is intended to provide incentives:

         (a) to the officers and other employees of NeTegrity, Inc. (the
         "Company") and any present or future subsidiaries of the Company by
         providing them with opportunities to purchase stock in the Company
         pursuant to options granted hereunder which qualify as "incentive stock
         options" under Section 422 of the Internal Revenue Code of 1986, as
         amended (the "Code") ("ISO" or "ISOs"); and

         (b) to officers, employees, consultants and directors of the Company
         and any present or future subsidiaries by providing them with
         opportunities to purchase stock in the Company pursuant to options
         granted hereunder which do not qualify as ISOs ("Non-Qualified Option"
         or "Non-Qualified Options"). As used herein, the terms "parent" and
         "subsidiary" mean "parent corporation" and "subsidiary corporation,"
         respectively, as those terms are defined in Section 424 of the Code and
         the Treasury Regulations promulgated thereunder (the "Regulations").

2. Stock Subject to the Plan.

         (a) The initial maximum number of shares of common stock, par value
$.01 per share, of the Company ("Common Stock") available for stock options
granted under the Plan through the end of the Company's fiscal year ending
December 31, 1997 shall be 500,000 shares of Common Stock. The maximum number of
shares of Common Stock available for grants shall be subject to adjustment in
accordance with Section 11 thereof. Shares issued under the Plan may be
authorized but unissued shares of Common Stock or shares of Common Stock held in
treasury.

         (b) To the extent that any stock option shall lapse, terminate, expire
or otherwise be cancelled without the issuance of shares of Common Stock, the
shares of Common Stock covered by such option(s) shall again be available for
the granting of stock options.

         (c) Common Stock issuable under the Plan may be subject to such
restrictions on transfer, repurchase rights or other restrictions as shall be
determined by the Committee (as defined in Section 3 below).

3. Administration of the Plan.

         (a) The Plan shall be administered by a committee (the "Committee")
consisting of two or more members of the Company's Board of Directors. The Board
of Directors may from time to time appoint a member or members of the Committee
in substitution for or in addition to the member or members then in office and
may fill vacancies on the Committee however caused. The Committee shall choose
one of its members as Chairman and shall hold meetings at such times and places
as it shall deem advisable. A majority of the members of the Committee shall
constitute a quorum and any action may be taken by a majority of those present
and voting at any meeting. Any action may also be taken without the necessity of
a meeting by a written instrument signed by a majority of the Committee. The
decision of the Committee as to all questions of interpretation and application
of the Plan shall be final, binding and conclusive on all persons. The Committee
shall have the authority to adopt, amend and rescind such rules and regulations
as, in its opinion, may be

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advisable in the administration of the Plan. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or in
any option agreement granted hereunder in the manner and to the extent it shall
deem expedient to carry the Plan into effect and shall be the sole and final
judge of such expediency. No Committee member shall be liable for any action or
determination made in good faith. Prior to the date of the registration of an
equity security of the Company under Section 12 of the Exchange Act, the Plan
may be administered by the Board of Directors and in such event all references
in this Plan to the Committee shall be deemed to mean the Board of Directors.

         (b) Subject to the terms of the Plan, the Committee shall have the
authority to (i) determine the employees of the Company and its subsidiaries
(from among the class of employees eligible under Section 4 to receive ISOs) to
whom ISOs may be granted, and to determine (from the class of individuals
eligible under Section 4 to receive Non-Qualified Options) to whom Non-Qualified
Options may be granted; (ii) determine the time or times at which options may be
granted; (iii) determine the option price of shares subject to each option which
price shall not be less than the minimum price specified in Section 6; (iv)
determine whether each option granted shall be an ISO or a Non-Qualified Option;
(v) determine (subject to Section 9) the time or times when each option shall
become exercisable and the duration of the exercise period; (vi) determine
whether restrictions such as repurchase options are to be imposed on shares
subject to options and the nature of such restrictions; and (vii) determine the
size of any Options under the Plan, taking into account the position or office
of the optionee with the Company, the job performance of the optionee and such
other factors as the Committee may deem relevant in the good faith exercise of
its independent business judgment.

4. Eligibility.

         Options designated as ISOs may be granted only to officers and other
employees of the Company or any subsidiary. Non-Qualified Options may be granted
to any officer, employee, consultant or director of the Company or of any of its
subsidiaries.

         In determining the eligibility of an individual to be granted an
option, as well as in determining the number of shares to be optioned to any
individual, the Committee shall take into account the position and
responsibilities of the individual being considered, the nature and value to the
Company or its subsidiaries of his or her service and accomplishments, his or
her present and potential contribution to the success of the Company or its
subsidiaries, and such other factors as the Committee may deem relevant.

         No option designated as an ISO shall be granted to any employee of the
Company or any subsidiary if such employee owns, immediately prior to the grant
of an option, stock representing more than 10% of the voting power or more than
10% of the value of all classes of stock of the Company or a parent or a
subsidiary, unless the purchase price for the stock under such option shall be
at least 110% of its fair market value at the time such option is granted and
the option, by its terms, shall not be exercisable more than five years from the
date it is granted. In determining the stock ownership under this paragraph, the
provisions of Section 424(d) of the Code shall be controlling. In determining
the fair market value under this paragraph, the provisions of Section 6 hereof
shall apply.

5. Option Agreement.

         Each option shall be evidenced by an option agreement (the "Agreement")
duly executed on behalf of the Company and by the optionee to whom such option
is granted, which Agreement shall comply with and be

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subject to the terms and conditions of the Plan. The Agreement may contain such
other terms, provisions and conditions which are not inconsistent with the Plan
as may be determined by the Committee, provided that options designated as ISOs
shall meet all of the conditions for ISOs as defined in Section 422 of the Code.
The date of grant of an option shall be as determined by the Committee. More
than one option may be granted to an individual.

6. Option Price.

         The option price or prices of shares of the Company's Common Stock for
options designated as Non-Qualified Options shall be as determined by the
Committee, but in no event shall the option price be less than the minimum legal
consideration required therefor under the laws of the State of Delaware or the
laws of any jurisdiction in which the Company or its successors in interest may
be organized. The option price or prices of shares of the Company's Common Stock
for ISOs shall be the fair market value of such Common Stock at the time the
option is granted as determined by the Committee in accordance with the
Regulations promulgated under Section 422 of the Code. If such shares are then
listed on any national securities exchange, the fair market value shall be the
mean between the high and low sales prices, if any, on such exchange on the
business day immediately preceding the date of the grant of the option or, if
none, shall be determined by taking a weighted average of the means between the
highest and lowest sales prices on the nearest date before and the nearest date
after the date of grant in accordance with Treasury Regulations Section
25.2512-2. If the shares are not then listed on any such exchange, the fair
market value of such shares shall be the mean between the high and low sales
prices, if any, as reported in the National Association of Securities Dealers
Automated Quotation System National Market System ("NASDAQ/NMS") for the
business day immediately preceding the date of the grant of the option, or, if
none, shall be determined by taking a weighted average of the means between the
highest and lowest sales on the nearest date before and the nearest date after
the date of grant in accordance with Treasury Regulations Section 25.2512-2. If
the shares are not then either listed on any such exchange or quoted in
NASDAQ/NMS, the fair market value shall be the mean between the average of the
"Bid" and the average of the "Ask" prices, if any, as reported in the National
Daily Quotation Service for the business day immediately preceding the date of
the grant of the option, or, if none, shall be determined by taking a weighted
average of the means between the highest and lowest sales prices on the nearest
date before and the nearest date after the date of grant in accordance with
Treasury Regulations Section 25.2512-2. If the fair market value cannot be
determined under the preceding three sentences, it shall be determined in good
faith by the Committee.

7. Manner of Payment; Manner of Exercise.

         (a) Options granted under the Plan may provide for the payment of the
exercise price by delivery of (i) cash or a check payable to the order of the
Company in an amount equal to the exercise price of such options, (ii) shares of
Common Stock of the Company owned by the optionee having a fair market value
equal in amount to the exercise price of the options being exercised, or (iii)
any combination of (i) and (ii), provided, however, that payment of the exercise
price by delivery of shares of Common Stock of the Company owned by such
optionee may be made only under such circumstances and on such terms as may from
time to time be established by the Committee. The fair market value of any
shares of the Company's Common Stock which may be delivered upon exercise of an
option shall be determined by the Committee in accordance with Section 6 hereof.
With the consent of the Committee, payment may also be made by delivery of a
properly executed exercise notice to the Company, together with a copy of
irrevocable instruments to a broker to deliver promptly to the Company the
amount of sale or loan proceeds to pay the exercise price. To facilitate the
foregoing, the Company may enter into agreements for coordinated procedures with
one or more brokerage firms.

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         (b) To the extent that the right to purchase shares under an option has
accrued and is in effect, options may be exercised in full at one time or in
part from time to time, by giving written notice, signed by the person or
persons exercising the option, to the Company, stating the number of shares with
respect to which the option is being exercised, accompanied by payment in full
for such shares as provided in subparagraph (a) above. Upon such exercise,
delivery of a certificate for paid-up non-assessable shares shall be made at the
principal office of the Company to the person or persons exercising the option
at such time, during ordinary business hours, after ten business days from the
date of receipt of the notice by the Company, as shall be designated in such
notice, or at such time, place and manner as may be agreed upon by the Company
and the person or persons exercising the option.

8. Exercise of Options.

         Subject to the provisions of paragraphs 9 through 11, each option
granted under the Plan shall be exercisable as follows:

         (a) Vesting. The Option shall not be exercisable until the anniversary
of the date of grant, after which the option shall be exercisable in accordance
with the option agreement evidencing the grant thereof.

         (b) Full Vesting of Installments. Once an installment becomes
exercisable it shall remain exercisable until expiration or termination of the
option, unless otherwise specified by the Committee.

         (c) Partial Exercise. Each option or installment may be exercised at
any time or from time to time, in whole or in part, for up to the total number
of shares with respect to which it is then exercisable.

         (d) Acceleration of Vesting. The Committee shall have the right to
accelerate the date of exercise of any installment or any option; provided that
the Committee shall not, without the consent of an optionee, accelerate the
exercise date of any installment of any option granted to any employee as an ISO
if such acceleration would violate the annual vesting limitation contained in
Section 422(d) of the Code.

9. Term of Options; Exercisability.

         (a) Term. Each option shall expire not more than ten (10) years from
the date of the granting thereof, but shall be subject to earlier termination as
may be provided in the Agreement.

         (b) Exercisability. Except as otherwise provided in the Agreement, an
option granted to an employee optionee who ceases to be an employee of the
Company or one of its subsidiaries shall be exercisable only to the extent that
the right to purchase shares under such option has accrued and is in effect on
the date such optionee ceases to be an employee of the Company or one of its
subsidiaries.

10. Options Not Transferable.

         The right of any optionee to exercise any option granted to him or her
shall not be assignable or transferable by such optionee otherwise than by will
or the laws of descent and distribution, or (solely with respect to
Non-Qualified Options) pursuant to a qualified domestic relations order, as
defined by the Code or Title I of the Employee Retirement Income Security Act,
or the rules thereunder, and any such option shall be

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exercisable during the lifetime of such optionee only by him. Any option granted
under the Plan shall be null and void and without effect upon the bankruptcy of
the optionee to whom the option is granted, or upon any attempted assignment or
transfer, except as herein provided, including without limitation any purported
assignment, whether voluntary or by operation of law, pledge, hypothecation or
other disposition, attachment, divorce, except as provided above with respect to
Non-Qualified Options, trustee process or similar process, whether legal or
equitable, upon such option.

11. Adjustments. Upon the occurrence of any of the following events, an
optionee's rights with respect to options granted to him or her hereunder shall
be adjusted as hereinafter provided, unless otherwise specifically provided in
the written agreement between the optionee and the Company relating to such
option:

         (a) Stock Dividends and Stock Splits. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable upon
the exercise of options shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.

         (b) Consolidations or Mergers. If the Company is to be consolidated
with or acquired by another entity in a merger, 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, as to outstanding options, either (i)
make appropriate provision for the continuation of such options by substituting
on an equitable basis for the shares then subject to such options the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition; or (ii) upon written notice to the optionees,
provide that all options must be exercised, to the extent then exercisable,
within a specified number of days of the date of such notice, at the end of
which period the options shall terminate; or (iii) terminate all options in
exchange for a cash payment equal to the excess of the fair market value of the
shares subject to such options (to the extent then exercisable) over the
exercise price thereof.

         (c) Recapitalization or Reorganization. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in subparagraph (b) above) pursuant to which securities of the Company
or of another corporation are issued with respect to the outstanding shares of
Common Stock, an optionee upon exercising an option shall be entitled to receive
for the purchase price paid upon such exercise the securities he would have
received if he had exercised his option prior to such recapitalization or
reorganization.

         (d) Modification of ISOs. Notwithstanding the foregoing, any
adjustments made pursuant to subparagraphs (a), (b) or (c) 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, it may refrain from making such adjustments.

         (e) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, each option will terminate
immediately prior to the consummation of such proposed action or at such other
time and subject to such other conditions as shall be determined by the
Committee.

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         (f) Issuances of Securities. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
subject to options. No adjustments shall be made for dividends paid in cash or
in property other than securities of the Company.

         (g) Fractional Shares. No fractional shares shall be issued under the
Plan and the optionee shall receive from the Company cash in lieu of such
fractional shares.

         (h) Adjustments. Upon the happening of any of the events described in
subparagraphs (a), (b) or (c) above, the class and aggregate number of shares
set forth in Section 2 hereof that are subject to options which previously have
been or subsequently may be granted under the Plan shall also be appropriately
adjusted to reflect the events described in such subparagraphs. The Committee or
the Successor Board shall determine the specific adjustments to be made under
this paragraph 11 and, subject to Section 3, its determination shall be
conclusive.

         If any person or entity owning restricted Common Stock obtained by
exercise of an option made hereunder receives shares or securities or cash in
connection with a corporate transaction described in subparagraphs (a), (b) or
(c) above as a result of owning such restricted Common Stock, such shares or
securities or cash shall be subject to all of the conditions and restrictions
applicable to the restricted Common Stock with respect to which such shares or
securities or cash were issued, unless otherwise determined by the Committee or
the Successor Board.

12. No Special Employment Rights.

         Nothing contained in the Plan or in any option granted under the Plan
shall confer upon any option holder any right with respect to the continuation
of his employment by the Company (or any subsidiary) or interfere in any way
with the right of the Company (or any subsidiary), subject to the terms of any
separate employment agreement to the contrary, at any time to terminate such
employment or to increase or decrease the compensation of the option holder from
the rate in existence at the time of the grant of an option. Whether an
authorized leave of absence, or absence in military or government service, shall
constitute termination of employment shall be determined by the Committee at the
time.

13. Withholding.

         The Company's obligation to deliver shares upon the exercise of any
option granted under the Plan shall be subject to the option holder's
satisfaction of all applicable Federal, state and local income, excise and
employment tax withholding requirements. The Company and employee may agree to
withhold shares of Common Stock purchased upon exercise of an option to satisfy
the above-mentioned withholding requirements. With the approval of the
Committee, which it shall have sole discretion to grant, and on such terms and
conditions as the Committee may impose, the option holder may satisfy the
foregoing condition by electing to have the Company withhold from delivery
shares having a value equal to the amount of tax to be withheld. The Committee
shall also have the right to require that shares be withheld from delivery to
satisfy such condition.

14. Restrictions on Issue of Shares.

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         (a) Notwithstanding the provisions of Section 7, the Company may delay
the issuance of shares covered by the exercise of an option and the delivery of
a certificate for such shares until one of the following conditions shall be
satisfied:

         (i) The shares with respect to which such option has been exercised are
at the time of the issue of such shares effectively registered or qualified
under applicable Federal and state securities acts now in force or as hereafter
amended; or

         (ii) Counsel for the Company shall have given an opinion, which opinion
shall not be unreasonably conditioned or withheld, that such shares are exempt
from registration and qualification under applicable Federal and state
securities acts now in force or as hereafter amended.

         (b) It is intended that all exercises of options shall be effective,
and the Company shall use its best efforts to bring about compliance with the
above conditions within a reasonable time, except that the Company shall be
under no obligation to qualify shares or to cause a registration statement or a
post-effective amendment to any registration statement to be prepared for the
purpose of covering the issue of shares in respect of which any option may be
exercised, except as otherwise agreed to by the Company in writing.

15. Purchase for Investment; Rights of Holder on Subsequent Registration.

         Unless the shares to be issued upon exercise of an option granted under
the Plan have been effectively registered under the Securities Act of 1933, as
now in force or hereafter amended, the Company shall be under no obligation to
issue any shares covered by any option unless the person who exercises such
option, in whole or in part, shall give a written representation and undertaking
to the Company which is satisfactory in form and scope to counsel for the
Company and upon which, in the opinion of such counsel, the Company may
reasonably rely, that he or she is acquiring the shares issued pursuant to such
exercise of the option for his or her own account as an investment and not with
a view to, or for sale in connection with, the distribution of any such shares,
and that he or she will make no transfer of the same except in compliance with
any rules and regulations in force at the time of such transfer under the
Securities Act of 1933, or any other applicable law, and that if shares are
issued without such registration, a legend to this effect may be endorsed upon
the securities so issued. In the event that the Company shall, nevertheless,
deem it necessary or desirable to register under the Securities Act of 1933 or
other applicable statutes any shares with respect to which an option shall have
been exercised, or to qualify any such shares for exemption from the Securities
Act of 1933 or other applicable statutes, then the Company may take such action
and may require from each optionee such information in writing for use in any
registration statement, supplementary registration statement, prospectus,
preliminary prospectus or offering circular as is reasonably necessary for such
purpose and may require reasonable indemnity to the Company and its officers and
directors and controlling persons from such holder against all losses, claims,
damages and liabilities arising from such use of the information so furnished
and caused by any untrue statement of any material fact therein or caused by the
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
under which they were made.

16. Loans.

         The Company may make loans to optionees to permit them to exercise
options. If loans are made, the requirements of all applicable Federal and state
laws and regulations regarding such loans must be met.

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17. Modification of Outstanding Options.

         The Committee may authorize the amendment of any outstanding option
with the consent of the optionee when and subject to such conditions as are
deemed to be in the best interests of the Company and in accordance with the
purposes of this Plan.

18. Approval of Shareholders.

         The Plan shall be subject to approval by the vote of shareholders
holding at least a majority of the voting stock of the Company voting in person
or by proxy at a duly held shareholders' meeting, or by written consent of
shareholders holding at least a majority of the voting stock of the Company,
within twelve (12) months after the adoption of the Plan by the Board of
Directors and shall take effect as of the date of adoption by the Board of
Directors upon such approval. The Committee may grant options under the Plan
prior to such approval, but any such option shall become effective as of the
date of grant only upon such approval and, accordingly, no such option may be
exercisable prior to such approval.

19. Termination and Amendment.

         Unless sooner terminated as herein provided, the Plan shall terminate
ten (10) years from the date upon which the Plan was duly adopted by the Board
of Directors of the Company. The Board of Directors may at any time terminate
the Plan or make such modification or amendment thereof as it deems advisable;
provided, however, that except as provided in this Section 19, the Board of
Directors may not, without the approval of the shareholders of the Company
obtained in the manner stated in Section 18, increase the maximum number of
shares for which options may be granted or change the designation of the class
of persons eligible to receive options under the Plan, or make any other change
in the Plan which requires shareholder approval under applicable law or
regulations, including any approval requirement which is a prerequisite for
exemptive relief under Section 16 of the Exchange Act. The Committee may grant
options to persons subject to Section 16(b) of the Exchange Act after an
amendment to the Plan by the Board of Directors requiring shareholder approval
under Section 19, but any such option shall become effective as of the date of
grant only upon such approval and, accordingly, no such option may be
exercisable prior to such approval. The Committee may terminate, amend or modify
any outstanding option without the consent of the option holder, provided,
however, that, except as provided in Section 11, without the consent of the
optionee, the Committee shall not change the number of shares subject to an
option, nor the exercise price thereof, nor extend the term of such option.

20. Compliance with Rule 16b-3.

         It is intended that the provisions of the Plan and any option granted
hereunder to a person subject to the reporting requirements of Section 16(a) of
the Exchange Act shall comply in all respects with the terms and conditions of
Rule 16b-3 under the Exchange Act, or any successor provisions, to the extent
the Company has any equity security registered pursuant to Section 12 of the
Exchange Act. Any agreement granting options shall contain such provisions as
are necessary or appropriate to assure such compliance. To the extent that any
provision hereof is found not to be in compliance with such Rule, such provision
shall be deemed to be modified so as to be in compliance with such Rule, or if
such modification is not possible, shall be deemed to be null and void, as it
relates to a recipient subject to Section 16(a) of the Exchange Act.

21. Reservation of Stock.

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         The Company shall at all times during the term of the Plan reserve and
keep available such number of shares of stock as will be sufficient to satisfy
the requirements of the Plan and shall pay all fees and expenses necessarily
incurred by the Company in connection therewith.

22. Limitation of Rights in the Option Shares.

         An optionee shall not be deemed for any purpose to be a shareholder of
the Company with respect to any of the options except to the extent that the
option shall have been exercised with respect thereto and, in addition, a
certificate shall have been issued theretofore and delivered to the optionee.

23. Notices.

         Any communication or notice required or permitted to be given under the
Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Company, to its principal place of business,
attention: President, and, if to an optionee, to the address as appearing on the
records of the Company.

Approved by the Directors: February 12, 1997

Approved by the Stockholders: May 22, 1997<PAGE>

                                                                   Exhibit 4.13

                     THE SOFTWARE DEVELOPER'S COMPANY, INC.
                          1994 STOCK PLAN, AS AMENDED

         1. Purpose. This 1994 Stock Plan (the "Plan") is intended to provide
incentives: (a) to the officers and other employees of The Software Developer's
Company, Inc. (the "Company"), its parent (if any) and any present or future
subsidiaries of the Company (collectively, "Related Corporations") by providing
them with opportunities to purchase stock in the Company pursuant to options
granted hereunder which qualify as "incentive stock options" under Section
422A(b) of the Internal Revenue Code of 1986, as amended (the "Code") ("ISO" or
"ISOs"); (b) to directors, officers, employees and consultants of the Company
and Related Corporations by providing them with opportunities to purchase stock
in the Company pursuant to options granted hereunder which do not qualify as
ISOs ("NonQualified Option" or "Non-Qualified Options"); (c) to directors,
officers, employees and consultants of the Company and Related Corporations by
providing them with awards of stock in the Company ("Awards"); and (d) to
directors, officers, employees and consultants of the Company and Related
Corporations by providing them with opportunities to make direct purchases of
stock in the Company ("Purchases"). Both ISOs and Non-Qualified options are
referred to hereafter individually as an "Option" and collectively as "Options".
Options, Awards and authorizations to make Purchases are referred to hereafter
collectively as "Stock Rights". As used herein, the terms "parent" and
"subsidiary" mean "parent corporation" and "subsidiary corporation",
respectively, as those terms are defined in Section 425 of the Code.

         2. Administration of the Plan.

         A. Board or Committee Administration. The Plan shall be administered by
the Board of Directors of the Company (the "Board"). The Board may appoint a
Compensation Committee (the "Committee") of three or more of its members to
administer this Plan. To the extent required by Rule 16b-3 or any successor
provision ("Rule 16b-3") of the Securities Exchange Act of 1934, with respect to
specific grants of Stock Rights, the Plan shall be administered by a
disinterested administrator or administrators within the meaning of Rule 16b-3.
Subject to ratification of the grant or authorization of each Stock Right by the
Board (if so required by applicable state law), and subject to the terms of the
Plan, the Committee shall have the authority to (i) determine the employees of
the Company and Related Corporations (from among the class of employees eligible
under paragraph 3 to receive ISOs) to whom ISOs may be granted, and to determine
(from among the class of individuals and entities eligible under paragraph 3 to
receive Non-Qualified Options and Awards and to make Purchases) to whom
Non-Qualified Options, Awards and authorizations to make Purchases may be
granted; (ii) determine the time or times at which Options or Awards may be
granted or Purchases made; (iii) determine the option price of shares subject to
each Option, which price shall not be less than the minimum price specified in
paragraph 6, and the purchase price of shares subject to each Purchase; (iv)
determine whether each Option granted shall be an ISO or a Non-Qualified Option;
(v) determine (subject to paragraph 7) the time or times when each option shall
become exercisable and the duration of the exercise period; (vi) determine
whether restrictions such as repurchase options are to be imposed on shares
subject to Options, Awards and Purchases and the nature of such restrictions, if
any, and (vii) interpret the Plan and prescribe and rescind rules and
regulations relating to it. If the Committee determines to issue a Non-Qualified
Option, it shall take whatever actions it deems necessary, under Section 422A of
the Code and the regulations promulgated thereunder, to ensure that such Option
is not treated as an ISO. The interpretation and construction by the Committee
of any provisions of the Plan or of any Stock Right granted under it shall be
final unless otherwise determined by the Board. The Committee may from time to
time adopt such rules and regulations for carrying

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out the Plan as it may deem best. No member of the Board or the Committee shall
be liable for any action or determination made in good faith with respect to the
Plan or any Stock Right granted under it.

         B. Committee Action. The Committee may select one of its members as its
chairman, and shall hold meetings at such time 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. All references in this Plan to the Committee shall mean the Board if
no Committee has been appointed. From time to time the Board may increase the
size of the Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies however caused, or remove all members of the Committee and thereafter
directly administer the Plan.

         C. Grant of Stock Rights to Board Members. Stock Rights may be granted
to members of the Board consistent with the provisions of the third sentence of
paragraph 2(A) above, if applicable. All grants of Stock Rights to members of
the Board shall in all other respects be made in accordance with the provisions
of this Plan applicable to other eligible persons. Consistent with the
provisions of the third sentence of paragraph 2(A) above, members of the Board
who are either (i) eligible for Stock Rights pursuant to the Plan or (ii) have
been granted Stock Rights may vote on any matters affecting the administration
of the Plan or the grant of any Stock Rights pursuant to the Plan, except that
no such member shall act upon the granting to himself of Stock Rights, but any
such member may be counted in determining the existence of a quorum at any
meeting of the Board during which action is taken with respect to the granting
to him of Stock Rights.

         3. Eligible Employees and Others. ISOs may be granted to any employee
of the Company or any Related Corporation. Those officers and directors of the
Company who are not employees may not be granted ISOs under the Plan.
Non-Qualified Options, Awards and authorizations to make Purchases may be
granted to any director (whether or not an employee), officer, employee or
consultant of the Company or any Related Corporation. The Committee may take
into consideration a recipient's individual circumstances in determining whether
to grant an ISO, a Non-Qualified Option or an authorization to make a Purchase.
Granting of any Stock Right to any individual or entity shall neither entitle
that individual or entity to, nor disqualify him from, participation in any
other grant of Stock Rights.

         4. Stock. The stock subject to Options, Awards and Purchases shall be
authorized but unissued shares of Common Stock of the Company, par value $.01
per share (the "Common Stock"), or shares of Common Stock reacquired by the
Company in any manner. The aggregate number of shares which may be issued
pursuant to the Plan is [1,500,000] shares, subject to adjustment as provided in
paragraph 13. Any such shares may be issued as ISOs, Non-Qualified Options or
Awards, or to persons or entities making Purchases, so long as the number of
shares so issued does not exceed such number, as adjusted or amended from time
to time by a vote of stockholders or otherwise pursuant to paragraph 13. 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 to such Options shall again be
available for grants of Stock Rights under the Plan.

         5. Granting of Stock Rights. Stock Rights may be granted under the Plan
at any time on or after March 23, 1994 and prior to March 23, 2004. The date of
grant of a Stock Right under the Plan will be the date specified by the
Committee at the time it grants the Stock Right; provided, however, that such
date shall not be prior to the date on which the Committee acts to approve the
grant. The Committee shall have the right, with the

<PAGE>

consent of the optionee, to convert an ISO granted under the Plan to a
Non-Qualified Option pursuant to paragraph 16.

         6. Minimum Option Price; ISO Limitations.

         A. Price for Non-Qualified Options. The exercise price per share
specified in the agreement relating to each Non-Qualified Option granted under
the Plan shall in no event be less than the lesser of (i) the book value per
share of Common Stock as of the end of the fiscal year of the Company
immediately preceding the date of such grant, or (ii) fifty (50%) percent of the
fair market value per share of Common Stock on the date of such grant.

         B. Price for ISOs. The exercise price per share specified in the
agreement relating to each ISO granted under the Plan shall not be less than the
fair market value per share of Common Stock on the date of such grant. In the
case of an ISO to be granted to an 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 Related Corporation, 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 Common Stock on the date of grant.

         C. $100,000 Annual Limitation on ISOs. Each eligible employee may be
granted ISOs only to the extent that, in the aggregate under this Plan and all
incentive stock option plans of the Company and any Related Corporation, such
ISOs do not become exercisable for the first time by such employee during any
calendar year in a manner which would entitle the employee to purchase more than
$100,000 in fair market value (determined at the time the ISOs were granted) of
Common Stock in that year. Any options granted to an employee in excess of such
amount will be granted as Non-Qualified Options.

         D. Determination of Fair Market Value. If, at the time an Option is
granted under the Plan, the Company's Common Stock is publicly traded, "fair
market value" shall be determined as of the last business day for which the
prices or quotes discussed in this sentence are available prior to the date such
Option is granted and shall mean (i) the average (on that date) of the high and
low prices of the Common Stock on the principal national securities exchange on
which the Common stock is traded, if the Common Stock is then traded on a
national securities exchange; or (ii) the last reported sale price (on that
date) of the Common Stock on the NASDAQ National Market List, if the Common
Stock is 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 Common Stock is not
reported on the NASDAQ National Market List. However, if the Common Stock is not
publicly traded at the time an Option is granted under the Plan, "fair market
value" shall be deemed to be the fair value of the Common Stock 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
Common Stock in private transactions negotiated at arm's length.

         7. Option Duration. Subject to earlier termination as provided in
paragraphs 9 and 10, each Option shall expire on the date specified by the
Committee, but not more than (i) ten years and one day from the date of grant in
the case of Non-Qualified Options, (ii) ten years from the date of grant in the
case of ISOs generally, and (iii) five years from the date of grant in the case
of ISOs granted to an 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

<PAGE>

Related Corporation. Subject to earlier termination as provided in paragraphs 9
and 10, the term of each ISO shall be the term set forth in the original
instrument granting such ISO, except with respect to any part of such ISO that
is converted into a Non-Qualified Option pursuant to paragraph 16.

         8. Exercise of Option. Subject to the provisions of paragraphs 9
through 12, each Option granted under the Plan shall be exercisable as follows:

         A. Full Vesting or Partial Vesting. The Option shall either be fully
exercisable on the date of grant or shall become exercisable thereafter in such
installments as the Committee may specify.

         B. Full Vesting of Installments. Once an installment becomes
exercisable it shall remain exercisable until expiration or termination of the
Option, unless otherwise specified by the Committee.

         C. Partial Exercise. Each Option or installment may be exercised at any
time or from time to time, in whole or in part, for up to the total number of
shares with respect to which it is then exercisable.

         D. Acceleration of Vesting. The Committee shall have the right to
accelerate the date of exercise of any installment of any Option; provided that
the Committee shall not accelerate the exercise date of any installment of any
Option granted to any employee as an ISO (and not previously converted into a
Non-Qualified Option pursuant to paragraph 16) if such acceleration would
violate the annual vesting limitation contained in Section 422A(b)(7) of the
Code, as described in paragraph 6(C).

         9. Termination of Employment. If an ISO optionee ceases to be employed
by the Company and all Related Corporations other than by reason of death or
disability as defined in paragraph 10, no further installments of his ISOs shall
become exercisable, and his ISOs shall terminate after the passage of ninety
(90) days from the date of termination of his employment, but in no event later
than on their specified expiration dates, except to the extent that such ISOs
(or unexercised installments thereof) have been converted into Non-Qualified
Options pursuant to paragraph 16. Employment shall be considered as continuing
uninterrupted during any bona fide leave of absence (such as those attributable
to illness, military obligations or governmental service) provided that the
period of such leave does not exceed ninety (90) days or, if longer, any period
during which such optionee's right to reemployment is guaranteed by statute. A
bona fide leave of absence with the written approval of the Committee shall not
be considered an interruption of employment under the Plan, provided that such
written approval contractually obligates the Company or any Related Corporation
to continue the employment of the optionee after the approved period of absence.
ISOs granted under the Plan shall not be affected by any change of employment
within or among the Company and Related Corporations, so long as the optionee
continues to be an employee of the Company or any Related Corporation. Nothing
in the Plan shall be deemed to give any grantee of any Stock Right the right to
be retained in employment or other service by the Company or any Related
Corporation for any period of time.

         10. Death; Disability.

         A. Death. If an ISO optionee ceases to be employed by the Company and
all Related Corporations by reason of his death, any ISO of his may be
exercised, to the extent of the number of shares with respect to which he could
have exercised it on the date of his death, by his estate, personal
representative or beneficiary who has acquired the ISO by will or by the laws of
descent and distribution, at any time prior to the earlier of the specified
expiration date of the ISO or 180 days from the date of the optionee's death.

<PAGE>

         B. Disability. If an ISO optionee ceases to be employed by the Company
and all Related Corporations by reason of his disability, he shall have the
right to exercise any ISO held by him on the date of termination of employment,
to the extent of the number of shares with respect to which he could have
exercised it on that date, at any time prior to the earlier of the specified
expiration date of the ISO or 180 days from the date of the termination of the
optionee's employment. For the purposes of the Plan, the term "disability" shall
mean "permanent and total disability" as defined in Section 22(e)(3) of the Code
or successor statute.

         11. Assignability. No Option shall be assignable or transferable by the
grantee except by will or by the laws of descent and distribution, and during
the lifetime of the grantee each Option shall be exercisable only by him.

         12. Terms and Conditions of Options. Options shall be evidenced by
instruments (which need not be identical) in such forms as the Committee may
from time to time approve. Such instruments shall conform to the terms and
conditions set forth in paragraphs 6 through 11 hereof and may contain such
other provisions as the Committee deems advisable which are not inconsistent
with the Plan, including restrictions applicable to shares of Common Stock
issuable upon exercise of Options. In granting any Non-Qualified Option, the
Committee may specify that such Non-Qualified Option shall be subject to the
restrictions set forth herein with respect to ISOs, or to such other termination
and cancellation provisions as the Committee may determine. The Committee may
from time to time confer authority and responsibility on one or more of its own
members and/or one or more officers of the Company to execute and deliver such
instruments. The proper officers of the Company are authorized and directed to
take any and all action necessary or advisable from time to time to carry out
the terms of such instruments.

         13. Adjustments. Upon the occurrence of any of the following events, an
optionee's rights with respect to Options granted to him hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in the
written agreement between the optionee and the Company relating to such Option:

         A. Stock Dividends and Stock Splits. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable upon
the exercise of Options shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.

         B. Consolidations or Mergers. If the Company is to be consolidated with
or acquired by another entity in a merger, 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, as to outstanding Options, take one or more of
the following actions: (i) make appropriate provision for the continuation of
such Options by substituting on an equitable basis for the shares then subject
to such Options the consideration payable with respect to the outstanding shares
of Common Stock in connection with the Acquisition; or (ii) make appropriate
provision for the continuation of such Options by substituting on an equitable
basis for the shares then subject to such Options any equity securities of the
successor corporation; or (iii) upon written notice to the optionees, provide
that all Options must be exercised, to the extent then exercisable, within a
specified number of days of the date of such notice, at the end of which period
the Options shall terminate; or (iv) terminate all Options in exchange for a
cash payment equal to the excess of the fair market value of the shares subject
to such Options (to the extent then exercisable) over the exercise price
thereof; or (v) accelerate the date of exercise of such Options or of any
installment of any such Options; or (vi)

<PAGE>

terminate all Options in exchange for the right to participate in any stock
option or other employee benefit plan of any successor corporation.

         C. Recapitalization or Reorganization. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in subparagraph B above) pursuant to which securities of the Company
or of another corporation are issued with respect to the outstanding shares of
Common Stock, an optionee upon exercising an Option shall be entitled to receive
for the purchase price paid upon such exercise the securities he would have
received if he had exercised his Option prior to such recapitalization or
reorganization.

         D. Modification of ISOs. Notwithstanding the foregoing, any adjustments
made pursuant to subparagraphs A, B or C 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 425 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
IS0s, it may refrain from making such adjustments.

         E. Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation of the Company, each Option will terminate immediately prior to
the consummation of such proposed action or at such other time and subject to
such other conditions as shall be determined by the Committee.

         F. Issuances of Securities. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
subject to Options. No adjustments shall be made for dividends paid in cash or
in property other than securities of the Company.

         G. Fractional Shares. No fractional shares shall be issued under the
Plan and the optionee shall receive from the Company cash in lieu of such
fractional shares.

         H. Adjustments. Upon the happening of any of the foregoing events
described in subparagraphs A, B or C above, the class and aggregate number of
shares set forth in paragraph 4 hereof that are subject to Stock Rights which
previously have been or subsequently may be granted under the Plan shall also be
appropriately adjusted to reflect the events described in such subparagraphs.
The Committee or the Successor Board shall determine the specific adjustments to
be made under this paragraph 13 and, subject to paragraph 2, its determination
shall be conclusive.

         If any person or entity owning restricted Common Stock obtained by
exercise of a Stock Right made hereunder receives shares or securities or cash
in connection with a corporate transaction described in subparagraphs A, B or C
above as a result of owning such restricted Common Stock, such shares or
securities or cash shall be subject to all of the conditions and restrictions
applicable to the restricted Common Stock with respect to which such shares or
securities or cash were issued, unless otherwise determined by the Committee or
the Successor Board.

         14. Means of Exercising Stock Rights. A Stock Right (or any part or
installment thereof) shall be exercised by giving written notice to the Company
at its principal office address. Such notice shall identify the

<PAGE>

Stock Right being exercised and specify the number of shares as to which such
Stock Right is being exercised, accompanied by full payment of the purchase
price therefor either (a) in United States dollars in cash or by check, or (b)
at the discretion of the Committee, through delivery of shares of Common Stock
having a fair market value equal as of the date of the exercise to the cash
exercise price of the Stock Right, or (c) at the discretion of the Committee, by
delivery of the grantee's personal recourse note bearing interest payable not
less than annually at no less than 100% of the lowest applicable Federal rate,
as defined in Section 1274(d) of the Code, or (d) at the discretion of the
Committee, by any combination of (a), (b) and (c) above. If the Committee
exercises its discretion to permit payment of the exercise price of an ISO by
means of the methods set forth in clauses (b), (c), or (d) of the preceding
sentence, such discretion shall be exercised in writing at the time of the grant
of the ISO in question. The holder of a Stock Right shall not have the rights of
a shareholder with respect to the shares covered by his Stock Right until the
date of issuance of a stock certificate to him for such shares. Except as
expressly provided above in paragraph 13 with respect to changes in
capitalization and stock dividends, no adjustment shall be made for dividends or
similar rights for which the record date is before the date such stock
certificate is issued.

         15. Term and Amendment of Plan. This Plan was adopted by the Board as
of March 23, 1994, 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 unanimous written consent. If
the approval of stockholders is not obtained by March 23, 1995, any grants of
Options under the Plan made prior to that date will be rescinded. The Plan shall
expire on March 23, 2004 (except as to Options outstanding on that date).
Subject to the provisions of paragraph 5 above, Stock Rights may be granted
under the Plan prior to the date of stockholder approval of the Plan. The Board
may terminate or amend the Plan in any respect at any time, except that, without
the approval of the stockholders obtained within 12 months before or after the
Board adopts a resolution authorizing any of the following actions: (a) the
total number of shares that may be issued under the Plan may not be increased
(except by adjustment pursuant to paragraph 13); (b) the provisions of paragraph
3 regarding eligibility for grants of ISOs may not be modified; (c) the
provisions of paragraph 6(B) regarding the exercise price at which shares may be
offered pursuant to ISOs may not be modified (except by adjustment pursuant to
paragraph 13); and (d) the expiration date of the Plan may not be extended.
Except as otherwise provided in this paragraph 15, in no event may action of the
Board or stockholders alter or impair the rights of a grantee, without his
consent, under any Stock Right previously granted to him.

         16. Conversion of ISOs into Non-Qualified Options; Termination of ISOs.
The Committee, at the written request or any optionee, may in its discretion
take such actions as may be necessary to convert such optionee's ISOs (or any
installments or portions of installments thereof) that have not been exercised
on the date of conversion into Non-Qualified Options at any time prior to the
expiration of such ISOs, regardless of whether the optionee is an employee of
the Company or a Related Corporation at the time of such conversion. Such
actions may include, but not be limited to, extending the exercise period or
reducing the exercise price of the appropriate installments of such Options. At
the time of such conversion, the Committee (with the consent of the Optionee)
may impose such conditions on the exercise of the resulting Non-Qualified
Options as the Committee in its discretion may determine, provided that such
conditions shall not be inconsistent with this Plan. Nothing in the Plan shall
be deemed to give any optionee the right to have such optionee's ISOs converted
into NonQualified Options, and no such conversion shall occur until and unless
the Committee takes appropriate action. The Committee, with the consent of the
optionee, may also terminate any portion of any ISO that has not been exercised
at the time of such termination.

<PAGE>

         17. Application Of Funds. The proceeds received by the Company from the
sale of shares pursuant to Options granted and Purchases authorized under the
Plan shall be used for general corporate purposes.

         18. Governmental Regulation. The Company's obligation to sell and
deliver shares of the Common Stock under this Plan is subject to the approval of
any governmental authority required in connection with the authorization,
issuance or sale of such shares.

         19. Withholding of Additional Income Taxes. Upon the exercise of a
NonQualified Option, the grant of an Award, the making of a Purchase of Common
Stock for less than its fair market value, the making of a Disqualifying
Disposition (as defined in paragraph 20) or the vesting of restricted Common
Stock acquired on the exercise of a Stock Right hereunder, the Company, in
accordance with Section 3402(a) of the Code, may require the optionee, Award
recipient or purchaser to pay additional withholding taxes in respect of the
amount that is considered compensation includible in such person's gross income.
The Committee in its discretion may condition (i) the exercise of an Option,
(ii) the grant of an Award, (iii) the making of a Purchase of Common Stock for
less than its fair market value, or (iv) the vesting of restricted Common Stock
acquired by exercising a Stock Right, on the grantee's payment of such
additional withholding taxes.

         20. Notice to Company of Disqualifying Disposition. Each employee who
receives an ISO must agree to notify the Company in writing immediately after
the employee makes a Disqualifying Disposition of any Common Stock acquired
pursuant to the exercise of an ISO. A Disqualifying Disposition is any
disposition (including any sale) of such Common Stock before the later of (a)
two years after the date the employee was granted the ISO, or (b) one year after
the date the employee acquired Common Stock by exercising the ISO. If the
employee has died before such stock is sold, these holding period requirements
do not apply and no Disqualifying Disposition can occur thereafter.

         21. Governing Law; Construction. The validity and construction of the
Plan and the instruments evidencing Stock Rights shall be governed by the laws
of the State of Delaware or the laws of any jurisdiction in which the Company or
its successors in interest may be organized. In construing this Plan, the
singular shall include the plural and the masculine gender shall include the
feminine and neuter, unless the context otherwise requires.
<PAGE>

                         APPENDIX A - ISRAELI RESIDENTS

             THE SOFTWARE DEVELOPER'S COMPANY, INC. 1994 STOCK PLAN

1. SPECIAL PROVISIONS FOR PERSONS WHO ARE ISRAELI RESIDENTS

         1.1      This Appendix (the "APPENDIX") to the Netegrity, Inc. 1994
Stock Plan (the "PLAN") is effective as of __________, 2004 (the "EFFECTIVE
DATE").

         1.2      The provisions specified hereunder apply only to persons who
are deemed to be residents of the State of Israel for tax purposes.

         1.3      This Appendix applies with respect to (a) options to purchase
Shares and (b) Shares issued directly, where such options or Shares are granted
or issued, respectively, under the Plan. The purpose of this Appendix is to
establish certain rules and limitations applicable to Options and Shares which
may be granted or issued under the Plan from time to time , in compliance with
the securities and other applicable laws currently in force in the State of
Israel. Except as otherwise provided by this Appendix, all grants made pursuant
to this Appendix shall be governed by the terms of the Plan. This Appendix is
applicable only to grants made after the Effective Date. This Appendix complies
with, and is subject to the ITO and Section 102.

         1.4      The Plan and this Appendix shall be read together. 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

         Capitalized terms shall have the meaning assigned to them in the Plan.
The following additional definitions will apply to grants made pursuant to this
Appendix:

         2.1      "3(I) OPTION" means an Option which is subject to taxation
pursuant to Section 3(I) of the ITO which has been granted to any person who is
not an Eligible 102 Optionee.

         2.2      "102 CAPITAL GAINS TRACK" means the tax alternative set forth
in Section 102(b)(2) of the ITO pursuant to which income resulting from the sale
of Shares (including Shares derived from Options) is taxed as a capital gain.

         2.3      "102 CAPITAL GAINS TRACK GRANT" means a 102 Trustee Grant
qualifying for the special tax treatment under the 102 Capital Gains Track set
forth in Section 102, specifically subsection (b)(2) thereof.

         2.4      "102 ORDINARY INCOME TRACK" means the tax alternative set
forth in Section 102(b)(1) of the ITO pursuant to which income resulting from
the sale of Shares (including Shares derived from Options) is taxed as ordinary
income.

         2.5      "102 ORDINARY INCOME TRACK GRANT" means a 102 Trustee Grant
qualifying for the ordinary income tax treatment under the 102 Capital Gains
Track set forth in Section 102, specifically subsection (b)(1) thereof.

         2.6      "102 TRUSTEE GRANT" means an Option, or Shares granted or
issued, as the case may be, pursuant to Section 102(b) of the ITO and held in
trust by a Trustee for the benefit of the Optionee,

<PAGE>
                                                                               2

and includes both 102 Capital Gains Track Grants and 102 Ordinary Income Track
Grants.

         2.7      "AFFILIATE" means any "employing Company" within the meaning
of Section 102(a) of the ITO.

         2.8      "COMPANY" means Netegrity, Inc.

         2.9      "CONTROLLING SHAREHOLDER" means, pursuant to Section 32(9) of
the ITO, an employee who prior to the grant or as a result of the exercise of
any Option, holds or would hold, directly or indirectly, in his name or with a
relative (as defined in the ITO) (i) 10% of the outstanding shares of the
Company, (ii) 10% of the voting power of the Company, (iii) the right to hold or
purchase 10% of the outstanding equity or voting power, (iv) the right to obtain
10% of the "profit" of the Company (as defined in the ITO), or (v) the right to
appoint a director of the Company, or as such definition is amended or replaced
from time to time.

         2.10     "ELECTION" means the Company's choice of the type (as between
capital gains track or ordinary income track) of 102 Trustee Grants it will make
under the Plan, as filed with the ITA.

         2.11     "ELIGIBLE 102 OPTIONEE" means a person who is employed by the
Company or its Affiliates, including an individual who is serving as a director
or an office holder, but excluding a Controlling Shareholder.

         2.12     "FAIR MARKET VALUE" shall have the meaning ascribed to it in
the Plan; provided, however, that with respect to 102 Capital Gains Track Grants
only, for the sole purpose of determining tax liability pursuant to Section
102(b)(3) of the ITO, if at the date of grant the Company's shares are listed on
any established stock exchange or a national market system or if the Company's
shares will be registered for trading within ninety (90) days following the date
of grant, the fair market value of the Shares at the date of grant shall be
determined in accordance with the average value of the Company's shares on the
thirty (30) trading days preceding the date of grant or on the thirty (30)
trading days following the date of registration for trading, as the case may be.

         2.13     "ITA" means the Israeli Tax Authorities.

         2.14     "ITO" means the Israeli Income Tax Ordinance (New Version)
1961 and the rules, regulations, orders or procedures promulgated thereunder and
any amendments thereto, including specifically the Rules, all as may be amended
from time to time.

         2.15     "NON-TRUSTEE GRANT" means an Option or Shares of Common Stock
granted or issued pursuant to Section 102(c) of the ITO and not held in trust by
a Trustee.

         2.16     "OPTION AGREEMENT" means the Option Agreement executed by the
Company and the Optionee, including the Notice of Grant attached thereto.

         2.17     "OPTIONS" means a Non-Qualified Option granted pursuant to the
Terms and Conditions of the Plan and the Appendix.

         2.18     "REQUIRED HOLDING PERIOD" means the requisite period
prescribed by the ITO and the Rules, or such other period as

                                       2
<PAGE>
                                                                               3

may be required by the ITA, during which Options or Common Stock granted by the
Company must be held by the Trustee for the benefit of the person to whom it was
granted, as amended or replaced from time to time. The Required Holding Period
for 102 Capital Gains Track Grants pursuant to the provisions of the ITO is
currently defined in Section 102 as twenty-four (24) months from the end of the
tax year during which the Options are granted.

         2.19     "RULES" means the Income Tax Rules (Tax benefits in Stock
Issuance to Employees) 5763-2003.

         2.20     "SECTION 102" means the provisions of Section 102 of the ITO,
as amended from time to time, including by the Law Amending the Income Tax
Ordinance (Number 132) 2002, effective as of January 1, 2003.

         2.21     "SHARES" means authorized but unissued or reacquired shares of
Common Stock of the Company, par value $0.01 per share (or as adjusted pursuant
to the Plan).

         2.22     "TRUST AGREEMENT"

         2.23     "TRUSTEE" means a person designated by the Board to serve as a
trustee and approved by the ITA in accordance with the provisions of Section
102(a) of the ITO.

3. TYPES OF GRANTS AND SECTION 102 ELECTION

         3.1      102 Trustee Grants made pursuant to Section 102, whether as
grants of Options or as issuances of Shares of Common Stock under the Plan,
shall be made pursuant to either (a) Section 102(b)(2) of the ITO as 102 Capital
Gains Track Grants or (b) Section 102(b)(1) of the ITO as 102 Ordinary Income
Track Grants. The Company's Election regarding the type of 102 Trustee Grant it
chooses to make must be filed with the ITA. Once the Company has filed such
Election, it may change the type of 102 Trustee Grant that it chooses to make
only after the passage of at least 12 months from the end of the calendar year
in which the first grant was made in accordance with the previous Election, in
accordance with Section 102. For the avoidance of doubt, such Election shall not
prevent the Company from granting Non-Trustee Grants.

         3.2      Eligible 102 Optionees may receive only 102 Trustee Grants or
Non-Trustee Grants. Optionees who are not Eligible 102 Optionees may be granted
only 3(I) Options under this Appendix.

         3.3      No 102 Trustee Grants may be made effective pursuant to this
Appendix until 30 days after the requisite filings required by the ITO and the
Rules have been made with the ITA.

         3.4      The option agreement or documents evidencing the Options
granted or Shares issued pursuant to the Plan and this Appendix shall indicate
whether the grant is a 102 Trustee Grant, a Non-Trustee Grant or a 3(I) Grant;
and, if the grant is a 102 Trustee Grant, whether it is a 102 Capital Gains
Track Grant or a 102 Ordinary Income Track Grant.

4. TERMS AND CONDITIONS OF 102 TRUSTEE OPTIONS

         4.1      Each 102 Capital Gains Track Grant will be deemed granted on
the date stated in a written notice by the Company, provided that on or before
such date (i) the Company has provided such notice to the Trustee and (ii) the
Optionee has signed all documents required pursuant to this Section 4.

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                                                                               4

         4.2      102 Trustee Grant Options granted to an Optionee during the
Required Holding Period shall be held in trust for the benefit of the Optionee
for the Required Holding Period, and each certificate for Shares acquired
pursuant to the exercise thereof or issued directly as a Shares during the
Required Holding Period shall be issued to and registered in the name of a
Trustee. After termination of the Required Holding Period, the Trustee may
release such Options and any such Shares, provided that (i) the Trustee has
received an acknowledgment from the Israeli Income Tax Authority that the
Optionee has paid any applicable tax due pursuant to the ITO or (ii) the Trustee
and/or the Company or its Affiliate withholds any applicable tax due pursuant to
the ITO. The Trustee shall not release any Options granted as 102 Trustee Grants
or Shares issued upon exercise of such Option prior to the full payment of the
Optionee's tax liabilities.

         4.3      Each 102 Trustee Grant (whether a 102 Capital Gains Track
Grant or a 102 Ordinary Income Track Grant, as applicable) shall be subject to
the relevant terms of Section 102 and the ITO, which shall be deemed an integral
part of the 102 Trustee Grant and which shall prevail over any term contained in
the Plan, this Appendix or the Option Agreement that is not consistent
therewith. Any provision of the ITO and any approvals by the Income Tax
Commissioner not expressly specified in the Plan, this Appendix or the Option
Agreement which are necessary to receive or maintain any tax benefit pursuant to
the Section 102 shall be binding on the Optionee. The Trustee and the Optionee
granted a 102 Trustee Grant shall comply with the ITO, and the terms and
conditions of the Trust Agreement. For avoidance of doubt, it is reiterated that
compliance with the ITO specifically includes compliance with the Rules.
Further, the Optionee agrees to execute any and all documents which the Company
or the Trustee may reasonably determine to be necessary in order to comply with
the ITO and, particularly, the Rules.

         4.4      During the Required Holding Period, the Optionee shall not
require the Trustee to release or sell the Options or Shares and other shares
received subsequently following any realization of rights derived from Shares or
Options (including stock dividends) to the Optionee or to a third party, unless
permitted to do so by applicable law. Notwithstanding the foregoing, the Trustee
may, pursuant to a written request, release and transfer such Shares to the
Optionee or to a designated third party, provided that both of the following
conditions have been fulfilled prior to such transfer: (i) payment has been
rendered to the tax authorities of all taxes required to be paid upon the
release and transfer of the shares, and confirmation of such payment has been
received by the Trustee and (ii) the Trustee has received written confirmation
from the Company that all requirements for such release and transfer have been
fulfilled according to the terms of the Company's corporate documents, the Plan,
this Appendix and the Option Agreement and any applicable law. To avoid doubt,
such sale or release during the Required Holding Period will result in adverse
tax ramifications under Section 102 of the ITO and the Rules and/or any other
regulations or orders or procedures promulgated thereunder, which shall apply to
and shall be borne solely by such Optionee.

         4.5      In the event a stock dividend is declared on Shares which
derive from Options granted as 102 Trustee Grants, such dividend shall also be
subject to the provisions of this Section 4 and the Required Holding Period for
such dividend shares shall be measured from the commencement of the Required
Holding Period for the Option or Shares with respect to which the dividend was
declared.

         4.6      If an Option granted as a 102 Trustee Grant is exercised
during the Required Holding Period, the Shares issued upon such exercise shall
be issued in the name of the Trustee for the benefit of the Optionee. If such an
Option is exercised after the Required Holding Period ends, the Shares issued
upon such exercise shall, at the election of the Optionee, either (i) be issued
in the name of the Trustee, or (ii) be transferred to the Optionee directly,
provided that the Optionee first complies with all applicable provisions of the
Plan.

                                       4
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                                                                               5

5. ASSIGNABILITY

         As long as Options or Shares are held by the Trustee on behalf of the
Eligible 102 Optionee, all rights of the Eligible 102 Optionee over the shares
are personal, can not be transferred, assigned, pledged or mortgaged, other than
by will or laws of descent and distribution.

6. TAX CONSEQUENCES

         6.1      Any tax consequences 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 Affiliates, and the Trustee or the Optionee),
hereunder, shall be borne solely by the Optionee, with the exception of taxes
imposed upon the Company or its Affiliate by law, such as the employer's
component of payments to the National Insurance Institute. The Company and/or
its Affiliates, and/or the Trustee shall withhold taxes according to the
requirements under the applicable laws, rules, and regulations, including
withholding taxes at source. Furthermore, the Optionee shall agree to indemnify
the Company and/or its affiliates 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
Optionee for which the Optionee is responsible, including specifically any
additional tax liability the Company may incur as a result of the exercise of
Options or any transfer effected prior to conclusion of the applicable Required
Holding Period. The Company or any of its Affiliates and the Trustee may make
such provisions and take such steps as it/they may deem necessary or appropriate
for the withholding of all taxes required by law to be withheld with respect to
Options granted under the Plan and the exercise thereof, including, but not
limited to (i) deducting the amount so required to be withheld from any other
amount then or thereafter payable to a Optionee, and/or (ii) requiring a
Optionee to pay to the Company or any of its Affiliates the amount so required
to be withheld as a condition of the issuance, delivery, distribution or release
of any Shares. In addition, the Optionee will be required to pay any amount that
exceeds the tax to be withheld and transferred to the tax authorities, pursuant
to applicable Israeli tax laws and regulations.

         6.2      With respect to Non-Trustee Grants, if the Optionee ceases to
be employed by the Company or any Affiliate, the Optionee shall extend to the
Company and/or its Affiliate a security or guarantee for the payment of tax due
at the time of sale of Shares, all in accordance with the provisions of Section
102 of the ITO and the Rules.

7. GOVERNING LAW AND JURISDICTION

Notwithstanding any other provision of the Plan, with respect to Optionees
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.

                                       5

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