Document:

EXHIBIT 10.16
                                                                   -------------

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

1.       Purpose & Construction
         ----------------------

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

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

2.       Definitions
         -----------

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

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

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

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

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

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

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

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

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

         2.9      "Transfer of Control" -- the closing of a sale, by way of
                  private offering or otherwise, in terms of which at least
                  50.1% (fifty and one tenth of a percent) of the total combined
                  voting power of all classes of shares of the Company are
<PAGE>

                  transferred from those shareholders who were holding such
                  voting power on the date the Plan was first implemented;

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

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

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

3.       Administration
         --------------

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

4.       Eligibility
         -----------

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

5.       Shares
         ------

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

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

6.       Terms & Conditions of Options
         -----------------------------

         Each Option granted pursuant to the Plan shall be evidenced by
         appropriate provisions in the applicable Employment Agreement, which
         provisions shall state the number of the Optioned Shares, the date(s)
         on which an option may be exercised and term of the Restricted Period.
         In addition, each Option shall be subject to the following terms and
         conditions as well as such other terms and conditions, not inconsistent
         with the Plan, as the Committee may determine:
<PAGE>

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

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

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

7.       Exercisability of Options
         -------------------------

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

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

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

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

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

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

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

8.       Non-transferability of Options
         ------------------------------

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

9.       Restricted Period
         -----------------

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

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

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

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

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

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

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

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

         9.7      Each Grantee who is an Employee shall confirm to the Company
                  and to the Trustee, in writing: (i) his consent to the terms
                  and conditions of the Plan, and (ii) his waiver of any claim
                  to a tax exemption pursuant to Sections 95 or 97(a) of the
                  income Tax ordinance or under Chapter Seven of the Law for the
<PAGE>

                  Encouragement of Industry (Taxes), 1969, with respect to the
                  transfer of the Shares within the Restricted Period.

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

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

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

10.      Rights as a Shareholder
         -----------------------

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

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

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

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

11.      No Rights to Employment
         -----------------------

         11.1     Nothing in the Plan or in any agreement entered into pursuant
                  hereto, shall confer upon any Grantee the right to continue in
                  the employment of the Company or of any Subsidiary, or to
                  receive any remuneration or benefits not set forth in the Plan
<PAGE>

                  or in such agreement, or to interfere with, or limit in any
                  way, the right of the Company or any such Subsidiary to
                  terminate such Grantee's employment.

         11.2     Options granted under the Plan shall not be affected by any
                  change in duties or position of a Grantee, as long as such
                  Grantee continues in the employment of the Company or of any
                  Subsidiary.EXHIBIT 10.17
                                                                   -------------

                       PRECISE SOFTWARE SOLUTIONS LIMITED
                      1998 SHARE OPTION AND INCENTIVE PLAN
                      ------------------------------------

         1. PURPOSE & CONSTRUCTION.

         1.1. The purpose of the PRECISE SOFTWARE SOLUTIONS Limited 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
Limited (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 US Employee with respect to
such US 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 US 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 US 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.

                                      P-1
<PAGE>

         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.

                                      P-2
<PAGE>

         2.15. "US 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 the 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 US 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
6,793,168. 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.

                                      P-3
<PAGE>

         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 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 US 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.

                                      P-4
<PAGE>

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

         Each US 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 90 days of such termination of employment; provided, however,
that in the case of an Option that is treated as an ISO, a Disabled Grantee may
exercise such ISO (to the extent otherwise exercisable) only

                                      P-5
<PAGE>

until the earlier of (i) the specified expiration date of the ISO or (ii) one
year from the date of the termination of the Grantee's 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 exercised 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; (ii) 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.

                                      P-6
<PAGE>

         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.

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

                                      P-7
<PAGE>

                  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 date of any 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.

                                      P-8
<PAGE>

         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.

                                      P-9
<PAGE>

         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.

                                      P-10
<PAGE>

         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.

                                      P-11
<PAGE>

                                                                      APPENDIX A
                                                                      ----------

         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.

         3. GRANT OF OPTIONS AND ISSUANCE OF SHARES.

         Notwithstanding anything herein to the contrary, the Plan may also be
administered

                                      A-1
<PAGE>

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

                                      A-2
<PAGE>

         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.

                                      A-3

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