Document:

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                             INSIGNIA SOLUTIONS plc

               1995 INCENTIVE STOCK OPTION PLAN FOR U.S. EMPLOYEES

                           As Adopted February 9, 1995
                              Amended April 20, 1999

                1. PURPOSE. The purpose of the Plan is to provide incentives
to attract, retain and motivate eligible persons whose present and potential
contributions are important to the success of the Company, its Parent,
Subsidiaries and Affiliates, by offering them an opportunity to participate
in the Company's future performance through awards of share options.
Capitalized terms not defined in the text are defined in Section 20.

                2.       SHARES SUBJECT TO THE PLAN.

                         2.1 NUMBER OF SHARES AVAILABLE. Subject to Sections
2.2 and 14 of the Plan, the total number of Shares issued and reserved and
available for grant and issue pursuant to options under the Plan, the UK
Employee Share Option Scheme 1996 (the "UK PLAN"), the 1988 U.S. Stock Option
Plan (the "PRIOR PLAN") and the Company's Inland Revenue approved share
option scheme (the "INLAND REVENUE PLAN") (the "PLAN", the "UK PLAN", the
"PRIOR PLAN" and the "INLAND REVENUE PLAN", collectively, the "OPTION
PLANS"), shall be four million six hundred seventy two thousand and seventy
one (4,672,071) Shares. As of the Effective Date, options will no longer be
granted pursuant to the Prior Plan. As of the date of expiration of the
Inland Revenue Plan in December 1996, options will no longer be granted
pursuant to the Inland Revenue Plan. Shares shall again be available for
grant and issue in connection with future awards of options under the Plan
and the UK Plan if such Shares cease to be subject to an option granted
pursuant to the Option Plans. To the extent Shares are subject to options
granted pursuant to the UK Plan, the Inland Revenue Plan or the Prior Plan,
such Shares shall be unavailable for issue under this Plan until such options
expire or become unexercisable without having been exercised in full. To the
extent Shares are subject to options granted pursuant to this Plan, such
Shares shall be unavailable for issue under the UK Plan until such options
expire or become unexercisable without having been exercised in full.

                         2.2 ADJUSTMENT OF SHARES. In the event that the
number of Shares in issue is changed by a consolidation or sub-division of
ordinary shares of the Company or any bonus or other capitalization issue of
ordinary shares or any similar change in the capital structure of the Company
without consideration, or by a Corporate Transaction (as defined in Section
14.1) then, unless such change results in the termination of all outstanding
Awards as a result of the Corporate Transaction, (a) the number of Shares
reserved for issue under the Plan and (b) the Exercise Prices of and number
of Shares subject to outstanding Awards shall be proportionately adjusted,
subject to any required action by the Board or the shareholders of the
Company and compliance with applicable securities laws; PROVIDED, HOWEVER,
that fractions of a Share shall not be issued but shall either be paid in
cash at Fair Market Value or shall be rounded
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up to the nearest Share, as determined by the Committee; and PROVIDED,
FURTHER, that the Exercise Price of any Award may not be decreased to below
the U.S. Dollar equivalent of the par value of the Shares calculated by
reference to the Conversion Rate prevailing at the date of exercise of an
Award.

                3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be
granted only to employees (including officers and directors who are also
employees) of the Company or of a Parent or Subsidiary of the Company. NQSOs
(as defined in Section 5 below) may be granted to employees, officers,
directors, consultants, independent contractors and advisors of the Company
or any Parent, Subsidiary or Affiliate of the Company; PROVIDED such
consultants, contractors and advisors render bona fide services not in
connection with the offer and sale of securities in a capital-raising
transaction. A person may be granted more than one Award under the Plan. Each
person is eligible to receive up to an aggregate maximum of five hundred
thousand (500,000) Shares per fiscal year.

                4.       ADMINISTRATION.

                         4.1 COMMITTEE AUTHORITY. The Plan shall be
administered by the Committee. Subject to the general purposes, terms and
conditions of the Plan, the Committee shall have full power to implement and
carry out the Plan. The Committee shall have the authority to:

                (a)      construe and interpret the Plan, any Stock Option
                         Agreement and any other agreement or document executed
                         pursuant to the Plan;

                (b)      prescribe, amend and rescind rules and regulations
                         relating to the Plan;

                (c)      select persons to receive Awards;

                (d)      determine the form and terms of Awards;

                (e)      determine the number of Shares subject to Awards;

                (f)      determine whether Awards will be granted in replacement
                         of, or as alternatives to, other Awards under the Plan
                         or any other incentive or compensation plan of the
                         Company or any Parent, Subsidiary or Affiliate of the
                         Company;

                (g)      grant waivers of Plan or Award conditions;

                (h)      determine the vesting and exercisability of Awards;

                (i)      correct any defect, supply any omission, or reconcile
                         any inconsistency in the Plan, any Award or any Stock
                         Option Agreement;

                (j)      determine the disposition of Awards in the event of a
                         Participant's divorce or dissolution of marriage; and

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                (k)      make all other determinations necessary or advisable
                         for the administration of the Plan.

                         4.2 COMMITTEE DISCRETION. Any determination made by
the Committee with respect to any Award shall be made in its sole discretion
at the time of grant of the Award or, unless in contravention of any express
term of the Plan or Award, at any later time, and such determination shall be
final and binding on the Company and all persons having an interest in any
Award under the Plan. The Committee may delegate to one or more officers of
the Company the authority to grant an Award under the Plan to Participants
who are not Insiders of the Company.

                         4.3 COMMITTEE REQUIREMENT. If two or more members of
the Board are Outside Directors, the Committee shall be comprised of at least
two members of the Board, all of whom are Outside Directors.

                5. STOCK OPTIONS. The Committee may grant Awards to eligible
persons and shall determine whether such Awards shall be Incentive Stock
Options within the meaning of the Code ("ISOs") or Nonqualified Stock Options
("NQSOs"), the number of Shares subject to the Award, the Exercise Price of
the Award, the period during which the Award may be exercised, and all other
terms and conditions of the Award, subject to the following:

                         5.1 FORM OF OPTION GRANT. Each Award granted under
the Plan shall be evidenced by a Stock Option Agreement which shall expressly
identify the Award as an ISO or NQSO, and be in such form and contain such
provisions (which need not be the same for each Participant) as the Committee
shall from time to time approve, and which shall comply with and be subject
to the terms and conditions of the Plan.

                         5.2 DATE OF GRANT. The date of grant of an Award
shall be the date on which the Committee makes the determination to grant
such Award, unless otherwise specified by the Committee. The Stock Option
Agreement and a copy of the Plan will be delivered to the Participant within
a reasonable time after the granting of the Award.

                         5.3 EXERCISE PERIOD. Awards shall be exercisable
within the times or upon the events determined by the Committee as in the
Stock Option Agreement; PROVIDED, HOWEVER, that no Award shall be exercisable
after the expiration of ten (10) years from the date the Award is granted;
and PROVIDED FURTHER that no ISO granted to a person who directly or by
attribution owns more than ten percent (10%) of the total combined voting
power of all classes of stock or shares of the Company or any Parent or
Subsidiary of the Company ("TEN PERCENT SHAREHOLDER") shall be exercisable
after the expiration of five (5) years from the date the Award is granted.
The Committee also may provide for the exercise of Awards to become
exercisable at one time or from time to time, periodically or otherwise, in
such number or percentage as the Committee determines.

                         5.4 EXERCISE PRICE. The Exercise Price shall be
determined by the Committee when the Award is granted subject to the
following:

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                (a)      The Exercise Price shall not be less than 100% of the
                         Fair Market Value of the Shares on the date of grant;
                         PROVIDED, that the Exercise Price of any ISO granted to
                         a Ten Percent Shareholder shall not be less than 110%
                         of the Fair Market Value of the Shares on the date of
                         grant. Payment for the Shares subscribed for may be
                         made in accordance with Section 6 of the Plan.

                (b)      The Exercise Price shall be in U.S. Dollars.

                (c)      The Exercise Price shall not be less than the U.S.
                         Dollar equivalent of the par value of the Shares
                         calculated by reference to the Conversion Rate
                         prevailing at the date of exercise of an Award.

                         5.5 METHOD OF EXERCISE. Awards may be exercised only
by delivery to the Company of a written exercise agreement (the "EXERCISE
AGREEMENT") in a form approved by the Committee (which need not be the same
for each Participant), stating the number of Shares being subscribed for, the
restrictions imposed on the Shares, if any, and such representations and
agreements regarding Participant's investment intent and access to
information and other matters, if any, as may be required or desirable by the
Company to comply with applicable securities laws, together with payment in
full of the Exercise Price for the number of Shares being subscribed for.

                         5.6 TERMINATION. Notwithstanding the exercise
periods set forth in the Stock Option Agreement, exercise of an Award shall
always be subject to the following:

                (a)      If the Participant is Terminated for any reason except
                         death or Disability, then Participant may exercise such
                         Participant's Awards only to the extent that such
                         Awards would have been exercisable upon the Termination
                         Date no later than three (3) months after the
                         Termination Date (or such longer time period not
                         exceeding five (5) years as may be determined by the
                         Committee), but in any event, no later than the
                         expiration date of the Awards.

                (b)      If the Participant is terminated because of death or
                         Disability (or the Participant dies within three (3)
                         months of such termination), then Participant's Awards
                         may be exercised only to the extent such Awards would
                         have been exercisable by Participant on the Termination
                         Date and must be exercised by Participant (or
                         Participant's legal representative or authorized
                         assignee) no later than (i) twelve (12) months after
                         the Termination Date in the case of disability or (ii)
                         eighteen (18) months after the Termination Date in the
                         case of death (or such longer time period not exceeding
                         five (5) years as may be determined by the Committee),
                         but in any event no later than the expiration date of
                         the Awards.

                         5.7 LIMITATIONS ON EXERCISE. The Committee may
specify a reasonable minimum number of Shares that may be subscribed for on
any exercise of an Award; PROVIDED that such minimum number will not prevent
Participant from exercising the Award for the full number of Shares for which
it is then exercisable.

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                         5.8 LIMITATIONS ON ISOs. The aggregate Fair Market
Value (determined as of the date of grant) of Shares with respect to which
ISOs are exercisable for the first time by a Participant during any calendar
year (under the Plan or under any other incentive stock option plan of the
Company or any Affiliate, Parent or Subsidiary of the Company) shall not
exceed $100,000. If the Fair Market Value of Shares on the date of grant with
respect to which ISOs are exercisable for the first time by a Participant
during any calendar year exceeds $100,000, the Awards for the first $100,000
worth of Shares to become exercisable in such calendar year shall be ISOs and
the Awards for the amount in excess of $100,000 that become exercisable in
that calendar year shall be NQSOs. In the event that the Code or the
regulations promulgated thereunder are amended after the Effective Date of
the Plan to provide for a different limit on the Fair Market Value of Shares
permitted to be subject to ISOs, such different limit shall be automatically
incorporated herein and shall apply to any Awards granted after the effective
date of such amendment.

                         5.9 MODIFICATION, EXTENSION OR RENEWAL. The
Committee may modify, extend or renew outstanding Awards and authorize the
grant of new Awards in substitution therefor; PROVIDED that any such action
may not, without the written consent of Participant, impair any of
Participant's rights under any Award previously granted. Any outstanding ISO
that is modified, extended, renewed or otherwise altered shall be treated in
accordance with Section 424(h) of the Code. The Committee may reduce the
Exercise Price of outstanding Awards without the consent of Participants
affected by a written notice to them; PROVIDED, HOWEVER, that the Exercise
Price may not be reduced below the minimum Exercise Price that would be
permitted under Section 5.4 of the Plan for Awards granted on the date the
action is taken to reduce the Exercise Price.

                         5.10 NO DISQUALIFICATION. Notwithstanding any other
provision in the Plan, no term of the Plan relating to ISOs shall be
interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be exercised, so as to disqualify the Plan under
Section 422 of the Code or, without the consent of the Participant affected,
to disqualify any ISO under Section 422 of the Code.

                6. PAYMENT FOR SHARES. Payment for Shares subscribed for
pursuant to the Plan may be made in cash (by check) or, where expressly
approved for the Participant by the Committee and where permitted by law:

                (a)      by waiver of compensation due or accrued to Participant
                         for services rendered;

                (b)      provided that a public market for the Shares exists:

                         (1)      through a "same day sale" commitment from
                                  Participant and a broker-dealer that is a
                                  member of the National Association of
                                  Securities Dealers (a "NASD DEALER") whereby
                                  the Participant irrevocably elects to exercise
                                  the Award and to sell a portion of the Shares
                                  so subscribed for in order to pay for the
                                  Exercise Price, and whereby the NASD Dealer
                                  irrevocably commits upon receipt of

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                                  such Shares to forward the Exercise Price
                                  directly to the Company; or

                         (2)      through a "margin" commitment from Participant
                                  and a NASD Dealer whereby Participant
                                  irrevocably elects to exercise the Award and
                                  to pledge the Shares so subscribed for to the
                                  NASD Dealer in a margin account as security
                                  for a loan from the NASD Dealer in the amount
                                  of the Exercise Price, and whereby the NASD
                                  Dealer irrevocably commits upon receipt of
                                  such Shares to forward the Exercise Price
                                  directly to the Company; or

                (c)      by any combination of the foregoing.

                7.       WITHHOLDING TAXES.

                         7.1 WITHHOLDING GENERALLY. Whenever Shares are to be
issued in satisfaction of Awards granted under the Plan, the Company may
require the Participant to remit to the Company an amount sufficient to
satisfy federal, state and local withholding tax requirements prior to the
delivery of any certificate or certificates for such Shares. Whenever, under
the Plan, payments in satisfaction of Awards are to be made in cash, such
payment shall be net of an amount sufficient to satisfy federal, state, and
local withholding tax requirements.

                         7.2 STOCK WITHHOLDING. When, under applicable tax
laws, a Participant incurs tax liability in connection with the exercise of
any Award that is subject to tax withholding and the Participant is obligated
to pay the Company the amount required to be withheld, the Committee may
allow the Participant to satisfy the minimum withholding tax obligation by
electing to have the Company withhold from the Shares to be issued that
number of Shares having a Fair Market Value equal to the minimum amount
required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined (the "TAX DATE"). All elections by a Participant
to have Shares withheld for this purpose shall be made in writing in a form
acceptable to the Committee and shall be subject to the following
restrictions:

                (a)      the election must be made on or prior to the applicable
                         Tax Date;

                (b)      once made, then except as provided below, the election
                         shall be irrevocable as to the particular Shares as to
                         which the election is made;

                (c)      all elections shall be subject to the consent or
                         disapproval of the Committee.

                8.       PRIVILEGES OF STOCK OWNERSHIP.

                         8.1 VOTING AND DIVIDENDS. No Participant shall have
any of the rights of a shareholder with respect to any Shares until the
Shares are issued to the Participant. After Shares are issued to the
Participant, the Participant shall be a shareholder and have all the rights
of a shareholder with respect to such Shares, including the right to vote and
receive all dividends or other distributions made or paid with respect to
such Shares.

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                         8.2 FINANCIAL STATEMENTS. The Company shall provide
financial statements to each Participant prior to such Participant's
subscription for Shares under the Plan, and to each Participant annually
during the period such Participant has Awards outstanding; PROVIDED, HOWEVER,
the Company shall not be required to provide such financial statements to
Participants whose services in connection with the Company assure them access
to equivalent information.

                9. TRANSFERABILITY. Subject to Section 4.1(j), Awards granted
under the Plan, and any interest therein, shall not: (a) be transferable or
assignable by the Participant, (b) be made subject to execution, attachment
or similar process, otherwise than by will or by the laws of descent and
distribution or as consistent with the specific Plan and Stock Option
Agreement provisions relating thereto or (c) during the lifetime of the
Participant, be exercisable by anyone other than the Participant, and any
elections with respect to an Award, may be made only by the Participant.

                10. CERTIFICATES. All certificates for Shares or other
securities delivered under the Plan shall be subject to such stock transfer
orders, legends and other restrictions as the Committee may deem necessary or
advisable, including restrictions under any applicable federal, state or
foreign securities law, or any rules, regulations and other requirements of
the SEC or any stock exchange or automated quotation system upon which the
Shares may be listed.

                11. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. An Award
shall not be effective unless such Award is in compliance with all applicable
federal and state securities laws, rules and regulations of any governmental
body, and the requirements of any stock exchange or automated quotation
system upon which the Shares may then be listed, as they are in effect on the
date of grant of the Award and also on the date of exercise or other issue.
Notwithstanding any other provision in the Plan, the Company shall have no
obligation to issue or deliver certificates for Shares under the Plan prior
to (a) obtaining any approvals from governmental agencies that the Company
determines are necessary or advisable, and/or (b) completion of any
registration or other qualification of such shares under any state or federal
law or ruling of any governmental body that the Company determines to be
necessary or advisable. The Company shall be under no obligation to register
the Shares with the SEC or to effect compliance with the registration,
qualification or listing requirements of any state securities laws, stock
exchange or automated quotation system, and the Company shall have no
liability for any inability or failure to do so.

                12.      EMPLOYMENT WITH COMPANY.

                         12.1 NO OBLIGATION TO EMPLOY. Nothing in the Plan or
any Award granted under the Plan shall confer or be deemed to confer on any
Participant any right to continue in the employ of, or to continue any other
relationship with, the Company or any Parent, Subsidiary or Affiliate of the
Company or limit in any way the right of the Company or any Parent,
Subsidiary or Affiliate of the Company to terminate Participant's employment
or other relationship at any time, with or without cause.

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                         12.2 NO RIGHT TO COMPENSATION. In the event that any
person holding an Award under the Plan ceases to be employed by, or otherwise
has ceased to provide services to, the Company or a Parent, Subsidiary or
Affiliate for whatever reason, he shall have no right to any compensation in
respect of this loss of right to receive Shares under this Plan.

                13. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any
time or from time to time, authorize the Company, with the consent of the
respective Participants, to issue new Awards in exchange for the surrender
and cancellation of any or all outstanding Awards. The Committee may at any
time buy from a Participant an Award previously granted with payment in cash,
Shares or other consideration, based on such terms and conditions as the
Committee and the Participant shall agree.

                14.  CORPORATE TRANSACTIONS.

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                         14.1 ASSUMPTION OR REPLACEMENT OF AWARDS BY
SUCCESSOR. In the event of (a) a sale of the entire share capital of the
Company to another corporation (whether for consideration in cash or in the
form of securities of any kind), (b) a dissolution or liquidation of the
Company, (c) the sale of substantially all of the assets of the Company, or
(d) any other transaction which qualifies as a "corporate transaction" under
Section 424(a) of the Code wherein the shareholders of the Company give up
all of their equity interest in the Company ("CORPORATE TRANSACTION"), any or
all outstanding Awards may be assumed or replaced by the purchasing or
successor corporation, which assumption or replacement shall be binding on
all Participants. In the alternative, the purchasing or successor corporation
may substitute equivalent Awards or provide substantially similar
consideration to Participants as was provided to shareholders (after taking
into account the existing provisions of the Awards). The purchasing or
successor corporation may also issue, in place of outstanding Shares of the
Company held by the Participant, substantially similar shares or other
property subject repurchase restrictions no less favorable to the Participant.

                         14.2 EXPIRATION OF AWARDS. In the event such
purchasing or successor corporation, if any, refuses to assume or substitute
the Awards, as provided above, pursuant to a transaction described in
Subsection 14.1(a) above, such Awards shall expire on such transaction at
such time and on such conditions as the Board shall determine. In the event
such purchasing or successor corporation, if any, refuses to assume or
substitute the Awards as provided above, pursuant to a corporate transaction
described in Subsections 14.1(b), (c) or (d) above, or there is no purchasing
or successor corporation, and if the Company ceases to exist as a separate
corporate entity, then, notwithstanding any contrary terms in the Stock
Option Agreement, the Awards shall expire on a date at least twenty (20) days
after the Board gives written notice to Participants specifying the terms and
conditions of such termination.

                         14.3 OTHER TREATMENT OF AWARDS. Subject to any
greater rights granted to Participants under the foregoing provisions of this
Section 14, in the event of the occurrence of any Corporate Transaction
described in Section 14.1, any outstanding Awards shall be treated as
provided in the applicable agreement or plan of such Corporate Transaction.

                         14.4 ASSUMPTION OF AWARDS BY THE COMPANY. The
Company, from time to time, also may substitute or assume outstanding awards
granted by another company, whether in connection with an acquisition of such
other company or otherwise, by either (a) granting an Award under the Plan in
substitution of such other company's award, or (b) assuming such award as if
it had been granted under the Plan if the terms of such assumed award could
be applied to an Award granted under the Plan. Such substitution or
assumption shall be permissible if the holder of the substituted or assumed
award would have been eligible to be granted an Award under the Plan if the
other company had applied the rules of the Plan to such grant. In the event
the Company assumes an award granted by another company, the terms and
conditions of such award shall remain unchanged (EXCEPT that the exercise
price and the number and nature of Shares issuable upon exercise of any such
option will be adjusted appropriately pursuant to Section 424(a) of the
Code). In the event the Company elects to grant a new Award rather

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than assuming an existing option, such new Award may be granted with a
similarly adjusted Exercise Price.

                15. ADOPTION AND SHAREHOLDER APPROVAL. The Plan shall become
effective at such date and time as the Registration Statement filed with the
SEC relating to the Company's securities is declared effective (and then only
provided that the initial public offering later closes) (the "EFFECTIVE
DATE"). The Plan shall be approved by the shareholders of the Company
(excluding Shares issued pursuant to this Plan), consistent with applicable
laws, within twelve months before or after the date the Plan is adopted by
the Board. Upon the Effective Date, the Board may grant Awards pursuant to
the Plan; PROVIDED, HOWEVER, that: (a) no Award may be exercised prior to
initial shareholder approval of the Plan and (b) no Award granted pursuant to
an increase in the number of Shares approved by the Board shall be exercised
prior to the time such increase has been approved by the shareholders of the
Company.

                16. TERM OF PLAN. The Plan will terminate ten (10) years from
the date the Plan is adopted by the Board or, if earlier, the date of
shareholder approval.

                17. AMENDMENT OR TERMINATION OF PLAN. The Board may at any
time terminate or amend the Plan in any respect, including without limitation
amendment of any form of Stock Option Agreement or instrument to be executed
pursuant to the Plan; PROVIDED, HOWEVER, that the Board shall not, without
the approval of the shareholders of the Company, amend the Plan in any manner
that requires such shareholder approval pursuant to the Code or the
regulations promulgated thereunder as such provisions apply to ISO plans;
PROVIDED, FURTHER, that no amendment may be made to outstanding Awards
without the consent of the Participant.

                18. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of the
Plan by the Board, the submission of the Plan to the shareholders of the
Company for approval, nor any provision of the Plan shall be construed as
creating any limitations on the power of the Board to adopt such additional
compensation arrangements as it may deem desirable, including, without
limitation, the granting of stock options otherwise than under the Plan, and
such arrangements may be either generally applicable or applicable only in
specific cases.

                19. GOVERNING LAW. The Plan and all agreements, documents and
instruments entered into pursuant to the Plan shall be governed by and
construed in accordance with the internal laws of the State of California,
excluding that body of law pertaining to conflict of laws.

                20. DEFINITIONS. As used in the Plan, the following terms
shall have the following meanings:

                   "AFFILIATE" means any corporation that directly, or
indirectly through one or more intermediaries, controls or is controlled by,
or is under common control with the Company where "control" (including the
terms "controlled by" and "under common control with") means the possession,
direct or indirect, of the power to cause the direction of the management and
policies of the corporation, whether through the ownership of voting
securities, by contract or otherwise.

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                   "AWARD" means an award of an option to subscribe for
Shares.

                   "BOARD" means the Board of Directors of the Company.

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

                   "COMMITTEE" means the committee appointed by the Board to
administer the Plan, or if no committee is appointed, the Board.

                   "COMPANY" means Insignia Solutions plc, a corporation
organized under the laws of England, or any successor corporation.

                   "CONVERSION RATE" means the average currency conversion
rate quoted by the Bank of America in London as the price for Pounds Sterling
purchased with U.S. Dollars.

                   "DISABILITY" means a disability, whether temporary or
permanent, partial or total, within the meaning of Section 22(e)(3) of the
Code, as determined by the Committee.

                   "EXERCISE PRICE" means the price per share at which a
holder of an Award may subscribe for the Shares issuable upon exercise of the
Award.

                   "FAIR MARKET VALUE" means the value of a share of the
Company's Ordinary Shares of 20p each determined as follows:

           (a)      if such Ordinary Shares, or instruments evidencing such
                    Ordinary Shares (e.g., American Depository Shares or
                    American Depository Receipts), are then quoted on the
                    Nasdaq National Market the closing price on the Nasdaq
                    National Market System on the trading day immediately
                    preceding the date on which Fair Market Value is
                    determined, or, if no such reported sale takes place on
                    such date, the closing price on the next preceding
                    trading date on which a reported sale occurred;

           (b)      if such Ordinary Shares, or instruments evidencing such
                    Ordinary Shares (e.g., American Depository Shares or
                    American Depository Receipts), are publicly traded and
                    are then listed on a national securities exchange, the
                    closing price or, if no reported sale takes place on
                    such date, the closing price on the next preceding
                    trading day on which a reported sale occurred;

           (c)      if such Ordinary Shares, or instruments evidencing such
                    Ordinary Shares (e.g., American Depository Shares or
                    American Depository Receipts), are publicly traded but
                    are not quoted on the Nasdaq National Market nor listed
                    or admitted to trading on a national securities
                    exchange, the average of the closing bid and asked
                    prices on such date, as reported by THE WALL STREET
                    JOURNAL, for the over-the-counter market; or

           (d)      if none of the foregoing is applicable, by the Board in
                    good faith.

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                    "INSIDER" means an officer or director of the Company or
any other person whose transactions in the Company's ordinary shares are
subject to Section 16 of the Securities Exchange Act of 1934, as amended.

                    "OUTSIDE DIRECTOR" means any outside director as defined
in Section 162(m) of the Code and the regulations issued thereunder.

                    "PARENT" means any corporation (other than the Company)
in an unbroken chain of corporations ending with the Company, if at the time
of the granting of an Award under the Plan, each of such corporations other
than the Company owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.

                    "PARTICIPANT" means a person who receives an Award under
the Plan.

                    "PLAN" means this Insignia Solutions plc 1995 Incentive
Stock Option Plan for U.S. Employees, as amended from time-to-time.

                    "SEC" means the Securities and Exchange Commission.

                    "SECURITIES ACT" means the Securities Act of 1933, as
amended.

                    "SHARES" means Ordinary Shares of 20p each in the
Company, reserved for issue under the Option Plans, as adjusted pursuant to
Sections 2 and 14 of the Plan, any instruments evidencing such Ordinary
Shares (e.g., American Depository Shares or American Depository Receipts) and
any successor security.

                    "STOCK OPTION AGREEMENT" means, with respect to each
Award, the signed written agreement between the Company and the Participant
setting forth the terms and conditions of the Award.

                    "SUBSIDIARY" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if,
at the time of granting of the Award, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.

                    "TERMINATION" or "TERMINATED" means, for purposes of the
Plan with respect to a Participant, that the Participant has ceased to
provide services as an employee, director, consultant, independent contractor
or advisor, to the Company or a Parent, Subsidiary or Affiliate of the
Company, except in the case of sick leave, military leave, or any other leave
of absence approved by the Committee; PROVIDED, that such leave is for a
period of not more than ninety (90) days, or reinstatement upon the
expiration of such leave is guaranteed by contract or statute. The Committee
shall have sole discretion to determine whether a Participant has ceased to
provide services and the effective date on which the Participant ceased to
provide services (the "TERMINATION DATE").

                                       -12-<PAGE>

                             INSIGNIA SOLUTIONS PLC

                                    THE RULES

                                     OF THE

                               INSIGNIA SOLUTIONS
                     U.K. EMPLOYEE SHARE OPTION SCHEME 1996

                   ADOPTED IN GENERAL MEETING ON 19 APRIL 1996
                  AND AMENDED IN GENERAL MEETING ON 29 MAY 1997
                      AND IN GENERAL MEETING ON 27 MAY 1999

<PAGE>

                                    CONTENTS
<TABLE>

CLAUSE                                                                PAGE
<S>               <C>                                                <C>
1                 Definitions                                            1
2                 Grant of Options                                       5
3                 Exercise Price                                         5
4                 Limitations                                            6
5                 Exercise and Lapse of Options                          6
6                 Payment of Exercise Price                              9
7                 Takeover and Liquidation                              10
8                 Variation in the Share Capital of the Company         14
9                 Rights of Ordinary Shares Allotted                    14
10                Availability of Shares                                15
11                Buyout of Options                                     15
12                Transfers of Options                                  15
13                Employment with the Company                           16
14                Documents                                             16
15                Administration                                        16
16                Governing Law                                         17

APPENDIX - Option Certificate
</TABLE>

<PAGE>

                               INSIGNIA SOLUTIONS
                     U.K. EMPLOYEE SHARE OPTION SCHEME 1996

<TABLE>
<CAPTION>
<S>              <C>
1                 DEFINITIONS

1.1               In this Scheme references to the following words and
                  expressions shall bear the following meanings:-

                  ACT:  the Income and Corporation Taxes Act 1988;

                  ADOPTION DATE: the date on which the Scheme is adopted by the
                  Company in general meeting;

                  AFFILIATE: any company that directly, or indirectly through
                  one or more intermediaries, controls or is controlled by, or
                  is under common control with the Company where "control"
                  (including the terms "controlled by" and "under common control
                  with") means the possession, direct or indirect, of the power
                  to cause the direction of the management and policies of the
                  company, whether through the ownership of voting securities,
                  by contract or otherwise;

                  AUDITORS:  the auditors for the time being of the Company;

                  BOARD:  the Board of Directors of the Company;

                  COMMITTEE: the Compensation Committee of the Board or such
                  duly constituted committee of the Board comprising of at least
                  two Disinterested Persons and which complies with the
                  provisions of Section 16 of the Exchange Act whilst the
                  Company is subject to the provisions of such Section;

                  COMPANY:  Insignia Solutions plc;

                  CONTROL:  has the same meaning as in Section 840 of the Act;

                  CONVERSION RATE: the average currency conversion rate quoted
                  by the Bank of

<PAGE>

                  America in London as the price for Pounds Sterling purchased
                  with US Dollars;

                  DATE OF GRANT: the date on which an Option is granted as
                  specified in the relevant Option Certificate;

                  DISINTERESTED PERSON: a director who has not, during the
                  period that person is a member of the Committee and for one
                  year prior to service as a member of the Committee, been
                  granted or awarded equity securities pursuant to the Scheme or
                  any other employee share scheme of the Company or any Parent,
                  Subsidiary or Affiliate of the Company, except in accordance
                  with the requirements set forth in rules as promulgated by the
                  SEC under Section 16(b) of the Exchange Act, as such rules are
                  amended from time to time and as interpreted by the SEC;

                  EXCHANGE ACT: the statute in the United States of America
                  known as the Securities Exchange Act 1934, as amended;

                  EXERCISE PRICE: the amount payable for an Option Share on the
                  exercise of an Option to be determined in accordance with Rule
                  3;

                  GROUP: the Company, its holding company and subsidiaries (as
                  defined in Section 736 of the Companies Act 1985);

                  INSIDER: an officer or director of the Company or any other
                  person whose transactions in the Ordinary Shares are subject
                  to Section 16 of the Exchange Act;

                  LAST EXERCISE DATE: in respect of any Option or part of any
                  Option, the date specified in the relevant Option Certificate
                  as determined by the Committee being a date not later than ten
                  years after the Date of Grant of the Option;

                  MARKET VALUE:

                  (a)     if Ordinary Shares, or instruments evidencing
                          Ordinary Shares, are then quoted on the Nasdaq
                          National Market the closing price on the Nasdaq
                          National Market System on the trading day immediately
                          preceding the Date of Grant of an Option, or, if no
                          such reported sale takes place on such date,

                                       2
<PAGE>

                           the closing price on the next preceding trading date
                           on which a reported sale occurred;

                  (b)      if Ordinary Shares, or instruments evidencing
                           Ordinary Shares, are publicly traded and are then
                           listed on a national securities exchange, the closing
                           price on the trading day immediately preceding the
                           Date of Grant of an Option, or, if no reported sale
                           takes place on such date, the closing price on the
                           next preceding trading day on which a reported sale
                           occurred;

                  (c)      if Ordinary Shares, or instruments evidencing
                           Ordinary Shares, are publicly traded but are not
                           quoted on the Nasdaq National Market nor listed or
                           admitted to trading on a national securities
                           exchange, the average of the closing bid and asked
                           prices on the day immediately preceding the Date of
                           Grant of an Option, as reported by The Wall Street
                           Journal, for the over-the-counter market;

                  (d)      if none of the foregoing is applicable, by the Board
                           in good faith.

                  1986 SCHEME: the Company's 1986 Executive Share Option Scheme;

                  OPTION SCHEME: a right to acquire Option Shares granted
                  pursuant to the Scheme;

                  OPTION CERTIFICATE: the Option Certificate substantially in
                  the form set out in the Appendix as such certificate may be
                  amended by the Committee from time to time;

                  OPTION HOLDER: a Qualified Person who holds an Option in
                  accordance with the terms of the Scheme or where the context
                  permits a person becoming entitled to any such Option in
                  consequence of the death of the original Option Holder;

                  OPTION SHARES: issued or unissued Ordinary Shares in respect
                  of which an Option is granted;

                  ORDINARY SHARES: the ordinary shares in the capital of the
                  Company and any instruments evidencing such Ordinary Shares;

                                       3
<PAGE>

                  PARENT: any company (other than the Company) in an unbroken
                  chain of companies ending with the Company, if at the time of
                  the granting of an Option under the Scheme, each of such
                  companies other than the Company owns shares possessing 50 per
                  cent or more of the total combined voting power of all classes
                  of shares in one of the other companies in such chain;

                  QUALIFIED PERSON: any employee (including officers and
                  directors who are also employees) of a company in the Group;

                  THE SCHEME: this Insignia Solutions U.K. Employee Share Option
                  Scheme 1996 in its present form with and subject to any
                  amendments hereto properly effected;

                  SEC: the United States of America Securities and Exchange
                  Commission;

                  SUBSIDIARY: any company (other than the Company) in an
                  unbroken chain of companies beginning with the Company if, at
                  the time of granting of an Option, each of the companies other
                  than the last company in the unbroken chain owns shares
                  possessing 50 per cent or more of the total combined voting
                  power of all classes of shares in one of the other companies
                  in such chain.

1.2               In this Scheme (unless the context requires otherwise):-

1.2.1             any reference to any statute or statutory provision shall be
                  construed as including a reference to any modification,
                  re-enactment or extension of such statute or statutory
                  provision for the time being in force, to any subordinate
                  legislation made under the same and to any former statutes or
                  statutory provisions which it consolidated or re-enacted;

1.2.2             any reference to a Rule is to a Rule of this Scheme, as
                  amended from time to time;

1.2.3             the singular includes a reference to the plural and vice
                  versa;

1.2.4             the masculine gender shall include the feminine gender;

                                       4
<PAGE>

1.2.5             references to the exercise of an Option shall where the
                  context so allows include the exercise of an Option in part.

2                 GRANT OF OPTIONS

2.1               Subject to the limitations and conditions of the Scheme and
                  unless prohibited by law, the Committee may grant Options
                  following the Adoption Date at any time to any Qualified
                  Person as it may in its sole discretion determine.

2.2               On the grant of an Option, the Committee shall determine the
                  Exercise Price (calculated in accordance with Rule 3) and the
                  Last Exercise Date of the Option and shall specify such
                  details in the Option Certificate.

2.3               There shall be no consideration payable for the grant of an
                  Option.

2.4               As soon as practicable after the grant of an Option the
                  Committee shall arrange for the despatch of an Option
                  Certificate duly sealed or executed as a deed by the Company
                  to each Option Holder to whom an Option has been granted. An
                  Option Holder may disclaim an Option by notice in writing to
                  the Company within fourteen days after the date of the Option
                  Certificate.

3                 EXERCISE PRICE

3.1               Subject to adjustment pursuant to Rule 8, the Exercise Price
                  at the relevant Date of Grant shall be determined by the
                  Committee but it may not be less than the higher of:-

3.1.1             where the Option is an option to subscribe for Ordinary
                  Shares, the US Dollar equivalent of the nominal value of an
                  Ordinary Share calculated by reference to the prevailing
                  Conversion Rate; and

3.1.2             the Market Value of an Ordinary Share.

3.2               The Exercise Price shall be expressed in US Dollars.

                                       5
<PAGE>

4                 LIMITATIONS

4.1               No Options shall be granted under the Scheme later than ten
                  years after the Adoption Date.

4.2               Subject to adjustment pursuant to Rule 8, no Option shall be
                  granted if the number of Ordinary Shares over which it is
                  proposed to grant the Option when aggregated with all Ordinary
                  Shares which have been issued or which might be issued in the
                  future pursuant to options and rights (excluding those which
                  have lapsed or have been surrendered) granted under the 1988
                  US Stock Option Plan, the 1995 Incentive Stock Option Plan for
                  US Employees and the 1986 Scheme will exceed 4,672,071
                  Ordinary Shares.

4.3               If an Option is granted in excess of the limitation in Rule
                  4.2, such Option shall be limited and take effect over such
                  number of Ordinary Shares as would be within the said
                  limitation and the Committee shall, if appropriate, as soon as
                  practicable arrange for any original Option Certificate to be
                  cancelled and a replacement Option Certificate to be issued in
                  its place.

5                 EXERCISE AND LAPSE OF OPTIONS

5.1               Notwithstanding any other provision of this Rule 5, an Option
                  shall not in any event be exercisable more than ten years
                  after the Date of Grant of that Option.

5.2               Options may be exercised by an Option Holder who is a
                  Qualified Person as follows:-

5.2.1             where such an Option Holder does not hold a subsisting option
                  granted under the 1986 Scheme at the Date of Grant of the
                  first Option granted to him then such first Option may be
                  exercised on or after the first anniversary of the Date of
                  Grant as to 1/48th of the number of Ordinary Shares comprised
                  in such Option (rounded to the nearest whole number) for each
                  complete month he has been employed by the Group since the
                  Date of Grant and shall lapse on the Last Exercise Date;

                                       6
<PAGE>

                  5.2.1.1           where such an Option Holder holds a
                                    subsisting option granted under the 1986
                                    Scheme at the Date of Grant of the first
                                    Option granted to him; or

                  5.2.1.2           in the case of each Option granted to such
                                    Option Holder after his first Option

                  then such Options may be exercised as to 1/48th of the number
                  of Ordinary Shares comprised in such Option (rounded to the
                  nearest whole number) for each complete month he has been
                  employed by the Group since the Date of Grant and shall lapse
                  on the Last Exercise Date.

5.3               An Option may be exercised otherwise than as set out in Rule
                  5.2 in the circumstances and during the periods set out
                  below:-

5.3.1             if an Option Holder ceases to be employed by the Group by
                  reason of his death his Option may be exercised to the extent
                  that his Option would have been exercisable at the time of his
                  death within eighteen months of his death (or such longer
                  period not exceeding five years as may be determined by the
                  Committee) by his legal personal representatives provided that
                  such exercise is not later than the Last Exercise Date and
                  thereafter the Option shall lapse;

5.3.2             if an Option Holder ceases to be employed by the Group by
                  reason of his disability (as determined by the Committee) his
                  Option may be exercised to the extent that his Option would
                  have been exercisable at the time of his cessation of
                  employment within twelve months of the date of such cessation
                  (or such longer period not exceeding five years as may be
                  determined by the Committee) provided that such exercise is
                  not later than the Last Exercise Date and thereafter the
                  Option shall lapse;

5.3.3             if an Option Holder ceases to be employed by the Group
                  (otherwise than by reason of his death or disability) his
                  Option may be exercised to the extent that his Option would
                  have been exercisable at the time of cessation of his
                  employment within three months of the date of such cessation
                  (or such longer period not exceeding five years as may be
                  determined by the Committee)

                                       7
<PAGE>

                  provided that such exercise is not later than the Last
                  Exercise Date and thereafter his Option shall lapse.

5.4               Each Option is to be exercisable by an Option Holder to the
                  extent that the Option has become exercisable in whole or in
                  part.

5.5               Exercise of an Option is to be by application in writing
                  addressed to the Company and specifying the number of Option
                  Shares in respect of which the Option is being exercised on
                  that occasion and the method of payment of the Exercise Price
                  for such Option Shares, such application to be delivered or
                  sent by prepaid post to the registered office for the time
                  being of the Company or to such office as may from time to
                  time be specified by the Company in writing to the Option
                  Holder.

5.6               Subject to the regulations and enactments for the time being
                  in force under any applicable national or foreign securities
                  law and any rules, regulations and other requirements of any
                  stock exchange or automated quotation system upon which the
                  Ordinary Shares may be listed or quoted and subject to
                  compliance by the Option Holder with the terms of the Option
                  the Company will after receipt of the application make an
                  allotment to the Option Holder of the number of Ordinary
                  Shares specified in the application at the Exercise Price (as
                  adjusted in accordance with the provisions of the Scheme) and
                  will (subject to the provisions of Rule 5.7) deliver to the
                  Option Holder evidence of title to such Ordinary Shares
                  provided that instead of allotting and issuing the appropriate
                  number of Ordinary Shares the Company shall have the right to
                  satisfy its obligations of allotment by (in whole or in part)
                  procuring that some or all of the Ordinary Shares are
                  transferred by a third party to the relevant Option Holder.
                  For these purposes delivery or transfer to an Option Holder
                  includes delivery or transfer to a nominee for the Option
                  Holder provided that the Option Holder acquires the beneficial
                  ownership of the Ordinary Shares delivered or transferred.

5.7               The Company shall have no obligation to issue or deliver
                  certificates for Ordinary Shares under the Scheme prior to:-

                                       8
<PAGE>

5.7.1             obtaining any approvals from governmental agencies that the
                  Company determines are necessary or advisable; and

5.7.2             completion of any registration or other qualification of the
                  Ordinary Shares under any applicable national or foreign law
                  or ruling of any governmental body that the Company determines
                  to be necessary or advisable.

6                 PAYMENT OF EXERCISE PRICE

6.1               Payment of the Exercise Price for the Ordinary Shares may be
                  made in cash (by cheque) or where expressly approved for the
                  Option Holder by the Committee and where permitted by law:-

6.1.1             by waiver of remuneration due or accrued to the Option Holder
                  by any company in the Group for services rendered;

6.1.2             provided that a public market for the Ordinary Shares exists:-

                  6.1.2.1           through a "same day sale" commitment from
                                    the Option Holder and a broker-dealer that
                                    is a member of the National Association of
                                    Securities Dealers ("a NASD Dealer") whereby
                                    the Option Holder irrevocably elects to
                                    exercise his Option and to sell a portion of
                                    the Ordinary Shares so subscribed for in
                                    order to pay for the Exercise Price, and
                                    whereby the NASD Dealer irrevocably commits
                                    upon receipt of such Ordinary Shares to
                                    forward the Exercise Price directly to the
                                    Company; or

                  6.1.2.2           through a "margin" commitment from an Option
                                    Holder and a NASD Dealer whereby the Option
                                    Holder irrevocably elects to exercise his
                                    Option and to pledge the Ordinary Shares so
                                    subscribed for to the NASD Dealer in a
                                    margin account as security for a loan from
                                    the NASD Dealer in the amount of the
                                    Exercise Price, and whereby the NASD Dealer
                                    irrevocably commits upon receipt of such
                                    Ordinary Shares to forward the Exercise
                                    Price directly to the Company; or

                                       9
<PAGE>

6.1.3             by any combination of cash and the methods described in this
                  Rule 6.1.

6.2               Where the payment is to be made in Pounds Sterling then the
                  amount payable shall be calculated by reference to the
                  Conversion Rate prevailing at the date of payment.

7                 TAKEOVER AND LIQUIDATION

7.1               In the event of:-

7.1.1             any person obtaining Control of the Company as a result of
                  making:-

                  7.1.1.1           a general offer to acquire the whole of the
                                    issued ordinary share capital of the Company
                                    (not already owned by such person) which is
                                    made on a condition such that if it is
                                    satisfied the person making the offer will
                                    have Control of the Company; or

                  7.1.1.2           a general offer to acquire all the shares in
                                    the Company which are of the same class as
                                    the Option Shares (not already owned by such
                                    person);

7.1.2             any company obtaining Control of the Company in pursuance of a
                  compromise or arrangement sanctioned by the Court under
                  Section 425 of the Companies Act 1985; or

7.1.3             the sale of substantially all of the assets of the Company;
                  the purchaser or acquiring company ("the Acquiring Company")
                  may:-

7.1.4             in consideration for the release by an Option Holder of his
                  subsisting Option grant to such Option Holder a new option
                  over shares in the Acquiring Company which is otherwise
                  equivalent (as defined in Rule 7.8) to his subsisting Option;

                                       10
<PAGE>

7.1.5             in consideration for the release by an Option Holder of his
                  subsisting Option grant to such Option Holder an equivalent
                  new option over shares in the Acquiring Company governed by
                  the rules of an employee share option scheme of the Acquiring
                  Company; or

7.1.6             offer substantially similar consideration to Option Holders as
                  is offered to shareholders of the Company (after taking into
                  account the existing provisions of the Option).

7.2               In the event that the Acquiring Company, pursuant to a
                  transaction described in Rule 7.1.1 above, refuses to make a
                  proposal as described in Rules 7.1.4 to 7.1.6 above to an
                  Option Holder prior to the commencement of the earliest of the
                  periods described in Rules 7.2.1.1 and 7.2.1.2 below, then:-

7.2.1             if his Option has already become capable of exercise under
                  these Rules then the Option Holder may exercise it to the
                  extent that the Option has become exercisable until the end of
                  whichever of the following periods finishes earliest:-

                  7.2.1.1           a period of one month beginning with the
                                    time when the Acquiring Company has obtained
                                    Control of the Company and (if applicable)
                                    any condition subject to which the offer is
                                    made is satisfied; and

                  7.2.1.2           if the Acquiring Company becomes bound or
                                    entitled to acquire the shares in the
                                    Company under Sections 428 to 430F of the
                                    Companies Act 1985, the period when that
                                    person remains so bound or entitled

                  and then any such Options as remain unexercised shall lapse;

7.2.2             if his Option has not already become capable of exercise under
                  these Rules then such Option shall lapse at such time and on
                  such conditions as the Board shall determine.

                                       11
<PAGE>

7.3               For the purposes of Rules 7.1 and 7.2 above a person shall be
                  deemed to have obtained Control of the Company if he and
                  others acting in concert with him have together obtained
                  Control of it.

7.4               In the event that the Acquiring Company, pursuant to a
                  transaction described in Rule 7.1.2 above, refuses to make a
                  proposal as described in Rules 7.1.4 to 7.1.6 above to an
                  Option Holder prior to the expiry of one month after the Court
                  sanctions the compromise or arrangement then his Option shall
                  be subject to the provisions of Rule 7.7.

7.5               In the event that the Acquiring Company, pursuant to a
                  transaction described in Rule 7.1.3 above, refuses to make a
                  proposal as described in Rules 7.1.4 to 7.1.6 above to an
                  Option Holder then his Option shall lapse at such time and on
                  such conditions as the Board shall determine.

7.6               In the event of a members' voluntary winding up of the Company
                  any Option Holder may, by notice in writing to the Company
                  within 60 days of the commencement of the winding up (such
                  notice being accompanied by payment of the Exercise Price),
                  elect in relation to any Option which has already become
                  capable of exercise under these Rules to be treated as if that
                  Option had been exercised either to the full extent that it is
                  then capable of being exercised or to the extent specified in
                  the notice, immediately before the commencement of the winding
                  up, and such Option Holder shall then be entitled to be paid a
                  sum equal to the amount he would have received as a holder of
                  the Ordinary Shares to which he would have been entitled upon
                  such exercise. Subject as aforesaid, all Options shall lapse
                  on the winding up of the Company.

7.7               If under Section 425 of the Companies Act 1985 it is proposed
                  that the court sanctions a compromise or arrangement proposed
                  for the purposes of or in connection with a scheme for the
                  reconstruction of the Company or its amalgamation with any
                  other company or companies the Company shall give notice
                  thereof to all Option Holders at the same time as it sends
                  notices to members of the Company summoning the meeting to
                  consider such a compromise or arrangement. Then at the time
                  that such notice is given:-

                                       12
<PAGE>

7.7.1             if the Option has already become capable of exercise under
                  these Rules, the Option Holder may exercise the Option, to the
                  extent that the Option has become exercisable, before the
                  expiry of the later of one month from the date of such notice
                  and one month from the date on which the Court sanctions the
                  compromise or arrangement and thereafter the Option shall
                  lapse. The exercise of an Option under this Rule 7.7.1 shall
                  be conditional on such compromise or arrangement becoming
                  effective;

7.7.2             if the Option has not already become capable of exercise under
                  these Rules the Option shall lapse at such time and on such
                  conditions as the Board shall determine.

                  It shall be a condition of exercising the Option under this
                  Rule 7.7 that, after exercising the Option, the Option Holder
                  shall transfer or otherwise deal with the Ordinary Shares
                  issued to him so as to place him in the same position (or as
                  near as possible) as would have been the case if such Ordinary
                  Shares had been subject to such compromise or arrangement.

7.8               For the purposes of Rule 7.1.4 above a new option over shares
                  in the Acquiring Company (hereinafter called the "New Option")
                  shall be equivalent to a subsisting option (hereinafter called
                  the "Old Option") if the date of grant is deemed to be the
                  same date as the Date of Grant of the Old Option; if the
                  aggregate exercise price of the Ordinary Shares subject to the
                  New Option is as nearly as practicable the same as the
                  aggregate Exercise Price of the Ordinary Shares subject to the
                  Old Option; and (save as provided in the Rules and save for
                  the number, description and Exercise Price of the Ordinary
                  Shares subject to the New Option) the other rights and terms
                  attaching to the New Option are as nearly as practicable the
                  same as those attaching to the Old Option. The New Option
                  shall, for all other purposes of the Scheme, be treated as
                  having been acquired at the same time as the Old Option.

7.9               With effect from the date on which an Option Holder releases
                  the Old Option in consideration of the grant to him of the New
                  Option, Rule 1 and Rules 5 to 16 inclusive shall, in relation
                  to the New Option, be construed for the purposes of that New
                  Option as if references directly or indirectly to "the
                  Company" and to

                                       13
<PAGE>

                  "Ordinary Shares" were references to the Acquiring Company and
                  to shares in the Acquiring Company.

7.10              Subject to the provisions of Rule 7.1 to 7.9 above, if any of
                  the corporate transactions described in such Rules should
                  occur, any outstanding Options shall be treated in the manner
                  provided for in the applicable agreement or plan of such
                  corporate transaction.

8                 VARIATION IN THE SHARE CAPITAL OF THE COMPANY

8.1               On any variation of the share capital of the Company (whether
                  by way of capitalisation or rights issue, sub-division or
                  consolidation of the Ordinary Shares or a share capital
                  reduction) the Exercise Price and/or the number and nominal
                  value of Ordinary Shares comprised in an Option and/or the
                  aggregate maximum number of Ordinary Shares available under
                  the Scheme may be varied in such manner as the Committee shall
                  determine and such decision of the Committee shall be final
                  and binding on the Option Holders and the Company subject to
                  written notification being given to the Option Holders.

8.2               An adjustment to the Exercise Price shall not be made pursuant
                  to the provisions of this Rule 8 which would result in any
                  Option Shares being issued unlawfully at a discount.

8.3               A variation shall not be made pursuant to this Rule 8 until
                  the Auditors shall (acting as experts and not as arbitrators)
                  have notified the Committee in writing that the proposed
                  variation is, in their opinion, fair and reasonable.

9                 RIGHTS OF ORDINARY SHARES ALLOTTED

9.1               Ordinary Shares to be allotted pursuant to the exercise of any
                  Option shall rank pari passu in all respects and as one class
                  with the Ordinary Shares in issue at the date of allotment and
                  Ordinary Shares allotted or transferred shall rank in full for
                  all dividends and distributions the record date of which falls
                  on or after the date of exercise of the Option but shall not
                  rank for any dividend or distribution the record date of which
                  precedes the date of exercise of the Option.

                                       14
<PAGE>

9.2               The Company shall not be under an obligation to register the
                  Ordinary Shares allotted pursuant to the exercise of an Option
                  with the SEC or to effect compliance with the registration,
                  qualification or listing requirements of any national or
                  foreign securities laws, stock exchange or automated quotation
                  system, and the Company shall have no liability for any
                  inability or failure to do so.

10                AVAILABILITY OF SHARES

                  The Company shall at all times have available sufficient
                  unissued Ordinary Shares to meet any exercise of any Option,
                  taking into account any arrangements made by the Company to
                  procure the transfer by a third party to the relevant Option
                  Holder of Ordinary Shares to satisfy (whether in full or in
                  part) the exercise of any Option.

11                BUYOUT OF OPTIONS

                  The Committee may at any time buy from an Option Holder his
                  Option previously granted with payment in cash, Ordinary
                  Shares or other consideration, based on such terms and
                  conditions as the Committee and the Option Holder shall agree.

12                TRANSFERS OF OPTIONS

12.1              No Option granted pursuant to the Scheme nor the benefit of an
                  Option may be transferred, assigned, charged or otherwise
                  alienated save that nothing in the Rules of the Scheme shall
                  prohibit the transmission of the Option by operation of law in
                  the event of the death of an Option Holder.

12.2              If an Option Holder does or suffers an act or thing whereby he
                  would or might be deprived of the legal or beneficial
                  ownership of an Option that Option shall forthwith lapse and
                  the Committee shall not knowingly permit its exercise.

                                       15
<PAGE>

13                EMPLOYMENT WITH THE COMPANY

13.1              Nothing in the Scheme or any Option granted under the Scheme
                  shall confer or be deemed to confer on any Option Holder any
                  right to continue in the employ of any member of the Group or
                  limit in any way the right of any member of the Group to
                  terminate the employment of the Option Holder with or without
                  cause.

13.2              If any Option Holder shall cease to be employed by or hold
                  office with a member of the Group for any reason he shall not
                  be entitled by way of compensation for loss of office or
                  otherwise to any sum or other benefit whatsoever to compensate
                  him for the loss of any right under the Scheme notwithstanding
                  any provision to the contrary in his contract of employment.

14                DOCUMENTS

                  The Company shall deliver to each Option Holder a copy of the
                  documents sent to ordinary shareholders of the Company as a
                  class of shareholders.

15                ADMINISTRATION

15.1              The Scheme shall be administered by the Committee. The
                  Committee shall have the power to:-

15.1.1            construe and interpret the Scheme, any Option Certificates and
                  any other agreement or document executed pursuant to the
                  Scheme;

15.1.2            prescribe, amend and rescind rules and regulations relating to
                  the Scheme;

15.1.3            correct any defect, supply any omission, or reconcile any
                  inconsistency in the Scheme or any agreement or document
                  executed pursuant to the Scheme;

15.1.4            make all other determinations necessary or advisable for the
                  administration of the Scheme.

                                       16
<PAGE>

15.2              Any determination made by the Committee with respect to any
                  Option shall be made in its sole discretion at the time of
                  grant of the Option or, unless in contravention of any express
                  term of the Scheme or Option, at any later time, and such
                  determination shall be final and binding on the Company and
                  all persons having an interest in any Option. The Committee
                  may delegate to one or more officers of the Company the
                  authority to grant Options under the Scheme to Option Holders
                  who are not Insiders of the Company.

15.3              An Option shall not be effective unless such Option is in
                  compliance with all relevant national and foreign securities
                  laws, rules and regulations of any governmental body, and the
                  requirements of any stock exchange or automated quotation
                  system upon which the Ordinary Shares may then be listed or
                  quoted, as they are in effect on the Date of Grant of such
                  Option and also on the date of exercise or other issue.

15.4              If any provision of any Rule or any Option conflicts with the
                  applicable requirements of Rule 16b-3 (or its successors) of
                  the SEC promulgated under the Exchange Act in relation to
                  Option Holders who are or may be Insiders then those
                  provisions to the extent possible shall be interpreted or
                  deemed amended so as to avoid such conflict.

15.5              The Board may at any time terminate or amend the Scheme in any
                  respect, including without limitation amendment of any form of
                  Option Certificate or instrument to be executed pursuant to
                  the Scheme, provided however that the Board shall not, without
                  the approval of the shareholders of the Company, amend the
                  Scheme in any manner that requires such shareholder approval
                  pursuant to the Exchange Act or Rule 16b-3 (or its successor),
                  as amended, thereunder, provided, further that no amendment
                  may be made to outstanding Options without the consent of the
                  Option Holders.

16                GOVERNING LAW

                  The Scheme shall be governed by and construed in accordance
                  with the Laws of England and Wales.
</TABLE>

                                       17
<PAGE>

                                    APPENDIX
                               OPTION CERTIFICATE
                     U.K. EMPLOYEE SHARE OPTION SCHEME 1996

                                                      Certificate No. JAN. 96/02

                             INSIGNIA SOLUTIONS PLC
                       (Registered in England No. 1961960)

1         This is to certify that     Name:             [               ]
                                      Address:          [               ]
                                                        [               ]
                                                        [               ]

is a holder of an Option to subscribe for the number of Ordinary Shares of 20p
each in the Company shown in Box `A' below subject to the Rules of the Insignia
Solutions UK Employee Share Option Scheme 1996.

<TABLE>
<CAPTION>
-------------------------------------------- ------------------------------ -------------------------

                    `A'                                   `B'
NUMBER OF ORDINARY SHARES COMPRISED IN THE    EXERCISE PRICE PER ORDINARY             `C'
                  OPTION                                 SHARE              DATE OF GRANT OF OPTION
-------------------------------------------- ------------------------------ -------------------------
<S>                                          <C>                            <C>
                    [ ]                                 US$ [ ]                       [ ]
-------------------------------------------- ------------------------------ -------------------------
</TABLE>

2                 The Date of Grant of the Option is shown in Box `C' above and
                  the Option is exercisable in whole or in part [not earlier
                  than the first anniversary of the Date of Grant] subject to
                  and in accordance with the Rules of the Scheme.

3                 The figures shown in Box `A' and Box `B' above are subject to
                  adjustment in certain circumstances in accordance with the
                  Rules of the Scheme.

4                 The Option is not transferable, assignable or chargeable.

5                 The Option will lapse on the Last Exercise Date being the
                  [tenth] anniversary of the Date of Grant to the extent that it
                  has not been exercised.

6                 The Option [will be exercisable as to 25% of the shares over
                  which it has been granted on [ ] and will be exercisable as to
                  1/48 of the Ordinary Shares over which it has been granted on
                  the expiry of each complete month thereafter] [will be
                  exercisable as to 1/48 of the Ordinary Shares over which it
                  has been granted on the expiry of each complete month since
                  the Date of Grant]. The Option is exercisable only by notice
                  in writing in the form prescribed under the Rules of the
                  Scheme. This certificate must be sent to the Company or such
                  office as may be specified from time to time by the Company
                  whenever the Option is

<PAGE>

                  exercised in whole or in part. Where the Option is exercised
                  in respect of part only of the Ordinary Shares comprised in
                  the certificate, the certificate will be returned to the
                  holder with the balance of Ordinary Shares endorsed overleaf.

7                 The rights under the Option may be renounced in whole or in
                  part by the holder giving notice in writing to the Company
                  WITHIN FOURTEEN DAYS AFTER THE DATE OF THIS CERTIFICATE. This
                  certificate must be returned to the Company if the holder
                  wishes to renounce in whole or in part his rights hereunder.
                  If rights are renounced in part only the appropriate
                  replacement certificate will be issued to the holder.

8                 This document shall be presumed to be delivered and is
                  intended by the parties to be a deed when (and not before) it
                  is dated.

Given under the Common Seal                 )
of INSIGNIA SOLUTIONS PLC                   )
in the presence of:-                        )

--------------------------
Director

--------------------------
Secretary

--------------------------
Date:

                                       2

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