Document:

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                                                                   EXHIBIT 10.26
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                                 VERISITY LTD.
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                       THE 1999 ISRAELI SHARE OPTION PLAN
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I.   NAME

    This Plan, as amended from time to time, shall be known as the VERISITY Ltd.
    1999 Israeli Share Option Plan ("the Option Plan").

II.  PURPOSE OF THE OPTION PLAN

    The Option Plan is intended as an incentive to retain, in the employment of
    VERISITY Ltd. ("the Company") or a Subsidiary of the Company which now
    exists or hereafter is organized or acquired by the Company, persons of
    training, experience, and ability, to attract employees, directors or
    consultants, whose services are considered valuable, to encourage the sense
    of proprietorship of such persons, and to stimulate the active interest of
    such persons in the development and financial success of the Company by
    providing them with opportunities to purchase shares in the Company,
    pursuant to the Option Plan approved by the board of directors of the
    Company ("the Board") (each such employee, director or consultant shall be
    referred to herein as "Optionee"). Options granted under the Option Plan may
    or may not contain such terms as will qualify such Options for the special
    tax treatment under section 102 of the Israeli Income Tax Ordinance
    ("Section 102").

    Options containing such terms as will qualify them for the special tax
    treatment under section 102 of the Israeli Income Tax Ordinance, shall be
    referred to herein as "102 Options". Options that do not contain such terms
    as will qualify them for the special tax treatment under section 102 of the
    Israeli Income Tax Ordinance, shall be referred to herein as "3(i) Options".

    All Options granted hereunder, whether together or separately, shall be
    hereinafter referred to as "the Options".

    The term "Subsidiary" shall mean for the purposes of the Plan any company
    (other than the Company) in an unbroken chain of companies beginning with
    the Company if, at the time of granting an option, each of the companies
    other than the last company in the unbroken chain owns stock possessing
    fifty percent (50%) or more of

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    the total combined voting power of all classes of stock in one of the other
    companies in such chains.

III.  ADMINISTRATION OF THE OPTION PLAN

    The Board or a committee appointed and maintained by the Board for such
    purpose ("the Committee") shall have the power to administer the Option
    Plan. Notwithstanding the above, the Board shall automatically have a
    residual authority if no Committee shall be constituted or if such Committee
    shall cease to operate for any reason whatsoever.

    The Committee shall consist of such number of members (not less than two (2)
    in number) as may be fixed by the Board. The Committee shall select one of
    its members as its chairman ("the Chairman") and shall hold its meetings at
    such times and places as the Chairman shall determine. The Committee shall
    keep records of its meetings and shall make such rules and regulations for
    the conduct of its business as it shall deem advisable.

    No member of such Committee shall be prevented from receiving Options under
    the Option Plan while serving on the Committee by virtue of his or her being
    a member as per the above, unless otherwise specified herein.

    The Committee shall have full power and authority to:

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IV.   Designate participants as per Section 4 below;

V.    Designate Options as 102 Options or 3(i) Options;

VI.   Determine the terms and provisions of respective Option agreements (which
      need not be identical) including, but not limited to, the number of
      Ordinary Shares in the Company to be covered by each Option, the vesting
      periods in respect thereof including but without limitation provisions
      concerning the time or times when and the extent to which the Options may
      be exercised and the nature and duration of restrictions as to
      transferability;

VII.  Accelerate the right of an Optionee (as defined in Section 1 above) to
      exercise, in whole or in part, any previously granted Option;

VIII. Interpret the provisions and supervise the administration of the Option
      Plan;

IX.   Determine the Fair Market Value (as defined below) of the Shares (as
      defined below);

X.    Determine any other matter which is necessary or desirable for, or
      incidental to administration of the Option Plan;

XI.   Appoint in its absolute discretion the Trustee and replace it at any time
      in the future; and

XII.  Suspend, terminate or cancel the Option Plan or any part thereof, replace
      and/or determine further provisions and sub-plans in addition to the
      Option Plan, determine any other plan in lieu of the Option Plan and
      determine any provision and do anything in connection with this Option
      Plan.

     The Committee shall have the authority to grant, in its discretion, to the
     holder of an outstanding Option, in exchange for the surrender and
     cancellation of such Option, a new Option having a purchase price equal to,
     lower than or higher than the purchase price provided in the Option so
     surrendered and canceled, and containing such other terms and conditions as
     the Committee may prescribe in accordance with the provisions of the Option
     Plan.

     All decisions made or resolutions passed by the Board or the Committee
     pursuant to the provisions of the Option Plan shall be made by a majority
     of its members except that no member of the Board or the Committee shall
     vote on, or be counted for quorum purposes, with respect to any proposed
     action of the Board or the

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     Committee relating to any Option to be granted to that member.
     Notwithstanding the above, any decision, signed or agreed to in writing or
     by telex or facsimile by all of the members of the Board or by all of the
     members of the Committee, as the case may be, shall be valid for every
     purpose as a resolution adopted at a Board or Committee meeting, as the
     case may be, that was duly convened and held.

     The interpretation and construction by the Committee of any provision of
     the Option Plan or of any Option thereunder shall be final and conclusive
     unless otherwise determined by the Board.

     Subject to any applicable law, each member of the Board or the Committee
     shall be indemnified and held harmless by the Company against any cost or
     expense (including counsel fees) reasonably incurred by him or her, or any
     liability (including any sum paid in settlement of a claim with the
     approval of the Company) arising out of any act or omission to act in
     connection with the Option Plan unless arising out of such member's own
     fraud or bad faith, all subject and to the extent permitted by any
     applicable law. Such indemnification shall be in addition to any rights of
     indemnification the member may have as a director or otherwise under the
     Company's Articles of Association, any agreement, any vote of shareholders
     or disinterested directors, insurance policy or otherwise. The term "Fair
     Market Value" shall mean, with respect to the Shares and as of the date
     that is relevant to such a determination, the market price per share of
     such Shares determined by the Committee, as follows: (a) if the Shares are
     traded on a stock exchange on the date in question, then the Fair Market
     Value will be equal to the closing price reported by the applicable
     composite-transactions report for such date; (b) if the Shares are traded
     over-the-counter on the date in question and are classified as a national
     market issue, then the Fair Market Value will be equal to the last-
     transaction price quoted by the NASDAQ system for such date; (c) if the
     Shares are traded over-the-counter on the date in question but are not
     classified as a national market issue, then the Fair Market Value will be
     equal to the mean between the last reported representative bid and asked
     prices quoted by the NASDAQ system for such date; and (d) if none of the
     foregoing provisions is applicable, then the Fair Market Value will be
     determined by the Committee in its sole and absolute discretion in good
     faith on such basis as it deems appropriate.

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XIII. DESIGNATION OF PARTICIPANTS

     The persons eligible for participation in the Option Plan as recipients of
     Options shall include any employees, directors or consultants of the
     Company or of any Subsidiary of the Company that now exists or hereafter is
     organized or acquired by the Company. The grant of an Option hereunder
     shall neither entitle the recipient thereof to participate, nor disqualify
     him or her from participating in, any other grant of Options pursuant to
     this Option Plan or any other option or stock plan of the Company or any of
     its affiliates.

     Anything in the Option Plan to the contrary notwithstanding, all grants of
     Options to directors and office holders ("Nosei Misra" - as such term is
     defined in the Companies Ordinance (New Version), 1983 - "the Companies
     Ordinance") shall be authorized and implemented only in accordance with the
     provisions of the Companies Ordinance, as in effect from time to time.

XIV.  TRUSTEE

     The 102 Options which shall be granted to employees of the Company or of
     any Subsidiary of the Company that now exists or hereafter is organized or
     acquired by the Company and/or any Shares (as defined below) issued upon
     exercise of such Options and/or other shares received subsequently
     following any realization of rights, if such shall be granted to an
     employee, 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 Optionees for a period of not less than two
     years (24 months) from the Date of Grant, as defined in Optionee's Option
     Agreement. Anything to the contrary notwithstanding, the Trustee shall not
     release any Options, prior to their exercise, or release any Shares issued
     upon exercise of Options prior to the full payment of the Optionee's tax
     liabilities arising from Options which were granted to him or her and/or
     any Shares issued upon exercise of such Options. The Optionee hereby
     authorizes the Trustee to sign an agreement with the Company whereby Shares
     will not be transferred without deduction of taxes at source.

     Upon receipt of the Option, the Optionee will sign an undertaking to exempt
     the Trustee from any liability in respect of any action or decision
     executed bona fide in relation with the Option Plan, or any Option or Share
     granted to him or her thereunder.

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XV.    SHARES RESERVED FOR THE OPTION PLAN; RESTRICTION THEREON

XVI.   The Company has reserved Six Hundred Sixty Four Thousand (664,000)
       authorized but unissued Ordinary Shares of NIS 0.01 par value each of the
       Company (each such Ordinary Share - a "Share" and collectively - "the
       Shares"), for purposes of the Plan, subject to adjustment as set forth in
       Section 8 below. Any of such Shares which may remain unissued and which
       are not subject to outstanding Options at the termination of the Option
       Plan shall cease to be reserved for the purpose of the Option Plan, but
       until termination of the Option Plan the Company shall at all times
       reserve sufficient number of Shares to meet the requirements of the
       Option Plan. Should any Option for any reason expire or be canceled prior
       to its exercise or expiration in full, the Shares therefore subject to
       such Option may again be subjected to an Option under the Option Plan.

XVII.  Until the consummation of an initial public offering of the Company's
       shares ("the IPO") an Optionee who purchased Shares hereunder upon
       exercise of Options:

XVIII. Shall not exercise his or her voting rights as a shareholder (in any and
       all matters whatsoever), and such Shares shall be voted by a proxy,
       substantially in the form attached to the Option Agreement as Exhibit C
       pursuant to the directions of the Board, such proxy to be to the person
       or persons designated by the Board. The Optionee shall further execute
       irrevocable and unconditional undertaking toward the person or persons so
       designated by the Board to vote under the Proxy, substantially in the
       form attached to the Option Agreement as Exhibit D. In addition to the
       above, any such Optionee shall not be entitled to receive any notice to
       which a shareholder of the Company is entitled.

XIX.   Notwithstanding anything to the contrary in the Articles of Association
       of the Company and/or in any applicable law or agreement, none of the
       Optionees nor the Trustee shall have right of first refusal and/or
       preemptive rights in relation with any issuance and/or sale of shares in
       the Company.

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XX.    If in connection with an IPO, the stock exchange regulations and/or any
       applicable law so provide and/or the Board or the Committee so resolve
       and/or the underwriter or underwriters managing such offering so
       requests, then each Optionee who purchased Shares hereunder upon exercise
       of Options will agree to not sell or otherwise transfer any such Shares
       (other than Shares included in such underwriting) without the prior
       written consent of such underwriter, for such period of time as may be
       requested by the underwriter commencing on the effective date of the
       registration statement filed in connection with such offering, but in no
       event longer than the period of time that the officers and directors of
       the Company are generally prohibited from transferring their Shares in
       connection with such public offering.

XXI.   OPTION PRICE

XXII.  The purchase price of each Share subject to an Option or any portion
       thereof shall be determined by the Committee in its sole and absolute
       discretion in accordance with applicable law, subject to any guidelines
       as may be determined by the Board from time to time.

XXIII. The Option price shall be payable upon the exercise of the Option in a
       form satisfactory to the Committee and in the event of 102 Options
       conforming to the requirements of Section 102, including without
       limitation, by cash or check as set forth in Section 9.1 below. The
       Committee shall have the authority to postpone the date of payment on
       such terms as it may determine.

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XXIV. CHANGE OF CONTROL TRANSACTIONS; ADJUSTMENTS

XXV.  In the event of a Change of Control Transaction, as defined below, the
      Company shall endeavor to cause the successor entity in such transaction
      either to assume all of the Options which have been granted hereunder and
      which are outstanding as of the consummation of such transaction
      ("Closing"), or to issue (or cause to be issued) in substitution thereof
      comparable options of such successor entity (or of its Parent or its
      Subsidiary). If the successor entity is unwilling to either assume such
      Options or grant comparable options in substitution for such Options, on
      terms that are acceptable to the Company as determined by the Board in the
      exercise of its discretion, then:

         (i)     with respect to each outstanding Option, that portion of the
              Option which remains unvested that either (x) would have become
              vested over the 12-month period immediately following the Closing,
              or (y) represents 50% of the unvested portion of the Option as of
              the Closing, whichever portion is smaller, will become Vested
              immediately prior to such Closing; and

         (ii)  the Board may cancel all outstanding Options, and terminate this
              Plan, effective as of the Closing, provided that it shall notify
              all Optionees of the proposed Change of Control Transaction a
              reasonable amount of time prior to the Closing so that the
              Optionee will be given the opportunity to exercise the vested
              portion of his or her Option (after giving effect to the
              acceleration of such vesting under clause (i) above) prior to the
              Closing.

         For purposes of this Section 8.1, the term "Change of Control
         Transaction" means a Business Combination in which less than 50% of the
         outstanding voting securities of the successor entity immediately
         following the Closing of the Business Combination transaction are
         beneficially held by those persons and entities in the same proportion
         as such persons and entities beneficially held the voting securities of
         the Company immediately prior to such transaction; the term "Business
         Combination" means a transaction or series of transactions consummated
         within any period of 90 days resulting in (A) the sale of all or
         substantially all of the assets of the Company, or (B) a merger or
         consolidation or other reorganization of which the Company is a merging
         party.

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XXVI. In the event of any change in the capital structure of the Company,
      including but without limitation as a result of a recapitalization,
      combination, reclassification, distribution of bonus shares, distribution
      of dividend otherwise than in cash, shares split, reverse shares split,
      dividend on winding up, consolidating shares, swapping shares, changing
      the Company's structure or otherwise, but excluding a Change of Control
      Transactions in respect of which the provisions of Section 8.1 above shall
      apply, appropriate proportionate adjustments will be made in (i) the
      aggregate number of Shares that are reserved for issuance pursuant to
      Section 6 above, under outstanding Options or future Options granted
      hereunder; and/or (ii) the Option price and the number of Shares that may
      be acquired under each outstanding Option granted hereunder; and/or (iii)
      other rights and matters determined on a per share basis under this Plan
      or any Option agreement evidencing an outstanding Option granted
      hereunder. Any such adjustments will be made only by the Board, and when
      so made will be effective, conclusive and binding for all purposes with
      respect to this Plan and all Options then outstanding. No such adjustments
      will be required by reason of the issuance or sale by the Company for cash
      or other consideration of additional shares or securities convertible into
      or exchangeable for Shares.

         For the removal of doubt all the terms and conditions contained herein
         in respect of the Options and/or the Shares shall apply to the options
         and/or shares resulting from the adjustments as per the above.

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XXVII.  Anything herein to the contrary notwithstanding, if prior to the
        completion of an IPO of the Company's securities, all or substantially
        all of the shares of the Company are to be sold, or upon a merger or
        reorganization or the like, the shares of the Company, or any class
        thereof, are to be exchanged for securities of another Company, then in
        such event, each Optionee shall be obliged to sell or exchange, as the
        case may be, the Shares such Optionee purchased under the Option Plan,
        in accordance with the instructions then issued by the Board whose
        determination shall be final.

XXVIII. TERM AND EXERCISE OF OPTIONS

XXIX.   Vested Options shall be exercised by the Optionee by giving written
        notice to the Company, in the form attached to the Option Agreement as
        Exhibit E, and the method as may be determined by the Company and the
        Trustee and if the Options so exercised are 102 Options than in
        accordance with the requirements of Section 102, which exercise shall be
        effective upon receipt of such notice by the Company at its principal
        office. The notice shall specify the number of Shares with respect to
        which the Option is being exercised and it shall be accompanied by any
        further assurances and/or undertaking as the Committee and/or Trustee
        may require to ensure that the transaction complies in all respects with
        the requirements of any applicable law. The notice as per the above will
        be signed by the person exercising the Option and it will be accompanied
        by full payment of the corresponding Option price, by cash or check made
        payable to the Company.

XXX.    Each Option granted under this Option Plan shall be exercisable
        following the Vesting Schedule Dates in respect thereof ("the Vesting
        Dates") and for the number of Shares as shall be provided in Exhibit B
        to the Option agreement. However no Option shall be exercisable after
        the expiration date, as defined for each Optionee in the Optionee's
        Option agreement ("the Expiration Date"), but subject always to Section
        9.6 below.

XXXI.   Options granted under the Option Plan shall not be transferable by
        Optionees other than by will or laws of descent and distribution, and
        during an Optionee's lifetime shall be exercisable only by that
        Optionee.

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XXXII.  The Options may be exercised by the Optionee in whole at any time or in
        part from time to time, to the extent that the Options become vested
        prior to the Expiration Date, provided that the number of Shares
        purchased under the exercised Option as per the above will be no less
        than 100 Shares, without regard to adjustments to the number of Shares
        subject to the Option pursuant to Section 8 above, or, if less, all of
        the remaining Shares subject to the Option, and provided further that,
        subject to the provisions of Section 9.6 below, the Optionee is an
        employee, director or consultant of the Company or a Subsidiary of the
        Company or a company or a Parent or a subsidiary company of such company
        issuing or assuming the Options in a transaction described in Section
        8.1 above, at all times during the period beginning with the granting of
        the Option and ending upon the date of exercise.

XXXIII. Subject to the provisions of Section 9.6 below, in the event of
        termination of Optionee's employment with or performance of services for
        or on behalf of the Company or a Subsidiary of the Company or a company
        or a Parent or a subsidiary company of such company issuing or assuming
        the Options in a transaction described in Section 8.1 above, all Options
        granted to him or her will immediately expire. A notice of termination
        of employment or services by either party shall be deemed to constitute
        termination of employment or services.

XXXIV.  Notwithstanding anything to the contrary hereinabove, an Option may be
        exercised after the date of termination of Optionee's employment with or
        performance of services for or on behalf of the Company or any
        Subsidiary of the Company thereof or a company or a Parent or a
        subsidiary company of such company issuing or assuming the Options in a
        transaction described in Section 8.1 above during an additional period
        of time beyond the date of such termination, but only with respect to
        the number of Options already vested at the time of such termination
        according to the Vesting Dates if:

XXXV.   Termination is without Cause (as defined below), in which event any
        Options still in force and unexpired may be exercised within a period of
        30 (thirty) days from the date of such termination.

XXXVI.  Termination is the result of death or disability of the Optionee, in
        which event any Options still in force and unexpired may be exercised
        within a period of six (6) months from the date of termination.

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XXXVII. The Committee may authorize an extension of the terms of all or part of
        the Options beyond the date of such termination, even if such terms has
        been expired, for a period not to exceed the period during which the
        Options by their terms would otherwise have been exercisable.

          The term "Cause" shall mean for the purposes of the Plan a termination
          by the Company and/or any of its Subsidiaries of the Optionee's
          employment or services (or if the Optionee is a director, removal of
          him or her from the Board by action of the shareholders or, if
          permitted by applicable law and the Articles of the Company, the other
          directors), in connection with the good faith determination of the CEO
          (or of the Company's shareholders if the Optionee is a director and
          the removal of him or her from the Board is by action of the
          shareholders, but in either case excluding the vote of the subject
          individual if he or she is a director or a shareholder) that the
          Optionee has engaged in any acts involving dishonesty or moral
          turpitude or in any acts that materially and adversely affect the
          business, affairs or reputation of the Company or any of its
          Subsidiaries.

          The term "Parent" shall mean for the purposes of the Plan any company
          (other than the Company) in an unbroken chain of companies ending with
          the Company if, at the time of granting an Option, each of the
          companies (other than the Company), owns stock possessing fifty
          percent (50%) or more of total combined voting power of all classes of
          stock in one of the other companies in such chain.

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XXXVIII.  To avoid doubt and subject to Sections 6.2 above and 11.1 below, the
    holders of Options shall not have any of the rights or privileges of
    shareholders of the Company in respect of any Shares purchasable upon the
    exercise of any part of an Option, nor shall they be deemed to be a class of
    shareholders or creditors of the Company for purpose of the operation of
    Section 233 of the Companies Ordinance or any successor to such Section,
    until registration of the Optionee as holder of such Shares in the Company's
    register of members upon exercise of the Option in accordance with the
    provisions of this Plan.

XXXIX.  Any form of Option agreement subject to the Option Plan may contain such
    other provisions as the Committee may, from time to time, deem advisable.
    Without limiting the foregoing, the Committee may, with the consent of the
    Optionee, from time to time cancel all or any portion of any Option then
    subject to exercise, and the Company's obligation in respect of such Option
    may be discharged by either (i) payment to the Optionee of an amount in cash
    equal to the excess, if any, of the Fair Market Value of the Shares at the
    date of such cancellation subject to the portion of the Option so canceled
    over the aggregate purchase price of such Shares, or (ii) the issuance or
    transfer to the Optionee of Shares of the Company with a Fair Market Value
    at the date of such transfer equal to any such excess, or (iii) a
    combination of cash and Shares with a combined value equal to any such
    excess, all as determined by the Committee in its sole discretion.

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XL.  SHARES SUBJECT TO RIGHT OF FIRST REFUSAL

    Until the consummation of an IPO, transfer of exercised Shares by the
    Optionee, whether for consideration or for no consideration (for the purpose
    of this Section 10 - "Sale") shall be made only once every year, within a
    period of time as shall be determined by the Committee and as the Company
    shall notify those Optionees who have notified the Company of their
    intention to sell the Shares held by them or any part thereof, and shall be
    subject to the right of first refusal of the Investor Shareholders, as
    defined in the Company's Articles of Association, and all other Shareholders
    of the Company holding 3% or more of the outstanding and issued share
    capital of the Company (save, for avoidance of doubt, for other Optionees
    who already exercised their options) ("Repurchasers"), pro rata in
    accordance with their shareholding. The Optionee shall give a notice of sale
    (the "Notice") to the Company in order to offer the Shares to the
    Repurchasers.

    The Notice shall specify the name of each proposed purchaser or other
    transferee ("Proposed Transferee"), the number of Shares offered for sale,
    the price per Share and the payment terms, as well as such other terms and
    conditions, if any, as were included in the offer. The Repurchasers will be
    entitled for 21 days from the day of receipt of the Notice, to purchase all
    of the offered Shares.

    If by the end of the above 21 days period not all of the offered Shares have
    been purchased by the Repurchasers, then the Repurchasers who have notified
    the Company of their desire to purchase the Shares which are subject to the
    Sale, if any, shall have additional 20 days period to purchase the balance
    of the Shares which are subject to the Sale. If by the end of the additional
    20 days period as per the above not all of the Shares which are subject to
    the Sale have been purchased by the Repurchasers then the Optionee will be
    entitled to sell such Shares at any time during the 60 days following the
    end of the 20 days period on terms not more favorable than those set out in
    the Notice, provided that the Proposed Transferee agrees in writing that the
    provisions of Sections 6.2, 6.3, 8.3 above and of this Section shall
    continue to apply to the Shares in the hands of such Proposed Transferee.

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XLI.    DIVIDENDS; NO SOCIAL BENEFITS

XLII.   With respect to all Shares (in contrary to unexercised Options) issued
        upon the exercise of Options purchased by the Optionee and held by the
        Trustee, the Optionee shall be entitled to receive dividends in
        accordance with the quantity of such Shares, and subject to any
        applicable taxation on distribution of dividends. During the period in
        which Shares issued to the Trustee on behalf of an Optionee are held by
        the Trustee, the cash dividends paid with respect thereto shall be paid
        directly to the Optionee.

XLIII.  The income attributed to the Optionee as a result of the grant of the
        Options hereunder and/or the exercise of the Shares, their transfer in
        his or her name or their sale and in all respects relating thereto,
        shall not be taken into account when computing the basis of the
        Optionee's entitlement to any social benefits. Without derogating from
        the generality of the above, that income shall not be taken into account
        in computing mangers insurance, vocational studies fund, provident
        funds, severance pay, holiday pay and the like. If the Company is
        legally obliged to take any of the above into account, as income which
        is to be attributed to the Optionee, the Optionee will indemnify the
        Company in respect of any expense sustained by it in such respect.

XLIV.   ASSIGNABILITY AND SALE OF OPTIONS

        No Option hereunder 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 Optionee each and all of such
        Optionee's rights to purchase Shares hereunder shall be exercisable only
        by the Optionee.

        As long as the Shares are held by the Trustee in favor of the Optionee,
        than all rights the last possesses over the Shares are personal, cannot
        be transferred, assigned, pledged or mortgaged, other than by will or
        laws of descent and distribution.

XLV.    TERM OF THE OPTION PLAN

        The Option Plan shall be effective as of the day it was adopted by the
        Board and shall terminate at the end of ten years from such day of
        adoption, if not terminated under Section 14 below prior to such date.
        For the removal of doubt, upon termination of the Option Plan as per the
        above, all unexercised Options shall immediately terminate.

XLVI.   AMENDMENTS OR TERMINATION

        The Board may at any time, but after consultation with the Trustee,
        amend, alter, suspend or terminate the Plan. No amendment, alteration,
        suspension or termination of the Plan shall impair the rights of any
        Optionee, unless mutually agreed otherwise between the Optionee and the
        Company, which agreement must be in writing and signed by the Optionee
        and the Company.

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        Termination of the Plan shall not affect the Committee's ability to
        exercise the powers granted to it hereunder with respect to Options
        granted under the Plan prior to the date of such termination.

XLVII.  GOVERNMENT REGULATIONS

        The Option 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, whether of the State of Israel or of the United States or
        any other state having jurisdiction over the Company and/or the
        Optionee, 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.

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XLVIII.   CONTINUANCE OF EMPLOYMENT

          Neither the Option Plan nor the Option agreement with the Optionee
          shall impose any obligation on the Company or a Subsidiary thereof, to
          continue the employment or services of any Optionee with it, and
          nothing in the Option Plan or in any Option granted pursuant thereto
          shall confer upon any Optionee any right to continue in the employment
          of the Company or a Subsidiary thereof, nor the right to be retained
          as a consultant thereof or restrict the right of the Company or a
          Subsidiary thereof to terminate such employment or consulting services
          at any time.

XLIX.     GOVERNING LAW & JURISDICTION

          This Option Plan shall be exclusively 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 and exclusive jurisdiction in any matters
          pertaining to this Option Plan.

L.        TAX CONSEQUENCES

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

          The Committee and/or the Trustee shall not be required to transfer any
          Shares or to release any Share certificate to an Optionee until all
          required payments have been fully made.

LI.       NON-EXCLUSIVITY OF THE OPTION PLAN

          The adoption of the Option Plan by the Board shall not be construed as
          amending, modifying or rescinding any previously approved incentive
          arrangements or as creating any limitations on the power of the Board
          to adopt such other incentive arrangements as it may deem desirable,
          including, without limitation, the granting of stock options

                                      -17-
<PAGE>

          otherwise then under the Option Plan, and such arrangements may be
          either applicable generally or only in specific cases. For the
          avoidance of doubt, prior grant of options to employees, directors or
          consultants of the Company under their employment or services
          agreements, and not in the framework of any previous option plan,
          shall not be deemed an approved incentive arrangement for the purpose
          of this Section.

                                      -18-
<PAGE>

LII.      MULTIPLE AGREEMENTS

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

                                      -19-
<PAGE>

                                   EXHIBIT B
                                   ---------

                             Terms of the Options
                             --------------------

Name of the Optionee:                     _______________

Date of Grant:                            _______________

Designation:                              3(i) Options [_]

1.  Number of Options granted:            _______________

2.  Price per Share:                      _______________

3.  Vesting Schedule:                     _______________

              % of Options                               Vesting Date
              ------------                               ------------
                  25 %                    1 year from the Date of Grant

                2.0833 %                  End of each month, starting from the
                                          13/th/ month from the Date of Grant

all subject to the employment or services of the Optionee with the Company
through the entire respective Vesting Date, as per the above.

4.  Expiration Date:                      _______________

                                      -20-
<PAGE>

                                   EXHIBIT C
                                   ---------

                                     PROXY

                        LETTER OF APPOINTMENT OF PROXY
                        ------------------------------

I, ________________________, hereby appoint the attorney of Verisity Ltd. (the
"Company") to vote in my name and in my place at any general meeting of the
Company and at any separate class meetings.

In witness whereof, I have hereby affixed my signature the _________ day of
___________.

                                                  _____________________
                                                  Appointor's Signature

I hereby confirm that the foregoing
instrument was signed before me by the Appointor.

______________________________
name

______________________________
profession

______________________________
address

                                      -21-
<PAGE>

                                   EXHIBIT D
                                   ---------

To
The Attorney of the Company
---------------------------

The undersigned, having executed a proxy in the form attached hereto as Appendix
"A" (the "Proxy"), pursuant to which you shall be representing the undersigned
at the general meetings of Verisity Ltd., and in connection therewith, hereby
irrevocably and unconditionally undertake and agree as follows:

1. You will be entitled to vote instead of the undersigned at any and all
   general meetings of VERISITY LTD. (the "Company") (including but without
   limitation general meetings convened for the purpose of adopting
   extraordinary resolutions and separate class meetings) and to vote thereat on
   any and all matters in respect of the Shares of the Company as the
   undersigned would be entitled to vote if then personally present.

2. The undersigned acknowledge and agree that you will refrain from voting under
   this Proxy except than in the case of resolution in writing of the
   Shareholders of the Company, in which event you will sign such resolution
   only after the other Shareholders of the Company have signed same. The
   undersigned further acknowledge and agree that such vote and/or refrain from
   voting by you may not be in the interest of the undersigned and/or may be
   contrary thereto and/or may adversely effect the rights and/or situation of
   the undersigned. The undersigned hereby waive any claims, causes of action or
   demands against you in connection with your voting and/or refraining from
   voting as per the above.

3. The undersigned will immediately indemnify and hold you harmless from and
   against any damages, costs and expenses, including legal fees and expenses
   you may incur as a result of, or in connection with, your actions or non-
   actions under the Proxy, promptly upon your first written demand.

                                      -22-
<PAGE>

4. The undersigned acknowledge and agree that his or her undertakings as per the
   above are and will remain irrevocable, as one or more third parties will be
   relying upon them in taking action that they may otherwise not take, and by
   which they may be adversely changing their financial and/or legal situation.

_____________________

Name:  ______________

I.D.:  ______________

Address:  ___________

                                      -23-
<PAGE>

                                   EXHIBIT E
                                   ---------

                         NOTICE OF EXERCISE OF OPTION
                                 Verisity Ltd.

To the General Manager of Verisity Ltd.

The undersigned, the holder of an Option to purchase ordinary shares of Verisity
Ltd. (the "Company"), hereby irrevocably elects to exercise the purchase rights
represented by such Option, and to purchase thereunder ______________ ordinary
shares of the Company, herewith makes payment of NIS _______________ therefor in
the form of a check made payable to the Company, and requests that the
certificates for such shares be issued in the name of and delivered to the
undersigned at the address set forth below.

The undersigned acknowledges that the issuance and delivery of the certificates
for the shares as per the above is subject to, inter alia, the payment by the
undersigned of all taxes due in connection with the purchase of said shares.

The undersigned further acknowledges that the shares being purchased by him or
her are subject to substantial restrictions on sale or transfer set forth in the
Company's Articles of Association and in the Company's 1999 Israeli Share Option
Plan (the "Plan") and agrees to be bound by the terms and conditions of said
Plan and the Option Agreement entered into by and between the Company and the
undersigned on ___________.

Dated: ____________

____________________________________
              (signature)

__________________________________________________
Print name exactly as to be shown on certificate

Address :

__________________________________________________

                                      -24-<PAGE>

                                                                   EXHIBIT 10.27

                                 Verisity Ltd.
                          1999  Share Incentive Plan
<PAGE>

1.   Adoption and Purpose of the Plan.  This plan, to be known as the "Verisity
     --------------------------------
Ltd. 1999 Share Incentive Plan" (the "Plan") has been adopted by the board of
directors (the "Board") of Verisity Ltd., an Israeli corporation (the
"Company").  The purpose of this Plan is to advance the interests of the Company
and its shareholders by enabling the Company and/or any of its Subsidiaries to
engage consultants by providing them with an opportunity for investment in the
Company.  The options that may be granted hereunder ("Options") represent the
right by the grantee thereof ("Optionee") to acquire Ordinary Shares of the
Company ("Shares" which if acquired pursuant to the exercise of an Option will
be referred to as "Option Shares") subject to the terms and conditions of this
Plan and a written agreement between the Company and the Optionee to evidence
each such Option (an "Option Agreement").

2.   Certain Definitions.  The defined terms set forth in Exhibit A attached
     -------------------                                  ---------
hereto and incorporated herein (together with other capitalized terms defined
elsewhere in this Plan) will govern the interpretation of this Plan.

3.   Eligibility.  The Company may grant Options under this Plan only to
     -----------
consultants of the Company and/or any of its Subsidiaries ("Eligible
Participants").  Subject to the provisions of section 4 of this Plan, there is
no limitation on the number of Options that may be granted to an Eligible
Participant.

4.   Option Pool; Shares Reserved for Options.  In no event will the Company
     ----------------------------------------
issue, in the aggregate, more than Four Million Two Hundred Twenty Thousand
(4,220,000) Shares (the "Option Pool") pursuant to the exercise of all Options
granted under this Plan, less that number of Shares that have been issued, or
have been reserved for issuance, either directly or pursuant to options granted,
to directors, officers, employees, independent contractors, consultants or
advisers of the Company and any of its Subsidiaries under any other stock option
plan, stock incentive plan, restricted stock or similar arrangement.  At all
times while Options granted under this Plan are outstanding, the Company will
reserve for issuance for the purposes hereof a sufficient number of authorized
and unissued Shares to fully satisfy the Company's obligations under all such
outstanding Options.

5.   Administration.  This Plan will be administered and interpreted by the
     --------------
Board, or by a committee consisting of two or more members of the Board,
appointed by the Board for such purpose (the Board, or such committee, referred
to herein as the "Administrator").  Subject to the express terms and conditions
hereof, the Administrator is authorized to prescribe, amend and rescind rules
and regulations relating to this Plan, and to make all other determinations
necessary or advisable for its administration and interpretation.  Specifically,
the Administrator will have full and final authority in its discretion, subject
to the specific limitations on that discretion as are set forth herein and in
the Articles of the Company, at any time:

               (a)  to select and approve the Eligible Participants to whom
          Options will be granted; provided that no Option may be granted to any
          person after he or she ceases, or to any entity after it ceases, for
          any reason, to perform services for or on behalf of the Company and/or
          any of its Subsidiaries (a "Loss of Eligibility Status");

               (b)  with respect to each Option, to determine the terms and
          conditions of the Option, to be set forth in the Option Agreement
          evidencing the Option (the form of which also being
<PAGE>

          subject to approval by the Administrator), which may vary from the
          "default" terms and conditions set forth in section 6 below, except to
          the extent otherwise provided as follows:

                      (i)   the total number of Option Shares that may be
                    acquired by the Optionee pursuant to the Option;

                      (ii)  the per share purchase price to be paid to the
                    Company by the Optionee to acquire the Option Shares
                    issuable upon exercise of the Option (the "Option Price");

                      (iii) the maximum period or term during which the Option
                    will be exercisable (the "Option Term"), provided that in no
                    event may the Option Term be longer than 10 years from the
                    Grant Date;

                      (iv)  the maximum period following any Loss of Eligibility
                    Status with respect to the Optionee, during which period
                    (the "Grace Period") the Option will be exercisable, subject
                    to Vesting and to the expiration of the Option Term;

                      (ii)  whether to accept some form of legal consideration
                    in addition to cash as payment of all or a portion of the
                    Option Price and/or Tax Withholding Liability to be paid by
                    the Optionee upon the exercise of an Option granted
                    hereunder;

                      (iii) the conditions (e.g., the passage of time or the
                    occurrence of events), if any, that must be satisfied prior
                    to the vesting of the right to exercise all or specified
                    portions of an Option (such portions being described as a
                    percentage of the total number of Option Shares that may be
                    acquired by the Optionee pursuant to the Option; the vested
                    portion being referred to as a "Vested Option" and the
                    unvested portion being referred to as an "Unvested Option");
                    and

               (c)  to delegate all or a portion of the Administrator's
          authority under sections 5(a) and (b) above to one or more members of
          the Board who also are executive officers of the Company, and subject
          to such restrictions and limitations as the Administrator may decide
          to impose on such delegation.

6.   Default Terms and Conditions of Option Agreements.  Unless otherwise
     -------------------------------------------------
expressly provided in an Option Agreement based on the Administrator's
determination pursuant to section 5(b) above, the following terms and conditions
will be deemed to apply to each Option as if expressly set forth in the Option
Agreement:

       6.1  Option Term. The Option Term will be for a period of 10 years
            -----------
beginning on the Grant Date.

       6.2  Grace Periods. Following a Loss of Eligibility Status, the Grace
            -------------
Period will be 30 days, unless the Loss of Eligibility Status is a result of a
Just Cause Termination , in which case the Option will terminate, and there will
be no Grace Period, effective immediately as of the date and time of a Loss of
Eligibility Status which results from a Just Cause Termination of the Optionee,
regardless of whether the Option is Vested or Unvested.

                                       2
<PAGE>

     6.3  Exercise of the Option; Issuance of Share Certificate.
          -----------------------------------------------------

          (a)  The portion of the Option that is a Vested Option may be
exercised by giving written notice thereof to the Company, on such form as may
be specified by the Administrator, but in any event stating: the Optionee's
intention to exercise the Option; the date of exercise; the number of full
Option Shares to be purchased (which number will be no less than 100 Shares,
without regard to adjustments to the number of Shares subject to the Option
pursuant to section 8 below, or, if less, all of the remaining Shares subject to
the Option); the amount and form of payment of the Option Price; and such
assurances of the Optionee's investment intent as the Company may require to
ensure that the transaction complies in all respects with the requirements of
the 1933 Act and other applicable securities laws. The notice of exercise will
be signed by the person or persons exercising the Option. In the event that the
Option is being exercised by the representative of the Optionee, the notice will
be accompanied by proof satisfactory to the Company of the representative's
right to exercise the Option. The notice of exercise will be accompanied by full
payment of the Option Price for the number of Option Shares to be purchased, in
United States dollars, in cash, by check made payable to the Company, or in the
form of a promissory note payable to the Company as may be approved by the
Administrator, in its discretion pursuant to section 5(b)(v) above.

          (b)  To the extent required by applicable federal, state, local or
foreign law, and as a condition to the Company's obligation to issue any Shares
upon the exercise of the Option in full or in part, the Optionee will make
arrangements satisfactory to the Company for the payment of any applicable Tax
Withholding Liability that may arise by reason of or in connection with such
exercise. Such arrangements may include, in the Company's sole discretion, that
the Optionee tender to the Company the amount of such Tax Withholding Liability,
in cash, by check made payable to the Company, or in the form of such other
payment as may be approved by the Administrator, in its discretion pursuant to
section 5(b)(v) above.

          (c)  After receiving a proper notice of exercise and payment of the
applicable Option Price and Tax Withholding Liability, the Company will cause to
be issued a certificate or certificates for the Option Shares as to which the
Option has been exercised, registered in the name of the person rightfully
exercising the Option and the Company will cause such certificate or
certificates to be delivered to such person.

     6.4  Compliance with Law. Notwithstanding any other provision of this Plan,
          -------------------
Options may be granted pursuant to this Plan, and Option Shares may be issued
pursuant to the exercise thereof by an Optionee, only after and on the condition
that there has been compliance with all applicable federal and state securities
laws and all other legal requirements. The Company will not be required to list,
register or qualify any Option Shares upon any securities exchange, under any
applicable state, federal or foreign law or regulation, or with the Securities
and Exchange Commission or any state agency, or secure the consent or approval
of any governmental regulatory authority, except that if at any time the Board
determines, in its discretion, that such listing, registration or qualification
of the Option Shares, or any such consent or approval, is necessary or desirable
as a condition of or in connection with the exercise of an Option and the
purchase of Option Shares thereunder, that Option may not be exercised, in whole
or in part, unless and until such listing, registration, qualification, consent
or approval is effected or obtained free of any conditions that are not
acceptable to the Board, in its discretion. However, the Company will seek to
register or qualify with, or as may be provided by applicable local law, file
for and secure an exemption from such registration or qualification requirements
from, the applicable securities administrator and other officials of each

                                       3
<PAGE>

jurisdiction in which an Eligible Participant would be granted an Option
hereunder prior to such grant.

     6.5  Restrictions on Transfer.
          ------------------------

          (a)  Prohibited Transfers. Prior to the Initial Public Offering, no
               --------------------
Holder of any Option or Option Shares may Transfer same, or any interest
therein, except as expressly provided in this Plan, and in full compliance with
applicable securities laws and the Articles of the Company. All Transfers not
complying with the specific limitations and conditions set forth in this section
6.5 and section 6.6 below, as well as in the Articles (the limitations and
conditions of which are deemed to be incorporated herein), are expressly
prohibited. Any prohibited Transfer is void and of no effect, and no purported
transferee in connection therewith will be recognized as a Holder of Option
Shares for any purpose whatsoever. Should such a Transfer purport to occur, the
Company may refuse to carry out the Transfer on its books, attempt to set aside
the Transfer, enforce any undertakings or rights under this Plan and the
Articles, or exercise any other legal or equitable remedy.

          (b)  Permitted Transfers. In the case of a Permitted Transfer, the
               -------------------
rights of first refusal and purchase of the U.S. Subsidiary set forth in section
6.6 below will not apply. For such purposes, a "Permitted Transfer" means a
Transfer by a natural person holding Option Shares either: (i) by will or under
the laws of descent and distribution; or (ii) to his or her ancestors,
descendants or spouse (other than pursuant to a decree of divorce, dissolution
or separate maintenance, a property settlement, or a separation agreement or any
similar agreement or arrangement with a spouse, except for bona fide estate
planning purposes), or to a trust, partnership, limited liability company,
custodianship or other fiduciary account for the benefit of the Holder and/or
such ancestors, descendants or spouse, including any Transfer in the form of a
distribution from any such trust, partnership, limited liability company,
custodianship or other fiduciary account to any of the foregoing permitted
beneficial owners or beneficiaries thereof.

          (c)  Conditions to Transfer. It will be a condition to any Transfer of
               ----------------------
any Option Shares that:

               (i)  the transferee of the Shares will execute such documents as
     the Company may reasonably require to ensure that the Company's rights
     under this Plan, the Articles and any applicable Option Agreement, are
     adequately protected with respect to such Shares, including, without
     limitation, the transferee's agreement to be bound by all of the terms and
     conditions of this Plan and such Agreement, as if he, she or it were the
     original Holder of such Shares; and

               (ii) the Company is satisfied that such Transfer complies in all
     respects with the requirements imposed by applicable Israeli laws and
     regulations as well as applicable state and federal securities laws and
     regulations and the Articles of the Company.

          (d)  Market Standoff. If in connection with any public offering of
               ---------------
securities of the Company (or any Successor Entity), the underwriter or
underwriters managing such offering so requests, then each Optionee and each
Holder of Option Shares will agree to not sell or otherwise Transfer any such
Shares (other than Shares included in such underwriting) without the prior
written consent of such underwriter, for such period of time as may be requested
by the underwriter commencing on the effective date of the registration
statement filed with the Securities and Exchange Commission in connection with
such offering, but in no event longer than the period of time that the

                                       4
<PAGE>

officers and directors of the Company or the U.S. Subsidiary are generally
prohibited from Transferring their Shares in connection with such public
offering.

     6.6  Rights of Purchase and First Refusal.  Prior to the Initial Public
          ------------------------------------
Offering, the U.S. Subsidiary will have the following rights of purchase and
first refusal with respect to Option Shares:

          (a)  Right of First Refusal. If any Holder proposes to Transfer any
               ----------------------
Option Shares, other than in the case of a Permitted Transfer pursuant to
section 6.5(b) above or an Involuntary or Donative Transfer subject to section
6.6(b) below, the U.S. Subsidiary will have an assignable right of first refusal
to purchase such Shares on the terms and conditions set out in this section
6.6(a). If the U.S. Subsidiary (or its assignee) elects to exercise such right,
it will do so on an all-or-nothing basis with respect to any particular Transfer
of Shares in the following manner:

               (i)   Before any such Transfer, the Holder proposing to Transfer
     such Shares will deliver a notice of proposed Transfer (a "Proposed
     Transfer Notice") to the U.S. Subsidiary stating: the number of Option
     Shares that the Holder proposes to Transfer and the Holder's bona fide
     intention to Transfer such Shares; the names and addresses of the Holder,
     the proposed transferee and subsequently such other information regarding
     such transferee as the U.S. Subsidiary reasonably requests; the manner and
     date of such proposed Transfer; and the bona fide cash price and/or other
     consideration (and the fair market value thereof) per share, if any, that
     such Transferee has offered to pay Holder for such Shares (the "Offered
     Price") as well as such other terms, including payment terms, and
     conditions, if any, as were included in such offer (the "Offered Terms").

               (ii)  The U.S. Subsidiary (or its assignee) may exercise its
     right of first refusal under this section 6.6(a) at any time not more than
     twenty (20) days after the U.S. Subsidiary has received the Proposed
     Transfer Notice with respect to such Shares. If the U.S. Subsidiary (or its
     assignee) elects to exercise such purchase rights it will do so by
     delivering to the Holder of such Shares a notice of such election and a
     closing date that is no more than thirty (30) days after receipt of the
     Proposed Transfer Notice (or such later date as the transferee may have
     offered or on which the Transfer is otherwise scheduled to occur).

               (iii) At the closing of the sale of the Shares to the U.S.
     Subsidiary (or its assignee), to be held at its principal executive
     offices, the U.S. Subsidiary (or its assignee) will pay the Holder of the
     Shares, in cash, the purchase price equal to the Offered Price, subject to
     an appropriate adjustment to take into account any deferred payment terms
     that were included in the Offered Terms, except in the case of a Transfer
     of Option Shares without consideration; provided that if the Offered Price
     includes any non-cash consideration, the value thereof for purposes of this
     section 6.6(a) will be determined in good faith by the Board, subject to
     section 6.6(c) below.

               (iv)  If the U.S. Subsidiary (including its assignees) fails or
     refuses to exercise its rights under this section 6.6(a) with respect to
     any Shares that are the subject of any Proposed Transfer Notice, then the
     Holder will have the right to Transfer such Shares to the transferee named
     in such Notice at the Offered Price and upon such Offered Terms as were set
     forth in such Notice; provided that such Transfer must be completed within
     ninety (90) days after the U.S. Subsidiary has received the Proposed
     Transfer Notice with respect to such Shares.

                                       5
<PAGE>

          (b)  Following an Involuntary or Donative Transfer. Following any
               ---------------------------------------------
Involuntary Transfer or Donative Transfer (other than a Permitted Transfer) of
Option Shares (the "Transferred Shares"), the U.S. Subsidiary will have the
assignable right to purchase from the transferee of the Transferred Shares
("Transferee") all or a portion of such Shares for a purchase price that is
equal to the Fair Market Value of those Shares as of the date of such Transfer.
If the U.S. Subsidiary (or its assignee) elects to exercise such right, it will
do so in the following manner:

               (i)   Promptly after such Transfer, the transferor of the
     Transferred Shares will deliver, or will cause the Transferee to deliver, a
     notice (a "Completed Transfer Notice") to the U.S. Subsidiary stating: the
     number of Transferred Shares; the names and addresses of the transferor and
     the Transferee, and subsequently such other information regarding the
     Transferee as the U.S. Subsidiary reasonably requests; and the manner,
     circumstances and date of such Transfer.

               (ii)  The U.S. Subsidiary (or its assignee) may exercise its
     purchase rights under this section 6.6(b) at any time not more than ninety
     (90) days after the U.S. Subsidiary has received the Completed Transfer
     Notice with respect to the Transferred Shares. If the U.S. Subsidiary (or
     its assignee) elects to exercise such purchase rights it will do so by
     delivering to the Transferee a notice of such election, specifying the
     number of Transferred Shares to be purchased and a closing date that is no
     more than sixty (60) days after the giving of such notice.

               (iii) At such closing, to be held at the U.S. Subsidiary's
     principal executive offices, the U.S. Subsidiary (or its assignee) will pay
     the Transferee the purchase price specified in this section 6.6(b).

          (c)  Resolution of Disputes. If there is a dispute concerning the fair
               ----------------------
market value of the consideration offered or accepted for the Option Shares or
the Fair Market Value of the Option Shares, in connection with the exercise by
the U.S. Subsidiary of its rights under this section 6.6, the dispute will be
resolved by binding arbitration pursuant to Israeli Arbitration Law, 1968,
conducted by one arbitrator, in Tel Aviv, Israel. The parties shall mutually
appoint the arbitrator and if the arbitrator is not so appointed within thirty
days of the request for arbitration, either party may apply to the Tel Aviv
District Court in order that the Court shall make the appointment. The
arbitrator shall not apply the rules of procedure and evidence but shall be
bound by substantive law, be required to give grounds for his decision and shall
not be limited in time for rendering his decision. The arbitrator's decision
shall be final and shall bind the parties. This section shall be considered an
arbitration agreement for the purpose of the Arbitration Law.

          (d)  Escrow. For purposes of facilitating the enforcement of the
               ------
restrictions on Transfer set forth in this Plan or in any Option Agreement, the
Administrator may, at its discretion, require the Holder of Option Shares to
deliver the certificate(s) for such Shares with a stock power executed by him,
her or it and by his or her spouse (if required for Transfer), in blank, to the
Secretary of the U.S. Subsidiary or his, her or its designee, to hold said
certificate(s) and stock power(s) in escrow and to take all such actions and to
effectuate all such Transfers and/or releases as are in accordance with the
terms of this Plan. The certificates may be held in escrow so long as the Option
Shares whose ownership they evidence are subject to any right of repurchase or
first refusal under this Plan or under an Option Agreement, and shall be
released by the escrow holder to an Optionee (or to any permitted transferee of
the Optionee) when they are no longer subject to any right of repurchase or
first refusal under this Plan or under the Option Agreement. Each Optionee, by
exercising an Option,

                                       6
<PAGE>

thereby acknowledges that the Secretary of the U.S. Subsidiary (or his or her
designee) is so appointed as the escrow holder with the foregoing authorities as
a material inducement to the grant of an Option under this Plan, that the
appointment is coupled with an interest, and that it accordingly will be
irrevocable. The escrow holder will not be liable to any party to an Option
Agreement (or to any other party) for any actions or omissions unless the escrow
holder is grossly negligent relative thereto. The escrow holder may rely upon
any letter, notice or other document executed by any signature purported to be
genuine.

     6.7  Change of Control Transactions and Reorganizations. In the event of a
          --------------------------------------------------
Change of Control Transaction,  the Board may cancel all outstanding Options,
and terminate this Plan, effective as of the consummation of such transaction
("Closing"), provided that it shall notify all Optionees of the proposed Change
of Control Transaction a reasonable amount of time prior to the Closing so that
the Optionee will be given the opportunity to exercise the Vested portion of
his,her or its Option prior to the Closing.

For purposes of this section 6.7, the term "Change of Control Transaction" means
a Business Combination in which less than 50% of the outstanding voting
securities of the Successor Entity immediately following the Closing of the
Business Combination transaction are beneficially held by those persons and
entities in the same proportion as such persons and entities beneficially held
the voting securities of the Company immediately prior to such transaction; the
term "Business Combination" means a transaction or series of transactions
consummated within any period of 90 days resulting in (A) the sale of all or
substantially all of the assets of the Company, (B) a merger or consolidation or
other reorganization of which the Company or a Subsidiary is a merging party, or
(C) the sale or other change of beneficial ownership of at least 33-1/3% of the
outstanding voting securities of the Company.

     6.8  Additional Restrictions on Transfer; Investment Intent. By accepting
          ------------------------------------------------------
an Option and/or Option Shares under this Plan, the Optionee will be deemed to
represent, warrant and agree that, unless a registration statement is in effect
with respect to the offer and sale of Option Shares: (i) neither the Option nor
any such Shares will be freely tradeable and must be held indefinitely unless
such Option and such Shares are either registered under the 1933 Act or an
exemption from such registration is available; (ii) the Company is under no
obligation to register the Option or any such Shares; (iii) upon exercise of the
Option, the Optionee will purchase the Option Shares for his,her or its own
account and not with a view to distribution within the meaning of the 1933 Act,
other than as may be effected in compliance with the 1933 Act and the rules and
regulations promulgated thereunder; (iv) no one else will have any beneficial
interest in the Option Shares; (v) the Optionee has no present intention of
disposing of the Option Shares at any particular time; and (vi) neither the
Option nor the Shares have been qualified under the securities laws of any state
and may only be offered and sold pursuant to an exception from qualification
under applicable state securities laws.

     6.9  Share Certificates; Legends. Certificates representing Option Shares
          ---------------------------
will bear all legends required by law and necessary or appropriate in the
Administrator's discretion to effectuate the provisions of this Plan and of the
applicable Option Agreement. The Company may place a "stop transfer" order
against Option Shares until full compliance with all restrictions and conditions
set forth in this Plan, in any applicable Option Agreement and in the legends
referred to in this section 6.9.

                                       7
<PAGE>

     6.10  Notices.  Any notice to be given to the Company under the terms of an
           -------
Option Agreement will be addressed to the Company at its principal executive
office, Attention:  President, or at such other address as the Company may
designate in writing.  Any notice to be given to an Optionee will be addressed
to him, her or it at the address provided to the Company by the Optionee.  Any
such notice will be deemed to have been duly given if and when enclosed in a
properly sealed envelope, addressed as aforesaid, deposited, postage prepaid, in
a post office or branch post office regularly maintained by the local postal
authority.

7.   Term of the Plan.  This Plan will become effective on the date of its
     ----------------
adoption by the Board. This Plan will expire on the tenth (10th) anniversary of
the date of its adoption by the Board, unless it is terminated earlier pursuant
to section 11 of this Plan, after which no more Options may be granted under
this Plan, although all outstanding Options granted prior to such expiration or
termination will remain subject to the provisions of this Plan, and no such
expiration or termination of this Plan will result in the expiration or
termination of any such Option prior to the expiration or early termination of
the applicable Option Term.

8.   Adjustments Upon Changes in Stock; Rights Offering.
     --------------------------------------------------

     (a)  In the event of any change in the outstanding Shares of the Company as
a result of a stock split, reverse stock split, stock bonus or distribution,
recapitalization, combination or reclassification, appropriate proportionate
adjustments will be made in: (i) the aggregate number of Shares that are
reserved for issuance in the Option Pool pursuant to section 4 above, under
outstanding Options or future Options granted hereunder; (ii) the Option Price
and the number of Option Shares that may be acquired under each outstanding
Option granted hereunder; and (iii) other rights and matters determined on a per
share basis under this Plan or any Option Agreement evidencing an outstanding
Option granted hereunder. Any such adjustments will be made only by the Board,
and when so made will be effective, conclusive and binding for all purposes with
respect to this Plan and all Options then outstanding. No such adjustments will
be required by reason of the issuance or sale by the Company for cash or other
consideration of additional Shares or securities convertible into or
exchangeable for Shares.

     (b)  If at any time prior to an Initial Public Offering, the Company
proposes to issue or sell any securities to all of its then current
shareholders, each Optionee shall be deemed for purposes of such issuance or
offer to sell to be a shareholder of that number of Option Shares that may be
acquired by the Optionee (whether vested or unvested) pursuant to an Option (in
addition to any Option Shares or other Shares actually held of record by such
Optionee).

9.   Modification, Extension and Renewal of Options.  Subject to the terms and
     ----------------------------------------------
conditions and within the limitations of this Plan, the Administrator may
modify, extend or renew outstanding Options granted under this Plan, or accept
the surrender of outstanding Options (to the extent not theretofore exercised)
and authorize the granting of new Options in substitution therefor (to the
extent not theretofore exercised). Notwithstanding the foregoing, however, no
modification of any Option will, without the consent of the Optionee, alter or
impair any rights or obligations under any outstanding Option.

10.  Governing Law.  It is the intention of the parties that the laws of the
     -------------
State of Israel (irrespective of its choice of law principles) shall govern the
validity of this Agreement, the construction of its terms and the interpretation
of the rights and duties of the parties hereunder. Further, it is the

                                       8
<PAGE>

intention of the parties that each such party hereby irrevocably submits to the
exclusive jurisdiction of the courts of Israel located in Tel Aviv.

11.  Amendment and Discontinuance.  The Board may amend, suspend or discontinue
     ----------------------------
this Plan at any time or from time to time. However, no such action may alter or
impair any Option previously granted under this Plan without the consent of the
Optionee, nor may the number of Option Shares in the Option Pool be reduced to a
number that is less than the aggregate number of Option Shares (i) that may be
issued pursuant to the exercise of all outstanding and unexpired Options granted
hereunder, and (ii) that have been issued and are outstanding pursuant to the
exercise of Options granted hereunder.

12.  No Shareholder Rights.  No rights or privileges of a shareholder in the
     ---------------------
Company are conferred by reason of the granting of an Option. Nothing in this
Plan will be construed as giving Optionee the right to be retained as a
consultant of the Company and/or its Subsidiaries. No Optionee will become a
shareholder in the Company with respect to any Option Shares unless and until
the Option has been properly exercised and the Option Price fully paid as to the
portion of the Option exercised.

13.  Copies of Plan.  A copy of this Plan will be delivered to each Optionee at
     --------------
or before the time he, she or it executes an Option Agreement. Copies of the
Articles of the Company will be provided upon request and are available for
review at the Company's main office.

Date Plan Adopted by Board of Directors: November ___, 1999

                                       9
<PAGE>

                                 Verisity Ltd.
                           1999 Share Incentive Plan

                                   Exhibit A
Definitions  1.  "1933 Act" means the Securities Act of 1933, as amended.
-----------

2.   "Administrator" has the meaning set forth in section 5 of the Plan.

3.   "Articles" means the Company's Articles of Association, as amended.

4.   "Board" has the meaning set forth in section 1 of the Plan.

5.   "Business Combination" has the meaning set forth in section 6.7 of the
Plan.

6.   "CCP Act" has the meaning set forth in section 6.6(c) of the Plan.

7.   "Change of Control Transaction" has the meaning set forth in section 6.7 of
the Plan.

8.   "Closing" has the meaning set forth in section 6.7 of the Plan.

9.   "Company" has the meaning set forth in section 1 of the Plan.

10.  "Completed Transfer Notice" has the meaning set forth in section 6.6(b) of
the Plan.

11.  "Donative Transfer" with respect to Option Shares means any voluntary
Transfer by a transferor other than for value or the payment of consideration to
the transferor.

12  "Eligible Participants" has the meaning set forth in section 3 of the Plan.

13.  "Fair Market Value" means, with respect to the Shares and as of the date
that is relevant to such a determination (e.g., on the Grant Date), the market
price per share of such Shares determined by the Administrator as follows: (a)
if the Shares are traded on a stock exchange on the date in question, then the
Fair Market Value will be equal to the closing price reported by the applicable
composite-transactions report for such date; (b) if the Shares are traded over-
the-counter on the date in question and are classified as a national market
issue, then the Fair Market Value will be equal to the last-transaction price
quoted by the NASDAQ system for such date; (c) if the Shares are traded over-
the-counter on the date in question but are not classified as a national market
issue, then the Fair Market Value will be equal to the mean between the last
reported representative bid and asked prices quoted by the NASDAQ system for
such date; and (d) if none of the foregoing provisions is applicable, then the
Fair Market Value will be determined by the Administrator in good faith on such
basis as it deems appropriate.

14.  "Grace Period" has the meaning set forth in section 5(b)(iv) of the Plan.

15.  "Grant Date" means, with respect to an Option, the date on which the Option
Agreement evidencing that Option is entered into between the Company and the
Optionee, or such other date as may be set forth in that Option Agreement as the
"Grant Date" which will be the effective date of that Option Agreement.

                                       10
<PAGE>

16.  "Holder" means the holder of any Option Shares.

17.  "Initial Public Offering" means the closing of the first sale of securities
of the Company, or of any Successor Entity, to the public, through a firm
commitment underwriting, for an aggregate price (exclusive of underwriters'
discounts and commissions and expenses of the offering) of at least fifteen
million dollars ($15,000,000), pursuant to an effective registration statement
filed with the Securities and Exchange Commission under the 1933 Act.

18.  "Involuntary Transfer" with respect to Option Shares includes, without
limitation, any of the following: (A) an assignment of the Shares for the
benefit of creditors of the transferor; (B) a Transfer by operation of law; (C)
an execution of judgment against the Shares or the acquisition of record or
beneficial ownership of Shares by a lender or creditor; (D) a Transfer pursuant
to any decree of divorce, dissolution or separate maintenance, any property
settlement, any separation agreement or any other agreement with a spouse
(except for bona fide estate planning purposes) under which any Shares are
Transferred or awarded to the spouse of the transferor or are required to be
sold; or (E) a Transfer resulting from the filing by the transferor of a
petition for relief, or the filing of an involuntary petition against the
transferor, under the bankruptcy laws of the United States or of any other
nation.

19.  "Just Cause Termination" means a termination by the Company and/or any of
its Subsidiaries of the Optionee's services arising out of or in connection with
the breach by Optionee of his, her or its consulting contract with the Company
and/or any of its Subsidiaries or any acts that materially and adversely affect
the business, affairs or reputation of the Company or any of its Subsidiaries.

20.  "Loss of Eligibility Status" has the meaning set forth in section 5(a) of
the Plan.

21.  "Offered Price" has the meaning set forth in section 6.6(a) of the Plan.

22.  "Offered Terms" has the meaning set forth in section 6.6(a) of the Plan.

23.  "Option Agreement" has the meaning set forth in section 1 of the Plan.

24.  "Option Pool" has the meaning set forth in section 4 of the Plan.

25.  "Option Price" has the meaning set forth in section 5(b)(ii) of the Plan.

26.  "Option Shares" has the meaning set forth in section 1 of the Plan,
provided that for purposes of section 6.5 and section 6.6 of the Plan, the term
"Option Shares" includes all Shares issued by the Company to a Holder (or his,
her or its predecessor) by reason of such holdings, including any securities
which may be acquired as a result of a stock split, stock dividend, and other
distributions of Shares in the Company made upon, or in exchange for, other
securities of the Company.

27.  "Option Term" has the meaning set forth in section 5(b)(iii) of the Plan.

28.  "Optionee" has the meaning set forth in section 1 of the Plan.

29.  "Options" has the meaning set forth in section 1 of the Plan.

                                       11
<PAGE>

30.  "Permitted Transfer" has the meaning set forth in section 6.5(b) of the
Plan.

31.  "Plan" has the meaning set forth in section 1 of the Plan.

32.  "Proposed Transfer Notice" has the meaning set forth in section 6.6(a) of
the Plan.

33.  "Shares" has the meaning set forth in section 1 of the Plan.

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

35.  "Successor Entity" means a corporation or other entity that acquires all or
substantially all of the assets of the Company, or which is the surviving or
parent entity resulting from a Business Combination, as that term is defined in
section 6.7(b) of the Plan.

36.  "Tax Withholding Liability" in connection with the exercise of any Option
means all federal and state income taxes, social security tax, and any other
taxes applicable to the compensation income arising from the transaction
required by applicable law to be withheld by the Company.

37.  "Transfer" with respect to Option Shares, includes, without limitation, a
voluntary or involuntary sale, assignment, transfer, conveyance, pledge,
hypothecation, encumbrance, disposal, loan, gift, attachment or levy of those
Shares, including any Involuntary Transfer, Donative Transfer or transfer by
will or under the laws of descent and distribution.

38.  "Transferee" has the meaning set forth in section 6.6(b) of the Plan.

39.  "Transferred Shares" has the meaning set forth in section 6.6(b) of the
Plan.

40.  "U.S. Subsidiary" means Verisity Design, Inc., a California corporation.

41.  "Unvested Option" has the meaning set forth in section 5(b)(vi) of the
Plan.

42.  "Vested Option" has the meaning set forth in section 5(b)(vi) of the Plan.

                                       12
<PAGE>

                            Stock Option Agreement
                            Under the Verisity Ltd.
                           1999 Share Incentive Plan

          This Agreement, between Verisity Ltd., a Company organized under the
laws of the State of Israel (the "Company") and the undersigned Optionee, is
made effective as of _______________ (the "Grant Date"; also the date the option
referred to herein was authorized for granting by the Administrator of the
Company's Option Plan).  Capitalized terms not otherwise defined in this
Agreement will have the meanings set forth in the Company's 1999 Share Incentive
Plan, a copy of which is attached hereto and incorporated by reference (the
"Option Plan").

           The Parties Agree as Follows:

1.  Option Grant.  Subject to all of the terms and conditions set forth herein
    ------------
and in the Incentive Plan, the Company hereby grants to Optionee an option (the
"Option") to purchase the number of the Company's ordinary shares (the
"Shares"), for an exercise price per share (the "Option Price") and based upon
the Grant Date set forth below and an Expiration Date of the tenth anniversary
of the Grant Date (subject to earlier termination as provided in the Incentive
Plan and as provided in Section 2(a)(ii) below) as set forth below:

        Number of Shares
         subject to the Option:  _____________________________

        Option Price per Share:  $
                                 -----------------------------
        Grant Date:              _____________________________

        Expiration Date:         _____________________________

2.  Vesting and Exercise.
    --------------------

          (a)  Vesting.  Initially, the entire Option will be "Unvested" within
the meaning of the Incentive Plan; portions of the Option will become "Vested"
within the meaning of the Incentive Plan on the following schedule:

               (i)  twenty-five percent (25%) of the Shares subject to the
    Option shall become Vested as of the first anniversary of the Vesting Start
    Date;

               (ii) thereafter, seventy-five percent (75%) of the Shares subject
    to the Option shall become Vested monthly ratably (approximately ____ shares
    per month) on a cumulative basis on the first day of each month over the 36
    month period commencing on the first anniversary of the Vesting Start Date;
    provided that Optionee does not suffer a Loss of Eligibility Status prior to
    each such vesting date.

    (b)  Minimum Number of Shares.  Any exercise of the Option must be for at
         ------------------------
least
<PAGE>

one hundred (100) Shares (without regard to adjustments to the number of Shares
subject to the Option pursuant to section 8 of the Incentive Plan) or, if less,
all of the remaining Shares subject to the Option.

    (c)  Notice of Exercise.  Optionee or Optionee's representative may exercise
         ------------------
the Option by giving written notice to the Company pursuant to section 6.3(a) of
the Incentive Plan using the specified form of notice of exercise attached to
this Agreement as Exhibit A. The notice will be signed by the person or persons
                  ---------
exercising the Option.  In the event that the Option is being exercised by the
representative of Optionee, the notice will be accompanied by proof reasonably
satisfactory to the Company of the representative's right to exercise the
Option.  Payment of the Option Price will accompany the notice and will be in
any of the following forms acceptable to the Company:  (i) cash or a check made
payable to the Company; or (ii) by the delivery of one or more certificate(s)
representing shares of the Company with a Fair Market Value on the date of
exercise equal to the Option Price, together with a stock power executed in
blank.

    (d)  Withholding Taxes.  To the extent required by applicable federal,
         -----------------
state, local or foreign law, and as a condition to the Company's obligation to
issue any Shares upon the exercise of the Option in full or in part, Optionee
will make arrangements reasonably satisfactory to the Company for the payment of
any withholding tax obligations that arise by reason of such exercise.

    (e)  Issuance of Option Shares.  Subject to the provisions of the Incentive
         -------------------------
Plan, after receiving a proper notice of exercise and payment of the applicable
Option Price and withholding taxes, the Company will cause to be issued a
certificate or certificates for the Option Shares as to which the Option has
been exercised, registered in the name of the person rightfully exercising the
Option.  The Company will cause such certificate or certificates to be delivered
to such person.

3.  Representations and Warranties of Optionee.  Optionee hereby represents and
    ------------------------------------------
warrants that:

    (a)  Optionee is acquiring the Option granted hereby, and will acquire any
Shares obtained upon exercise of the Option, for investment purposes only, for
Optionee's own account, and with no view to the distribution thereof.

    (b)  Optionee understands that the Option and the Shares that may be
acquired by exercising the Option ("Option Shares") have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"), and that the
Option and the Option Shares are not freely tradeable and must be held
indefinitely unless they are either registered under the 1933 Act or an
exemption from such registration is available.  Optionee understands that the
Company is under no obligation to register the Option or the Option Shares.
Optionee also understands that the Option and the Option Shares have not been
qualified under the securities laws of any state and are to be offered and sold
pursuant to an exception from qualification under applicable state securities
laws.

4.  No Shareholder Rights.  No rights or privileges of a shareholder in the
    ---------------------
Company are
<PAGE>

conferred by reason of the granting of the Option. Optionee will not become a
shareholder in the Company with respect to any Option Shares unless and until
the Option has been properly exercised and the Option Price fully paid as to the
portion of the Option exercised.

5.  No Employment Rights.  Nothing in this Agreement will be construed as giving
    --------------------
Optionee the right to be retained as a consultant or independent contractor of
the Company and/or its Subsidiaries.

6.  Terms of the Incentive Plan.  Optionee understands that the Incentive Plan
    ---------------------------
includes important terms and conditions that apply to the Option. Those terms
include (without limitation): important conditions to the right of Optionee to
exercise the Option; important restrictions on the ability of Optionee to
transfer the Option or to Transfer any of the Option Shares received upon
exercise of the Option; and early termination of the Option following the
occurrence of certain events, including Optionee no longer being an employee,
director, consultant or independent contractor to or of the Company or its
Subsidiaries. OPTIONEE ACKNOWLEDGES THAT HE OR SHE HAS READ THE INCENTIVEPLAN,
AGREES TO BE BOUND BY ITS TERMS, AND MAKES EACH OF THE REPRESENTATIONS REQUIRED
TO BE MADE BY OPTIONEE UNDER IT. OPTIONEE FURTHER ACKNOWLEDGES THAT THE COMPANY
HAS GIVEN NO TAX ADVICE CONCERNING THE OPTION AND HAS ADVISED OPTIONEE TO
CONSULT WITH HIS OR HER OWN TAX OR FINANCIAL ADVISOR ABOUT THE TAX TREATMENT OF
THE OPTION AND ITS EXERCISE.

7.  Miscellaneous.
    -------------

    (a)  Assignment.  Neither this Agreement nor the Option is assignable by
         ----------
either party, except as expressly provided herein.  All of the covenants and
provisions of this Agreement by or for the benefit of the Company or Optionee
shall bind and inure to the benefit of their respective successors.

    (b)  Entire Agreement; Amendments.  This Agreement constitutes the final and
         ----------------------------
complete expression of all of the terms of the understanding and agreement
between the parties hereto concerning the subject matter hereof.  This Agreement
may not be modified, amended, altered or supplemented except by means of the
execution and delivery of a written instrument mutually executed by the Company
and Optionee.

    (c)  Governing Law.  This Agreement shall be construed and governed by the
         -------------
substantive laws of the State of Israel.
<PAGE>

    (d)  Counterparts.  This Agreement may be executed in any number of
         ------------
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.

The parties hereby have entered into this Agreement as of the Grant Date.

                                   Verisity Ltd.

                                   By:_________________________________________

                                   Title:______________________________________

                                   Optionee

                                   By: ________________________________________

                                   Title: _____________________________________

                                   Address:
                                   ------------------------------
                                   ------------------------------

                                   Tax ID No.:___________________

Attachments:  (1)  1999 Share Incentive Plan

Exhibit A:  Form of Notice of Exercise of Stock Option
<PAGE>

                                                                       Exhibit A
                                                                       ---------
                      NOTICE OF EXERCISE OF STOCK OPTION
                                 Verisity Ltd.

To The General Manager of Verisity Ltd.

    The undersigned, the holder of an Option to purchase ordinary shares of
Verisity Ltd. (the "Company"), hereby irrevocably elects to exercise the
purchase rights represented by such Option, and to purchase thereunder _________
ordinary shares of the Company, herewith makes payment of $_____________
therefor in the form of a check made payable to the Company, and requests that
the certificates for such shares be issued in the name of and delivered to the
undersigned at the address set forth below.

    The undersigned acknowledges that the shares being purchased by him or her
(the "Option Shares") are subject to substantial restrictions on sale or
transfer set forth in the Company's Articles of Association and in the Company's
1999 Share Incentive Plan (the "Incentive Plan") and agrees to be bound by the
terms and conditions of said Incentive Plan and the Stock Option Agreement
entered into by and between the Company and the undersigned on ___________,
2000.  The undersigned further represents, warrants and acknowledges that,
unless a registration statement is in effect with respect to the sale of Option
Shares:  (i) those Option Shares are not freely tradeable and must be held
indefinitely unless such Option Shares are either registered under the
Securities Act of 1933, as amended, (the "Act"), or an exemption from such
registration is available; (ii) the Company is under no obligation to register
those Option Shares; (iii) the undersigned is purchasing the Option Shares for
his or her own account and not with a view to or for sale in connection with any
distribution within the meaning of the Act, other than as may be effected in
compliance with the Act and the rules and regulations promulgated thereunder;
(iv) no one else will have any beneficial interest in the Option Shares; and (v)
he or she has no present intention of disposing of the Option Shares or any
interest therein at any particular time.

DATED: _______________

                         _______________________________________________________
                            (signature)

                         _______________________________________________________
                         Print name exactly as to be shown on certificate

                         Address:
                         _______________________________________________________

                         _______________________________________________________

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