PIVOTAL CORP
<DOCUMENT>
<TYPE>EX-10.21
<SEQUENCE>4
<FILENAME>ex10_21.txt
<TEXT>
                                                                   EXHIBIT 10.21




                               PIVOTAL CORPORATION
                           INCENTIVE STOCK OPTION PLAN
                  (Amended and Restated as of October 25, 2000)

1.   PURPOSES

     The  purposes  of this  Incentive  Stock  Option  Plan (the  "Plan") are to
attract  and  retain the best  available  people for  positions  of  substantial
responsibility with Pivotal Corporation (the "Company") and its subsidiaries, to
provide  additional  incentives to the directors,  officers and employees of and
independent  contractors and consultants to the Company and its subsidiaries and
to promote the success of the  Company's  business by  providing to such persons
the opportunity to purchase common shares  ("Shares") in the Company pursuant to
options granted hereunder ("Options").

2.   ADMINISTRATION

     (a) The Plan shall be administered by the Board of Directors ("Board") or a
committee or committees  appointed by, and consisting of two or more members of,
the Board (the Board or a committee  thereof  administering the Plan is referred
to below as the  ("Administrator").  If and so long as the Shares are registered
under  Section 12(b) or 12(g) of the United  States  Securities  Exchange Act of
1934, as amended  ("Exchange  Act"),  the Board shall  consider in selecting the
Administrator and the membership of any committee acting as Administrator,  with
respect to any persons  subject or likely to become subject to Section 16 of the
Exchange Act, the provisions  regarding (a) "outside  directors" as contemplated
by Section 162(m) of the United States Internal Revenue Code of 1986, as amended
("Codes") and  "nonemployee  directors" as  contemplated by Rule 16b-3 under the
Exchange Act. The Board may delegate the  responsibility  for  administering the
Plan with  respect to  designated  classes  of  eligible  persons  to  different
committees  consisting  of two or more  members  of the  Board,  subject to such
limitations as the Board deems  appropriate.  Committee  members shall serve for
such term as the Board may  determine,  subject  to  removal by the Board at any
time.  To the extent  consistent  with  applicable  law, the  Administrator  may
authorize and designate two officers of the Company,  acting together,  to grant
Options to  individuals  eligible to receive  grants under the Plan,  other than
executive officers or directors of the Company,  within the limits  specifically
prescribed by the Administrator.

     (b) Subject to the terms of the Plan and, in the case of a committee of the
Board, the specific duties delegated by the Board to such committee, and subject
to  the  approval  of any  relevant  authorities,  including  the  approval,  if
required,  of any stock  exchange  or market upon which the Shares are listed or
quoted, the Administrator shall have the authority, in its discretion:

     (i) to determine the persons to whom Options may be granted;

    (ii) to determine the number of Shares covered by each Option;

   (iii) to determine  the exercise  price per Share  specified in  each Option,
         based  upon  the  Fair  Market  Value  of the  Shares,  determined  in
         accordance with Section 7;

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<PAGE>


    (iv) to determine the terms and conditions, not inconsistent with the terms
         of  the  Plan,  of  Options   granted   hereunder  or  any  agreement,
         undertaking,  representation  or  covenant  required to be executed in
         connection with or as a condition of the exercise of any Option;

     (v) to set the time or times at which Options may be granted;

    (vi) to approve forms of agreements and instruments under the Plan;

   (vii) to amend  the  terms  and  conditions of the  grant of any  Option or
         Option agreement and accelerate the vesting of Options;

  (viii) to  authorize  any person to  execute  on behalf of the   Company  any
         instrument  required  to   effect the  grant of an  Option  previously
         granted by the Administrator;

    (ix) to construe and  interpret  the terms of the Plan and Options  granted
         under the Plan;

     (x) to prescribe, amend and rescind such rules and regulations relating to
         the Plan as it may deem advisable; and

    (xi) to make all other  determinations  deemed  necessary or advisable  for
         administering the Plan.

     (c)  The  interpretation  and  construction  by  the  Administrator  of any
provisions of the Plan or of any Option  granted  hereunder  shall be conclusive
and binding upon the Company and the persons holdings Options ("Optionees").  No
member of the Administrator shall be liable for any action or determination made
in good faith with respect to the Plan or any Option granted under it.

     (d) Options  granted  pursuant to this Plan shall be  evidenced  by written
stock option agreements or certificates ("Option Certificate"), substantially in
the form  attached  hereto  as  Exhibit  A, or such  other  form or forms as the
Administrator may from time to time approve.

3.   COMPLIANCE WITH LAWS

     Transactions  under  the Plan are  intended  to  comply  with all  relevant
provisions of law and the rules and  regulations of any stock exchange or market
upon which the Shares may be listed or quoted.  To the extent any  provision  of
the Plan or action by the  Administrator  fails to so comply,  it will be deemed
null and void,  to the  extent  permitted  by law and  deemed  advisable  by the
Administrator.

4.   ELIGIBLE PERSONS

(a)  The  Administrator  may from time to time authorize the grant of Options to
     anyone who is at the time of such authorization:

     (i)  an officer or employee  (collectively an "Employee") of the Company or
          any subsidiary of the Company ("Subsidiary"), meaning any corporation,
          partnership,

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<PAGE>


          joint  venture or other  entity in which the Company owns or controls,
          directly or indirectly, not less than 50% of the total combined voting
          power, and includes a subsidiary of a subsidiary;

     (ii) subject to applicable laws, an independent  contractor or other person
          providing ongoing consulting services (collectively a "Consultant") to
          the Company or a Subsidiary; or

    (iii) a member of the Board of the Company or a Subsidiary;

     (collectively  the  "Eligible  Persons").  The granting of any Option to an
     Eligible  Person shall  neither  entitle him to, nor  disqualify  him from,
     participation in any other grant of Options.  Options may be granted to one
     or more Eligible  Persons without being granted to other Eligible  Persons,
     as the Administrator may deem fit;

(b)  The aggregate  number of Shares  reserved for issuance upon the exercise of
     Options granted to Consultants from time to time shall not exceed 2% of the
     issued  and  outstanding  securities  of the  Company as of the date of the
     grant of any Option to a Consultant.

5.   STOCK SUBJECT TO PLAN

     (a)  Subject  to the  provisions  of Section  11 of the Plan,  the  maximum
aggregate number of Shares which may be optioned by the Company and purchased by
Eligible Persons under the Plan is 6,576,186 Shares,  plus an annual increase to
be added on the first day of the Company's  fiscal year beginning in 2001 and on
the first day of each fiscal year thereafter  equal to the lesser of (i) 800,000
shares or (ii) 4% of the average number of outstanding  Shares used to calculate
fully diluted  earnings per share as reported in the Company's  annual report to
shareholders for the preceding year.

     The Shares may be authorized but unissued or reacquired  Shares,  or may be
Shares which have been allotted to a trustee for purposes of issuance  under the
Plan.  If an Option  expires or  becomes  unexercisable  for any reason  without
having been exercised in full, the unpurchased Shares which were subject thereto
shall, unless the Plan shall have been terminated, return to the Plan and become
available for other Options under the Plan.

     (b) If the Company purchases Shares from an Eligible Person pursuant to the
terms of a right of purchase or first  refusal as  hereinafter  described,  such
repurchased  Shares  shall be at the  Company's  discretion  either  retained or
cancelled  by the  Company,  and, in the event they are retained by the Company,
may become available for other Options under the Plan.

6.   OPTION TERM

     The Shares  subject to each Option  shall vest and the Option  shall become
exercisable  at the time or times as  provided in the Option  Certificate.  Each
Option shall not be exercisable  after the expiration of ten years from the date
granted, subject to earlier termination as provided in Section 9, and may expire
on such earlier date or dates as may be fixed by the  Administrator.  Any Shares
not purchased prior to expiration of an Option granted  hereunder may thereafter
be

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<PAGE>


reallocated  and become  subject to  Options  granted in favour of  Eligible
Persons in accordance with the provisions of the Plan.

7.   OPTION EXERCISE PRICE

(a)  In this section and in this Plan "Fair Market Value" means:

     (i)  if the  Shares  are listed on a stock  exchange  or a national  market
          system,  the closing  price per Share on the  exchange or system as of
          the last market trading day prior to the time of determination,  or if
          no Shares have been traded on such day,  then as of the last  previous
          day for which a trade was reported by such stock exchange or system;

     (ii) if the Shares are regularly quoted by a recognized  securities  dealer
          but selling prices are not reported,  the average between the high bid
          and low asked  prices for the Shares on the last  market  trading  day
          prior to the date of determination; or,

     (iii)in the  absence  of an  established  market for the  Shares,  the Fair
          Market  Value  thereof  shall  be  determined  in  good  faith  by the
          Administrator.

(b)  The per  share  Option  exercise  price for the  Shares  to be issued  upon
     exercise of an Option shall be determined by the  Administrator;  provided,
     however,  that such  price  shall in no event be less than the Fair  Market
     Value per Share less,  in the case of an Option  which is not an  Incentive
     Stock Option as defined in the Code,  any discount  permitted by law and by
     the regulations, rules and policies of the securities authorities and stock
     exchange or market  having  jurisdiction  over the affairs of the  Company;
     except that the  exercise  price shall be 110% of the Fair Market Value per
     Share in the case of an Option  granted to any person  who, at the time the
     Option  is  granted,  owns  shares  possessing  more  than 10% of the total
     combined  voting  power  of all  classes  of  shares  of the  Company  or a
     Subsidiary.

8.   EXERCISE OF OPTION

     (a) Subject to the provisions of Section 9 and unless otherwise provided by
the Administrator,  each Option granted under the Plan shall be exercisable only
with  respect to the portion  thereof that is vested in the Optionee to whom the
Option is granted.  Unless otherwise  provided by the Administrator the right to
exercise any Option shall become vested in increments over a term of four years,
calculated from the date of granting any such Option, according to the following
schedule and subject to the provisions of section 9:

         (i)   in the  case of  Options  granted  to an  Optionee  that  has not
               previously been granted an Option under the Plan:



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<PAGE>


<TABLE>
<S>             <C>                                                             <C>
                                                    Percentage of Option Shares
         Vesting Date (calculated from Date         with Respect to which Optionee has a
         Option Granted)                            Vested Right to Exercise
         -----------------------------------------  -----------------------------------------

         First Anniversary                                           25%

         The end of each 6 months following                      12 1/2%
         the First Anniversary
</TABLE>


         (ii)  in the case of Options granted to an Optionee that has previously
               been  granted  an  Option  under the Plan,  the  Option  shall be
               exercisable  as to 12 1/2%  at the  end of  each 6  month  period
               calculated from the date the Option is granted.

     (b) Any Option may be exercised in accordance  with the  provisions of this
Plan as to all or any portion of the Shares then exercisable and vested under an
Option,  from time to time during the term of the  Option.  An Option may not be
exercised for a fraction of a share. The exercise at any time or times of a part
of an  Option  will not  exhaust  or  terminate  the  Option  as to the  balance
unexercised; however, any Option not fully exercised within the times set out to
exercise shall automatically expire.

     (c) An Option shall be deemed to be exercised  when written  notice of such
exercise  has been given to the  Company  at its  principal  business  office in
accordance with the terms of the Option by the Optionee and full payment for the
Shares with respect to which the Option is exercised and an amount  necessary to
satisfy any  applicable  withholding  taxes has been  received  by the  Company,
accompanied by the executed Option Certificate, or other agreement, undertaking,
covenant  or  representation  required  by the terms of this Plan or the  Option
granted  hereunder.  Until the Option is properly  exercised  hereunder  and the
Company receives full payment for the Shares with respect to which the Option is
exercised,  no right to receive  dividends or any other rights as a  shareholder
shall exist with respect to the Shares  issuable  upon  exercise of Options.  No
adjustment will be made for a dividend or other rights for which the record date
is prior to the date the Option is  properly  exercised  and  payment in full is
received except as provided in Section 12.

     (d) All Shares  purchased  on the  exercise of Options  and any  applicable
withholding taxes shall be paid for in full by certified cheque or cash, or such
other  consideration  having  equivalent  value at the time of  purchase  as the
Administrator may determine.

     (e) As soon as  practicable  after  any  proper  exercise  of an  Option in
accordance  with the  provisions of this Plan and payment in full for the Shares
with  respect to which the Option is  exercised,  the Company  shall  deliver or
cause to be delivered to the person that exercised the Option,  at the principal
business  office of the  Company  or at such  other  place as shall be  mutually
acceptable,  a certificate or certificates  representing  the Shares as to which
the Option has been exercised together with the Option Certificate,  endorsed or
caused to be endorsed by the Company  recording the exercise of the Option.  The
time of issuance and delivery of the certificates representing the Shares may be
postponed  by the Company  for such  period as may be

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<PAGE>


required for it to comply with any law or regulation  applicable to the issuance
and delivery of such Shares.

     (f)  Exercise of an Option in any manner  shall result in a decrease in the
number of Shares which  thereafter  may be  available,  both for purposes of the
Plan and for sale  under  the  Option,  by the  number of Shares as to which the
Option is exercised.

9.   TERMINATION OF SERVICE, DEATH OR DISABILITY

     (a) If an Optionee ceases to be continuously  engaged by the Company or any
of its Subsidiaries or a Controlled  Entity within the meaning under the Code in
the capacity as a director, an officer, an employee,  an independent  contractor
or a  consultant  for any  reason  other  than  death  or  permanent  and  total
disability, no further instalments of his Options that have not vested as of the
date of such  termination  shall  become  exercisable.  The  Optionee  shall  be
entitled  to  exercise  his Option  only to the extent  that he was  entitled to
exercise it immediately  prior to the date of such  termination and his right to
exercise such Option shall  terminate after the passage of thirty (30) days from
the date of termination or the date of  commencement of leave which has not been
approved by the  Company  under  Section  9(c) but in no event later than on the
Option's  specified  expiration  date.  To the extent that the  Optionee was not
entitled to exercise the Option at the date of such  termination,  or if he does
not  exercise  an Option  (which he was  entitled to  exercise)  within the time
specified  herein,  the Option shall  terminate.  If the  Optionee  ceases to be
employed,  engaged or retained by the  Company,  a  Subsidiary  or a  Controlled
Entity for cause or if any  Optionee  is removed  from  office as a director  or
becomes disqualified from being a director by law, any Option or the unexercised
portion  thereof  granted  to  such  Optionee  shall  terminate  at the  time of
termination, removal or disqualification.

     (b) If an Optionee ceases to serve as a director, an officer or an employee
of or an  independent  contractor  or a consultant  to the Company or any of its
Subsidiaries  or  Controlled  Entities  due to  death  or  permanent  and  total
disability,  thereby resulting in the termination of his continuous  engagement,
the  Option may be  exercised,  to the extent the  individual  was  entitled  to
exercise the Option at the date of his  termination  of such service by death or
disability,  but only within  twelve (12) months  following the date of death or
termination of such service due to disability  (subject to and in no event later
than the Option's specified  expiration date), by the individual or his personal
representative  in the  case  of  disability,  or in the  case of  death  by the
individual's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance or the laws of descent and distribution.

     (c) For the  purpose of the Plan,  "continuously  engaged"  or  "continuous
engagement" in the case of a director,  an officer or an employee shall mean the
absence  of any  interruption  or  termination  of  employment  or  service as a
director,  an officer or an employee of the Company or any of its  Subsidiaries,
and in the  case of an  independent  contractor  or  consultant  shall  mean the
absence of any  interruption or termination in the retainer or engagement  other
than as a result of  termination  by  effluxion  of time or as a result of other
termination on terms agreed to between the independent  contractor or consultant
and the Board.  Continuous engagement shall not be considered interrupted in the
case of sick leave in excess of the  Company's  stated policy on paid sick leave
communicated  to the Optionee  and approved by the Board,  maternity or parental
leave in  excess of  statutory  entitlement  approved  by the Board or any other
leave of  absence  approved

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<PAGE>


by the Board or in the case of transfers  between locations of the Company or in
the case of any change in the nature of service rendered to the Company,  any of
its Subsidiaries or Controlled Entities.  An Optionee while on any such leave or
other leave of absence  approved by the Board shall be entitled to exercise  any
Options  granted to him under the Plan in respect of and only to the extent that
he was entitled to exercise such Options prior to any such leave and the vesting
period shall be suspended  during the period of such leave and shall be extended
and the vesting  date for the  exercise  of any Options  shall be delayed by the
length of such leave.

10.  TRANSFER RESTRICTIONS

     (a)  Options  shall  not be  sold,  transferred,  assigned,  encumbered  or
otherwise  disposed  of  except  by will or the  laws of  intestate  succession,
descent and distribution and, except as otherwise  provided in Section 9, may be
exercised only by the Optionee.

     (b)  (i) In connection with any underwritten public offering by the Company
          of its Shares,  including the Company's  initial public  offering,  no
          person shall sell, make any short sale of, loan, hypothecate,  pledge,
          grant any option for the purchase of, or otherwise dispose or transfer
          for  value  or  otherwise  agree  to  engage  in any of the  foregoing
          transactions  with respect to, any Shares acquired upon exercise of an
          Option or any  right to  acquire  any  Shares  issued  under the Plan,
          without the prior written consent of the Company or its  underwriters.
          Such  limitations  shall be in effect for such period of time from and
          after the  effective  date of such offering as may be requested by the
          Company or such underwriters provided, however, that in no event shall
          such period exceed one hundred eighty (180) days.  The  limitations of
          this  Section  10(b) shall  remain in effect for the  two-year  period
          immediately  following  the effective  date of the  Company's  initial
          public offering and shall  thereafter  terminate and cease to have any
          force or effect.

          (ii) Employees of and  independent  contractors  or consultants to the
               Company or any of its Subsidiaries shall be subject to the market
               stand-off  provisions of this Section 10(b)  provided and only if
               the  officers  and  directors  of the Company are also subject to
               similar arrangements.

         (iii) In   the   event   of   any   stock   dividend,    stock   split,
               recapitalization   or  other  change   affecting   the  Company's
               outstanding  Shares  effected  as  a  class  without  receipt  of
               consideration, then any new, substituted or additional securities
               distributed  with  respect  to the  Shares  shall be  immediately
               subject to the  provisions  of this  Section  10(b),  to the same
               extent the Shares are at such time covered by such provisions.

11.  ALTERATION OF CAPITAL

     (a) In the event of any increase or decrease in the number of issued Shares
resulting from a share split, share consolidation or share dividend or any other
increase or decrease in the number of issued Shares effected  without receipt of
consideration by the Company, then the

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<PAGE>


maximum  number of Shares  subject to the Plan as set forth in Section  5(a) and
the number of Shares covered by each outstanding Option as well as the price per
Share covered by each outstanding  Option shall be  proportionately  adjusted by
the  Administrator,   whose  determination  in  that  respect  shall  be  final,
conclusive  and binding.  The  conversion of any  convertible  securities of the
Company  shall  not  be  deemed  to  have  been  effected   without  receipt  of
consideration.

     (b) In the event of a proposed sale of substantially all of the assets
of the Company, or the merger, amalgamation, arrangement or consolidation of the
Company with or into another company, the Administrator may, if it so determines
in the exercise of its sole  discretion,  either  declare that any portion of an
Option  that  has not  vested  shall  terminate  as of a date to be fixed by the
Administrator or give the Optionee the right to exercise his Option as to all or
any part of such  Shares as to which the  Option  has not  vested  and would not
otherwise be  exercisable,  or accelerate and reduce the period for the exercise
of those  portions  of Options  that have  vested or the  vesting  date of those
portions of Options  that have not vested  (provided  that the  exercise  period
shall  in no  event  be  reduced  to less  than 30 days  and  provided  that the
acceleration  of vesting or vesting  dates shall not occur if, in the opinion of
the  Company's  outside  accountants,  it would render  unavailable  "pooling of
interest"  accounting for a transaction  that would  otherwise  qualify for such
accounting  treatment) or make such  provision as it deems  appropriate  for the
continuance  of outstanding  and  unexercised  Options  subsequent to such sale,
merger, amalgamation,  arrangement or consolidation, including the assumption of
such Options or substitution of equivalent options by a successor company.

     (c) No  fractional  shares  shall be  issuable  on  account  of any  action
aforesaid,  and the aggregate number of shares into which Shares then covered by
the Option,  when  changed as a result of such  action,  available to be issued,
shall be reduced  to the  largest  number of whole  shares  resulting  from such
action.

12.  DIVIDENDS AND DISTRIBUTIONS

     If the Company  shall at any time during the period in which Options may be
exercised  under  the Plan pay any  dividend,  or make any  other  distribution,
payable in shares of the Company, the Optionee shall be entitled to receive upon
any exercise  thereafter of an Option granted under the Plan (in addition to the
number of shares  which the  Optionee  would  have been  entitled  to receive on
exercise of the Option if such dividend or  distribution  of shares had not been
paid)  such  additional  number of fully paid and  non-assessable  shares of the
appropriate class as would have been payable on the Shares which would have been
issuable on the exercise of an Option if they had been outstanding on the record
date for the payment of such dividend or  distribution,  and in the event of the
payment of any dividend or distribution  payable in any shares of the Company as
aforesaid  the Company will reserve and set aside a sufficient  number of shares
in which any such  dividend  or  distribution  shall be  payable to enable it to
fulfil its obligations hereunder.

13.  CONDITIONS UPON ISSUANCE OF SHARES

     (a) Shares shall not be issued pursuant to the exercise of an Option unless
the  exercise of the Option and the  issuance  and  delivery of Shares  pursuant
thereto  shall comply

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<PAGE>


with all relevant provisions of law, including,  without limitation,  the United
States Securities Act of 1933, as amended,  the Exchange Act, the Securities Act
(British  Columbia) and other applicable  provincial  securities laws, the rules
and  regulations  promulgated  thereunder,  and the  requirements  of any  stock
exchange or market upon which the Shares may then be listed or quoted, and shall
be further  subject to the  approval of counsel for the Company  with respect to
such  compliance.  Without limiting the foregoing,  the Company's  obligation to
issue  Shares upon the exercise of an Option shall in any case be subject to the
Company  being  satisfied  that the Shares  purchased  are being  purchased  for
investment  purposes  and not for the purpose or with the  intention  to sell or
distribute  such Shares,  if at the time of such exercise a sale or distribution
of such Shares would otherwise violate any applicable laws.

     (b) As a condition  to the  exercise of an Option,  the  Administrator  may
require the Optionee to execute such agreements or undertakings, and to make any
representation  or warranty to the Company as may in the judgment of counsel for
the Company be required under  applicable laws or regulation,  including but not
limited to a  representation  and warranty  that the Shares are being  purchased
only for  investment  purposes  and  without any  present  intention  to sell or
distribute  such Shares if, in the opinion of counsel  for the  Company,  such a
representation is appropriate under any applicable laws.

14.      ADDITIONAL PROVISIONS CONCERNING U.S. OPTIONEES

     (a)  Options  granted  to  an  Employee   (which  term  includes,   without
limitation,  an officer or  director  who is also an  Employee)  who is a United
States  citizen  or  resident  within the  meaning  of the Code  (such  Employee
referred to in this Section as a "U.S.  Employee")  will  generally be Incentive
Stock Options as that term is defined in the Code,  provided  however,  that the
Administrator  may, at its discretion,  at the time of the grant of the Options,
make a  determination  as to whether the Options will be deemed  Incentive Stock
Options  or  Non-Qualified  Stock  Options  within  the  meaning  of  the  Code.
Notwithstanding the foregoing, an Option that is an Incentive Stock Option shall
not be granted to an Employee of a Subsidiary  unless such  Subsidiary is also a
"subsidiary  corporation" of the Company within the meaning of Section 424(f) of
the Code or any successor provision.

     (b) The maximum aggregate number of Shares which may be subject to
Options that are Incentive  Stock  Options  under the Plan is 6,576,186  Shares,
subject to adjustment as provided in Section 11 and subject to the provisions of
Section 422 or 424 of the Code or any successor provision.

     (c)  Options  granted  to an  Optionee  who is a United  States  citizen or
resident  within  the  meaning  of the Code who is not an  Employee  will not be
Incentive Stock Options,  and any written  agreement with such an Optionee for a
grant of Options under the Plan will state that the Options  granted  thereunder
are Non-Qualified Stock Options for U.S. income tax purposes.

     (d) In addition to the terms and  conditions  of Options  granted under the
Plan referred to in the preceding  Sections,  Options granted to a U.S. Employee
that are granted by the Administrator as Incentive Stock Options will be subject
to the following terms and conditions:

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<PAGE>


         (i)   Options  will  be  designated  in the  written  Option  agreement
               between  the U.S.  Employee  and the Company as  Incentive  Stock
               Options;

         (ii)  if the U.S.  Employee is directly or  indirectly  the  beneficial
               owner of 10% or more of the combined  voting power of all classes
               of shares in the  capital of the Company or a  Subsidiary  at the
               time an Option is  granted  to the U.S.  Employee,  the  exercise
               price of such  Option  will be equal to at least 110% of the Fair
               Market Value of the Shares, determined in accordance with Section
               7, and the term of the  Option  shall be five years from the date
               of grant  thereof or such  shorter term as may be provided in the
               Option Certificate;

        (iii)  Options  may  not be  transferred,  assigned  or  pledged  in any
               manner  other  than by will or  applicable  laws of  descent  and
               distribution  and  shall be  exercisable  during  the  Optionee's
               lifetime only by the Optionee; and

         (iv)  no Options may be granted  after the date  immediately  preceding
               the tenth  anniversary  of the  earlier of the date this Plan was
               adopted or was  approved by the  Company's  shareholders,  except
               that  if  an  amendment   and   restatement   of  this  Plan  has
               subsequently  been  approved by the  Company's  shareholders,  no
               Options may be granted after the date  immediately  preceding the
               tenth anniversary of the date of such subsequent approval.

          (e)  If a U.S. Employee is granted Options under the Plan, the written
               Option   agreement   with  the   U.S.   Employee   will   contain
               acknowledgments by the U.S. Employee that:

          (i)  notwithstanding  a  designation  of  Options  granted  to a  U.S.
               Employee  as  Incentive  Stock  Options,  to the extent  that the
               aggregate  Fair  Market  Value,  determined  as of the date  such
               Options  were  granted,  of the Shares  issuable  on  exercise of
               Options  which are  exercisable  for the  first  time by any U.S.
               Employee during any calendar year exceeds US$100,000, such excess
               Options shall not be treated as Incentive Stock Options; and

         (ii)  in order for  Options  granted  under the Plan to be  treated  as
               Incentive Stock Options:

               A.   Shares  purchased  on the  exercise of an Option must not be
                    sold or  otherwise  disposed of within 2 years from the date
                    the Option was  granted,  or within 1 year from the date the
                    Option was exercised; and

               B.   the  U.S.  Employee  must  maintain  his  status  as a  U.S.
                    Employee  at all times  during the period  beginning  on the
                    date the  Option is granted  and  ending 30 days  before the
                    date an Option is exercised.

          (f) The  acknowledgement  of the U.S.  Employee in (e)(ii)B above does
     not confer upon the U.S. Employee any right with respect to continuation of
     his employment  relationship with the Company, nor will it interfere in any
     way with the Company's  right to terminate his employment  relationship  at
     any time, with or without cause.

                                       10
<PAGE>


     (g) Unless and until  Shares  issuable  upon the  exercise  of Options  are
registered under the United States  Securities Act of 1933,  Shares issued under
this Plan to an Optionee who is a resident of the United  States of America will
contain the following legend, as amended or supplemented by applicable laws:

     THE SECURITIES  REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED
     UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
     ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND MAY NOT
     BE OFFERED,  SOLD, OR OTHERWISE  TRANSFERRED OR ASSIGNED  EXCEPT (A) TO THE
     COMPANY,  (B) OUTSIDE THE UNITED  STATES IN  ACCORDANCE  WITH  REGULATION S
     UNDER THE SECURITIES ACT, IF AVAILABLE, OR (C) INSIDE THE UNITED STATES (1)
     PURSUANT  TO THE  EXEMPTION  FROM  REGISTRATION  UNDER THE  SECURITIES  ACT
     PROVIDED BY RULE 144  THEREUNDER,  IF  AVAILABLE,  AND IN  COMPLIANCE  WITH
     APPLICABLE  STATE  SECURITIES  LAWS OR (2) IN A  TRANSACTION  THAT DOES NOT
     REQUIRE  REGISTRATION  UNDER THE  SECURITIES  ACT OR ANY  APPLICABLE  STATE
     SECURITIES  LAWS, AND, IN CONNECTION WITH ANY TRANSFERS  PURSUANT TO (C)(1)
     OR (C)(2)  ABOVE,  THE SELLER HAS  FURNISHED  TO THE  COMPANY AN OPINION OF
     COUNSEL OF RECOGNIZED STANDING,  REASONABLY SATISFACTORY TO THE COMPANY, TO
     THAT EFFECT.

15.  TAX CONSEQUENCES OF PLAN

     Notwithstanding  Section 14, the Company does not assume responsibility for
the income or other tax consequences for Optionees or Eligible Persons under the
Plan and they are advised to consult with their own tax advisors.01

16.  AMENDMENT AND TERMINATION OF PLAN

     (a) The  Board  may at any  time  amend,  alter,  suspend,  discontinue  or
terminate  the Plan.  To the extent  necessary and desirable to comply with Rule
16b-3  under  the  Exchange  Act or with  Section  422 of the Code (or any other
applicable law, rule or regulation,  including the  requirements of any exchange
or market  system on which the Shares are listed or quoted),  the Company  shall
obtain shareholder approval of any Plan amendment in such a manner and to such a
degree as required by the applicable law, rule or regulation.

     (b) Without the written  consent of the  Optionee,  and except as otherwise
permitted herein, any such amendment, alteration, suspension,  discontinuance or
termination  of the Plan  shall not  affect  Options  already  granted  and such
Options  shall  remain  in full  force  and  effect as if this Plan had not been
amended, altered, suspended, discontinued or terminated.

17.  RESERVATION OF SHARES

     (a) The Company,  during the term of this Plan,  shall at all times reserve
and keep available, and if necessary shall allot to a trustee for the benefit of
the Eligible  Persons and to facilitate the granting of Options  hereunder,  the
number of Shares as shall be sufficient to satisfy the requirements of the Plan.

                                       11
<PAGE>


     (b) The Company will, if necessary, use its best efforts to seek and to
obtain from appropriate  regulatory  authorities any requisite  authorization in
order to issue and sell such number of Shares as shall be  sufficient to satisfy
the  requirements  of the Plan.  The  inability  of the  Company  to obtain  the
requisite authorization from any regulatory agency having jurisdiction deemed by
the  Company's  counsel to be necessary  to the lawful  issuance and sale of any
Shares  hereunder or the inability of the Company to confirm to its satisfaction
that any issuance and sale of any Shares  hereunder will meet  applicable  legal
requirements,  shall  relieve  the  Company of any  liability  in respect to the
non-issuance  or sale of such Shares as to which such requisite  authority shall
not have been obtained.

18.  NOTICES

     Any notice to be given to the Company  pursuant to the  provisions  of this
Plan shall be addressed to the Company in care of its secretary at its principal
business office in North Vancouver, British Columbia, and any notice to be given
to an Optionee shall be delivered  personally or addressed to him at the address
given beneath his signature on his Option Certificate,  or at such other address
as such  Optionee may  hereafter  designate in writing to the Company.  Any such
notice  shall be deemed  duly given when made in writing  and  delivered  to the
Company or the  Optionee,  as the case may be, or if  mailed,  then on the third
business  day  following  the date of mailing  such notice in a properly  sealed
envelope addressed as aforesaid,  registered or certified mail, postage prepaid,
in a post office or post office branch maintained in Canada or the United States
of America.

19.  NO ENLARGEMENT OF RIGHTS

     (a) This  Plan is  purely  voluntary  on the part of the  Company,  and the
continuance of the Plan shall not be deemed to constitute a contract between the
Company and any Eligible Person,  or to be  consideration  for or a condition of
the acting by an  individual  as a director,  an officer or an employee of or an
independent   contractor   or  a  consultant  to  the  Company  or  any  of  its
Subsidiaries.  Nothing  contained  in this  Plan  shall  be  deemed  to give any
director, officer or employee the right to be retained in such capacity with the
Company of any Subsidiary or successor  company,  or to interfere with the right
of the Company or any such  company or its  shareholders  to discharge or retire
any director,  officer or employee thereof at any time. No Eligible Person shall
have any right to or interest in Options authorized hereunder prior to the grant
of such Option to such Eligible Person,  and upon such grant, he shall have only
such rights and interests as are expressly provided herein,  subject however, to
all applicable  provisions of the Company's  memorandum and articles as the same
may be amended from time to time.

     (b) Nothing  herein  contained or done  pursuant  hereto shall  obligate an
Optionee to purchase  and/or pay for any Shares,  except those Shares in respect
of which the Optionee shall have exercised his Option to purchase hereunder in a
manner hereinbefore provided.

                                       12
<PAGE>


20.  FINANCIAL STATEMENTS

     The Company shall provide to each Optionee at least  annually a copy of the
financial statement for the Company for its last completed financial year in the
form and containing the information  required under the British Columbia Company
Act.

21.  MISCELLANEOUS

     (a) The  validity  and  construction  of the Plan shall be  governed by and
construed  exclusively  in  accordance  with the laws of the Province of British
Columbia.

     (b) In this Plan,  unless the context otherwise  requires,  words importing
the  singular  include  the  plural and vice  versa and words  importing  gender
include all genders.

22.  ADOPTION OF PLAN AND TERMINATION

     This Plan was adopted by the Company and  approved by the  directors of the
Company  as of the 31st day of July,  1992 and shall  terminate  fourteen  years
thereafter.



                                       13
<PAGE>



                                    EXHIBIT A

                               PIVOTAL CORPORATION
                       INCENTIVE STOCK OPTION CERTIFICATE


                                                       Certificate
Name of Option Holder                                  No. ___________________

                                                     Date: ___________________
Number of Shares


Exercise Price Per Share


Expiry Date


INCENTIVE  STOCK OPTION granted by Pivotal  Corporation  (the  "Company") to the
above-named option holder (the "Optionee"),  pursuant to the Company's Incentive
Stock Option Plan (the "Plan"),  the terms of which are  incorporated  herein by
reference and which, in the event of any conflict,  shall control over the terms
contained herein.

1.   Grant and Vesting of Option

     Subject to the vesting  schedule  below,  the Company  hereby grants to the
Optionee  an option to  purchase  on the terms  herein  provided  a total of the
number of voting  common  Shares of the Company set forth above,  at an exercise
price per Share as set forth above.

     This option may be exercised only with respect to the portion  thereof that
is vested in the Optionee.  The Optionee's  rights to exercise this option shall
become vested in increments over a term of four years,  calculated from the date
of the granting of this option according to the following schedule:

     (i)  The following Schedule shall apply if this Certificate  relates to the
          first grant of an option to the Optionee:


<TABLE>
<S>               <C>                                                <C>

                                                   Percentage of Option Shares with
          Vesting Date (calculated from Date       Respect to which Optionee has a
          Option Granted)                          Vested Right to Exercise
          ---------------------------------------- ------------------------------------

          First Anniversary                                                  25%

          The end of each 6 months following the First                       12 1/2%
          Anniversary

</TABLE>

                                       14
<PAGE>


     (ii) If this  Certificate  relates to an Optionee that has previously  been
          granted an option under the Plan,  then the option  hereunder shall be
          exercisable as to 12 1/2% at the end of each 6 month period calculated
          from the date the Option is granted.

     In the case of the first grant of an option to an Optionee,  vesting rights
shall  be  calculated  only in terms of a full  year,  in the case of the  first
vesting,  and thereafter  semi-annually  (i.e., from one semi-annual date to the
next).  In the case of a subsequent  grant of an option to an Optionee,  vesting
rights shall be calculated  semi-annually.  No partial  vesting  credit shall be
given for partial periods.

     This option shall expire and shall not be exercisable after the expiry date
set forth above ("Expiry Date").

2.   Exercise of Option

     Each  election  to  exercise  this  option  shall be in writing in the form
attached hereto,  signed by the Optionee or by the person authorized to exercise
this option under paragraph 5 hereof or otherwise  permitted under the Plan, and
delivered to the secretary of the Company at its principal office accompanied by
this certificate.

     In the event an option is exercised by the executor or  administrator  of a
deceased  Optionee,  or by the  person or  persons  to whom the  option has been
transferred  by the  Optionee's  will  or the  applicable  laws of  descent  and
distribution,  the  Company  shall be  under no  obligation  to  deliver  Shares
thereunder  unless and until the Company is satisfied that the person or persons
exercising the option is or are the duly appointed  executor or administrator of
the deceased  Optionee or the person to whom the option has been  transferred by
the  Optionee"s  Optionee's  will  or by the  applicable  laws  of  descent  and
distribution.

3.   Payment for and Delivery of Shares

     Payment in full by cash or a certified  bank  cheque  shall be made for all
Shares for which this option is exercised and any applicable  withholding  taxes
at the time of such  exercise,  and no  Shares  shall be  delivered  until  such
payment is made.

4.   Conditions upon Issuance of Shares

     This option may not be exercised in whole or in part unless the exercise of
the option and the issuance and delivery of Shares  pursuant to it complies with
all relevant provisions of law, including, without limitation, the United States
Securities Act of 1933, as amended, the United States Securities Exchange Act of
1934, as amended,  the  Securities Act (British  Columbia) and other  applicable
provincial  securities laws, the rules and regulations  promulgated  thereunder,
and the  requirements  of any stock exchange or market upon which the Shares may
then be listed or  quoted,  and shall be  further  subject  to the  approval  of
counsel for the Company with respect to such  compliance.  Without  limiting the
foregoing,  the  Company's  obligation to issue Shares upon the exercise of this
option  shall in any case be subject to the  Company  being  satisfied  that the
Shares  purchased are being  purchased for  investment  purposes and not for the
purpose or with the intention to sell or distribute such Shares,  if at the time
of such exercise a sale or distribution  of such Shares would otherwise  violate
any applicable law.

                                       15
<PAGE>


     The Optionee shall have no rights of a shareholder of the Company until the
Shares are actually delivered to him.

5.   Option not Transferable

     Subject to the  provisions of the Plan,  this option may not be transferred
by the Optionee  otherwise than by will or the laws of descent and  distribution
and during the Optionee's lifetime this option may be exercised only by him.

6.   Termination of Service

     If the Optionee ceases to be continuously  engaged by the Company or any of
its  Subsidiaries  in the capacity as a director,  an officer,  an employee,  an
independent  contractor  or a  consultant  for any  reason  other  than death or
permanent and total disability,  the Optionee may exercise this option not later
than 30 days after the date of such cessation but only to the extent to which he
was  entitled  immediately  prior  to such  cessation.  To the  extent  that the
Optionee  was not  entitled to exercise  this option  immediately  prior to such
cessation,  or if the Optionee  does not exercise  this option within 30 days of
the date of such cessation,  this option shall terminate. If the Optionee ceases
to be  employed,  engaged or retained by the Company or any of its  Subsidiaries
for cause or if the  Optionee  is removed  from  office as a director or becomes
disqualified  from  being  a  director  by  law,  this  option  shall  terminate
forthwith.  Nothing herein shall be construed as extending the exercisability of
this option past its Expiry Date.

7    Disability

     In the event of the  Optionee  ceasing to be a  director  or officer of the
Company or any of its  Subsidiaries or in the event of termination of employment
or  termination  of the  independent  contract or  consulting  agreement  of the
Optionee, because of permanent and total disability, this option shall terminate
one year after such  termination and the Optionee may exercise this option prior
to such time but only to the extent to which he was entitled  immediately  prior
to such termination because of disability.  Nothing herein shall be construed as
extending the exercisability of this option past its Expiry Date.

8    Death

     In the event of death of the  Optionee  while a director,  an officer or an
employee of or an independent  contractor or consultant to the Company or any of
its Subsidiaries, this option shall be exercisable within one (1) year after his
death,  provided the option does not expire by its terms prior to that date,  by
the executor,  administrator or other legal  representative of the estate of the
deceased  Optionee  or the  person or persons  to whom the  deceased  Optionee's
rights  under  the  option  shall  pass  by  will or the  laws  of  descent  and
distribution  but only to the extent  the  deceased  Optionee  was  entitled  to
exercise this option  immediately  prior to his death.  Nothing  herein shall be
construed as extending the exercisability of this option past its Expiry Date.

                                       16
<PAGE>


9    Alteration of Shares

     (a) In the event of any increase or decrease in the number of issued Shares
resulting from a share split, share consolidation or share dividend or any other
increase or decrease in the number of issued Shares effected  without receipt of
consideration  by the Company,  then the number of Shares covered by this option
as well as the purchase price per Share shall be proportionately adjusted by the
Administrator,  whose  determination in that respect shall be final,  conclusive
and binding.  The conversion of any convertible  securities of the Company shall
not be deemed to have been effected without receipt of consideration.

     (b) In the event of a proposed sale of  substantially  all of the assets of
the Company,  or the merger,  amalgamation,  arrangement or consolidation of the
Company with or into another company, the Administrator may, if it so determines
in the exercise of its sole discretion,  either declare that any portion of this
option  that  has not  vested  shall  terminate  as of a date to be fixed by the
Administrator  or give the Optionee the right to exercise  this option as to all
or any part of such  Shares as to which this option has not vested and would not
otherwise be  exercisable,  or accelerate and reduce the period for the exercise
of those  portions of this option that have vested or the vesting  date of those
portions of this option that have not vested  (provided that the exercise period
shall in no event be reduced to less than 30 days) or make such  provision as it
deems  appropriate for the continuance of this option if unexercised  subsequent
to such sale, merger, amalgamation,  arrangement or consolidation, including the
assumption of this option or substitution  of equivalent  options by a successor
company.

10   Continuance of Employment

     This option shall not be deemed to obligate  the Company or any  subsidiary
to retain the Optionee as a director,  an officer,  an employee,  an independent
contractor or a consultant for any period.

11   Certificate Subject to Terms of Plan

     The terms and conditions of this certificate and the agreement  constituted
hereby are subject to the  provisions  of the Plan  adopted by the Company as of
July 31, 1992 as amended from time to time, which provisions are incorporated by
reference  into this  agreement.  In the event of an  inconsistency  between the
provisions  of the Plan and this  agreement,  the  provisions  of the Plan shall
prevail. The Plan shall be available for review by the Optionee at its principal
office.

     IN WITNESS WHEREOF,  Pivotal  Corporation has caused this certificate to be
duly executed. This option is granted on the date first stated above.


                                                PIVOTAL CORPORATION


                                                By:_________________________
                                                   Authorized Signatory




                                       17
<PAGE>


RECORD OF PARTIAL EXERCISE

Please do not write in these  spaces.  Entries  will be made by the Company upon
the partial exercise.


--------------------------------------------------------------------------------

          Number of Shares          Date of Exercise        Official Signature
       Purchased Under Option









--------------------------------------------------------------------------------




                                       18
<PAGE>





FORM OF EXERCISE OF OPTION
(for use by all Optionees other than US Employees)
(for use by US consultants and independent contractors)

Certificate No. _____________________

To:  Pivotal Corporation ("Pivotal")

The  undersigned  Optionee  hereby  exercises  his/her  right  to  purchase  the
following common Shares of Pivotal in accordance with the terms of the Incentive
Stock Option  Certificate  issued by Pivotal to the Optionee,  and by exercising
this Option the undersigned  acknowledges and agrees to be bound by the terms of
the Pivotal Incentive Stock Option Plan.

Name of Optionee:____________________________

Number of Shares for which
this option is exercised:____________________

Exercise price per Share:____________________

Total Exercise Price:________________________


The Option hereby  exercised does not constitute an Incentive Stock Option under
the United States Internal Revenue Code.

The Optionee  expressly  acknowledges that any Shares to be issued and delivered
to the  Optionee by Pivotal  hereunder  are subject to certain  limitations  and
restrictions  on  transfer  and first  refusal  rights of  purchase in favour of
Pivotal and certain of its shareholders.

The  Optionee  represents  that he/she is  purchasing  the Shares for which this
Option is  exercised  for his/her own account and not with a view to or for sale
in connection with any distribution of the Shares.

The Optionee  delivers  herewith cash or a certified cheque in the amount of the
Total  Exercise  Price in  payment  for the  Shares  for  which  this  option is
exercised.

Dated this _________ day of _______________________,   _____.


                           ____________________________________________________
                           Signature of Optionee



                                       19
<PAGE>







FORM OF EXERCISE OF OPTION
(US Employees only - not consultants or independent
contractors)

Certificate No. _____________________


To:    Pivotal Corporation ("Pivotal")

The  undersigned  Optionee  hereby  exercises  his/her  right  to  purchase  the
following common Shares of Pivotal in accordance with the terms of the Incentive
Stock Option  Certificate  issued by Pivotal to the Optionee,  and by exercising
this Option the undersigned  acknowledges and agrees to be bound by the terms of
the Pivotal Incentive Stock Option Plan.


Name of Optionee:___________________________________________

Number of Shares for which
this option is exercised:___________________________________

Exercise price per Share:___________________________________

Total Exercise Price:_______________________________________

The Option hereby  exercised  DOES/DOES  NOT (delete as applicable  and initial)
constitute an Incentive Stock Option under the US Internal Revenue Code.

The Optionee  expressly  acknowledges that any Shares to be issued and delivered
to the  Optionee by Pivotal  hereunder  are subject to certain  limitations  and
restrictions  on  transfer  and first  refusal  rights of  purchase in favour of
Pivotal and certain of its shareholders.

The  Optionee  represents  that he/she is  purchasing  the Shares for which this
Option is  exercised  for his/her own account and not with a view to or for sale
in connection with any distribution of the Shares.

The Optionee  delivers  herewith cash or a certified cheque in the amount of the
Total  Exercise  Price in  payment  for the  Shares  for  which  this  option is
exercised.

Dated this _________ day of _______________________, ______.


                           __________________________________________________
                           Signature of Optionee




</TEXT>
</DOCUMENT>
