Amended 1993 Director Stock Option Plan

ARI NETWORK SERVICES, INC.
1993 DIRECTOR STOCK OPTION PLAN
(Amended and Restated as of December 10, 1998)


1. PURPOSE OF THE PLAN


The purpose of the Plan is to attract and retain superior Directors, to provide a stronger incentive for such Directors to put forth maximum effort for the continued success and growth of the Company and its Subsidiaries and, in combination with these goals, to encourage stock ownership in the Company by Directors.


2. DEFINITIONS


Unless the context otherwise requires, the following terms shall have the meanings set forth below:


(a) "Administrator" shall mean any committee of the Board of
Directors or any executive officer or officers of the Company
designated by the Board of Directors.


(b) "Board of Directors" shall mean the entire board of
directors of the Company, consisting of both Employee and
non-Employee members.


(c) "Code" shall mean the Internal Revenue Code of 1986 as
amended.


(d) "Company" shall mean ARI Network Services, Inc., a
Wisconsin corporation.


(e) "Director" shall mean an individual who is a member of the
Board of Directors and is not an Employee.


(f) "Disability" shall mean a physical or mental incapacity
which results in a Director no longer serving as a member of
the Board of Directors.


(g) "Effective Date" shall mean May 21, 1993, or such other
date as the Board of Directors may establish as the Effective
Date.


(h) "Employee" shall mean an individual who is employed by the
Company or a Subsidiary.


(i) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.


(j) "Market Price" shall mean the closing price of the Shares
as reported on the National Association of Securities Dealers,
Inc. Automated Quotation - National Market System ("NASDAQ").
However, if at any time the Shares are listed on any exchange,
"Market Price" shall mean the average of the highest and
lowest prices at which Shares are sold on such exchange. In
the absence of reported sales on NASDAQ or on such exchange on
any trading date, "Market Price" shall mean the reported
closing price for the Shares on NASDAQ or such exchange on the
day immediately preceding such date during which there were
sales of Shares.


2


(k) "Option" shall mean an option which does not comply with
the provisions of Section 422 of the Code and which is granted
under the Plan to purchase Shares.


(l) "Option Agreement" shall mean the agreement between the
Company and a Director whereby an Option is granted to such
Director.


(m) "Plan" shall mean this 1993 Director Stock Option Plan.


(n) "Share" shall mean a share of the $0.001 par value common
stock of the Company.


(o) "Subsidiary" shall mean a subsidiary corporation of the
Company as defined in Section 424(f) of the Code.


(p) "Triggering Event" shall mean the first to occur of any of
the following:


(1) the acquisition (other than from the Company),
by any person, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act),
directly or indirectly, of beneficial ownership (within
the meaning of Rule 13d-3 under the Exchange Act) of 20%
or more of the then outstanding shares of common stock
of the Company or voting securities representing 20% or
more of the combined voting power of the Company's then
outstanding voting securities entitled to vote in the
election of directors; provided, however, that no
Triggering Event shall be deemed to have occurred as a
result of an acquisition of shares of common stock or
voting securities of the Company by any other
corporation or other entity with respect to which,
following such acquisition, more than 50% of the
outstanding shares of the common stock or voting
securities entitled to vote in the election of directors
are then beneficially owned, directly or indirectly, by
the persons who were the Company's shareholders
immediately prior to such acquisition in substantially
the same proportions as their ownership, immediately
prior to such acquisition, of the Company's then
outstanding common stock; or


(2) any merger or consolidation of the Company
with any other corporation, other than a merger or
consolidation which results in more than 60% of the
outstanding shares of the common stock, and voting
securities representing more than 60% of the combined
voting power of the then outstanding voting securities
entitled to vote in the election of directors, of the
surviving or consolidated corporation being then
beneficially owned, directly or indirectly, by the
persons who were the Company's shareholders immediately
prior to such acquisition in substantially the same
proportions as their ownership, immediately prior to
such acquisition, of the Company's then outstanding
common stock; or


(3) any liquidation or dissolution of the Company
or the sale or other disposition of all or substantially
all of the assets of the Company; provided, however,
that the transfer of substantially all of the Company's
assets to a wholly owned Subsidiary in connection with
any ...