S-8

As filed with the Securities and Exchange Commission on August 27, 2003.

Registration No. 333-          

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-8

REGISTRATION STATEMENT

Under

THE SECURITIES ACT OF 1933

MERCURY INTERACTIVE CORPORATION

(Exact name of Registrant as specified in its charter)

Delaware	77-0225776
(State of incorporation)	(I.R.S. Employer Identification Number)

1325 Borregas Avenue

Sunnyvale, California 94089

(408) 822-5200

(Address, including zip code, of Registrant’s principal executive offices)

KINTANA, INC. 1997 EQUITY INCENTIVE PLAN

CHAIN LINK TECHNOLOGIES LIMITED COMPANY SHARE OPTION SCHEME

(Full title of the plans)

Amnon Landan

President and Chief Executive Officer

Mercury Interactive Corporation

1325 Borregas Avenue

Sunnyvale, California 94089

(408) 822-5200

(Name, address and telephone number, including area code, of agent for service)

Copies to:

Susan J. Skaer, Esq.

Vice President, General Counsel and Secretary

Mercury Interactive Corporation

1325 Borregas Avenue

Sunnyvale, California 94089

(408) 822-5200

CALCULATION OF REGISTRATION FEE

Title of Securities to be Registered	Maximum Amount to be Registered		Proposed Maximum Offering Price Per Share			Proposed Maximum Aggregate Offering Price			Amount of Registration Fee
Common Stock, $.002 par value	1,493,066 shares	(1)	$	36.60	(2)	$	54,646,139	(2)	$	4,420.89

(1) Represents the aggregate number of shares issuable upon exercise of presently outstanding options that have been granted under the Kintana, Inc. 1997 Equity Incentive Plan and the Chain Link Technologies Limited Company Share Option Scheme and that were assumed by Registrant in connection with the closing of the merger by and between Kintana, Inc. (f/k/a Chain Link Technologies, Inc.), Registrant, Kanga Merger Corporation, a wholly-owned subsidiary of Registrant and Kanga Acquisition LLC, a wholly-owned subsidiary of Registrant. This registration statement shall also cover any additional shares of Common Stock which become issuable by reason of any stock dividend, stock split, recapitalization or other similar transaction effected without the receipt of consideration which results in an increase in the number of Registrant’s outstanding shares of Common Stock.

(2) Calculated in accordance with Rule 457(h) under the Securities Act of 1933 solely for the purpose of calculating the total registration fee and based upon the weighted average per share exercise price of the options assumed by the Registrant.

PART II:

INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. INFORMATION INCORPORATED BY REFERENCE

The following documents and information heretofore filed with the Securities and Exchange Commission are hereby incorporated by reference:

(a) Registrant’s Annual Report on Form 10-K filed on March 14, 2003 pursuant to Section 13(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) which contains audited financial statements for the Registrant’s fiscal year ended December 31, 2002, the latest fiscal year end for which such statements have been filed.

(b) Registrant’s Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31, 2003, filed on April 30, 2003 and June 30, 2003, filed on August 14, 2003 and our current reports on Form 8-K filed on April 16, 2003, April 24, 2003, May 12, 2003, June 10, 2003, July 16, 2003 and August 18, 2003.

(c) All other reports filed by the Registrant pursuant to Sections 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by the Annual Report on Form 10-K referred to in Item 3(a) above.

(d) Items 1 and 2 of the Registrant’s Registration Statement on Form 8-A filed on September 9, 1993, as amended by Amendment No. 1 to Form 8-A filed on October 28, 1993, pursuant to Section 12 of the Exchange Act and Items 1 and 2 of the Registrant’s Registration Statement on Form 8-A filed on July 9, 1996, as amended by Amendment No. 1 to Form 8-A filed on April 2, 1999 and Amendment No. 2 to Form 8-A filed on May 22, 2000.

All documents subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be part hereof from the date of filing of such documents.

Item 4. DESCRIPTION OF SECURITIES

Not Applicable.

Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL

Not Applicable.

Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS

As permitted by the Delaware General Corporation Law, the Registrant has included in its Certificate of Incorporation a provision to eliminate the personal liability of its directors for monetary damages for breach or alleged breach of their fiduciary duties as directors, subject to certain exceptions. In addition, the Bylaws of the Registrant provide that the Registrant is required to indemnify its officers and directors under certain circumstances, including those circumstances in which indemnification would otherwise be discretionary, and the Registrant is required to advance expenses to its officers and directors as incurred in connection with proceedings against them for which they may be indemnified. The Registrant has entered into indemnification agreements with its officers and directors containing provisions that are in some respects broader than the specific indemnification provisions contained in the Delaware General Corporation Law. The indemnification agreements may require the Registrant, among other things, to indemnify such officers and directors against certain liabilities that may arise by reason of their status or service as directors or officers (other than liabilities arising from willful misconduct of a culpable nature), to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified, and to obtain directors’ and officers’ insurance if available on reasonable terms. At present, the Registrant is not aware of any pending or threatened litigation or proceeding involving a director, officer, employee or agent of the Registrant in which indemnification would be required or permitted. The Registrant believes that its charter provisions and indemnification agreements are necessary to attract and retain qualified persons as directors and officers.

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Item 7. EXEMPTION FROM REGISTRATION CLAIMED

Not Applicable.

Item 8. EXHIBITS

Exhibit Number	Document
4.1	Kintana, Inc. 1997 Equity Incentive Plan.
4.2	Chain Link Technologies Limited Company Share Option Scheme.
5.1	Opinion of Counsel as to Legality of Securities Being Registered.
23.1	Consent of Independent Accountants.
23.2	Consent of Counsel (contained in Exhibit 5.1 hereto).
24.1	Power of Attorney (see page 4).

Item 9. UNDERTAKINGS

A. The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement.

(2) That, for the purpose of determining any liability under the Securities Act of 1933 (the “Securities Act”), each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

B. The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

C. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant, Mercury Interactive Corporation, a corporation organized and existing under the laws of the State of Delaware, certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Sunnyvale, State of California, on August 27, 2003.

MERCURY INTERACTIVE CORPORATION
By:	/s/    DOUGLAS P. SMITH
	Douglas P. Smith, Executive Vice President and Chief Financial Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Amnon Landan, Douglas P. Smith and Susan J. Skaer, jointly and severally, as his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Registration Statement on Form S-8, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Name	Title	Date
/s/    AMNON LANDAN         Amnon Landan	President, Chief Executive Officer (Principal Executive Officer) and Chairman of the Board of Directors	August 27, 2003
/s/    DOUGLAS P. SMITH         Douglas P. Smith	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	August 27, 2003
/s/    BRYAN J. LEBLANC         Bryan J. LeBlanc	Vice President, Finance (Principal Accounting Officer)	August 27, 2003
/s/    Igal Kohavi         Igal Kohavi	Director	August 27, 2003
/s/    Yair Shamir         Yair Shamir	Director	August 27, 2003
/s/    Giora Yaron         Giora Yaron	Director	August 27, 2003
/s/    Kenneth Klein         Kenneth Klein	Director	August 27, 2003
/s/    Clyde Ostler         Clyde Ostler	Director	August 27, 2003
/s/    Anthony Zingale         Anthony Zingale	Director	August 27, 2003

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EXHIBIT INDEX

Exhibit Number	Document
4.1	Kintana, Inc. 1997 Equity Incentive Plan.
4.2	Chain Link Technologies Limited Company Share Option Scheme.
5.1	Opinion of Counsel as to Legality of Securities Being Registered.
23.1	Consent of Independent Accountants.
23.2	Consent of Counsel (contained in Exhibit 5.1 hereto).
24.1	Power of Attorney (see page 4).

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EX-4.1

Exhibit 4.1

KINTANA, INC.

1997 EQUITY INCENTIVE PLAN

As Adopted August 25, 1997

As Amended June 10, 1999

As Amended May 2, 2000

As Amended January 24, 2001

1. PURPOSE. The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company, its Parent and Subsidiaries, by offering them an opportunity to participate in the Company’s future performance through awards of Options and Restricted Stock. Capitalized terms not defined in the text are defined in Section 22. This Plan is intended to be a written compensatory benefit plan within the meaning of Rule 701 promulgated under the Securities Act.

2. SHARES SUBJECT TO THE PLAN.

2.1 Number of Shares Available. Subject to Sections 2.2 and 17, the total number of Shares reserved and available for grant and issuance pursuant to this Plan will be Nine Million One Hundred Sixty Thousand Five Hundred Six (9,160,506) Shares or such lesser number of Shares as permitted under Section 260.140.45 of Title 10 of the California Code of Regulations. Subject to Sections 2.2 and 17, Shares that: (a) are subject to issuance upon exercise of an Option but cease to be subject to such Option for any reason other than exercise of such Option or (b) are subject to an Award that otherwise terminates without Shares being issued will again be available for grant and issuance in connection with future Awards under this Plan. At all times the Company will reserve and keep available a sufficient number of Shares as will be required to satisfy the requirements of all Awards granted under this Plan.

2.2 Adjustment of Shares. In the event that the number of outstanding Shares is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the Company without consideration, then (a) the number of Shares reserved for issuance under this Plan, (b) the Exercise Prices of and number of Shares subject to outstanding Options, and (c) the number of Shares subject to other outstanding Awards will be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and compliance with applicable securities laws; provided, however, that fractions of a Share will not be issued but will either be paid in cash at Fair Market Value of such fraction of a Share or will be rounded up to the nearest whole Share, as determined by the Committee (as defined in Section 22 below).

3. ELIGIBILITY. ISOs (as defined in Section 5 below) may be granted only to employees (including officers and directors who are also employees) of the Company or of a Parent or Subsidiary of the Company. All other Awards may be granted to employees, officers, directors and consultants of the Company or any Parent or Subsidiary of the Company; provided such consultants render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction. A person may be granted more than one Award under this Plan.

4. ADMINISTRATION.

4.1 Committee Authority. This Plan will be administered by the Committee or the Board acting as the Committee. Subject to the general purposes, terms and conditions of this Plan, and to the direction of the Board, the Committee will have full power to implement and carry out this Plan. Without limitation, the Committee will have the authority to:

(a) construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan;

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

(c) select persons to receive Awards;

(d) determine the form and terms of Awards;

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

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

(g) grant waivers of Plan or Award conditions;

(h) determine the vesting, exercisability and payment of Awards;

(i) correct any defect, supply any omission, or reconcile any inconsistency in this Plan, any Award, any Award Agreement, any Exercise Agreement or any Restricted Stock Purchase Agreement;

(j) determine whether an Award has been earned; and

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

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

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

5.1 Form of Option Grant. Each Option granted under this Plan will be evidenced by an Award Agreement which will expressly identify the Option as an ISO or an NQSO (“Stock Option Agreement”), and will be in such form and contain such provisions (which need not be the same for each Participant) as the Committee may from time to time approve, and which will comply with and be subject to the terms and conditions of this Plan.

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

5.3 Exercise Period. Options may be exercisable immediately (subject to repurchase pursuant to Section 11 of this Plan) or may be exercisable within the times or upon the events determined by the Committee as set forth in the Stock Option Agreement governing such Option; provided, however, that no Option will be exercisable after the expiration of ten (10) years from the date the Option is granted; and provided further that no ISO granted to a person who directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary of the Company (“Ten Percent Stockholder”) will be exercisable after the expiration of five (5) years from the date the ISO is granted. The Committee also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines. Subject to earlier termination of the Option as provided herein, Participant’s other than officers, directors or consultants of the Company or of a Parent or Subsidiary of the Company shall have the right to exercise an Option granted hereunder at the rate of at least twenty percent (20%) per year over five (5) years from the date such Option is granted.

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5.4 Exercise Price. The Exercise Price of an Option will be determined by the Committee when the Option is granted and may not be less than 85% of the Fair Market Value of the Shares on the date of grant; provided that (i) the Exercise Price of an ISO will not be less than 100% of the Fair Market Value of the Shares on the date of grant and (ii) the Exercise Price of any Option granted to a Ten Percent Stockholder will not be less than 110% of the Fair Market Value of the Shares on the date of grant. Payment for the Shares purchased must be made in accordance with Section 7 of this Plan.

5.5 Method of Exercise. Options may be exercised only by delivery to the Company of a written stock option exercise agreement (the “Exercise Agreement”) in a form approved by the Committee (which need not be the same for each Participant), stating the number of Shares being purchased, the restrictions imposed on the Shares purchased under such Exercise Agreement, if any, and such representations and agreements regarding Participant’s investment intent and access to information and other matters, if any, as may be required or desirable by the Company to comply with applicable securities laws, together with payment in full of the Exercise Price, and any applicable taxes, for the number of Shares being purchased.

5.6 Termination. Subject to earlier termination pursuant to Subsection 17.1 and notwithstanding the exercise periods set forth in the Stock Option Agreement, exercise of an Option will always be subject to the following:

(a) If the Participant is Terminated for any reason except death, Disability or for Cause, then the Participant may exercise such Participant’s Options only to the extent that such Options would have been exercisable upon the Termination Date no later than three (3) months after the Termination Date (or such shorter time period, not less than thirty (30) days, as may be specified in the Stock Option Agreement) or such longer time period not exceeding five (5) years after the Termination Date as may be determined by the Committee, with any exercise beyond three (3) months after the Termination Date deemed to be an NQSO, but in any event, no later than the expiration date of the Options.

(b) If the Participant is Terminated because of Participant’s death or Disability (or the Participant dies within three (3) months after a Termination other than because of Participant’s death or Disability or Cause), then Participant’s Options may be exercised only to the extent that such Options would have been exercisable by Participant on the Termination Date and must be exercised by Participant (or Participant’s legal representative or authorized assignee) no later than twelve (12) months after the Termination Date (or such shorter time period, not less than six (6) months, as may be specified in the Stock Option Agreement) or such longer time period not exceeding five (5) years after the Termination Date as may be determined by the Committee, with any exercise beyond (a) three (3) months after the Termination Date when the Termination is for any reason other than the Participant’s death or disability, within the meaning of Section 22(e)(3) of the Code, or (b) twelve (12) months after the Termination Date when the Termination is for Participant’s death or disability, within the meaning of Section 22(e)(3) of the Code, deemed to be an NQSO, but in any event no later than the expiration date of the Options.

(c) If the Participant is terminated for Cause, then Participant’s options shall expire on such Participant’s Termination Date, or at such later time and on such conditions as determined by the Committee.

5.7 Limitations on Exercise. The Committee may specify a reasonable minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent Participant from exercising the Option for the full number of Shares for which it is then exercisable.

5.8 Limitations on ISOs. The aggregate Fair Market Value (determined as of the date of grant) of Shares with respect to which ISOs are exercisable for the first time by a Participant during any calendar year (under this Plan or under any other incentive stock option plan of the Company or any Parent or Subsidiary of the Company) will not exceed $100,000. If the Fair Market Value of Shares on the date of grant with respect to

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which ISOs are exercisable for the first time by a Participant during any calendar year exceeds $100,000, then the Options for the first $100,000 worth of Shares to become exercisable in such calendar year will be ISOs and the Options for the amount in excess of $100,000 that become exercisable in that calendar year will be NQSOs. In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date (as defined in Section 18 below) of this Plan to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, then such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment.

5.9 Modification, Extension or Renewal. The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of a Participant, impair any of such Participant’s rights under any Option previously granted. Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code. The Committee may reduce the Exercise Price of outstanding Options without the consent of Participants affected by a written notice to them; provided, however, that the Exercise Price may not be reduced below the minimum Exercise Price that would be permitted under Section 5.4 of this Plan for Options granted on the date the action is taken to reduce the Exercise Price.

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

6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the Company to sell to an eligible person Shares that are subject to restrictions. The Committee will determine to whom an offer will be made, the number of Shares the person may purchase, the Purchase Price, the restrictions to which the Shares will be subject, and all other terms and conditions of the Restricted Stock Award, subject to the following:

6.1 Form of Restricted Stock Award. All purchases under a Restricted Stock Award made pursuant to this Plan will be evidenced by an Award Agreement (“Restricted Stock Purchase Agreement”) that will be in such form (which need not be the same for each Participant) as the Committee will from time to time approve, and will comply with and be subject to the terms and conditions of this Plan. The offer of Restricted Stock will be accepted by the Participant’s execution and delivery of the Restricted Stock Purchase Agreement and full payment for the Shares to the Company within thirty (30) days from the date the Restricted Stock Purchase Agreement is delivered to the person. If such person does not execute and deliver the Restricted Stock Purchase Agreement along with full payment for the Shares to the Company within thirty (30) days, then the offer will terminate, unless otherwise determined by the Committee.

6.2 Purchase Price. The Purchase Price of Shares sold pursuant to a Restricted Stock Award will be determined by the Committee and will be at least 85% of the Fair Market Value of the Shares on the date the Restricted Stock Award is granted or at the time the purchase is consummated, except in the case of a sale to a Ten Percent Stockholder, in which case the Purchase Price will be 100% of the Fair Market Value on the date the Restricted Stock Award is granted or at the time the purchase is consummated. Payment of the Purchase Price may be made in accordance with Section 7 of this Plan.

6.3 Restrictions. Restricted Stock Awards may be subject to the restrictions set forth in Section 11 of this Plan or such other restrictions not inconsistent with Section 25102(o) of the California Corporations Code.

7. PAYMENT FOR SHARE PURCHASES.

7.1 Payment. Payment for Shares purchased pursuant to this Plan may be made in cash (by check) or, where expressly approved for the Participant by the Committee and where permitted by law:

(a) by cancellation of indebtedness of the Company to the Participant;

(b) by surrender of shares that either: (1) have been owned by Participant for more than six (6) months and have been paid for within the meaning of SEC Rule 144 (and, if such shares were purchased from the Company by use of a promissory

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note, such note has been fully paid with respect to such shares); or (2) were obtained by Participant in the public market;

(c) by tender of a full recourse promissory note having such terms as may be approved by the Committee and bearing interest at a rate sufficient to avoid imputation of income under Sections 483 and 1274 of the Code; provided, however, that Participants who are not employees or directors of the Company will not be entitled to purchase Shares with a promissory note unless the note is adequately secured by collateral other than the Shares;

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

(e) with respect only to purchases upon exercise of an Option, and provided that a public market for the Company’s stock exists:

(1) through a “same day sale” commitment from the Participant and a broker-dealer that is a member of the National Association of Securities Dealers (an “NASD Dealer”) whereby the Participant irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased to pay for the Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to forward the Exercise Price directly to the Company; or

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

(f) by any combination of the foregoing.

7.2 Loan Guarantees. The Committee may help the Participant pay for Shares purchased under this Plan by authorizing a guarantee by the Company of a third-party loan to the Participant.

8. WITHHOLDING TAXES.

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

8.2 Stock Withholding. When, under applicable tax laws, a Participant incurs tax liability in connection with the exercise or vesting of any Award that is subject to tax withholding and the Participant is obligated to pay the Company the amount required to be withheld, the Committee may in its sole discretion allow the Participant to satisfy the minimum withholding tax obligation by electing to have the Company withhold from the Shares to be issued that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld, determined on the date that the amount of tax to be withheld is to be determined. All elections by a Participant to have Shares withheld for this purpose will be made in accordance with the requirements established by the Committee for such elections and be in writing in a form acceptable to the Committee.

9. PRIVILEGES OF STOCK OWNERSHIP.

9.1 Voting and Dividends. No Participant will have any of the rights of a stockholder with respect to any Shares until the Shares are issued to the Participant. After Shares are issued to the Participant, the Participant will be a stockholder and have all the rights of a stockholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided, that

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if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted Stock; provided, further, that the Participant will have no right to retain such stock dividends or stock distributions with respect to Unvested Shares that are repurchased pursuant to Section 11. The Company will comply with Section 260.140.1 of Title 10 of the California Corporations Code with respect to the voting rights of Common Stock.

9.2 Financial Statements. The Company will provide financial statements to each Participant prior to such Participant’s purchase of Shares under this Plan, and to each Participant annually during the period such Participant has Awards outstanding, or as otherwise required or permitted under Section 260.140.46 of Title 10 of the California Code of Regulations. Notwithstanding the foregoing, the Company will not be required to provide such financial statements to Participants whose services in connection with the Company assure them access to equivalent information.

10. TRANSFERABILITY. Awards granted under this Plan, and any interest therein, will not be transferable or assignable by Participant, and may not be made subject to execution, attachment or similar process, otherwise than by will or by the laws of descent and distribution. During the lifetime of the Participant an Award will be exercisable only by the Participant, and any elections with respect to an Award, may be made only by the Participant.

11. RESTRICTIONS ON SHARES. At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) in the Award Agreement (a) a right of first refusal to purchase all Shares that a Participant (or a subsequent transferee) may propose to transfer to a third party, unless otherwise not permitted by Section 25102(o) of the California Corporations Code, provided, that such right of first refusal terminates when the Company’s securities become publicly traded and/or (b) a right to repurchase Shares held by a Participant following such Participant’s Termination at any time within ninety (90) days after Participant’s Termination Date (or, in the case of securities issued upon exercise of an Option after the Participant’s Termination Date, within 90 days after the date of such exercise) for cash and/or cancellation of purchase money indebtedness, at: (A) with respect to Vested Shares, the Fair Market Value of such Shares on Participant’s Termination Date, provided, that such right of repurchase terminates when the Company’s securities become publicly traded; or (B) with respect to Unvested Shares, the Participant’s Exercise Price or Purchase Price, as the case may be, provided, that to the extent the Participant is not an officer, director or consultant of the Company or of a Parent or Subsidiary of the Company, such right of repurchase at Exercise Price or Purchase Price, as the case may be, lapses at the rate of at least twenty percent (20%) per year over five (5) years from: (i) the date of grant of the Option or (ii) in the case of Restricted Stock, the date the Participant purchases the Shares.

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

13. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a Participant’s Shares, the Committee may require the Participant to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated, and the Committee may cause a legend or legends referencing such restrictions to be placed on the certificates. Any Participant who is permitted to execute a promissory note as partial or full consideration for the purchase of Shares under this Plan will be required to pledge and deposit with the Company all or part of the Shares so purchased as collateral to secure the payment of Participant’s obligation to the Company under the promissory note; provided, however, that the Committee may require or accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the promissory note notwithstanding any pledge of the Participant’s Shares or other collateral. In connection with any pledge of the Shares, Participant will be required to execute and deliver a written pledge agreement in such form as the Committee will from time to time approve. The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid.

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

15. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. This Plan is intended to comply with Section 25102(o) of the California Corporations Code. Any provision of the Plan which is inconsistent with Section 25102(o) shall, without further act or amendment by the Company or the Board, be reformed to comply with the requirements of Section 25102(o). An Award will not be effective unless such Award is in compliance with all applicable federal and state securities laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the date of grant of the Award and also on the date of exercise or other issuance. Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to (a) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable, and/or (b) compliance with any exemption, completion of any registration or other qualification of such Shares under any state or federal law or ruling of any governmental body that the Company determines to be necessary or advisable. The Company will be under no obligation to register the Shares with the SEC or to effect compliance with the exemption, registration, qualification or listing requirements of any state securities laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so.

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

17. CORPORATE TRANSACTIONS.

17.1 Assumption or Replacement of Awards by Successor. In the event of (a) a dissolution or liquidation of the Company, (b) a merger or consolidation in which the Company is not the surviving corporation (other than a merger or consolidation with a wholly-owned subsidiary, a reincorporation of the Company in a different jurisdiction, or other transaction in which there is no substantial change in the stockholders of the Company or their relative stock holdings and the Awards granted under this Plan are assumed, converted or replaced by the successor corporation, which assumption will be binding on all Participants), (c) a merger in which the Company is the surviving corporation but after which the stockholders of the Company immediately prior to such merger (other than any stockholder which merges, or which owns or controls another corporation which merges, with the Company in such merger) cease to own their shares or other equity interests in the Company, or (d) the sale of substantially all of the assets of the Company, any or all outstanding Awards may be assumed, converted or replaced by the successor corporation (if any), which assumption, conversion or replacement will be binding on all Participants. In the alternative, the successor corporation may substitute equivalent Awards or provide substantially similar consideration to Participants as was provided to stockholders (after taking into account the existing provisions of the Awards). The successor corporation may also issue, in place of outstanding Shares of the Company held by the Participant, substantially similar shares or other property subject to repurchase restrictions and other provisions no less favorable to the Participant than those which applied to such outstanding Shares immediately prior to such transaction described in this Subsection 17.1. In the event such successor corporation (if any) refuses to assume or substitute Awards, as provided above, pursuant to a transaction described in this Subsection 17.1, then notwithstanding any other provision in this Plan to the contrary, such Awards will expire on such transaction at such time and on such conditions as the Board will determine. In the event such successor corporation (if any) refuses to assume or substitute Awards, as provided above, pursuant to a transaction described in this Subsection 17.1, then notwithstanding any other provision in this Plan to the contrary, the vesting of such Awards will accelerate and the Options will become exercisable in full prior to the consummation of such event at such times and on such conditions as the Committee determines, and if such Options are not exercised prior to the consummation of the corporate transaction, they shall terminate in accordance with the provisions of this Plan.

17.2 Other Treatment of Awards. Subject to any greater rights granted to Participants under the foregoing provisions of this Section 17, in the event of the occurrence of any transaction described in Section

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17.1, any outstanding Awards will be treated as provided in the applicable agreement or plan of merger, consolidation, dissolution, liquidation or sale of assets.

17.3 Assumption of Awards by the Company. The Company, from time to time, also may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either (a) granting an Award under this Plan in substitution of such other company’s award or (b) assuming such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan. Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other company had applied the rules of this Plan to such grant. In the event the Company assumes an award granted by another company, the terms and conditions of such award will remain unchanged (except that the exercise price and the number and nature of shares issuable upon exercise of any such option will be adjusted appropriately pursuant to Section 424(a) of the Code). In the event the Company elects to grant a new Option rather than assuming an existing option, such new Option may be granted with a similarly adjusted Exercise Price.

18. ADOPTION AND STOCKHOLDER APPROVAL. This Plan will become effective on the date that it is adopted by the Board (the “Effective Date”). This Plan will be approved by the stockholders of the Company (excluding Shares issued pursuant to this Plan), consistent with applicable laws, within twelve (12) months before or after the Effective Date. Upon the Effective Date, the Board may grant Awards pursuant to this Plan; provided, however, that no Option may be exercised prior to stockholder approval of this Plan. In the event that stockholder approval is not obtained within twelve (12) months before or after the date this Plan is adopted by the Board, all Awards granted hereunder will be canceled, any Shares issued pursuant to any Award will be canceled and any purchase of Shares hereunder will be rescinded.

19. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided herein, this Plan will terminate ten (10) years from the Effective Date or, if earlier, the date of stockholder approval. This Plan and all agreements hereunder shall be governed by and construed in accordance with the laws of the State of California.

20. AMENDMENT OR TERMINATION OF PLAN. The Board may at any time terminate or amend this Plan in any respect, including without limitation amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan; provided, however, that the Board will not, without the approval of the stockholders of the Company, amend this Plan in any manner that requires such stockholder approval pursuant to the Code or the regulations promulgated thereunder as such provisions apply to ISO plans.

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

22. DEFINITIONS. As used in this Plan, the following terms will have the following meanings:

“Award” means any award under this Plan, including any Option or Restricted Stock Award.

“Award Agreement” means, with respect to each Award, the signed written agreement between the Company and the Participant setting forth the terms and conditions of the Award.

“Board” means the Board of Directors of the Company.

“Cause” means Termination because of (i) any willful material violation by the Participant of any law or regulation applicable to the business of the Company or a Parent or Subsidiary of the Company, the Participant’s conviction for, or guilty plea to, a felony or a crime involving moral turpitude, any willful perpetration by the Participant of a common law fraud or any unlawful use by the Participant of drugs or other controlled substances, (ii) the Participant’s commission of an act of personal dishonesty which involves personal profit in connection with the Company or any other entity having a business relationship with the Company, (iii) any material breach by the Participant of any provision of any agreement or understanding between the Company and the Participant regarding the terms of the Participant’s service as an employee, director, consultant, independent contractor or adviser to the Company or a Parent or Subsidiary of the Company, including without limitation, the

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willful and continued failure or refusal of the Participant to perform the material duties required of such Participant as an employee, director, consultant, independent contractor or adviser of the Company or a Parent or Subsidiary of the Company, other than as a result of having a Disability, or a breach of any applicable invention assignment and confidentiality agreement or similar agreement between the Company and the Participant, (iv) Participant’s disregard of the policies of the Company so as to cause loss, damage or injury to the property, reputation or employees of the Company or a Parent or Subsidiary of the Company, or (v) any other misconduct by the Participant which is materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, the Company or a Parent or Subsidiary of the Company.

“Code” means the Internal Revenue Code of 1986, as amended.

“Committee” means the committee appointed by the Board to administer this Plan, or if no committee is appointed, the Board.

“Company” means Kintana, Inc., or any successor corporation.

“Disability” means a disability, whether temporary or permanent, partial or total, as determined by the Committee.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exercise Price” means the price at which a holder of an Option may purchase the Shares issuable upon exercise of the Option.

“Fair Market Value” means, as of any date, the value of a share of the Company’s Common Stock determined as follows:

(a) if such Common Stock is then quoted on the Nasdaq National Market, its closing price on the Nasdaq National Market on the date of determination as reported in The Wall Street Journal;

(b) if such Common Stock is publicly traded and is then listed on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Common Stock is listed or admitted to trading as reported in The Wall Street Journal;

(c) if such Common Stock is publicly traded but is not quoted on the Nasdaq National Market nor listed or admitted to trading on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported by The Wall Street Journal (or, if not so reported, as otherwise reported by any newspaper or other source as the Board may determine); or

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

“Insider” means an officer or director of the Company or any other person whose transactions in the Company’s Common Stock are subject to Section 16 of the Exchange Act.

“Option” means an award of an option to purchase Shares pursuant to Section 5.

“Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of such corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

“Participant” means a person who receives an Award under this Plan.

“Plan” means this Kintana, Inc. 1997 Equity Incentive Plan, as amended from time to time.

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“Purchase Price” the price at which a Participant may purchase Restricted Stock.

“Restricted Stock Award” means an award of Shares pursuant to Section 6.

“SEC” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Shares” means shares of the Company’s Common Stock reserved for issuance under this Plan, as adjusted pursuant to Sections 2 and 17, and any successor security.

“Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

“Termination” or “Terminated” means, for purposes of this Plan with respect to a Participant, that the Participant has for any reason ceased to provide services as an employee, officer, director or consultant to the Company or a Parent or Subsidiary of the Company. An employee will not be deemed to have ceased to provide services in the case of (i) sick leave, (ii) military leave, or (iii) any other leave of absence approved by the Committee, provided that such leave is for a period of not more than 90 days unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to formal policy adopted from time to time by the Company and issued and promulgated to employees in writing. In the case of any employee on an approved leave of absence, the Committee may make such provisions respecting suspension of vesting of the Award while on leave from the employ of the Company or a Subsidiary as it may deem appropriate, except that in no event may an Option be exercised after the expiration of the term set forth in the Stock Option Agreement. The Committee will have sole discretion to determine whether a Participant has ceased to provide services and the effective date on which the Participant ceased to provide services (the “Termination Date”).

“Unvested Shares” means “Unvested Shares” as defined in the Award Agreement.

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EX-4.2

Exhibit 4.2

[LOGO] CHAIN LINK TECHNOLOGIES LTD.

THE CHAIN LINK TECHNOLOGIES LIMITED

COMPANY SHARE OPTION SCHEME

Page 1 of 13

RULES OF THE CHAIN LINK TECHNOLOGIES LIMITED

COMPANY SHARE OPTION SCHEME

0. PURPOSE. The purpose of this Scheme is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company, its Parent and Subsidiaries, by offering them an opportunity to participate in the Company’s future performance through awards of Share Options

1. DEFINITIONS

1.1 In these Rules the following words and expressions shall have the following meanings

“Appropriate Period” has the same meaning as in Paragraph 15(2) of Schedule 9 of ICTA 1988

“Approval Date” the date on which the Scheme is approved by the Board of Inland Revenue under Schedule 9.

“Associated Company” has the same meaning as in Section 416 of ICTA 1988.

“Auditors” the auditors for the time being of the Company (acting as experts and not as arbitrators).

“Board” the Board of Directors of the Company or, except in Rule 10.4, a duly constituted committee thereof.

“Cause” Termination because of (i) any wilful material violation by the Eligible Employee of any law or regulation applicable to the business of the Company or a Parent or Subsidiary of the Company, the Eligible Employee’s conviction for, or guilty plea to, a felony or a crime involving moral turpitude, any wilful perpetration by the Eligible Employee of a common law fraud or any unlawful use by the Eligible Employee of drugs or other controlled substances, (ii) the Eligible Employee’s commission of an act of personal dishonesty which involves personal profit in connection with the Company or any other entity having a business relationship with the Company, (iii) any material breach by the Eligible Employee of any provision of any agreement or understanding between the Company and the Eligible Employee regarding the terms of the Eligible Employee’s service as an employee, director, consultant, independent contractor or adviser to the Company or a Parent or Subsidiary of the Company, including without limitation, the wilful and continued failure or refusal of the Eligible Employee to perform the material duties required of such Eligible Employee as an employee, director, consultant, independent contractor or adviser of the Company or a Parent or Subsidiary of the Company, other than as a result of having a Disability, or a breach of any applicable invention assignment and confidentiality agreement or similar agreement between the Company and the Eligible Employee, (iv) Eligible Employee’s disregard of the policies of the Company so as to cause loss, damage or injury to the property, reputation or employees of the Company or a Parent or Subsidiary of the Company, or (v) any other misconduct by the Eligible Employee which is materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, the Company or a Parent or Subsidiary of the Company.

“Company” CHAIN LINK TECHNOLOGIES LIMITED registered in England No. 3810163 by whatever name known from time to time

“Control” has the same meaning as in Section 840 of ICTA1988.

“Date of Grant” the date on which an Option is, was, or is to be granted under the Scheme.

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“Disability” a disability, whether temporary or permanent, partial or total, as determined by the Board.

“Eligible Employee” any director of any Participating Company who is required to devote to his duties not less than 25 hours per week (excluding meal breaks) or any employee (other than one who is a director) of any Participating Company, provided that the director or employee is not precluded by paragraph 8 of Schedule 9 from participating in the Scheme.

“Expiration Date” the date specified as such in the applicable Option Certificate and on which date the Option shall expire.

“First Vesting Date” the date specified as such in the applicable Option Certificate and before which date the Option shall not vest nor be exercisable.

“ICTA 1988” The Income and Corporation Taxes Act 1988.

“Market Value” On any day the market value of a Share determined in accordance with the provisions of Part Vlll of the Taxation of Chargeable Gains Act 1992 and agreed for the purposes of the Scheme with the Inland Revenue Shares Valuation Division on or before that day.

“Option” a right to subscribe for Shares granted (or to be granted) in accordance with the Rules of this Scheme

“Option Holder” an individual to whom an Option has been granted or his personal representatives.

“Participating Company” the Company and any other company of which the Company has Control and which is for the time being nominated by the Board to be a Participating Company .

“Schedule 9” Schedule 9 ICTA 1988.

“Scheme” the employee share option scheme constituted and governed by these rules as from time to time amended.

“Share” a $0.001 Common Stock share in the capital of CHAIN LINK TECHNOLOGIES INC, (incorporated in Delaware, U.S.A.), which satisfies the conditions specified in paragraphs 10-14 inclusive of Schedule 9.

“Subscription Price” the price at which each Share subject to an Option may be acquired on the exercise of that Option determined in accordance with Rule 2.

“Subsisting Option” an option which has neither lapsed nor been exercised.

“Termination” or “Terminated” means with respect to an Eligible Employee, that the

“Termination Date” Eligible Employee has for any reason ceased to provide services as an employee, officer, director or consultant to the Company or a Parent or Subsidiary of the Company. An employee will not be deemed to have ceased to provide services in the case of (i) sick leave, (ii) statutory leave, or (iii) any other leave of absence approved by the Committee, provided that such leave is for a period of not more than 90 days unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to formal policy adopted from time to time by the Company and issued and promulgated to employees in writing. In the case of any employee on an approved leave of absence, the Committee may make such provisions respecting suspension of vesting of the Option while on leave from the employ of the Company or a Subsidiary as it may deem appropriate, except that in no event may an Option be exercised after

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the expiration of the term set forth in the Option Certificate. The Committee will have sole discretion to determine whether an Eligible Employee has ceased to provide services and the effective date on which the Eligible Employee ceased to provide services (the “Termination Date”).

1.2 Where the context so admits the singular shall include the plural and vice versa and the masculine shall include the feminine.

1.3 Any reference in the Scheme to any enactment includes a reference to that enactment as from time to time modified, extended or re-enacted.

1.4 These rules are governed by and shall be construed in accordance with the law of England and references herein to any statutes or statutory instruments or any part or parts thereof are references to statutes or statutory instruments of the United Kingdom unless otherwise specified.

1.5 These rules, together with all the model documents attached hereto, constitute the entire agreement and understanding of the parties with respect to the subject matter of the CHAIN LINK TECHNOLOGIES LIMITED COMPANY SHARE OPTION SCHEME, and supersede all prior understandings and agreements, whether oral or written, between the parties hereto with respect to the specific subject matter hereof.

2. INVITATION TO APPLY FOR OPTIONS

2.1 At any time or times not earlier than the Approval Date the Board may in its absolute discretion select any number of individuals who may at the intended Date of Grant be Eligible Employees and invite them to apply for the grant of Options to acquire Shares in CHAIN LINK TECHNOLOGIES INC.

2.2 Each invitation shall specify

i. the date (being neither earlier than 7 nor later than 14 days after the issue of the invitation) by which an application must be made,

ii. the maximum number of Shares over which that individual may on that occasion apply for an Option, being determined at the absolute discretion of the Board save that it shall not be so large that the grant of the Option over that number of Shares would cause the limit specified in Rule 5.1 to be exceeded,

iii. the Subscription Price at which Shares may be acquired on the exercise of any Option granted in response to the application,

iv. the First Vesting Date, and

v. the Expiration Date

2.3 Each invitation shall be accompanied by an application in such form, not inconsistent with these Rules, as the Board may determine.

2.4

i. The Subscription Price shall not be less than the nominal value of a Share.

ii. Subject to Rule 8, the Subscription Price shall not be less than the Market Value of a Share on the day the invitation to apply for an Option was issued pursuant to Rule 2.1.

3. APPLICATIONS FOR OPTIONS

3.1 Not later than the date specified in the invitation each Eligible Employee to whom an invitation has been issued in accordance with Rule 2 above may apply to the Board, using the application form supplied, for an Option over a number of Shares not exceeding the number specified in the invitation .

4. GRANT OF OPTIONS

4.1 Not later than the twenty-first day following the issue of invitations the Board may grant to each applicant who is still an Eligible Employee an Option over the number of Shares specified in his application.

4.2 As soon as possible after Options have been granted the Board shall issue an option certificate in respect of each Option in such form, not inconsistent with these Rules, as the Board may determine.

4.3 No Option may be transferred, assigned or charged and any purported transfer, assignment or charge shall cause the Option to lapse forthwith. Each option certificate shall carry a statement to this effect.

4.4 Subject to Rules 8 and 15, the total number of Shares reserved and available for grant and issuance pursuant to this Sceme will be 750,000 ( seven hundred and fifty thousand) Shares or such lesser number of Shares as permitted under Section 260.140.45 of Title 10 of the California Code of Regulations. Subject Rules 8 and 15, Shares that: (a) are subject to issuance upon exercise of an Option but cease to be subject to such Option for any reason other than exercise of such Option or (b) are subject to an Option that otherwise terminates without Shares being issued will again be available for grant and issuance in connection with future Options under this Plan. At all times the Company will reserve and keep available a sufficient number of Shares as will be required to satisfy the requirements of all Options granted under this Plan.

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5. LIMITATIONS ON GRANTS

5.1 Any option granted to an Eligible Employee shall be limited and take effect so that the aggregate Market Value of Shares subject to that Option, when aggregated with the Market Value of shares subject to Subsisting Options, shall not exceed £30,000.

5.2 For the purposes of Rule 5.1

i. Options shall include all Options granted under this Scheme and all options granted under any other scheme, not being a savings-related share option scheme, approved under Schedule 9 and established by the Company or any Associated Company thereof.

ii. The Market Value of shares shall be calculated as at the time the options in relation to those shares were granted or such earlier time as may have been agreed in writing with the Board of Inland Revenue.

6. EXERCISE OF OPTIONS

6.1 Subject to Rule 9 below, and provided the Eligible Employee continues to provide services to the Company or any Subsidiary or Parent of the Company, any Option which has not lapsed will become vested and exercisable as to portions of the Shares as follows:

(i) the Option shall not vest nor be exercisable with respect to any of the Shares until the First Vesting Date; (ii) on the First Vesting Date the Option will become vested and exercisable as to twenty-five percent (25%) of the Shares; (iii) thereafter at the end of each full succeeding month the Option will become vested and exercisable as to 2.08% of the Shares until the Shares are vested with respect to one hundred percent (100%) of the Shares. If application of the vesting percentage causes a fractional share, such share shall be rounded down to the nearest whole share for each month except for the last month in such vesting period, at the end of which last month this Option shall become exercisable for the full remainder of the Shares.

6.2 An Option shall lapse on the earliest of the following dates or events, or earlier as provided elsewhere in these rules

i. the Expiration Date

ii. the Option Holder being adjudicated bankrupt

iii. the tenth anniversary of the date the Option is granted.

7. TERMINATION

7.1 If the Eligible Employee is terminated for any reason, except death, Disability or Cause, the Option, to the extent (and only to the extent) that it would have been exercisable by the Eligible Employee on the Termination Date, may be exercised by the Eligible Employee, no later than three (3) months after the Termination Date, but in any event no later than the Expiration Date.

7.2 If the Eligible Employee is terminated because of death or Disability of the Eligible Employee (or the Eligible Employee dies within three (3) months of termination when termination is for any reason other than the Eligible Employee’s disability or for cause) the Option, to the extent that it is exercisable by the Eligible Employee on the Termination Date, may be exercised by the Eligible Employee (or the Eligible Employee’s legal representative), no later than twelve (12) months after the Termination Date, but in any event no later than the Expiration Date.

7.3 If the Eligible Employee is terminated for Cause, then the Option will expire on The Eligible Employee’s Termination Date, or at such later time and on such conditions as are determined by the Board.

7.4 Nothing in the rules shall confer on the Eligible Employee any right to continue in the employ of, or other relationship with, the Company or any Parent or Subsidiary of the Company, or limit in any way the right of the Company or any Parent or Subsidiary of the Company to terminate the Eligible Employee’s employment or other relationship at any time, with or without Cause.

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8. VARIATION OF SHARE CAPITAL

In the event of any variation of the share capital of the CHAIN LINK TECHNOLOGIES INC by way of capitalisation or rights issue, consolidation, subdivision or reduction of capital or otherwise, the number of Shares subject to any Option and the Subscription Price for each of those Shares shall be adjusted in such manner as the Auditors confirm in writing to be fair and reasonable provided that i. the aggregate amount payable on the exercise of an Option in full is not increased

ii. the Subscription Price for a Share is not reduced below its nominal value

iii. no adjustment shall be made without the prior approval of the Board of Inland Revenue and

iv. following the adjustment the Shares continue to satisfy the conditions specified in paragraphs 10 to 14 inclusive of Schedule 9.

9. MANNER OF EXERCISE OF OPTIONS

9.1 No Option may be exercised by an individual at any time when he is precluded by paragraph 8 of Schedule 9 from participating in the Scheme.

9.2 No Option may be exercised at any time when the shares which may be thereby acquired do not satisfy the conditions specified in paragraphs 10-14 of Schedule 9.

9.3 An Option shall be exercised by the Option Holder giving notice to the Company in writing of the number of Shares in respect of which he wishes to exercise the Option accompanied by the appropriate payment and the relevant option certificate and shall be effective on the date of its receipt by the Company.

9.4 Shares shall be allotted and issued pursuant to a notice of exercise within 30 days of the date of exercise and a definitive share certificate issued to the Option Holder in respect thereof. Save for any rights determined by reference to a date preceding the date of allotment, such Shares shall rank pari passu with the other shares of the same class in issue at the date of allotment.

9.5 When an Option is exercised only in part, the balance shall remain exercisable on the same terms as originally applied to the whole Option and a new option certificate shall be issued accordingly by the CHAIN LINK TECHNOLOGIES INC as soon as possible after the partial exercise.

10. ADMINISTRATION AND AMENDMENT

10.1 The Scheme shall be administered by the Board whose decision on all disputes shall be final.

10.2 The Board may from time to time amend these Rules provided that:

i. no amendment may materially affect an Option Holder as regards an Option granted prior to the amendment being made

ii. no amendment may be made which would make the terms on which Options may be granted materially more generous or would increase the limit specified in Rule 5.1 without the prior approval of the Company in general meeting and iii. no amendment shall have effect until approved by the Board of Inland Revenue.

10.3 The cost of establishing and operating the Scheme shall be borne by the Participating Companies in such proportions as the Board shall determine.

10.4 The Board may establish a committee consisting of not less than three Board members to whom any or all of its powers in relation to the Scheme may be delegated. The Board may at any time dissolve the Committee, alter its constitution or direct the manner in which it shall act.

10.5 Any notice or other communication under or in connection with the Scheme may be given by the Company either personally or by post to the secretary; items sent by post shall be prepaid and shall be deemed to have been received 72 hours after posting.

10.6 The CHAIN LINK TECHNOLOGIES INC shall at all times keep available sufficient authorised and unissued Shares to satisfy the exercise to the full extent still possible of all Options which have neither lapsed nor been fully exercised, taking account of any other obligations of the CHAIN LINK TECHNOLOGIES INC to issue unissued Shares.

11. WITHOLDING TAXES

Whenever Shares are to be issued in satisfaction of Options granted under this Scheme, the Company may require the Option Holder to remit to the Company an amount sufficient to satisfy any withholding tax requirements prior to the delivery of any certificate or certificates for such Shares.

Page 6 of 13

12. PRIVILEGES OF SHARE OWNERSHIP: VOTING AND DIVIDENDS

No Option Holder will have any of the rights of a shareholder with respect to any Shares until the Shares are issued to the Option Holder. After Shares are issued to the Option Holder, the Option Holder will be a shareholder and have all the rights of a shareholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares.

13. TRANSFERABILITY

Options granted under this Scheme, and any interest therein, will not be transferable or assignable by the Eligible Employee, and may not be made subject to execution, attachment or similar process, otherwise than by will or by the laws of descent and distribution. During the lifetime of the Eligible Employee an Option will be exercisable only by the Eligible Employee, and any elections with respect to an Option may be made only by the Eligible Employee.

14. NO OBLIGATION TO EMPLOY

Nothing in this Scheme or any Option granted under this Scheme will confer or be deemed to confer on any Option Holder any right to continue in the employ of, or to continue any other relationship with, the Company or any Parent or Subsidiary of the Company or limit in any way the right of the Company or any Parent or Subsidiary of the Company to terminate Option Holder’s employment or other relationship at any time, with or without Cause.

15. TAKEOVERS AND LIQUIDATIONS

15.1 If any person obtains Control of CHAIN LINK TECHNOLOGIES INC as a result of making

i. a general offer to acquire the whole of the issued share capital of CHAIN LINK TECHNOLOGIES INC which is made on a condition such that if it is satisfied the person making the offer will have Control of CHAIN LINK TECHNOLOGIES INC or

ii. a general offer to acquire all the shares in CHAIN LINK TECHNOLOGIES INC which are of the same class as the Shares

then any Subsisting Option may subject to Rule 15.4 below be exercised within six months of the time when the person making the offer has obtained Control of CHAIN LINK TECHNOLOGIES INC and any condition subject to which the offer is made has been satisfied.

15.2 If under Section 425 of the Companies Act 1985 the Court sanctions a compromise or arrangement proposed for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies, any Subsisting Option may subject to Rule 15.4 below be exercised within six months of the Court sanctioning the compromise or arrangement.

15.3 If any person becomes bound or entitled to acquire shares in the Company under Section 428 to 430 of the said Act of 1985 any Subsisting Option may subject to Rule 15.4 below be exercised at any time when that person remains so bound or entitled.

15.4 If as a result of the events specified in Rules 15.1 or 15.2 a company has obtained Control of CHAIN LINK TECHNOLOGIES INC or of the Company, or if a company has become bound or entitled as mentioned in Rule 15.3, the Option Holder may, by agreement with that other company (the “Acquiring Company”), within the Appropriate Period, release each Subsisting Option (the “Old Option”) for an option (the “New Option”) which satisfies the conditions that it

i. is over shares in the Acquiring Company or some other company falling within paragraph (b) or paragraph (c) of Paragraph 10, Schedule 9 which satisfy the conditions specified in Paragraphs 10 to 14 inclusive of Schedule 9

ii. is a right to acquire such number of such shares as has on acquisition of the New Option an aggregate Market Value equal to the aggregate Market Value of the shares subject to the Old Option on its release

Page 7 of 13

iii. has a subscription price per share such that the aggregate price payable on the complete exercise equals the aggregate price which would have been payable on complete exercise of the Old Option and

iv. is otherwise identical in terms to the Old Option.

The New Option shall, for all other purposes of this scheme, be treated as having been acquired at the same time as the Old Option.

Where any New Options are granted pursuant to this clause 15.4, Rules 4.3, 6, 8, 9, 10.1, 10.3 to 10.6, and 15 shall, in relation to the New Options, be construed as if references to the CHAIN LINK TECHNOLOGIES INC or the Company (as appropriate) and to the Shares were references to the Acquiring Company or, as the case may be, to the other company to whose shares the New Options relate, and to the shares in that other company, but references to Participating Company shall continue to be construed as if references to the Company were references to CHAIN LINK TECHNOLOGIES INC or to CHAIN LINK TECHNOLOGIES LIMITED (as appropriate).

15.5 If the to CHAIN LINK TECHNOLOGIES INC or Company passes a resolution for voluntary winding up, any Subsisting Option may be exercised within six months of the passing of the resolution.

15.6 For the purposes of this Rule 15, other than Rule 15.4, a person shall be deemed to have obtained Control of a company if he and others acting in concert with him have together obtained Control of it.

15.7 The exercise of an Option pursuant to the preceding provisions of this Rule 15 shall be subject to the provisions of Rule 9 above.

15.8 Where in accordance with Rule 15.4 Subsisting Options are released and New Options granted the New Options shall not be exercisable in accordance with Rule 15.1, 15.2, and 15.3 above by virtue of the event by reason of which the New Options were granted.

Page 8 of 13

MODEL LETTER OF INVITATION

ON LETTERHEAD OF CHAIN LINK TECHNOLOGIES LIMITED

NAME

ADDRESS

Date

Dear

THE CHAIN LINK TECHNOLOGIES LIMITED COMPANY SHARE OPTION SCHEME (“the Scheme”)

The Board has decided to invite you to apply for an Option to acquire [                                    ] Common Stock Shares of $0.001 each in the capital of the CHAIN LINK TECHNOLOGIES INC under the terms of the Scheme Rules.

The grant of the Option will be subject to the Rules of the Scheme, a copy of which is attached for your consideration.

The subscription price per share payable upon the exercise of the Option will be                  [insert subscription price].

The First Vesting Date will be                                                   [Insert First Vesting Date]

The Expiration Date will be                                                   [Insert Expiration Date]

If you wish to accept this invitation, as to all or part of the shares specified, please complete the attached application form and send it to the Company so as to arrive by NOT LATER THAN                                 [insert date required by the Scheme Rules].

Yours sincerely

.......................................................................

Name

.......................................................................

Name

.......................................................................

Name

[signed by the Directors of CHAIN LINK TECHNOLOGIES LIMITED]

and

Agreed by a duly authorised representative of the CHAIN LINK TECHNOLOGIES INC

.......................................................................

Name

[signed by a duly authorised representative of the CHAIN LINK TECHNOLOGIES INC]

Page 9 of 13

MODEL APPLICATION FORM

		Home address of
		eligible employee
Date
To: The Directors,
THE CHAIN LINK TECHNOLOGIES LIMITED
	Address of
	CHAIN LINK TECHNOLOGIES LIMITED

Dear Sirs

THE CHAIN LINK TECHNOLOGIES LIMITED COMPANY SHARE OPTION SCHEME

With reference to your letter of [            ] I hereby apply for the grant of an Option under the above Scheme to subscribe for [                        *] Common Stock Shares of $0.001 each in the capital of the CHAIN LINK TECHNOLOGIES INC at a subscription price of [                             insert subscription price].

If my application is accepted I agree to comply with and be bound by the Rules of the Scheme and by any amendments or variations thereto.

Yours faithfully

Signed ..........................................................

[Eligible Employee]

Full Name of Employee                                                                      

* Applications must be for no more than the number of shares specified in the Letter of Invitation.

Page 10 of 13

MODEL OPTION CERTIFICATE

ON LETTERHEAD OF CHAIN LINK TECHNOLOGIES LIMITED

THE CHAIN LINK TECHNOLOGIES LIMITED

COMPANY SHARE OPTION SCHEME

OPTION CERTIFICATE

This is to certify that                                                   is the holder of an Option to acquire up to a maximum of              Common Stock shares of $0.001 each of CHAIN LINK TECHNOLOGIES INC at a price of                  per ordinary share.

This Option was granted on                                               under the Rules of the CHAIN LINK TECHNOLOGIES LIMITED COMPANY Share Option Scheme.

The Option is exercisable in accordance with the terms of the Scheme Rules.

The First Vesting Date is                                                           [Insert First Vesting Date]

The Expiration Date is                                                       [Insert Expiration Date]

If there is to be no charge to United Kingdom income tax on the exercise of an Option then, in addition to complying with the rules of the Scheme, the exercises must be • made at a time when the Scheme retains Inland Revenue approval • not earlier than 3 or later than 10 years after the Option was granted and • not earlier than 3 years following the latest previous exercise by the Eligible Employee of an Option (obtained under this or any other Option Scheme (except a savings related Share Option Scheme) approved by the Inland Revenue) which enjoyed relief from income tax.

It is not transferable, and will lapse upon the occasion of an assignment, charge, disposal or other dealing with the rights conveyed by it in any other circumstances.

In witness wherof the common seal of CHAIN LINK TECHNOLOGIES LIMITED has been hereunto affixed this                      day of                                                  

In the presence of

        Signed                                                      

        Name                                                            

                                    Director

        Signed                                                      

        Name                                                               

                                     Secretary

and

Agreed by a duly authorised representative of the CHAIN LINK TECHNOLOGIES INC

Name                                     

[signed by a duly authorised representative of the CHAIN LINK TECHNOLOGIES INC]

THIS CERTIFICATE IS IMPORTANT AND SHOULD BE KEPT IN A SAFE PLACE

Page 11 of 13

MODEL NOTICE OF EXERCISE OF OPTION

To: The Secretary

THE CHAIN LINK TECHNOLOGIES LIMITED

		Address of
		CHAIN LINK TECHNOLOGIES LIMITED
From:	(name in BLOCK CAPITALS)
	(ADDRESS)

(1) I hereby give notice to CHAIN LINK TECHNOLOGIES LIMITED that immediately upon your receipt of this certificate and the enclosed remittance I am exercising the Option, granted in the attached Option Certificate, to acquire                                      Common Stock shares of $0.001 each in CHAIN LINK TECHNOLOGIES INC at the subscription price stated of $                

(2) I enclose herewith a cheque drawn in favour of CHAIN LINK TECHNOLOGIES INC for                          being the amount payable in full for those shares.

(3) I UNDERSTAND THAT I MAY SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF MY PURCHASE OR DISPOSITION OF THE SHARES. I REPRESENT: (i) THAT I HAVE CONSULTED WITH ANY TAX ADVISER THAT I DEEM ADVISABLE IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE SHARES AND (ii) THAT I AM NOT RELYING ON THE COMPANY OR ITS ADVISORS FOR ANY TAX ADVICE

(4.1) I understand and acknowledge that the Shares have not been registered with the United States SEC under the United States Securities Act and that, notwithstanding any other provision of the CHAIN LINK TECHNOLOGIES LIMITED Company Share Option Scheme to the contrary, the exercise of any rights to purchase any Shares is expressly conditioned upon compliance with the said Securities Act and all applicable United States state securities laws. I agree to cooperate with the Company and the CHAIN LINK TECHNOLOGIES INC to ensure compliance with such laws. The Shares are being issued under the said Securities Act pursuant to the exemption provided by United States SEC Rule 701.

(4.2) I understand and acknowledge that the CHAIN LINK TECHNOLOGIES LIMITED Company Share Option Scheme, including the Letter of Invitation, Application Form, Option Certificate and this Notice of Exercise of Option are intended to comply with Section 25102(o) of the California Corporations Code and any rules (INCLUDING COMMISSIONER RULES, IF APPLICABLE) or regulations promulgated thereunder BY THE CALIFORNIA DEPARTMENT OF CORPORATIONS (the “REGULATIONS”). Any provision of this Notice of Exercise of Option which is inconsistent with Section 25102(o) shall, without further act or amendment by the Company or the Board, be reformed to comply with the requirements of Section 25102(o). THE SALE OF THE SECURITIES THAT ARE THE SUBJECT OF

Page 12 of 13

THIS NOTICE OF EXERCISE OF OPTION, IF NOT YET QUALIFIED WITH THE CALIFORNIA COMMISSIONER OF CORPORATIONS AND NOT EXEMPT FROM SUCH QUALIFICATION, IS SUBJECT TO SUCH QUALIFICATION, AND THE ISSUANCE OF SUCH SECURITIES, AND THE RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE IS EXEMPT. THE RIGHTS OF THE PARTIES TO THIS EXERCISE AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION BEING AVAILABLE.

(5) I understand that I may not transfer any Shares unless such Shares are registered under the United States Securities Act or qualified under applicable United States state securities laws or unless, in the opinion of counsel to the Company or to CHAIN LINK TECHNOLOGIES INC, exemptions from such registration and qualification requirements are available. I understand that only the CHAIN LINK TECHNOLOGIES INC may file a registration statement with the United States SEC and that CHAIN LINK TECHNOLOGIES INC is under no obligation to do so with respect to the Shares. I have also been advised that exemptions from registration and qualification may not be available or may not permit me to transfer all or any of the Shares in the amounts or at the times proposed by me.

(5.2) In addition, I have been advised that United States SEC Rule 144 promulgated under the said Securities Act, which permits certain limited sales of unregistered securities, is not presently available with respect to the Shares and, in any event, requires that the Shares be held for a minimum of one (1) year, and in certain cases two (2) years, after they have been purchased and paid for (within the meaning of Rule 144). I understand that Rule 144 may indefinitely restrict transfer of the Shares so long as I remain an “affiliate” of the Company or if “current public information” about the Company (as defined in Rule 144) is not publicly available.

(6) Market Standoff Agreement: I agree in connection with any registration of CHAIN LINK TECHNOLOGIES INC’s securities that, upon the request of the Company or CHAIN LINK TECHNOLOGIES INC or the underwriters managing any public offering of the CHAIN LINK TECHNOLOGIES INC’s securities, I will not sell or otherwise dispose of any Shares without the prior written consent of CHAIN LINK TECHNOLOGIES INC or such underwriters, as the case may be, for such period of time (not to exceed one hundred eighty (180) days) after the effective date of such registration requested by such managing underwriters and subject to all restrictions as the Company or CHAIN LINK TECHNOLOGIES INC or the underwriters may specify. I further agree to enter into any agreement reasonably required by the underwriters to implement the foregoing.

Signed                                                                                

Date Signed                                                                      

Page 13 of 13

EX-5.1

EXHIBIT 5.1

OPINION OF COUNSEL

August 27, 2003

Mercury Interactive Corporation

1325 Borregas Avenue

Sunnyvale, California 94089

RE: Registration Statement on Form S-8

Ladies and Gentlemen:

We have acted as counsel for Mercury Interactive Corporation (the “Company”) in connection with the filing of a Registration Statement (the “Registration Statement”) on Form S-8 under the Securities Act of 1933, as amended, relating to 1,493,066 shares (the “Shares”) of the Company’s common stock, par value $0.002 per share, deliverable pursuant to the Kintana, Inc. 1997 Equity Incentive Plan and the Chain Link Technologies Limited Company Share Option Scheme (together, the “Plans”).

We have examined such documents and records as we have deemed necessary for the purposes of rendering this opinion.

Upon the basis of the foregoing, we are of the opinion that the Shares, when delivered in accordance with the Plans upon receipt by the Company of adequate consideration therefor, will be validly issued, fully paid and nonassessable.

The foregoing opinion is limited to the federal laws of the United States of America and the General Corporation Law of the State of Delaware.

We consent to the filing of this opinion as an exhibit to the Registration Statement.

Very truly yours,

/s/    DAVIS POLK & WARDWELL     

EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of our report dated January 18, 2003 relating to the consolidated financial statements, which appears in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.

/s/    PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP

San Jose, California

August 27, 2003

9