<PAGE>

                                                                 EXHIBIT 10.1
                               NEURON DATA, INC
                             1996 STOCK OPTION PLAN
                             ----------------------

              (As Amended and Restated Effective August 27, 1996,
            September 25, 1996, October 28, 1997, April 23, 1999,
                    December 2, 1999 and December 31, 1999)

                                  ARTICLE ONE

                               GENERAL PROVISIONS
                               ------------------

     I.   PURPOSE OF THE PLAN

          A.   This 1996 Stock Option Plan is intended to promote the interests
of Neuron Data, Inc., a California corporation, by providing eligible persons
with the opportunity to acquire a proprietary interest, or otherwise increase
their proprietary interest, in the Corporation as an incentive for them to
remain in the service of the Corporation.

          B.   Capitalized terms herein shall have the meanings assigned to such
terms in the attached Appendix.

     II.  ADMINISTRATION OF THE PLAN

          A.   The Plan shall be administered by the Board. However, any or all
administrative functions otherwise exercisable by the Board may be delegated to
the Committee. Members of the Committee shall serve for such period of time as
the Board may determine and shall be subject to removal by the Board at any
time. The Board may also at any time terminate the functions of the Committee
and reassume all powers and authority previously delegated to the Committee.

          B.   The Plan Administrator shall have full power and authority
(subject to the provisions of the Plan) to establish such roles and regulations
as it may deem appropriate for proper administration of the Plan and to make
such determinations under, and issue such interpretations of, the Plan and any
outstanding options as it may deem necessary or advisable. Decisions of the Plan
Administrator shall be final and binding on all parties who have an interest in
the Plan or any option or Shares issued thereunder.

     III.   ELIGIBILITY

          A.   The persons eligible to receive option grants under the Plan are
as follows:

                  (i)    Employees,

                  (ii)   non-employee members of the Board or the non-employee
          members of the board of directors of any Parent or Subsidiary, and
<PAGE>

                  (iii)  consultants who provide services to the Corporation
          (or any Parent or Subsidiary).

          B.  The Plan Administrator shall have full authority to determine
which eligible persons are to receive option grants under the Plan, the time or
times when such option grants are to be made, the number of shares to be covered
by each such grant, the status of the granted option as either an Incentive
Option or a Non-Statutory Option, the time or times at which each option is to
become exercisable, the vesting schedule (if any) applicable to the option
shares and the maximum term for which the option is to remain outstanding.

     IV.  STOCK SUBJECT TO THE PLAN

          A.  The stock issuable under the Plan shall be shares of authorized
but unissued or reacquired Common Stock. The maximum number of shares of Common
Stock which may be issued over the term of the Plan shall not exceed 7,003,429.

          B.  Shares of Common Stock subject to outstanding options shall be
available for subsequent issuance under the Plan to the extent (i) the options
expire or terminate for any reason prior to exercise in full or (ii) the options
are cancelled in accordance with the cancellation-regrant provisions of Article
Two. Unvested shares issued under the Plan and subsequently repurchased by the
Corporation, at the option exercise price paid per share, pursuant to the
Corporation's repurchase rights under the Plan shall be added back to the number
of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent option
grants under the Plan.

          C.  Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
Without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and/or class of securities issuable
under the Plan and (ii) the number and/or class of securities and the exercise
price per share in effect under each outstanding option in order to prevent the
dilution or enlargement of benefits thereunder. The adjustments determined by
the Plan Administrator shall be final, binding and conclusive. In no event shall
any such adjustments be made in connection with the conversion of one or more
outstanding shares of the Corporation's preferred stock into shares of Common
Stock.

                                       2
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                                  ARTICLE TWO

                              OPTION GRANT PROGRAM
                              --------------------

     I.   OPTION TERMS

          Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document
                                    --------
shall comply with the terms specified below. Each document evidencing an
Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.

          A.   Exercise Price.
               --------------

               1.  The exercise price per share shall be fixed by the Plan
Administrator in accordance with the following provisions:

                  (i) The exercise price per share shall not be less than
          eighty-five percent (85%) of the Fair Market Value per share of Common
          Stock on the option grant date.

                 (ii) If the person to whom the option is granted is a 10%
          Shareholder, then the exercise price per share shall not be less than
          one hundred ten percent (110%) of the Fair Market Value per share of
          Common Stock on the option grant date.

               2.  The exercise price shall become immediately due upon exercise
of the option and shall, subject to the provisions of Section I of Article Three
and the documents evidencing the option, be payable in cash or check made
payable to the Corporation. Should the Common Stock be registered under Section
12(g) of the 1934 Act at the time the option is exercised, then the exercise
price may also be paid as follows:

                  (i) in shares of Common Stock held for the requisite period
          necessary to avoid a charge to the Corporation's earnings for
          financial reporting purposes and valued at Fair Market Value on the
          Exercise Date, or

                                       3
<PAGE>

                  (ii) to the extent the option is exercised for vested shares,
          through a special sale and remittance procedure pursuant to which the
          Optionee shall concurrently provide irrevocable written instructions
          (a) to a Corporation-designated brokerage firm to effect the immediate
          sale of the purchased shares and remit to the Corporation, out of the
          sale proceeds available on the settlement date, sufficient funds to
          cover the aggregate exercise price payable for the purchased shares
          plus all applicable Federal, state and local income and employment
          taxes required to be withheld by the Corporation by reason of such
          exercise and (b) to the Corporation to deliver the certificates for
          the purchased shares directly to such brokerage firm in order to
          complete the sale.

          Except to the extent such sale and remittance procedure is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.

          B.  Exercise and Term of Options. Each option shall be exercisable at
              ----------------------------
such time or times, during such period and for such number of shares as shall be
determined by the Plan Administrator and set forth in the documents evidencing
the option grant. However, no option shall have a term in excess of ten (10)
years measured from the option grant date.

          C.  Effect of Termination of Service. The following provisions shall
              --------------------------------
govern the exercise of any options held by the Optionee at the time of cessation
of Service or death:

                 (i) Should the Optionee cease to remain in Service for any
       reason other than Disability or death, then the Optionee shall have a
       period of three (3) months following the date of such cessation of
       Service during which to exercise each outstanding option held by such
       Optionee.

                 (ii) Should such Service terminate by reason of Disability,
       then the Optionee shall have a period of twelve (12) months following the
       date of such cessation of Service during which to exercise each
       outstanding option held by such Optionee.

                 (iii) Should the Optionee die while holding one or more
       outstanding options, then the personal representative of the Optionee's
       estate or the person or persons to whom the option is transferred
       pursuant to the Optionee's will or in accordance with the laws of descent
       and distribution shall have a period of twelve (12) months following the
       date of the Optionee's death during which to exercise each such option.

                 (iv) Under no circumstances, however, shall any such option be
       exercisable after the specified expiration of the option term.

                 (v) During the applicable post-Service exercise period, the
       option may not be exercised in the aggregate for more than the number of
       vested shares for which the option is exercisable on the date of the
       Optionee's

                                       4
<PAGE>

       cessation of Service. Upon the expiration of the applicable exercise
       period or (if earlier) upon the expiration of the option term, the option
       shall terminate and cease to be outstanding for any vested shares for
       which the option has not been exercised. However, the option shall,
       immediately upon the Optionee's cessation of Service, terminate and cease
       to be outstanding with respect to any and all option shares for which the
       option is not otherwise at the time exercisable or in which the Optionee
       is not otherwise at that time vested.

          D.  Shareholder Rights. The holder of an option shall have no
              ------------------
shareholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.

          E.  Unvested Shares. The Plan Administrator shall have the discretion
              ---------------
to grant options which are exercisable for unvested shares of Common Stock under
the Plan. Should the Optionee cease Service while holding such unvested shares,
the Corporation shall have the right to repurchase, at the exercise price paid
per share, all or (at the discretion of the Corporation and with the consent of
the Optionee) any of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Plan Administrator and set forth in the document evidencing such
repurchase right. The Plan Administrator may not impose a vesting schedule upon
any option grant or any shares of Common Stock subject to the option which is
more restrictive than twenty percent (20%) per year vesting, with the initial
vesting to occur not later than one (1) year after the option grant date.
However, this minimum vesting requirement shall not be applicable with respect
to any option granted to an officer, director or consultant of the Corporation
(or any Parent or Subsidiary).

          F.  First Refusal Rights. Until such time as the Common Stock is first
              --------------------

registered under Section 12(g) of the 1934 Act, the Corporation shall have the
right of first refusal with respect to any proposed disposition by the Optionee
(or any successor in interest) of any shares of Common Stock issued under the
Plan. Such right of first refusal shall be exercisable in accordance with the
terms established by the Plan Administrator and set forth in the document
evidencing such right.

          G.  Limited Transferability of Options. During the lifetime of the
              ----------------------------------
Optionee, the option shall be exercisable only by the Optionee and shall not be
assignable or transferable other than by will or by the laws of descent and
distribution following the Optionee's death.

          H.  Withholding. The Corporation's obligation to deliver shares of
              -----------
Common Stock upon the exercise of any options granted under the Plan shall be
subject to the satisfaction of all applicable Federal, state and local income
and employment tax withholding requirements.

     II.  INCENTIVE OPTIONS

          The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of the Plan shall be applicable to

                                       5
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Incentive Options. Options which are specifically designated as Non-Statutory
Options shall not be subject to the terms specified in this Section II.
              ---

          A.  Eligibility. Incentive Options may only be granted to Employees.
              -----------

          B.  Exercise Price. The exercise price per share shall not be less
              --------------
than one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the option grant date.

          C.  Dollar Limitation. The aggregate Fair Market Value of the shares
              -----------------
of Common Stock (determined as of the respective date or dates of grant) for
which one or more options granted to any Employee under the Plan (or any other
option plan of the Corporation or any Parent or Subsidiary) may for the first
time become exercisable as Incentive Options during any one (1) calendar year
shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such options which become exercisable
for the first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.

          D.  10% Shareholder. If any Employee to whom an Incentive Option is
              ---------------
granted is a 10% Shareholder, then the option term shall not exceed five (5)
years measured from the option grant date.

     III. CORPORATE TRANSACTION

          A.  The shares subject to each option outstanding under the Plan at
the time of a Corporate Transaction shall automatically vest in full so that
each such option shall, immediately prior to the effective date of the Corporate
Transaction, become fully exercisable for all of the shares of Common Stock at
the time subject to that option and may be exercised for any or all of those
shares as fully-vested shares of Common Stock. However, the shares subject to an
outstanding option shall not vest on such an accelerated basis if and to the
extent: (i) such option is, in connection with the Corporate Transaction, either
to be assumed by the successor corporation (or parent thereof) or to be replaced
with a comparable option to purchase shares of the capital stock of the
successor corporation (or parent thereof), (ii) such option is to be replaced
with a cash incentive program of the successor corporation which preserves the
spread existing on the unvested option shares at the time of the Corporate
Transaction and provides for subsequent payout in accordance with the same
vesting schedule applicable to those unvested option shares or (iii) the
acceleration of such option is subject to other limitations imposed by the Plan
Administrator at the time of the option grant. The determination of option
comparability under clause (i) above shall be made by the Plan Administrator,
and its determination shall be final, binding and conclusive.

                                       6
<PAGE>

          B.  All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Corporate Transaction,
except to the extent: (i) those repurchase rights are to be assigned to the
successor corporation (or parent thereof) in connection with such Corporate
Transaction or (ii) such accelerated vesting is precluded by other limitations
imposed by the Plan Administrator at the time the repurchase right is issued.

          C.  Immediately following the consummation of the Corporate
Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).

          D.  Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan following the consummation of
such Corporate Transaction and (ii) the exercise price payable per share under
each outstanding option, provided the aggregate exercise price payable for such
                         --------
securities shall remain the same.

          E.  The Plan Administrator shall have the discretion, exercisable
either at the time the option is granted or at any time while the option remains
outstanding, to provide for the automatic acceleration, in whole or in part, of
one or more outstanding options (and the automatic termination, in whole or in
part, of one or more outstanding repurchase rights, with the immediate vesting
of the shares of Common Stock subject to those terminated rights) upon the
occurrence of a Corporate Transaction, whether or not those options are to be
assumed or replaced (or those repurchase rights are to be assigned) in the
Corporate Transaction.

          F.  The Plan Administrator shall have full power and authority to
structure option grants so that the shares subject to those grants will
automatically vest in full in the event the Optionee's Service subsequently
terminates by reason of an Involuntary Termination within a designated period
(not to exceed eighteen (18) months) following the effective date of any
Corporate Transaction in which those options are assumed or replaced and the
vesting of the underlying option shares does not otherwise accelerate. Such
options shall remain exercisable for fully-vested shares until the earlier of
                                                                   -------
(i) the expiration of the option term or (ii) the expiration of the one (1)-year
period measured from the effective date of the Involuntary Termination. In
addition, the Plan Administrator may structure one or more of the Corporation's
outstanding repurchase rights so that those rights shall immediately terminate
upon an Involuntary Termination of the Optionee's Service within a designated
period (not to exceed eighteen (18) months) following the effective date of any
Corporate Transaction in which those repurchase rights are assigned and the
vesting of the shares subject to those rights does not otherwise accelerate. The
shares subject to the terminated repurchase rights shall accordingly vest in
full upon such Involuntary Termination.

                                       7
<PAGE>

          G. The grant of options under the Plan shall in no way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.

     IV.  CANCELLATION AND REGRANT OF OPTIONS

          The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Plan and to grant in
substitution therefor new options covering the same or different number of
shares of Common Stock but with an exercise price per share based on the Fair
Market Value per share of Common Stock on the new option grant date.

                                       8
<PAGE>

                                 ARTICLE THREE

                                 MISCELLANEOUS
                                 -------------

     I.   FINANCING

          The Plan Administrator may permit any Optionee to pay the option
exercise price by delivering a promissory note payable in one or more
installments. The terms of any such promissory note (including the interest rate
and the terms of repayment) shall be established by the Plan Administrator in
its sole discretion. Promissory notes may be authorized with or without security
or collateral. However, any promissory notes delivered by a consultant must be
secured by property other than the purchased shares of Common Stock. In all
events, the maximum credit available to each Optionee may not exceed the sum of
                                                                         ---
(i) the aggregate option exercise price payable for the purchased shares plus
(ii) any Federal, state and local income and employment tax liability incurred
by the Optionee in connection with the option exercise.

     II.  ADDITIONAL AUTHORITY

          The Plan Administrator shall have the discretion, exercisable either
at the time an option is granted or at any time while the option remains
outstanding, to:

                  (i) extend the period of time for which the option is to
          remain exercisable following the Optionee's cessation of Service from
          the period otherwise in effect for that option to such greater period
          of time as the Plan Administrator shall deem appropriate, but in no
          event beyond the expiration of the option term, and/or

                 (ii) permit the option to be exercised, during the applicable
          post-Service exercise period, not only with respect to the number of
          vested shares of Common Stock for which such option is exercisable at
          the time of the Optionee's cessation of Service but also with respect
          to one or more additional installments in which the Optionee would
          have vested under the option had the Optionee continued in Service.

     III. EFFECTIVE DATE AND TERM OF THE PLAN

                                       9
<PAGE>

          A.  The Plan shall become effective when adopted by the Board, but no
option granted under the Plan may be exercised until the Plan is approved by the
Corporation's shareholders. If such shareholder approval is not obtained within
twelve (12) months after the date of the Board's adoption of the Plan, then all
options previously granted under the Plan shall terminate and cease to be
outstanding, and no further options shall be granted. Subject to such
limitation, the Plan Administrator may grant options under the Plan at any time
after the effective date of the Plan and before the date fixed herein for
termination of the Plan.

          B.  The Plan was amended and restated by the Board on August 27, 1996
in order to increase the maximum number of shares of Common Stock authorized for
issuance over the term of the Plan by an additional 280,797 shares from
1,224,200 to 1,504,997 shares. The Plan was amended and restated by the Board
again on September 25, 1996 in order to further increase the maximum number of
shares of Common Stock authorized for issuance over the term of the Plan by an
additional 109,640 shares from 1,504,997 to 1,559,817 shares. Both of these 1996
share increases were subsequently approved by the shareholders. The Board again
amended and restated the Plan on October 27, 1997 to increase the maximum number
of shares of Common Stock authorized for issuance over the term of the Plan by
an additional 300,000 shares from 1,559,817 to 1,859,817 shares. This 300,000
share increase was approved by the shareholders on December 12, 1997. The board
again amended and restated the Plan on December 1999 to increase the maximum
number of shares of common stock authorized for issuance over the term of the
Plan by an additional 850,000 shares from 4,903,429 to 5,753,429 shares. This
850,000 shares increase was approved by the shareholders on December 2, 1999.
The Board again amended and restated the Plan on December 31, 1999 to increase
the maximum number of shares of common stock authorized for issuance over the
term of the Plan by 1,250,000 shares from 5,753,429 shares to 7,003,429 shares.

          C.  The Plan shall terminate upon the earliest of (i) the expiration
                                                --------
of the ten (10)-year period measured from the Plan Effective Date, (ii) the date
on which all shares available for issuance under the Plan shall have been issued
or (iii) the termination of all outstanding options in connection with a
Corporate Transaction. Upon any such Plan termination, all options and unvested
stock issuances outstanding under the Plan shall continue to have full force and
effect in accordance with the provisions of the documents evidencing those
options or issuances.

     IV.  AMENDMENT OF THE PLAN

          A.  The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects. However, no such amendment or
modification shall, without the consent of the Optionees, adversely affect their
rights and obligations under their outstanding options. In addition, the Board
shall not, without the approval of the Corporation's shareholders, (i) increase
the maximum number of shares issuable under the Plan, except for permissible
adjustments in the event of certain changes in the Corporation's capitalization
or, (ii) materially modify the eligibility requirements for Plan participation.

          B.  Options may be granted under the Plan to purchase shares of Common
Stock in excess of the number of shares then available for issuance under the
Plan, provided any such options actually granted may not be exercised until
there is obtained shareholder approval of an amendment sufficiently increasing
the number of shares of Common Stock available for issuance under the Plan. If
such shareholder approval is not obtained within twelve (12) months after the
date the excess grants are first made, then any options granted on the basis of
such excess shares shall terminate and cease to be outstanding.

                                       10
<PAGE>

      V.  USE OF PROCEEDS

          Any cash proceeds received by the Corporation from the sale of shares
of Common Stock under the Plan shall be used for general corporate purposes.

     VI.  REGULATORY APPROVALS

          The implementation of the Plan, the granting of any option hereunder
and the issuance of any shares of Common Stock upon the exercise of any option
shall be subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the
options granted under it and the shares of Common Stock issued pursuant to it.

     VII. NO EMPLOYMENT OR SERVICE RIGHTS

          Nothing in the Plan shall confer upon the Optionee any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining Optionee) or of the Optionee, which rights are
hereby expressly reserved by each, to terminate the Optionee's Service at any
time for any reason, with or without cause.

    VIII. FINANCIAL REPORTS

          The Corporation shall deliver a balance sheet and an income statement
at least annually to each individual holding an outstanding option under the
Plan, unless such individual is a key Employee whose duties in connection with
the Corporation (or any Parent or Subsidiary) assure such individual access to
equivalent information.

                                       11
<PAGE>

                                    APPENDIX
                                    --------

              The following definitions shall be in effect under the Plan:

          A.  Board shall mean the Corporation's Board of Directors.
              -----

          B.  Code shall mean the Internal Revenue Code of 1986, as amended.
              ----

          C.  Committee shall mean a committee of two (2) or more Board members
              ---------
appointed by the Board to exercise one or more administrative functions under
the Plan.

          D.  Common Stock shall mean the Corporation's common stock.
              ------------

          E.  Corporate Transaction shall mean either of the following
              ---------------------
shareholder-approved transactions to which the Corporation is a party:

                  (i) a merger or consolidation in which securities possessing
          more than filly percent (50%) of the total combined voting power of
          the Corporation's outstanding securities are transferred to a person
          or persons different from the persons holding those securities
          immediately prior to such transaction; or

                  (ii) the sale, transfer or other disposition of all or
          substantially all of the Corporation's assets in complete liquidation
          or dissolution of the Corporation.

          F.  Corporation shall mean Neuron Data, Inc., a California
              -----------
corporation.

          G.  Disability shall mean the inability of an individual to engage in
              ----------
any substantial gainful activity by reason of any medically determinable
physical or mental impairment and shall be determined by the Plan Administrator
on the basis of such medical evidence as the Plan Administrator deems warranted
under the circumstances.

          H.  Employee shall mean an individual who is in the employ of the
              --------
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.

          I.  Exercise Date shall mean the date on which the Corporation shall
              -------------
have received written notice of the option exercise.

                                       12
<PAGE>

          J.  Fair Market Value per share of Common Stock on any relevant date
              -----------------
shall be determined in accordance with the following provisions:

                  (i) If the Common Stock is at the time traded on the Nasdaq
          National Market, then the Fair Market Value shall be the closing
          selling price per share of Common Stock on the date in question, as
          such price is reported by the National Association of Securities
          Dealers on the Nasdaq National Market or any successor system. If
          there is no closing selling price for the Common Stock on the date in
          question, then the Fair Market Value shall be the closing selling
          price on the last preceding date for which such quotation exists.

                  (ii) If the Common Stock is at the time listed on any Stock
          Exchange, then the Fair Market Value shall be the closing selling
          price per share of Common Stock on the date in question on the Stock
          Exchange determined by the Plan Administrator to be the primary market
          for the Common Stock, as such price is officially quoted in the
          composite tape of transactions on such exchange. If there is no
          closing selling price for the Common Stock on the date in question,
          then the Fair Market Value shall be the closing selling price on the
          last preceding date for which such quotation exists.

                  (iii)  If the Common Stock is at the time neither listed on
          any Stock Exchange nor traded on the Nasdaq National Market, then the
          Fair Market Value shall be determined by the Plan Administrator after
          taking into account such factors as the Plan Administrator shall deem
          appropriate.

          K.  Incentive Option shall mean an option which satisfies the
              ----------------
requirements of Code Section 422.

          L.  Involuntary Termination shall mean the termination of the
              -----------------------
Optionee's Service by reason of:

                   (i) the Optionee's involuntary dismissal or discharge by the
          Corporation for reasons other than Misconduct, or

                  (ii) the Optionee's voluntary resignation following (A) a
          change in his or her position with the Corporation which materially
          reduces his or her level of responsibility, (B) a reduction in the
          Optionee's level of compensation (including base salary, fringe
          benefits and participation in corporate-performance based bonus or
          incentive programs) by more than fifteen percent (15%) or (C) a
          relocation of the Optionee's place of employment by more than fifty
          (50) miles, provided and only if such change, reduction or relocation
          is effected by the Corporation without the Optionee's consent.

          M.  Misconduct shall mean the commission of any act of fraud,
              ----------
embezzlement or dishonesty by the Optionee, any unauthorized use or disclosure
by such person of confidential

                                       13
<PAGE>

information or trade secrets of the Corporation (or any Parent or Subsidiary),
or any other intentional misconduct by such person adversely affecting the
business or affairs of the Corporation (or any Parent or Subsidiary) in a
material manner. The foregoing definition shall not be deemed to be inclusive of
all the acts or omissions which the Corporation (or any Parent or Subsidiary)
may consider as grounds for the dismissal or discharge of any Optionee or other
person in the Service of the Corporation (or any Parent or Subsidiary).

          N.  1934 Act shall mean the Securities Exchange Act of 1934, as
              --------
amended.

          O.  Non-Statutory Option shall mean an option not intended to satisfy
              --------------------
the requirements of Code Section 422.

          P.  Optionee shall mean any person to whom an option is granted under
              --------
the Plan.

          Q.  Parent shall mean any corporation (other than the Corporation) in
              ------
an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.

          R.  Plan shall mean the Corporation's 1996 Stock Option Plan, as set
              ----
forth in this document.

          S.  Plan Administrator shall mean either the Board or the Committee
              ------------------
acting in its administrative capacity under the Plan.

          T.  Plan Effective Date shall mean the date the Plan is adopted by the
              -------------------
Board.

          U.  Service shall mean the provision of services to the Corporation
              -------
(or any Parent or Subsidiary) by a person in the capacity of an Employee, a non-
employee member of the board of directors or a consultant, except to the extent
otherwise specifically provided in the documents evidencing the option grant.

          V.  Stock Exchange shall mean either the American Stock Exchange or
              --------------
the New York Stock Exchange.

          W.   Subsidiary shall mean any corporation (other than the
               ----------
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other  corporations in such chain.

          X.  10% Shareholder shall mean the owner of stock (as determined under
              ---------------
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).

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