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                                                                    EXHIBIT 10.3

                               2BRIDGE SOFTWARE
                            1997 STOCK OPTION PLAN

1.  Adoption and Purpose of the Plan.  This stock option plan, to be known as
    --------------------------------
the "2Bridge Software 1997 Stock Option Plan" (but referred to herein as the
"Plan") has been adopted by the board of directors (the "Board") of 2Bridge
Software, a California corporation (the "Company"), and is subject to the
approval of its shareholders pursuant to section 8 below.  The purpose of this
Plan is to advance the interests of the Company and its shareholders by enabling
the Company to attract and retain qualified directors, officers, employees,
independent contractors, consultants and advisers by providing them with an
opportunity for investment in the Company.  The options that may be granted
hereunder ("Options") represent the right by the grantee thereof (each,
including any permitted transferee pursuant to section 7.3 below, an "Optionee")
to acquire shares of the Company's common stock ("Shares" which if acquired
pursuant to the exercise of an Option will be referred to as "Option Stock")
subject to the terms and conditions of this Plan and a written agreement between
the Company and the Optionee to evidence each such Option (an "Option
Agreement").

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

3.  Eligibility.  The Company may grant Options under this Plan only to (i)
    -----------
persons who, at the time of such grant, are directors, officers and/or employees
of the Company and/or any of its Subsidiaries, and (ii) persons who, and
entities which, at the time of such grant, are independent contractors,
consultants or advisers of the Company and/or any of its Subsidiaries ("Eligible
Participants"); provided that no Option may be granted to any person after he or
she ceases, or to any entity after it ceases, for any reason, to be an Eligible
Participant (a "Loss of Eligibility Status").  Subject to the provisions of
section 4 of this Plan, there is no limitation on the number of Options that may
be granted to an Eligible Participant.

4.  Option Pool: Shares Reserved for Option.  In no event will the Company
    ---------------------------------------
issue, in the aggregate, more than three million four hundred eighty-five
thousand (3,485,000) Shares (the "Option Pool") pursuant to the exercise of all
Options granted under this Plan, exclusive of those Shares of Option Stock that
may be reacquired by the Company by repurchase or otherwise; provided that in
order to comply with the requirements of Section 260.140.45 of Title 10 of the
California Code of Regulations (the "30% Rule"), at no time will the total
number of Shares that either (x) may be acquired pursuant to the exercise of all
outstanding Options granted hereunder or under any other outstanding options or
warrants issued by the Company (exclusive of certain excluded rights and
warrants described in the 30% Rule), or (y) are provided for under any stock
bonus or similar plan of the Company, in the aggregate exceed 30% of the total
number of then issued and outstanding Shares of the Company (including shares of
convertible preferred stock or convertible senior common stock on an as
converted basis).  At all times while Options granted under this Plan are
outstanding, the Company will reserve for issuance for the purposes hereof a
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sufficient number of authorized and unissued Shares to fully satisfy the
Company's obligations under all such outstanding Options.

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

   (a)  to select and approve the Eligible Participants to whom Options will be
granted from time to time hereunder;

   (b)  to determine the Fair Market Value of the Shares as of the Grant Date
for any Option that is granted hereunder;

   (c)  with respect to each Option it decides to grant, to determine the terms
and conditions of that Option, to be set forth in the Option Agreement
evidencing that Option (the form of which also being subject to approval
by the Administrator), including at a minimum the following:

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

        (ii) whether that Option will be designated an "incentive stock option"
as defined in Section 422 of the Code (an "ISO"), in which case the Option will
be subject to all of the special provisions set forth in section 6 below;

        (iii) the per share purchase price to be paid to the Company by the
Optionee to acquire the Option Stock issuable upon exercise of the Option (the
"Option Price"); provided that the Option Price will not be less than eighty-
five percent (85%) of the Fair Market Value of the Shares as of the Grant Date,
unless the Optionee is a 10% shareholder, in which case the Option Price will
not be less than one hundred ten percent (110%) of such Fair Market Value;

        (iv) the maximum period or term during which that Option will be
exercisable (the "Option Term") and/or the last date on which that Option may be
exercised (the "Expiration Date"), provided that in no event may the Expiration
Date be later than, or the Option Term be longer than, ten (10) years from the
Grant Date.

        (v) the maximum period following any Loss of Eligibility Status with
respect to the Original Holder, whether resulting from his or her death,
disability or any other reason, during which period (the "Grace Period") the
Option will be exercisable, subject to the earlier end of the Option Term or the
Expiration Date, provided that if the Administrator fails to

                                      -2-
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specify such Grace Periods, but subject to the provisions of section 6(e) below
with respect to ISOs, the following Grace Periods will apply (and in no event
may the Administrator select Grace Periods that are shorter than the following):
(A) sixty (60) days after such Loss of Eligibility Status, other than by reason
of a Just Cause Termination or the Original Holder's death or disability, (B)
one hundred eighty (180) days after such Loss of Eligibility Status by reason of
the Original Holder's death or disability, and (C) thirty (30) days after such
Loss of Eligibility Status by reason of a Just Cause Termination of the Original
Holder;

        (vi) the form or forms of legal consideration in addition to cash
(including without limitation Shares and unexercised Vested Options, and, for an
Optionee who is an employee and/or director only, unsecured promissory notes)
that the Company will accept as payment of all or a portion of the Option Price
and/or Tax Withholding Liability to be paid by the Optionee upon the exercise of
an Option granted hereunder, and the fair market value of such non-cash
consideration;

        (vii) the conditions (e.g., the passage of time or the occurrence of
events), if any, that must be satisfied prior to the vesting of the right to
exercise all, or specified portions of an Option (such portions being described
as a percentage of the total number of Shares of Option Stock that may be
acquired by the Optionee pursuant to that Option; the vested portion being
referred to as a "Vested Option" and the unvested portion being referred to as
an "Unvested Option"); provided that no such conditions (except the Loss of
Eligibility Status of the Original Holder, after which no Unvested Option will
become a Vested Option) may be imposed which prevents an Optionee from
purchasing at least twenty percent (20%) of the Shares of Option Stock initially
subject to the Option as of the first anniversary of the Grant Date, and as of
each anniversary thereafter, such that by the fifth anniversary of the Grant
Date (assuming no such Loss of Eligibility Status) the entire Option would be
deemed a Vested Option; provided further that if the Option Agreement does not
otherwise specify, the Option will initially be deemed an entirely Unvested
Option but portions of the Option will become a Vested Option on the following
schedule: (A) twenty-five percent (25.0%) will become a Vested Option as of the
first anniversary of the Grant Date; and (B) two and one-twelfth percent
(2.083%) will become a Vested Option as of the first day of each month
thereafter, such that the Option will be a fully Vested Option as of the fourth
anniversary of the Grant Date, subject to the condition that the Original Holder
does not suffer a Loss of Eligibility Status prior to each such vesting date;
and

        (viii) in addition, or as an alternative, to imposing vesting conditions
on the right to exercise an Option as provided in section 5(c)(vii) above,
whether any portion of the Shares of Option Stock acquired by an Optionee upon
exercise of an Option will be subject to repurchase by the Company or its
assigns pursuant to section 7.4(c) below at the Option Price paid for such
Shares or at some other price that may be less than the Fair Market Value of
such Shares (such Shares, if subject to repurchase at less than Fair Market
Value, being referred to as "Unvested Shares") following a Loss of Eligibility
Status or other designated event, and the conditions (e.g., the passage of time
or the occurrence of events), if any, that must be satisfied for such Shares to
be no longer subject to such rights of repurchase at less than Fair Market Value
(such Shares being referred to as "Vested Shares"); provided that no such
conditions (except the Loss of Eligibility Status of the Original Holder, after
which no Unvested Shares will become

                                      -3-
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Vested Shares) may be imposed which prevent Unvested Shares from becoming Vested
Shares at the rate of at least twenty percent (20%) per year following the Grant
Date, such that by the fifth anniversary of the Grant Date (assuming no such
Loss of Eligibility Status) all of the Shares would be deemed Vested Shares;
provided further that no Shares acquired upon the exercise of an Option will be
deemed Unvested Shares unless specified in the Option Agreement; and

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

6.  Special Provisions Relating to ISOs.  Notwithstanding anything else in this
    -----------------------------------
Plan to the contrary, the following provisions will apply to each Option granted
hereunder that is designated as an ISO pursuant to section 5(c)(ii) above and
that is intended to qualify for the treatment available pursuant to Section 422
of the Code:

         (a) such ISO may be granted only to Eligible Participants who, as of
the Grant Date, are employees of the Company and/or its Subsidiaries (as
determined by Section 3401(c) of the Code);

         (b) to the extent that the Fair Market Value of Option Stock
(determined as of the Grant Date) with respect to which all ISOs are exercisable
for the first time by any individual during any calendar year (pursuant to this
Plan and all other plans of the Company and/or its Subsidiaries) exceeds
$100,000, the Option will not be treated as an ISO;

         (c) the Option Price of an ISO will not be less than one hundred
percent (100%) of the Fair Market Value of the Shares as of the Grant Date,
except as set forth in section 6(d) below;

         (d) in the case of an ISO granted to an Optionee who is a 10%
shareholder: (i) the Option Price will not be less than one hundred ten percent
(110%) of the Fair Market Value of the Shares as of the Grant Date; and (ii) the
Option Term and/or the Expiration Date may not be more than five (5) years from
the Grant Date; and

         (e) notwithstanding any Grace Period selected by the Administrator
pursuant to section 5(c)(v) above, the tax treatment available pursuant to
Section 422 of the Code upon the exercise of an ISO will not be available to an
Optionee who exercises any ISO more than (i) three (3) months following the
Original Holder's Loss of Eligibility Status other than by reason of his or her
death or permanent and total disability within the meaning of Section 22(e)(3)
of the Code, or (ii) twelve (12) months following such Original Holder's Loss of
Eligibility Status by reason or his or her permanent and total disability,
whichever case may be applicable.

7.  Additional Terms and Conditions of Stock Option Agreements.  No Option will
    ----------------------------------------------------------
be deemed granted hereunder merely upon the authorization thereof by the
Administrator, but will be deemed granted hereunder only upon the execution of
an Option Agreement evidencing the same by both the Optionee and a duly
authorized officer of the Company.  In addition to the terms and

                                      -4-
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conditions thereof to be determined by the Administrator pursuant to section
5(c) above, unless otherwise stated therein, each Option Agreement will be
deemed to include the following terms and conditions unless expressly waived by
the Company in the Option Agreement:

    7.1 Exercise of the Option; Issuance of Share Certificate. That portion of
        -----------------------------------------------------
the Option that is a Vested Option may be exercised by giving written notice
thereof to the Company, on such form as may be specified by the Administrator,
but in any event stating: the Optionee's intention to exercise the Option; the
date of exercise; the number of full Shares of Option Stock to be purchased
(which number will be no less than one hundred (100) Shares, without regard to
adjustments to the number of Shares subject to the Option pursuant to section 9
below, or, if less, all of the remaining Shares subject to the Option); the
amount and form of payment of the Option Price; and will contain such assurances
of the Optionee's investment intent as the Company may require to ensure that
the transaction complies in all respects with the requirements of the 1933 Act
and other applicable securities laws. The notice of exercise will be signed by
the person or persons exercising the Option. In the event that the Option is
being exercised by the representative of Optionee, the notice will be
accompanied by proof satisfactory to the Company of the representative's right
to exercise the Option. The notice of exercise will be accompanied by full
payment of the Option Price for the number of Shares of Option Stock to be
purchased, in United States dollars, in cash, by check made payable to the
Company, or in the form of such other legal consideration for the purchase of
Shares as may be approved by the Administrator, in its discretion pursuant to
section 5(c)(vi) above. In addition, to the extent required by applicable
federal, state, local or foreign law, and as a condition to the Company's
obligation to issue any Shares upon the exercise of the Option in full or in
part, Optionee will make arrangements satisfactory to the Company for the
payment of any applicable Tax Withholding Liability that may arise by reason of
or in connection with such exercise. Such arrangements may include, in the
Company's sole discretion, that the Optionee tender to the Company the amount of
such Tax Withholding Liability, in cash, by check made payable to the Company,
or in the form of such other payment as may be approved by the Administrator, in
its discretion pursuant to section 5(c)(vi) above. After receiving a proper
notice of exercise and payment of the applicable Option Price and withholding
taxes, the Company will cause to be issued a certificate or certificates for the
Shares of Option Stock as to which the Option has been exercised, registered in
the name of the person rightfully exercising the Option and, subject to sections
7.4(e) and 7.7 below, the Company will cause such certificate or certificates to
be delivered to such person.

     7.2 Compliance with Law. Notwithstanding any other provision of this Plan,
         -------------------
Options may be granted pursuant to this Plan, and Option Stock may be issued
pursuant to the exercise thereof by an Optionee, only after and on the condition
that there has been compliance with all applicable federal and state securities
laws. The Company will not be required to list, register or qualify any Shares
of Option Stock upon any securities exchange, under any state or federal law, or
with the Securities and Exchange Commission or any State agency, or secure the
consent or approval of any governmental regulatory authority, except that if at
any time the Board determines, in its discretion, that such listing,
registration or qualification of the Shares of Option Stock, or any such consent
or approval, is necessary or desirable as a condition of or in connection with
the exercise of an Option and the purchase of Shares of Option Stock thereunder,
that Option may not be exercised, in whole or in part, unless and until such
listing, registration, qualification,

                                      -5-
<PAGE>

consent or approval is effected or obtained free of any conditions that are not
acceptable to the Board, in its discretion. However, the Company will seek to
register or qualify with, or as may be provided by applicable local law, file
for and secure an exemption from such registration or qualification requirements
from, the applicable securities administrator and other officials of each
jurisdiction in which an Eligible Participant would be granted an Option
hereunder prior to such grant.

     7.3  Restrictions on Transfer.
          ------------------------

          (a) Options Nontransferable. No Option will be transferable by the
              -----------------------
Original Holder otherwise than by will or the laws of descent and distribution.
During the lifetime of the Original Holder, the Option will be exercisable only
by the Original Holder.

          (b) Prohibited Transfers. In addition to any other limitation on
              --------------------
Transfer created by applicable securities laws, prior to the Initial Public
Offering, no Holder of any Shares of Option Stock, may Transfer such Shares, or
any interest therein, except pursuant to a Permitted Transfer or as otherwise
expressly provided in this section 7, and in any event only after compliance
with the specific limitations and conditions set forth in this section 7 and
with all applicable securities laws. All transfers of Option Stock not complying
with the specific limitations and conditions set forth in this section 7 are
expressly prohibited. Any prohibited Transfer is void and of no effect, and no
purported transferee in connection therewith will be recognized as a Holder of
Option Stock for any purpose whatsoever. Should such a Transfer purport to
occur, the Company may refuse to carry out the Transfer on its books, attempt to
set aside the Transfer, enforce any undertakings or rights under this section 7,
or exercise any other legal or equitable remedy. For purposes of this section 7,
the term "Option Stock" includes all Shares issued by the Company to a Holder
(or his, her or its predecessor) by reason of such holdings, including any
securities which may be acquired as a result of a stock split, stock dividend,
and other distributions of Shares in the Company made upon, or in exchange for,
other securities of the Company.

          (c) Permitted Transfers. The Company's rights of first refusal and
              -------------------
repurchase set forth in section 7.4(a) and section 7.4(b) below will not apply
in the case of a Permitted Transfer. For such purposes, a "Permitted Transfer"
means any of the following: (i) a Transfer by will or under the laws of descent
and distribution; or (ii) a Transfer by a Holder of Option Stock to his or her
ancestors, descendants or spouse (other than pursuant to a decree of divorce,
dissolution or separate maintenance, a property settlement, or a separation
agreement or any similar agreement or arrangement with a spouse, except for bona
fide estate planning purposes), or to a trust, partnership, limited liability
company, custodianship or other fiduciary account for the benefit of the Holder
and/or such ancestors, descendants or spouse, including any Transfer in the form
of a distribution from any such trust, partnership, limited liability company,
custodianship or other fiduciary account to any of the foregoing permitted
beneficial owners or beneficiaries thereof.

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<PAGE>

         (d) Conditions to Transfer. It will be a condition to any Transfer of
             ----------------------
any Shares of Option Stock, in the case of either a Permitted Transfer or the
Company's failure or refusal to exercise its rights of first refusal under
section 7.4 below, that:

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

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

         (e) Market Standoff. If in connection with any public offering of
             ---------------
securities of the Company (or any Successor Entity), the underwriter or
underwriters managing such offering so requests, then each Optionee and each
Holder of Shares of Option Stock will agree to not sell or otherwise Transfer
any such Shares (other than Shares included in such underwriting) without the
prior written consent of such underwriter, for such period of time as may be
requested by the underwriter (not to exceed 210 days) commencing on the
effective date of the registration statement filed with the Securities and
Exchange Commission in connection with such offering.

     7.4  Company Rights of Repurchase and First Refusal. The Company win have
          ----------------------------------------------
the following rights of repurchase and first refusal with respect to Shares of
Option Stock:

          (a) Company's Right of First Refusal. If any Holder proposes to
              --------------------------------
Transfer any Shares of Option Stock to any transferee, other than in the case of
an Involuntary Transfer subject to section 7.4(b) below, the Company will have
an assignable right (but not an obligation), prior to an Initial Public
Offering, to purchase such Shares on the terms and conditions set out in this
section 7.4(a). Such right of first refusal will be exercisable only on an all-
or-nothing basis as to any particular Transfer of Shares, in the following
manner:

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

              (ii) The Company (or its assignee) may exercise its right of first
refusal under this section 7.4(a) by delivering to the Holder of such Shares a
notice of such

                                      -7-
<PAGE>

election, within thirty (30) days after the Company has received the Proposed
Transfer Notice, specifying a closing date that is no more than sixty (60) days
after receipt of the Proposed Transfer Notice (or such later date as the
transferee may have offered or on which the Transfer is otherwise scheduled to
occur).

              (iii) At such closing, to be held at the Company's principal
executive offices, the Company (or its assignee) will pay the Holder of the
Shares, in cash, the purchase price equal to the Offered Price (or, in the case
of a Donative Transfer of Shares of Option Stock, the Fair Market Value
thereof), subject to an appropriate adjustment to take into account any deferred
payment terms that were included in the Offered Terms; provided that if the
Offered Price includes any non-cash consideration, the value thereof for
purposes of this section 7.4(a) will be determined in good faith by the Board,
subject to section 7.4(d) below.

              (iv) If the Company (including its assignees) fails or refuses to
exercise its rights under this section 7.4(a) with respect to any Shares that
are the subject of any Proposed Transfer Notice, then the Holder will have the
right to Transfer such Shares to the transferee named in such Notice at the
Offered Price and upon such Offered Terms as were set forth in such Notice;
provided that such Transfer must be completed within ninety (90) days after the
Company has received the Proposed Transfer Notice with respect to such Shares.

          (b) Following an Involuntary Transfer. Following any Involuntary
Transfer of Shares of Option Stock (the "Transferred Shares"), the Company will
have the assignable right (but not the obligation), prior to an Initial Public
Offering, to purchase from the transferee of the Transferred Shares
("Transferee") all or a portion of such Shares for a purchase price that is
equal to the Fair Market Value of those Shares as of the date of such
Involuntary Transfer. Such right will be exercisable in the following manner:

              (i) The Transferee promptly after such Involuntary Transfer will
provide to the Company a notice of Transfer (an "Involuntary Transfer Notice")
stating: the number of Transferred Shares; the names and addresses of the
transferor and the Transferee; and the manner, circumstances and date of such
Involuntary Transfer. If the Company subsequently requests additional
information concerning the proposed transferee, or the Involuntary Transfer, the
Transferee will attempt promptly to provide the requested information to the
Company.

              (ii) The Company (or its assignee) may exercise its purchase
rights under this section 7.4(b) at any time not more than ninety (90) days
after the Company has received the Involuntary Transfer Notice with respect to
the Transferred Shares. If the Company (or its assignee) elects to exercise such
purchase rights it will do so by delivering to the Transferee a notice of such
election, specifying the number of Transferred Shares to be purchased and a
closing date that is no more than sixty (60) days after the giving of such
notice.

              (iii) At such closing, to be held at the Company's principal
executive offices, the Company (or its assignee) will pay the Transferee the
purchase price specified in this section 7.4(b). Following a Loss of Eligibility
Status.

                                      -8-
<PAGE>

         (c) Following a Loss of Eligibility Status. Following any Loss of
             --------------------------------------
Eligibility Status by the Original Holder of an Option, the Company will have
the assignable right (but not the obligation) to purchase from the Holder of
Shares acquired pursuant to the exercise of the Option, all or a portion of such
Shares for a purchase price that (1) in the case of Unvested Shares pursuant to
section 5(c)(viii) above, is equal to the Option Price paid for such Shares, and
(2) in the case of Vested Shares, or Shares of Option Stock that were never
subject to Vesting pursuant to section 5(c)(viii) above, is equal to the greater
of (A) the Option Price per share paid upon the exercise of the Option pursuant
to which those Shares were issued, or (B) the Fair Market Value of those Shares
as of the date of such Loss of Eligibility Status. Such right will be
exercisable in the following manner:

             (i) The Company (or its assignee) may exercise its right of
repurchase under this section 7.4(c) at any time not more than ninety (90) days
after the effective date of the Loss of Eligibility Status of the Original
Holder of the Option (or if such Loss of Eligibility Status results from the
Original Holder's death or disability, a period of ninety (90) days after the
expiration of the Grace Period determined by the Administrator pursuant to
section 5(c)(v) above during which the Optionee would be able to exercise any
Vested Option), but in any event in the case of Vested Shares, prior to an
Initial Public Offering. If the Company (or its assignee) elects to exercise
such purchase rights it will do so by delivering to the Holder of such Shares a
notice of such election, specifying the number of Shares to be purchased and a
closing date that is within such ninety (90) day period.

             (ii) At such closing, to be held at the Company's principal
executive offices, the Company (or its assignee) will pay the Holder of the
Shares, the purchase price, as specified in this section 7.4(c), in cash, or by
cancellation of indebtedness to the Company, if any, incurred by the original
purchaser of the Option Stock to purchase the same, or both, at a closing to be
held at the Company's principal executive offices on the date specified in such
notice.

             (iii) Any assignment by the Company of its rights to purchase
Unvested Shares under this section 7.4(c) will be subject to the requirements of
Section 260.140.41(k) of Title 10 of the California Code of Regulations.

         (d) Resolution of Disputes. If there is a dispute concerning the fair
             ----------------------
market value of the consideration offered or accepted for the Shares of Option
Stock or the Fair Market Value of the Option Stock, in connection with the
exercise by the Company of its rights under this section 7.4, the dispute will
be resolved by the independent certified public accounting firm that audited or
prepared without audit the Company's last regular annual financial statement and
the determination of that firm will be binding on the parties in the absence of
fraud.

         (e) Escrow. For purposes of facilitating the enforcement of the
             ------
restrictions on Transfer set forth in this Plan or in any Option Agreement, the
Administrator may, at its discretion, require the Holder of Shares of Option
Stock to deliver the certificate(s) for such Shares with a stock power executed
by him or her and by his or her spouse (if required for Transfer), in blank, to
the Secretary of the Company or his or her designee, to hold said

                                      -9-
<PAGE>

certificate(s) and stock power(s) in escrow and to take all such actions and to
effectuate all such Transfers and/or releases as are in accordance with the
terms of this Plan. The certificates may be held in escrow so long as the Shares
of Option Stock whose ownership they evidence are subject to any right of
repurchase or of first refusal under this Plan or under an Option Agreement.
Each Optionee, by exercising an Option, thereby acknowledges that the Secretary
of the Company (or his or her designee) is so appointed as the escrow holder
with the foregoing authorities as a material inducement to the grant of an
Option under this Plan, that the appointment is coupled with an interest, and
that it accordingly will be irrevocable. The escrow holder will not be liable to
any party to an Option Agreement (or to any other party) for any actions or
omissions unless the escrow holder is grossly negligent relative thereto. The
escrow holder may rely upon any letter, notice or other document executed by any
signature purported to be genuine.

     7.5 Change of Control Transactions. Notwithstanding any other provision of
         ------------------------------
this Plan, in the event of a Change of Control Transaction (as defined herein):

         (a) with respect to all Options that have been granted hereunder and
that are outstanding as of the consummation of such Change of Control
Transaction, the Board, in its sole discretion, may determine that it is in the
best interests of the Company, and if so may take all appropriate action either
to:

             (i) cancel all such Options effective as of the consummation of the
Change of Control Transaction and, in connection with each Option, any portion
of which is a Vested Option, notify the Optionee of the proposed Change of
Control Transaction reasonably prior to its consummation so that the Optionee
will have an opportunity to exercise the Vested Option immediately prior to such
consummation; or

             (ii) require the Successor Entity in such Change of Control
Transaction to assume the outstanding Options or substitute therefor comparable
options of such Successor Entity (or of its parent or its Subsidiary); and

         (b) with respect to all Shares of Option Stock that have been issued
and that are outstanding as of the consummation of such Change of Control
Transaction, the Company will have the right (but not the obligation) to
repurchase all (but not less than all) of the Shares by paying the Holder
thereof cash, or cancelling any indebtedness of such Holder to the Company, or
both, at a closing to be held contemporaneously with the consummation of the
Change of Control Transaction, provided that the repurchase price for such
Shares (other than Unvested Shares pursuant to section 5(c)(viii) above)] will
be an amount per share that is equal to the Fair Market Value of the Shares
based on the Board's good faith estimate of the valuation of the Company implied
by the estimated fair market value of the total consideration to be paid in
connection with the Change of Control Transaction.

             (i) For purposes of this section 7.5: the term "Change of Control
Transaction" means a Business Combination in which less than sixty-six and two-
thirds percent (66.67%) of the outstanding voting securities of the Successor
Entity immediately following the consummation of the Business Combination
transaction are beneficially held by those persons and entities in the same
proportion as such persons and entities beneficially held the voting securities

                                      -10-
<PAGE>

of the Company immediately prior to such transaction; the term "Business
Combination" means a transaction or series of transactions consummated within
any period of ninety (90) days resulting in (A) the sale of all or substantially
all of the assets of the Company, (B) a merger or consolidation or other
reorganization in which the Company is not the surviving entity or becomes owned
entirely by another entity, or (C) the sale or other change of beneficial
ownership of at least thirty-three and one-third percent (33.33%) of the
outstanding voting securities of the Company.

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

     7.7 Stock Certificates; Legends. Certificates representing Shares of Option
         ---------------------------
Stock will bear all legends required by law and necessary or appropriate in the
Administrator's discretion to effectuate the provisions of this Plan and of the
applicable Option Agreement. The Company may place a "stop transfer" order
against Shares of Option Stock until full compliance with all restrictions and
conditions set forth in this Plan, in any applicable Option Agreement and in the
legends referred to in this section 7.7.

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

     7.9  Other Provisions.  Each Option Agreement may contain such other terms,
          ----------------
provisions and conditions, including restrictions on the Transfer of Shares of
Option Stock, and rights of the Company to repurchase such Shares, not
inconsistent with this Plan, as may be determined by the Administrator in its
sole discretion.

     7.10  Specific Performance.  Under those circumstances in which the Company
           --------------------
chooses to timely exercise its rights to repurchase Shares of Option Stock as
provided herein, the Company will be entitled to receive such Shares in specie
in order to have the same available for

                                      -11-
<PAGE>

future issuance without dilution of the holdings of other shareholders of the
Company. By accepting Shares of Option Stock, the Holder thereof therefore
acknowledges and agrees that money damages will be inadequate to compensate the
Company and its shareholders if such a repurchase is not completed as
contemplated hereunder and that the Company will, in such case, be entitled to a
decree of specific performance of the terms hereof or to an injunction
restraining such holder (or such Holder's personal representative) from
violating this Plan or Option Agreement, in addition to any other remedies that
may be available to the Company at law or in equity.

     7.11 No Shareholder Rights. No rights or privileges of a shareholder in the
          ---------------------
Company are conferred by reason of the granting of the Option. No Optionee will
become a shareholder in the Company with respect to any Shares of Option Stock
unless and until the Option has been properly exercised and the Option Price
fully paid as to the portion of the Option exercised.

8.  Term of the Plan.  This Plan will become effective on the date of its
    ----------------
adoption by the Board, provided this Plan is approved by the shareholders of the
Company (excluding Shares of Option Stock issued by the Company pursuant to the
exercise of Options granted under this Plan) within twelve (12) months before or
after that date.  If this Plan is not so approved by the shareholders of the
Company within that twelve (12) month period of time, any Options granted under
this Plan will be rescinded and will be void.  This Plan will remain in effect
until the tenth (10th) anniversary of the date of its adoption by the Board or
its approval by the shareholders of the Company, whichever is earlier, unless it
is terminated earlier pursuant to section 11 of this Plan.

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

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

                                      -12-
<PAGE>

any rights or obligations under any outstanding Option. This Plan will be
governed by, and construed in accordance with, the laws of the State of
California.

11.  Amendment and Discontinuance. The Board May amend, suspend or discontinue
     ----------------------------
this Plan at any time or from time to time; provided that no action of the Board
will cause ISOs granted under this Plan not to comply with Section 422 of the
Code unless the Board specifically declares such action to be made for that
purpose and provided further that no such action may, without the approval of
the shareholders of the Company, materially increase (other than by reason of an
adjustment pursuant to section 9 hereof) the maximum aggregate number of Shares
of Option Stock in the Option Pool, materially increase the benefits accruing to
Eligible Participants, or materially modify the category of, or eligibility
requirements for persons who are Eligible Participants.  However, no such action
may alter or impair any Option previously granted under this Plan without the
consent of the Optionee, nor may the number of Shares of Option Stock in the
Option Pool be reduced to a number that is less than the aggregate number of
Shares of Option Stock (i) that may be issued pursuant to the exercise of all
outstanding and unexpired Options granted hereunder, and (ii) that have been
issued and are outstanding pursuant to the exercise of Options granted hereunder
(net of any such Shares that have been reacquired by the Company by repurchase
or otherwise).

12.  Information Provided by Company.  Prior to an Initial Public Offering, the
     -------------------------------
Company annually will make available to each Optionee the Company's financial
statements (which statements need not be audited), and each Optionee will, by
virtue of entering into an Option Agreement, be deemed to have agreed (and to
cause any investment advisers to whom the Optionee proposes to make such
information available to agree) to keep such information confidential and not to
use such information for any purpose whatsoever other than determining whether
to exercise an Option.

13.  Copies of Plan.  A copy of this Plan will be delivered to each Optionee at
     --------------
or before the time he or she executes an Option Agreement.

Date Plan Adopted by Board of Directors: March 17, 1997

Date Plan Approved by the Shareholders: March 17, 1997

                                      -13-
<PAGE>

                               2BRIDGE SOFTWARE
                            1997 STOCK OPTION PLAN


                                   Exhibit A
                                  DEFINITIONS


1.  "10% shareholder" means a person who owns, either directly or indirectly by
virtue of the ownership attribution provisions set forth in Section 424(d) of
the Code at the time he or she is granted an Option, stock possessing more than
ten percent (10%) of the total combined voting power or value of all classes of
stock of the Company and/or of its Subsidiaries.

2.  "1933 Act" means the Securities Act of 1933, as amended.

3.  "Code" means the Internal Revenue Code of 1986, as amended (references
herein to Sections of the Code are intended to refer to Sections of the Code as
enacted at the time of the Plan's adoption by the Board and as subsequently
amended, or to any substantially similar successor provisions of the Code
resulting from recodification, renumbering or otherwise).

4.  "Donative Transfer" with respect to Shares of Option Stock means any
Transfer, other than a Permitted Transfer or an Involuntary Transfer, without
the receipt of cash or other legal consideration in payment therefor.

5.  "Fair Market Value" means, with respect to the Shares and as of the date
that is relevant to such a determination (e.g., on the Grant Date), the market
price per share of such Shares determined by the Administrator, consistent with
the requirements of Section 422 of the Code and to the extent consistent
therewith, as follows: (a) if the Shares are traded on a stock exchange on the
date in question, then the Fair Market Value will be equal to the closing price
reported by the applicable composite transactions report for such date; (b) if
the Shares are traded over-the-counter on the date in question and are
classified as a national market issue, then the Fair Market Value will be equal
to the last-transaction price quoted by the NASDAQ system for such date; (c) if
the Shares are traded over-the-counter on the date in question but are not
classified as a national market issue, then the Fair Market Value will be equal
to the mean between the last reported representative bid and asked prices quoted
by the NASDAQ system for such date; and (d) if none of the foregoing provisions
is applicable, then the Fair Market Value will be determined by the
Administrator in good faith on such basis as it deems appropriate, taking into
consideration the provisions of Section 260.141.50 of Title 10 of the California
Code of Regulations.

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

<PAGE>

7.  "Holder" means the holder of any Shares of Option Stock.

8.  "Initial Public Offering" means the closing of the first sale of securities
of the Company, or of any Successor Entity, to the public, through a firm
commitment underwriting, for an aggregate price (exclusive of underwriters'
commissions and expenses of the offering) of at least ten million dollars
($10,000,000), pursuant to an effective registration statement filed with the
Securities and Exchange Commission under the 1933 Act.

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

10.  "Just Cause Termination" means a termination by the Company and/or any of
its Subsidiaries of the Original Holder's employment or services (or if the
Original Holder is a director, removal of him or her from the Board by action of
the shareholders or, if permitted by applicable law and the Bylaws of the
Company, the other directors), in connection with the good faith determination
of the Board (or of the Company's shareholders if the Original Holder is a
director and the removal of him or her from the Board is by action of the
shareholders, but in either case excluding the vote of the subject individual if
he or she is a director or a shareholder) that the Original Holder has engaged
in any acts involving dishonesty or moral turpitude or in any acts that
materially and adversely affect the business, affairs or reputation of the
Company or any of its Subsidiaries.

11.  "Original Holder" means the original Eligible Participant to whom an Option
is granted under the Plan, even if such Option is transferred pursuant to
section 7.3 of the Plan.

12.  "Subsidiary" has the same meaning as "subsidiary corporation" as defined in
Section 424(f) of the Code.

13.  "Successor Entity" means a corporation or other entity that acquires an or
substantially all of the assets of the Company, or which is the surviving or
parent entity resulting from a Business Combination, as that term is defined in
section 7.5 of the Plan.

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

                                      -15-
<PAGE>

15.  "Transfer" with respect to Shares of Option Stock, includes, without
limitation, a voluntary or involuntary sale, assignment, transfer, conveyance,
pledge, hypothecation, encumbrance, disposal, loan, gift, attachment or levy of
those Shares, including without limitation any Involuntary Transfer.

                                      -16-