<PAGE>

                                                                    EXHIBIT 4.06

                                 KEYLABS, INC.

                     1996 STOCK OPTION/STOCK ISSUANCE PLAN
                     -------------------------------------

                                  ARTICLE ONE

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

     I.   PURPOSE OF THE PLAN

          This 1996 Stock Option/Stock Issuance Plan is intended to promote the
interests of KEYLABS, INC., a Utah 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.

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

     II.  STRUCTURE OF THE PLAN

          A.  The Plan shall be divided into two (2) separate equity programs:

              (i) the Option Grant Program under which eligible persons may, at
     the discretion of the Plan Administrator, be granted options to purchase
     shares of Common Stock, and

              (ii) the Stock Issuance Program under which eligible persons may,
     at the discretion of the Plan Administrator, be issued shares of Common
     Stock directly, either through the immediate purchase of such shares or as
     a bonus for services rendered the Corporation (or any Parent or
     Subsidiary).

          B.  The provisions of Articles One and Four shall apply to both the
equity programs under the Plan and shall accordingly govern the interests of all
persons under the Plan.

     III. 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 rules 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 or stock issuances thereunder 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 stock issuance
thereunder.

     IV.  ELIGIBILITY

          A.  The persons eligible to participate in the Plan are as follows:

              (i)   Employees,

              (ii) non-employee members of the Board or the nonemployee 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, (i)
with respect to the option grants under the Option Grant Program, which eligible
persons are to receive option grants, 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, and (ii) with respect to stock
issuances under the Stock Issuance Program, which eligible persons are to
receive stock issuances, the time or times when such issuances are to be made,
the number of shares to be issued to each Participant, the vesting schedule (if
any) applicable to the issued shares and the consideration to be paid by the
Participant for such shares.

          C.  The Plan Administrator shall have the absolute discretion either
to grant options in accordance with the Option Grant Program or to effect stock
issuances in accordance with the Stock Issuance Program.

     V.  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 200,000
shares.

          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.  All shares issued under the Plan, whether or not those shares are
subsequently repurchased by the Corporation pursuant to its repurchase rights
under the Plan, shall reduce on a share-for-share basis she number of shares of
Common Stock available for subsequent issuance 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.

                                  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:

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                   (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 Four
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

                   (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 transaction.

          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.  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 six (6) months following the date
     of such cessation of Service during which to exercise each outstanding
     option held by such Optionee. However, should such Disability be deemed to
     constitute Permanent Disability, then the period during which each
     outstanding option held by the Optionee is to remain exercisable shall be
     extended by an additional six (6) months so that the exorcise period shall
     be the twelve (12)-month period following the date of the Optionee's
     cessation of Service by reason of such Permanent Disability.

                   (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

                                       3
<PAGE>

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 cessation of Service.  Upon the expiration of the applicable
     exercises 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 to the extent it is not exercisable for vested
     Shares on the date of such cessation of Service.

          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 prices 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.
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 he 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, beginning one (1)
year after the option grant date.  However, this minimum vesting requirement
shall not be applicable with respect to any option granted to a Highly-
Compensated Person.

          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 Option Grant Program.  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.  However, a Non-Statutory Option
may be assigned in accordance with the terms of a Qualified Domestic Relations
Order.  The assigned option may only be exercised by the person or persons who
acquire a proprietary interest in the option pursuant to such Qualified Domestic
Relations Order.  The terms applicable to the assigned option (or portion
thereof) shall be the same as those in effect for the option immediately prior
to such assignment and shall be set forth in such documents issued to the
assignee as the Plan Administrator may deem appropriate.

     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 Articles One, Two and Four shall be applicable to Incentive
Options.  Options which are specifically designated as Non-Statutory Options
shall be subject to the terms of 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

                                       4
<PAGE>

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.  In the event of any Corporate Transaction, each outstanding
option shall terminate and cease to be outstanding, except to the extent assumed
by the successor corporation (or parent thereof) in connection with such
Corporate Transaction.  In addition, all outstanding repurchase rights shall
terminate automatically in the event of any Corporate Transaction, except to the
extent the repurchase rights are assigned to the successor corporation (or
parent thereof) in connection with such Corporate Transaction.

          B.  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 the 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.

          C.  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 Option Grant Program
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.

     V.   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 or death
     from the limited 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 or death 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.

                                 ARTICLE THREE

                             STOCK ISSUANCE PROGRAM
                             ----------------------

                                       5
<PAGE>

I.  STOCK ISSUANCE TERMS

          Shares of Common Stock may be issued under the Stock Issuance program
through direct and immediate issuances without any intervening option grants.
Each such stock issuance shall be evidenced by a Stock Issuance Agreement which
complies with the terms specified below.

          A.  Purchase Price.
              --------------

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

                   (i) The purchase price per share shall not be less than
     eighty-five percent (85%) of the Fair Market Value per share of Common
     Stock on the stock issuance date,

                   (ii) If the person to whom the stock issuance is made is a
     10% Shareholder, then the purchase 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 stock issuance date.

              2. Subject to the provisions of Section I of Article Four, shares
of Common Stock may be issued under the Stock Issuance Program for one or both
of the following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:

                   (i)  cash or check made payable to the Corporation, or

                   (ii) past services rendered to the Corporation (or any Parent
     or Subsidiary).

          B.  Vesting Provisions.
              ------------------

              1. Shares of Common Stock issued under the Stock Issuance Program
may, in the discretion of the Plan Administrator, be fully and immediately
vested upon issuance or may vest in one or more installments over the
Participant's period of Service or upon attainment of specified performance
objectives. The elements of the vesting schedule applicable to any unvested
shares of Common Stock issued under the Stock Issuance Program, namely:

                   (i) the Service period to be completed by the Participant or
     the performance objectives to be attained,

                   (ii) the number of installments in which the shares are to
     vest,

                   (iii)  the interval or intervals (if any) which are to lapse
     between installments, and

                   (iv) the effect which death, Disability or other event
     designated by the Plan Administrator is to have upon the vesting schedule,

shall be determined by the Plan Administrator and incorporated into the Stock
Issuance Agreement.  The Plan Administrator may not impose a vesting schedule
upon any stock issuance effected under   the Stock Issuance Program which is
more restrictive than twenty percent (20%) per year vesting, beginning one (1)
year after the stock issuance date.  However, this minimum vesting requirement
shall not be applicable with respect to any stock issued to a Highly-Compensated
Person.

          2.  Any new, substituted or additional securities or other property
(including money paid other than as a regular cash dividend) which the
participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class

                                       6
<PAGE>

without the Corporation's receipt of consideration shall be issued subject to
(i) the same vesting requirements applicable to the Participant's unvested
shares of Common Stock and (ii) such escrow arrangements as the Plan
Administrator shall deem appropriate.

          3.  The Participant shall have full shareholder rights with respect to
any shares of Common Stock issued to the Participant under the Stock Issuance
Program, whether or not the Participant's interest in those shares is vested.
Accordingly, the Participant shall have the right to vote such shares and to
receive any regular cash dividends paid on such shares.

          4.  Should the Participant cease to remain in Service while holding
one or more unvested shares of Common Stock issued under the Stock Issuance
Program or should the performance objectives not be attained with respect to one
or more such unvested shares of Common Stock, then those shares shall be
immediately surrendered to the Corporation for cancellation, and the Participant
shall have no further shareholder rights with respect to those shares.  To the
extent the surrendered shares were previously issued to the Participant for
consideration paid in cash or cash equivalent (including the Participant's
purchase-money indebtedness), the Corporation shall repay to the Participant the
cash consideration paid for the surrendered shares and shall cancel the unpaid
principal balance of any outstanding purchase-money note of the Participant
attributable to such surrendered shares.

          5.  The Plan Administrator may in its discretion waive the surrender
and cancellation of one or more unvested shares of Common Stock (or other assets
attributable thereto) which would otherwise occur upon the non-completion of the
vesting schedule applicable to such shares.  Such waiver shall result in the
immediate vesting of the Participant's interest in the shares of Common Stock as
to which the waiver applies.  Such waiver may be effected at any time, whether
before or after the Participant's cessation of Service or the attainment or non-
attainment of the applicable performance objectives.

     C.  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
Participant (or any successor in interest) of any shares of Common Stock issued
under the Stock Issuance Program.  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.

     II. CORPORATE TRANSACTION

         All of the outstanding repurchase rights under the Stock Issuance
Program shall terminate automatically in the event of any Corporate Transaction,
except to the extent the repurchase rights are assigned to the successor
corporation (or parent thereof) in connection with such Corporate Transaction.

     III. SHARE ESCROW/LEGENDS

          Unvested shares may, in the Plan Administrator's discretion, be held
in escrow by the Corporation until the Participant's interest in such shares
vests or may be issued directly to the Participant with restrictive legends on
the certificates evidencing those unvested shares.

                                  ARTICLE FOUR

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

     I.  FINANCING

          The Plan Administrator may permit any Optionee or Participant to pry
the option exercise price or the purchase price for shares issued to such person
under the Plan 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

                                       7
<PAGE>

property other than the purchased shares of Common Stock. In all events, the
maximum credit available to the Optionee or Participant may not exceed the sum
of (i) the aggregate option exercise price or purchase price payable for the
purchased shares plus (ii) any Federal, state and local income and employment
tax liability incurred by the Optionee or the Participant in connection with the
option exercise or share purchase.

     II.  EFFECTIVE DATE AND TERM OF THE PLAN

          A.  The Plan shall become effective when adopted by the Board, but no
option granted under the Plan may be exercised, and no shares shall be issued
under the Plan, 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 and no shares shall be issued under the Plan.  Subject
to such limitation, the Plan Administrator may grant options and issue shares
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 shall terminate upon the earliest of (i) the expiration
                                                --------
of the ten (10) year period measured from the date the Plan is adopted by the
Board, (ii) the date on which all shares available for issuance under the Plan
shall have been issued pursuant to the exercise of options or the Issuance of
shares (whether vested or unvested) under the Plan or (iii) the termination of
all outstanding options in connection with a Corporate Transaction.  Upon 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 such options or issuances.

     III. 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 adversely affect the rights and obligations with respect to
options or unvested stock issuances at the time outstanding under the Plan,
unless the Optionee or the Participant consents to such amendment or
modification.  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, (ii) materially modify the
eligibility requirements for Plan participation or (iii) materially increase the
benefits accruing to Plan participants.

          B.  Options to purchase shares of Common Stock may be granted under
the Plan and shares of Common Stock may be issued under the Plan that are in
each instance in excess of the number of shares then available for issuance
under the plan, provided any excess shares actually issued under the Plan are
held in escrow 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 first such excess issuances are made, then
(i) any unexercised options granted on the basis of such excess shares shall
terminate and cease to be outstanding and (ii) the Corporation shall promptly
refund to the Optionees and the Participants the exercise or purchase price paid
for any excess shares issued under the Plan and held in escrow, together with
interest (at the applicable Short-Term Federal Rate) for the period the shares
were held in escrow, and such shares shall thereupon be automatically cancelled
and cease to be outstanding.

     IV.  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.

     V.  WITHHOLDING

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

                                       8
<PAGE>

     VI.  REGULATORY APPROVALS

          The implementation of the Plan, the granting of any options under the
Plan and the issuance of any shares of Common Stock (i) upon the exercise of any
option or (ii) under the Stock Issuance Program 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 or the Participant
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 such person) or of the
Optionee or the Participant, which rights are hereby expressly reserved by each,
to terminate such person'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 and
each Participant in 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.

                                       9
<PAGE>

                                    APPENDIX

         The following definitions shall be in effect udder 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 fifty 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 KEYLABS, INC., a Utah corporation.
         -----------

     G.  Disability shall mean the inability of the Optionee or the Participant
         ----------
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.  Disability shall be deemed to
constitute Permanent Disability in the event that such Disability is expected to
result in death or has lasted or can be expected to last for a continuous period
of twelve (12) months or more.

     H.  Domestic Relations Order shall mean any judgment, decree or order
         ------------------------
(including approval of a property settlement agreement) which provides or
otherwise conveys, pursuant to applicable State domestic relations laws
(including community property laws), marital property rights to any spouse or
former spouse of the Optionee.

     I.  Employees 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.

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

     K.  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, than 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

                                       10
<PAGE>

     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
     data 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.

     L.  Highly-Compensated Person shall mean an Optionee or Participant (i)
         -------------------------
whose compensation per calendar year from the Corporation (or any Parent or
Subsidiary) equals or exceeds Sixty Thousand Dollars ($60,000) in the aggregate
and (ii) who has previously received one or more option grants or stock
issuances under the Plan.

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

     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.  Option Grant Program shall mean the option grant program in effect
         --------------------
under the Plan.

     Q.  Optionee shall mean any person to whom an option is granted under the
         --------
Option Grant Program.

     R.  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.

     S.  Participant shall mean any person who is issued shares of Common Stock
         -----------
under the Stock Issuance Program.

     T.  Plan shall mean the Corporation's 1996 Stock Option/Stock Issuance
         ----
Plan, as set forth in this document.

     U.  Plan Administrator shall mean either the Board or the Committee, to the
         ------------------
extent the Committee is at the time responsible for the administration of the
Plan.

     V.  Qualified Domestic Relations Order shall mean a Domestic Relations
         ----------------------------------
Order which substantially complies with the requirements of Code Section 414(p).
The Plan Administrator shall have the sole discretion to determine whether a
Domestic Relations Order is a Qualified Domestic Relations Order.

     W.  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 or stock
issuance.

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

     Y.  Stock Issuance Agreement shall mean the agreement entered into by the
         ------------------------
Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.

     Z.  Stock Issuance Program shall mean the stock issuance program in effect
         ----------------------
under the Plan.

                                       11
<PAGE>

     AA.  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.

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

                                       12
<PAGE>

                                                              Grant No. ________


                                 KEYLABS, INC.

                        NOTICE OF GRANT OF STOCK OPTION
                        -------------------------------

          Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of KEYLABS, INC. (the "Corporation"):

                Optionee:
                --------   _____________________________________
                Grant Date:
                ----------  ____________________________________
                Vesting Commencement Date:
                -------------------------  _____________________
                Exercise Price:  $______________________________per share
                --------------
                Number of Option Shares: __________________________shares
                -----------------------
                Expiration Date:
                --------------- __________________________
                Type of Option:  ______  Incentive Stock Option
                --------------
                                   ______  Non-Statutory Stock Option
                Date Exercisable:  Immediately Exercisable
                ----------------

                Vesting Schedule: The Option Shares shall be unvested and
                ----------------
                subject to repurchase by the Corporation at the Exercise Price
                paid per share. Optionee shall acquire a vested interest in, and
                the Corporation's repurchase right will accordingly lapse with
                respect to, (i) twenty-five percent (25%) of the Option Shares
                upon Optionee's completion of one (1) year of Service measured
                from the Vesting Commencement Date and (ii) the balance of the
                Option Shares in equal successive monthly installments upon
                Optionee's completion of each of the next thirty-six (36) months
                of Service measured from and after the first anniversary of the
                Vesting Commencement Date. In no event shall any additional
                Option Shares vest after Optionee's cessation of Service.

                Optionee understands and agrees that the Option is granted
subject to and in accordance with the terms of the KEYLABS, INC. 1996 Stock
Option/Stock Issuance Plan (the "Plan"). Optionee further agrees to be bound by
the terms of the Plan and the terms of the Option as set forth in the Stock
Option Agreement attached hereto as Exhibit A. Optionee understands that any
Option Shares purchased under the Option will be subject to the terms set forth
in the Stock Purchase Agreement attached hereto as Exhibit B.

                Optionee hereby acknowledges receipt of a copy of the
Plan in the form attached hereto as Exhibit C.

          REPURCHASE RIGHTS.  OPTIONEE HEREBY AGREES THAT ALL OPTION SHARES
          -----------------
ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL BE SUBJECT TO CERTAIN REPURCHASE
RIGHTS AND RIGHTS OF FIRST REFUSAL EXERCISABLE BY THE CORPORATION AND ITS
ASSIGNS.  THE TERMS OF SUCH RIGHTS ARE SPECIFIED IN THE ATTACHED STOCK PURCHASE
AGREEMENT.

          No Employment or Service Contract.  Nothing in this Notice or in the
          ---------------------------------
Plan shall confer upon 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 Optionee,
<PAGE>

which rights are hereby expressly reserved by each, to terminate Optionee's
Service at any time for any reason, with or without cause.

          Definitions.  All capitalized terms in this Notice shall have the
          -----------
meaning assigned to them in this Notice or in the attached Stock Option
Agreement.

___________________,199
      Date
                                   KEYLABS, INC.

                                   By:
                                         -----------------------------
                                   Title:
                                         -----------------------------


                                   -----------------------------------
                                   OPTIONEE

                                   Address:
                                            --------------------------

                                   -----------------------------------
ATTACHMENTS
-----------
Exhibit A - Stock Option Agreement
Exhibit B - Stock Purchase Agreement
Exhibit C - 1996 Stock Option/Stock Issuance Plan

                                       2
<PAGE>

                                 KEYLABS, INC.

                             STOCK OPTION AGREEMENT
                             ----------------------

RECITALS
--------

I.  The Board has adopted the Plan for the purpose of retaining the service of
selected Employees, non-employee members of the Board or the board of directors
of any Parent or Subsidiary and consultants who provide services to the
Corporation (or any Parent or Subsidiary).

     A.  Optionee is to render valuable service to the Corporation (or a Parent
or Subsidiary), and this Agreement is executed pursuant to, and is intended to
carry out the purposes of, the Plan in connection with the Corporation's grant
of an option to Optionee.

     B.  All capitalized terms in this Agreement shall have the meaning assigned
to them in the attached Appendix.

          NOW, THEREFORE, it is hereby agreed as follows:

          1.  Grant of Option.  The Corporation hereby grants to Optionee, as of
              ---------------
the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice.  The Option Shares shall be purchasable from time
to time during the option term specified in Paragraph 2 at the Exercise Price.

          2.  Option Term.  This option shall have a term of ten (10) years
              -----------
measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5, 6 or 17.

          3.  Limited Transferability.  This option shall be neither
              -----------------------
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution following Optionee's death and may be exercised, during
Optionee's lifetime, only by Optionee.  However, if this option is designated a
Non-Statutory Option in the Grant Notice, then this option may also be assigned
in accordance with the terms of a Qualified Domestic Relations Order.  If so
assigned, the assigned option shall be exercisable only by the person or persons
who acquire a proprietary interest in the option pursuant to such Qualified
Domestic Relations Order.  The terms applicable to the assigned option (or
portion thereof) shall be the same as those in effect for this option
immediately prior to such assignment and shall be set forth in such documents
issued to the assignee as the Plan Administrator may deem appropriate.

          4.  Dates of Exercise.  This option shall become exercisable for the
              -----------------
Option Shares in one or more installments as specified in the Grant Notice.  As
the option becomes exercisable for such installments, those installments shall
accumulate and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5, 6 or 17.

          5.  Cessation of Service.  The option term specified in Paragraph 2
              --------------------
shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:

              (a) Should Optionee cease to remain in Service for any reason
(other than death or Disability) while this option is outstanding, then Optionee
shall have a period of three (3) months (commencing with the date of such
cessation of Service) during which to exercise this option, but in no event
shall this option be exercisable at any time after the Expiration Date.

              (b) Should Optionee die while this option is outstanding, then the
personal representative of Optionee's estate or the person or persons to whom
the option is transferred pursuant to Optionee's will or in accordance with the
laws of descent and distribution shall have the right to exercise this option.
Such right shall lapse and this option shall cease to be outstanding upon the
earlier of (i) the expiration of twelve (12)-month period measured from the date
of Optionee's death or (ii) the Expiration Date.
<PAGE>

              (c) Should Optionee cease Service by reason of Disability while
this option is outstanding, then Optionee shall have a period of six (6) months
(commencing with the date of such cessation of Service) during which to exercise
this option. However, should such Disability be deemed to constitute Permanent
Disability, then the period during which this option is to remain exercisable
shall be extended by an additional six (6) months so that the exercise period
shall be the twelve (12)-month period following the date of Optionee's cessation
of Service by reason of such Permanent Disability. In no event shall this option
be exercisable at any time after the Expiration Date.

          Note:  Exercise of this option on a date later than three (3) months
          ----
          following cessation of Service due to Disability will result in loss
          of favorable Incentive Option treatment, unless such Disability
                                                   ------
          constitutes Permanent Disability.  In the event that Incentive Option
          treatment is not available, this option will be taxed as Non-Statutory
          Option upon exercise.

              (d) During the limited period of post-Service exercisability, this
option may not be exercised in the aggregate for more than the number of vested
Option Shares for which the option is exercisable at the time of Optionee's
cessation of Service.  Upon the expiration of such limited exercise period or
(if earlier) upon the Expiration Date, this option shall terminate and cease to
be outstanding for any vested Option Shares for which the option has not be
exercised.  To the extent Optionee is not vested in the Option Shares at the
time of Optionee's cessation of Service, this option shall immediately terminate
and cease to be outstanding with respect to those shares.

          6.  Special Termination of Option.
              -----------------------------

              (a) In the event of a Corporate Transaction, this option shall
terminate and cease to be outstanding, except to the extent assumed by the
successor corporation or parent thereof in connection with such Corporation
Transaction.

              (b) If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation at such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise
Price, provided the aggregate Exercise Price shall remain the same.
       --------

              (c) This Agreement shall not in any 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.

          7.  Adjustment in Option Shares.  Should any change be made to the
              ---------------------------
Common Stock by reason of any stock split, stock dividend, recapitalizations,
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 total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.

          8.  Shareholder Rights.  The holder of this option shall not have any
              ------------------
shareholder rights with respect to the Option Shares until such person shall
have exercise the option, paid the Exercise Price and become a holder of record
of the purchased shares.

          9.  Manner of Exercising Option.
              ---------------------------

             (a) In order to exercise this option with respect to all or any
part of the Option Shares for which this option is at the time exercisable,
Optionee (or any other person or persons exercising the option ) must take the
following actions:

                                       2
<PAGE>

                 (i) Execute and deliver to the Corporation a Purchase Agreement
             for the Option Shares for which the option is exercised.

                 (ii) Pay the aggregate Exercise Price for the purchased shares
             in one or more of the following forms:

                     (A) cash or check made payable to the Corporation;

             or

                     (B) a promissory note payable to the Corporation, but only
             to the extent approved by the Plan Administrator in accordance with
             Paragraph 14.

                    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:

                     (C) in shares of Common Stock held by Optionee (or any
             other person or persons exercising the option) 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
             Exercise Date; or

                     (D) to the extent the option is exercised for vested Option
             Shares, through a special sale and remittance procedure pursuant to
             which Optionee (or any other person or persons exercising the
             option) 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 the sale and remittance procedure is
             utilized in connection with the option exercise, payment of the
             Exercise Price must accompany the Purchase Agreement delivered to
             the Corporation in connection with the option exercise.

                 (iii) Furnish to the Corporation appropriate documentation
             that the person or persons exercising the option (if other than
             Optionee) have the right to exercise this option.

                 (iv) Execute and deliver to the Corporation such written
             representations as may be requested by the Corporation in order for
             it to comply with the applicable requirements of Federal and state
             securities laws.

                 (v) Make appropriate arrangements with the Corporation (or
             Parent or Subsidiary employing or retaining Optionee) for the
             satisfaction of all Federal, state and local income and employment
             tax withholding requirements applicable to the option exercise.

             (b) As soon as practical after the Exercise Date, the Corporation
shall issue to or on behalf of Optionee (or any other person or persons
exercising this option) a certificate for the purchased Option Shares, with the
appropriate legends affixed thereto.

             (c) In no event may this option be exercised for any fractional
shares.

                                       3
<PAGE>

         10. REPURCHASE RIGHTS.  ALL OPTION SHARES ACQUIRED UPON THE EXERCISE
             -----------------
OF THIS OPTION SHALL BE SUBJECT TO CERTAIN RIGHTS OF THE CORPORATION AND ITS
ASSIGNS TO REPURCHASE THOSE SHARES IN ACCORDANCE WITH THE TERMS SPECIFIED IN THE
PURCHASE AGREEMENT.

         11. Compliance with Laws and Regulations.
             ------------------------------------

             (a) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or the Nasdaq National Market if
applicable) on which the Common Stock may be listed for trading at the time of
such exercise and issuance.

             (b) The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such
approvals.

         12.  Successors and Assigns.  Except to the extent otherwise provided
              ----------------------
in Paragraphs 3 and 6, the provisions of this Agreement shall insure to the
benefit of, and be binding upon the Corporation and its successors and assigns
and Optionee, Optionee's assigns and the legal representatives, heirs and
legatees of Optionee's estate.

         13.  Notices.  Any notice required to be given or delivered to the
              -------
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices.  Any notice required to
be given or delivered to Optionee shall be in writing and addressed to Optionee
at the address indicated below Optionee's signature line on the Grant Notice.
All notices shall be deemed effective upon personal delivery or upon deposit in
the U.S. mail, postage prepaid and properly addressed to the party to be
notified.

         14.  Financing.  The Plan Administrator may, in its absolute
              ---------
discretion and without any obligation to do so, permit Optionee to pay the
Exercise Price for the purchased Option Shares by delivering a promissory note.
The terms of any such promissory note (including the interest rate, the
requirements for collateral and the terms of repayment) shall be established by
the Plan Administrator in its sole discretion.

         15.  Construction.  This Agreement and the option evidenced hereby are
              ------------
made and granted to the Plan and are in all respects limited by and subject to
the terms of the Plan.  All decisions of the Plan Administrator with respect to
any question or issue arising under the Plan or this Agreement shall be
conclusive and binding on all persons having an interest in this option.

         16.  Governing Law.  The interpretation, performance and enforcement
              -------------
of this Agreement shall be governed by the laws of the State of Utah without
resort to that State's conflict-of-laws rules.

         17.  Shareholder Approval.
              --------------------

              (a) The grant of this option is subject to approval of the Plan by
the Corporation's shareholders within twelve (12) months after the adoption of
the Plan by the Board. Notwithstanding any provision of this Agreement to the
                       ------------------------------------------------------
contrary, this option may not be exercised in whole or in part until such
-------------------------------------------------------------------------
shareholder approval is obtained. In the event that such shareholder approval is
--------------------------------
not obtained, then this option shall terminate in its entirety and Optionee
shall have no further rights to acquire any Option Shares hereunder.

---------------------
/1/  Authorization of payment of the Exercise Price by a promissory note under
such provisions may, under currently proposed Treasury Regulations, result in
the loss of incentive stock option treatment under the Federal Tax laws.

                                       4
<PAGE>

              (b) If the Option Shares covered by this Agreement exceed, as of
the Grant Date, the number of shares of Common Stock which may without
shareholder approval be issued under the Plan, then this option shall be void
with respect to such excess shares, unless shareholder approval of an amendment
sufficiently increasing the number of shares of Common Stock issuable under the
Plan is obtained in accordance with the provisions of the Plan.

         18.  Additional Terms Applicable to an Incentive Option.  In the event
              --------------------------------------------------
this option is designated an Incentive Option in the Grant Notice, the following
terms and conditions shall also apply to the grant:

              (a) This option shall cease to qualify for favorable tax treatment
as an Incentive Option if (and to the extent) this option is exercise for one or
more Option Shares: (i) more than three (3) months after the date Optionee
ceases to be an Employee for any reason other than death or Permanent Disability
or (ii) more than twelve (12) months after the date Optionee ceases to be an
Employee by reason of Permanent Disability.

              (b) This option shall not become exercisable in the calendar year
in which granted if (and to the extent) the aggregate Fair Market Value
(determined at the Grant Date) of the Common Stock for which this option would
otherwise first become exercisable in such calendar year would, when added to
the aggregate value (determined as of the respective date or dates of grant) of
the Common Stock and any other securities for which one or more other Incentive
Options granted to Optionee prior to the Grant Date (whether under the Plan or
any other option plan of the Corporation or any Parent or Subsidiary) first
become exercisable during the same calendar year exceed One Hundred Thousand
Dollars ($100,000) in the aggregate. To the extent the exercisability of this
option is deferred by reason of the foregoing limitation, the deferred portion
shall become exercisable in the fist calendar year or years thereafter in which
the One Hundred Thousand Dollar ($100,000) limitation of this Paragraph 18(b)
would not be contravened, but such deferral shall in all events end immediately
prior to the effective date of a Corporate Transaction in which this option is
not to be assumed, whereupon the option shall become immediately exercisable as
a Non-Statutory Option for the deferred portion of the Option Shares.

              (c) Should Optionee hold, in addition to this option, one or more
other options to purchase Common Stock which become exercisable for the first
time in the same calendar year as this option, then the foregoing limitations on
the exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.

                                       5
<PAGE>

                                    APPENDIX
                                    --------

     The following definitions shall be in effect under the Agreement:

I.   Agreement shall mean this Stock Option Agreement.
     ---------

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

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

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

     D. 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 fifty 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.

     E.  Corporation shall mean KEYLABS, INC., a Utah corporation.
         -----------


     F.  Disability shall mean the inability of Optionee 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.  Disability shall be deemed to constitute Permanent Disability in
the event that such Disability is expected to result in death or has lasted or
can be expected to last for a continuous period of twelve (12) months or more.

     G.  Domestic Relations Order shall mean any judgment, decree or order
         ------------------------
(including approval of a property settlement agreement) which provides or
otherwise conveys, pursuant to applicable State domestic relations laws
(including community property laws), marital property rights to any spouse or
former spouse of the Optionee.

     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 option shall have been
        -------------
exercised in accordance with Paragraph 9 of the Agreement.

     J. Exercise Price shall mean shall mean the exercise price per share as
        --------------
specified in the Grant Notice.

     K. Expiration Date shall mean the date on which the option expires as
        ---------------
specified in the Grant Notice.

     L.  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 the 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
<PAGE>

     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 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.

     M.  Grant Date shall mean the date of the option as specified in the Grant
         ----------
Notice.

     N.  Grant Notice shall mean the Notice of Grant of Stock Option
         ------------
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.

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

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

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

     R.  Option Shares shall mean the number of shares of Common Stock subject
         -------------
to the option.

     S.  Optionee shall mean the person to whom the option is granted as
         --------
specified in the Grant Notice.

     T.  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.

     U.  Plan shall mean the Corporation's 1995 Stock Option/Stock Issuance
         ----
Plan.

     V.  Plan Administrator shall mean either the Board or a committee of
         ------------------
Board members, to the extent the committee is at the time responsible for the
administration of the Plan.

     W.  Purchase Agreement shall mean the stock purchase agreement in
         ------------------
substantially the form of Exhibit B to the Grant Notice.
                          ---------

     X.  Qualified Domestic Relations Order shall mean a Domestic Relations
         ----------------------------------
Order which substantially complies with the requirements of Code Section 414(p).
The Plan Administrator shall have the sole discretion to determine whether a
Domestic Relations Order is a Qualified Domestic Relations Order.

     Y.  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.

     Z.  Stock Exchange shall mean the American Stock Exchange or the New York
         --------------
Stock Exchange.

<PAGE>

     AA.  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.